Mgmt 371
Chapter Fourteen
Managing Human Resources in
Organizations
Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©
1
The Environmental Context of
Human Resource Management
 Human Resource Management (HRM)

The set of organizational activities directed at
attracting, developing, and maintaining an effective
work force.
 The Strategic Importance of HRM

HRM is increasingly important as firms realize the
value of their human capital in improving
productivity.

HRM is critical to bottom-line performance of the
firm.

HR planning is now part of the strategic planning
process.
2
The Legal Environment of HRM
(Equal Employment Opportunity)
 Equal Employment Opportunity


Title VII of the Civil Rights Act of 1964

Forbids discrimination in the employment relationship
on the basis of race, color, religion. sex, or national
origin.

Employers are not required to seek out and hire
minorities but they must treat fairly all who apply.
Adverse impact


When minority group members pass a selection
standard at a rate less than 80% of the rate of the
majority group.
Equal Employment Opportunity Commission (EEOC)

Federal agency charged with enforcing Title VII as
well as several other employment-related laws.
3
The Legal Environment of HRM
(Equal Employment Opportunity)
 Affirmative Action (E.O.11246)
Intentionally seeking and hiring qualified or
qualifiable employees from racial, sexual, and
ethnic groups that are underrepresented in the
organization
 Several executive orders require federal
contractors to develop affirmative action plans and
take affirmative action in hiring veterans and the
disabled.
 Pregnancy Discrimination Act
 Specifically outlaws discrimination on the basis of
pregnancy.

4
The Legal Environment of HRM
(Equal Employment Opportunity)
 Age Discrimination in Employment
Act of 1967 (ADEA)

Outlaws discrimination against persons
older than 40 years of age
 Americans with Disabilities Act of
1990 (ADA)

Forbids discrimination on the basis of
disabilities and requires employers to
provide reasonable accommodations for
disabled employees.
5
The Legal Environment of HRM
(Equal Employment Opportunity)
 Civil Rights Act of 1991
Amended the original Civil Rights Act,
making it easier to bring discrimination
lawsuits while also limiting punitive damages
that can be awarded in those lawsuits.
 Prohibits race norming.
 Places burden of proof on complaining
parties initiating disparate impact charges.
 Provides for extraterritorial application of Title
VII.
 Provides for jury trials

6
The Legal Environment of HRM
(Compensation and Benefits)
 Fair Labor Standards Act of 1938 (FLSA)
Sets a minimum wage and requires overtime pay
for work in excess of 40 hours per week for nonexempt employees.
 Salaried professional, executive, and
administrative employees are exempt from the
Act’s minimum wage and overtime provisions.
 Equal Pay Act of 1963
 Requires men and women to be paid the same
amount for doing the same jobs; exceptions are
permitted for seniority and merit pay.

7
The Legal Environment of HRM
(Compensation and Benefits)
 Employee Retirement Income Security
Act of 1974 (ERISA)

Sets standards for pension plan
management and provides federal
insurance if pension plans go bankrupt.
8
The Legal Environment of HRM
(Compensation and Benefits)
 Family and Medical Leave Act of
1993 (FMLA)
 Requires employers to provide up
to 12 weeks of unpaid leave for
qualifying family and medical
emergencies.
9
The Legal Environment of HRM
(Compensation and Benefits)
 Eligibility Requirements for FMLA
 Must work for a covered employer (private with 50+
employees, state governments and agencies, or the
federal government.
 Employee must have worked for at least 12 months for
a covered employer.
 Employee must have worked in excess of 1,250 hours
to be eligible. [156.25 work days, 31.25 work weeks]
 Work at a facility with 50 or more employees who live
within 75 miles of the place of employment
10
The Legal Environment of HRM
(Labor Relations)
 The National Labor Code
 National Labor Relations Act of 1935 (Wagner Act)
 Set up procedures for employees to vote whether to
have a union; if the vote is for a union, management is
required to bargain collectively with the union.
 National Labor Relations Board (NLRB)—the
federal agency empowered to enforce provisions of
the NLRA.
 Labor Management Relations Act of 1947 (TaftHartley Act)
 Amended the NLRA to limit the power of unions and
increase management’s rights during organizing
campaigns.
 Allows the U.S. president to prevent or end a strike
that endangers national security.
11
The Legal Environment of HRM
(Health and Safety)
 Occupational Safety and Health Act of 1970
(OSHA)
 Requires that employers:


Provide a place of employment that is free from
hazards that may cause death or serious physical
harm.
Obey the safety and health standards established by
Occupational Safety and Health Administration
(OSHA).
 Emerging Legal Issues
 Sexual orientation harassment
 Alcohol and drug dependence
 AIDS
12
Social Change and HRM
 Temporary Workers
 An increasing trend is to use more temporary workers
without the risk that the organization may have to
eliminate their jobs.
 Dual-Career Families
 Firms are increasingly having
to make accommodations for
dual-career partners by:



Delaying transfers
Offering employment to spouses
Providing more flexible work
schedules and benefits packages
13
Change and HRM
 Employment-at-Will

A traditional view of the workplace in which an
organization can fire an employee for any or no
reason.

