7-1 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

7-2 Learning Objectives L01: HRM & Competitive advantage L02: Recruitment - internal and external L03: Selection methods L04: Training and development L05: Appraisal methods L06: Reward systems L07: Unions and labor laws

7-3 Strategic Human Resources Management 1. People create value 2. Talent is rare 3. A group of well-chosen, motivated people is difficult to imitate 4. People can be organized for success

7-4 The puzzle of HR  Attracting talent  Maintaining a well-trained, highly motivated and loyal workforce  Managing diversity  Devising effective compensation systems  Managing layoffs  Containing health care and pension costs

7-5 HR Planning Process

7-6 Job Analysis Tools for determining what is done on a given job and what should be done on that job 1. Job description describes job itself essential tasks, duties, and responsibilities involved in performing job 2. Job specification prescribes skills, knowledge, abilities, and other characteristics needed to perform job

7-7 Staffing the Organization  Recruitment  development of a pool of applicants for jobs in an organization  Selection  choosing from among qualified applicants to hire into an organization  Outplacement  process of helping people who have been dismissed from the company to regain employment elsewhere

7-8 Advantages & Disadvantages of Internal Recruitment Knowledge of company and employees Employee motivation Outsiders may demoralize employees Limited applicant pool Inhibits company changes – cultures, goals, etc.

7-9 External Recruitment Brings in new blood Can inspire motivation Sources Internet job boards, company Web sites, employee referrals, newspaper advertisements and college campus recruiting

7-10 Selection Instruments Applications and resumes Interviews Reference checks Background checks Personality tests Drug testing Cognitive ability tests Performance tests Integrity tests

7-11 Interviews 1. Structured interviews Interviewer asks all applicants the same questions and compares responses to standardized set of answers Types Situational (hypothetical) Behavioral (SAR) 2. Unstructured interviews interviewer asks different interviewees different questions

7-12 Hiring Checks Reference