The new argument: an organization should be able to
fire only people who are poor performers or who violate
rules.

Recent court cases have placed limits on an
organization’s ability to terminate employees by
requiring just cause for firing or dismissal as part of an
organization-wide cutback.
14
Attracting Human Resources
 Job Analysis
 A systematic analysis of jobs within an organization.
 Job Description
 A listing of the job’s tasks, duties, and responsibilities
(TDR); its working conditions; and the tools, materials,
and equipment use to perform the job.
 Job Specification
 A listing of the knowledge, skills, abilities (KSA), and
other credentials the incumbent jobholder will need to
do a job.
15
Attracting Human Resources
 Forecasting HR Demand and
Supply


Replacement chart
 A list of managerial positions
in the organization, the
occupants, how long they will
stay in the position, and who
will replace them.
Employee information system
(skills inventory) (OCI)
 A database of employees’
education, skills, work
experience, and career
expectations, usually
computerized.
16
Human Resource Planning (HRP)
17
Recruiting Human Resources
 Recruiting
 The process of attracting qualified persons to apply for
jobs that are open.
 Internal Recruiting
 Considering present employees as candidates for
openings.


Advantage: promotion from within can help build
morale and reduce turnover of high-quality employees.
Disadvantage: internal recruiting can create a “ripple
effect” of having to successively fill vacated positions.
18
Recruiting Human Resources
(cont’d)
 External Recruiting


Attracting persons from outside the
organization.
Realistic Job Preview (RJP) is considered a
successful method to ensure person-job fit.
19
Selecting Human Resources
 Validation:
 Determining the extent to which a selection device is
really predictive of future job performance.
 Predictive validation
 Correlating previously collected test scores of
employees with the employees’ actual job
performance.
 Content validation
 The use of logic and job analysis to determine that
selection techniques measure the exact skills needed
for job performance.
 Used to establish the job relatedness of a selection
device.
20
Selecting Human Resources
 Application Blanks
 Used to gather information about work history,
educational background, and other job-related
demographic data.
 Must not ask for information unrelated to the job.
 Tests
 Ability, skill, aptitude, or knowledge tests are usually
the best predictors of job success.
 Must be validated, administered, and scored
consistently.
21
Selecting Human Resources
 Interviews

Interviews can be poor predictors of job
success due to interviewer biases.

Interview validity can be improved by training
interviewers and using structured interviews.
22
Selecting Human Resources
 Assessment Centers
 A popular method for selecting managers and are
particularly good for selecting current employees for
promotion.
 A content validation of major parts of the managerial
job.
 Other Techniques
 Polygraphs have declined in popularity due to passage
of the Polygraph Protection Act.
 Employers now use physical exams, drug tests, and
credit checks to screen prospective employees.
23
Figure
14.2:
The
Training
Process
24
Developing Human Resources
(cont’d)
 Training and Development
 Assessing training needs
 Determining what needs exist is
the first step in developing a
training plan.
 Common training methods
 Lectures
 Work well for factual material.

Role play and case studies
 Good for improving interpersonal
relations skills or group decisionmaking.

On-the-job and vestibule training
 Facilitates learning physical skills
through practice and actual use of
tools
25
Developing Human Resources
(cont’d)
 Performance Appraisal

A formal assessment of how well employees do their
jobs.

Reasons for performance appraisal

Validates the selection process and the effects of
training.

Aids in making decisions about pay raises,
promotions, and training.

Provides feedback to employees to improve their
performance and plan future careers.
26
Developing Human Resources
(cont’d)
 Performance Appraisal (cont’d)

Objective measures of performance

Actual output (units produced), scrap rate, dollar
volume of sales, and number of claims processed.

Can become contaminated by outside factors resulting
in “opportunity bias” where some have a better chance
to perform than others.

Special performance tests are a method in which each
employee is assessed under standardized conditions.

Performance tests measure ability and not motivation.
27
Developing Human Resources
(cont’d)
 Performance Appraisal (cont’d)

Judgmental methods

Ranking—compares employees directly with each
other.
 Difficult to do with large numbers of employees.
 Difficult to make comparisons across work groups.
 Employees are ranked only on overall performance.
 Do not provide useful information for employee feedback.

Rating—compares each employee with a fixed
standard.
 Graphic rating scales
 Behaviorally-anchored rating scale (BARS)
28
Figure 14.3: Graphic Rating Scales
for a Bank Teller
29
Figure 14.4: Behaviorally
Anchored Rating Scale
30
Performance Appraisal Errors
 Recency Error - most raters can only recall
an employees last 30 to 60 days of
performance (Critical Incident Method can
reduce this error).
 Central Tendency - rating all subordinates as
average.

Common to Graphic Rating Scales when comments must be
provided for below or above average ratings.
 Leniency Error - everyone is rated above
average (usually done to reduce or avoid
conflict).
31
Performance Appraisal Errors
 Strictness Error - rating all subordinates as lower than
their actual performance indicates.
 Rater Bias - personal prejudices cloud the evaluation
(women are perceived as passive leaders, e.g.).
 Leniency Error - everyone is rated above average
(usually done to reduce or avoid conflict).
 Halo Effect - one (or a few) characteristic the ratee
possesses is generalized to the employee’s entire
performance evaluation. (A negative halo is sometimes
called the horns effect).
32
Performance Appraisal Errors
 Contrast Error (Varying Standards)- rating
employees performing similar jobs relative to one
another rather than to established performance
standards.


Similar performance is rated differently
A problem of all comparative methods.
33
Developing Human Resources
 Performance Feedback

Is best given in a private meeting
between the employee and immediate
supervisor.

Discussion should focus on the facts:

The assessed level of performance

How and why the assessment was
made.

How the employee’s performance can
be improved.
34
Developing Human Resources
 Performance Feedback
 Properly training managers can
help them conduct more effective
feedback interviews.
 “360 degree” (multi-source)
feedback
 Managers are evaluated by
everyone around them.
 Provides a richer array of
performance information on which
to base an appraisal.
35
Maintaining Human Resources
(Compensation)
 Determining Compensation
 Compensation
 The financial remuneration given by the organization
to its employees in exchange for their work.
 Wages
 Salary
 Incentives

Purposes of compensation
 Provide the means to maintain a reasonable standard
of living.
 Provide a tangible measure of the value of the
individual to the organization.
36
Maintaining Human Resources
(Compensation)
 Wage-level decision


The wage-level decision is a management policy
decision to pay above, at, or below the going rate
for labor in an industry or geographic area.
Factors that affect the wage-level decision:



the size and current success of the firm.
the level of unemployment in
the labor force.
Area wage surveys
 Can provide information about the maximum,
minimum, and average wages for a particular job in a
labor market.
37
Maintaining Human Resources
(Compensation)


Wage-structure decision

Job evaluations

Wage surveys data and the wage structure
Individual wage decision

Factors such as seniority, initial qualifications,
individual merit, and labor market conditions
influence
wage decisions.
38
Maintaining Human Resources
(Compensation)
 Determining Benefits

Benefits (Indirect compensation)




Things of value other than compensation that
an organization provides to its workers.
The average company spends an amount
equal to more than one-third of its cash payroll
on employee benefits.
A good benefit plan encourages employees to
stay with the company and attracts new
employees.
Benefits do not necessarily stimulate high
performance.
39
Maintaining Human Resources
(Compensation)

Managing benefits effectively:



Shop carefully for the best-cost providers.
Avoid redundant coverage.
Provide only the benefits that employees want.
40
Maintaining Human Resources
(Compensation)
 Types of benefits
Pay for time not worked
 Insurance
 Employee service benefits
 Cafeteria benefit plans
 Flexible plans that provide basic coverage and
allow employees to choose the additional benefits
they want up to the cost limit set by the
organization.
 Other benefits
 On-site childcare, mortgage assistance, and paidleave programs.

41
Managing Labor Relations
 Labor Relations

The process of dealing with employees when they are
represented by a union.

Organizations prefer employees remain nonunion
because unions limit management’s freedom.

The best way to avoid unionization is to practice good
employee relations all the time by:

Providing fair treatment with clear standards in pay,
promotions, layoffs, and discipline.

Providing a complaint and appeal system.

Avoiding favoritism.
42
The Union-Organizing Process
Authorization Card Campaign
Recognition
[50% + 1]
Certification
[30%]
File recognition
petition
File Certification
Petition
Consent Election
Decree
Collective Bargaining
Begins
Formal Election
Hearing
Election
[Simple Majority of Ballots Cast] 43
Managing Labor Relations
 Collective Bargaining

The process of agreeing on a satisfactory labor
contract between management and labor.

The contract contains agreements about wage, hours,
and working conditions and how management will
treat employees.
 Grievance Procedure

The step-wise means by which a labor contract is
enforced.

Grievances are filed on behalf of an employee by the
union when it believes employees have not been
treated fairly under the contract.
44
New Challenges in the Changing
Workplace
 Managing Knowledge Workers
 Knowledge workers
 Employees whose contributions to an
organization are based on what they
know (e.g., computer scientists,
engineers, and
physical scientists).
 Tend to work in high-technology areas
 Are experts in abstract knowledge
areas.
 Like to work independently and identify
strongly with their professions.
 Have skills that require continual
updating and additional training.
45
New Challenges in the Changing
Workplace
 Knowledge Worker Management and Labor Markets
 Demand is strong for knowledge workers.
 External labor market pressures
 Internal labor market pressures
 Contingent and Temporary Workers
 Trends in contingent and temporary workers
 There have been dramatic and consistent increases in
contingent workers—10% of the U.S. workforce is
either contingent or temporary.
46
New Challenges in the Changing
Workplace
 Contingent and Temporary Workers (cont’d)
 Managing contingent workers
 Careful planning allows for integrating contingent
workers into the organization in a coordinated fashion
for well-defined time periods.
 Understanding contingent workers and acknowledging
their advantages and disadvantages.
 Carefully assess and document the true labor-cost
savings of using contingent workers.
 Decide early on how similarly contingent employees
will be treated relative to permanent employees.
47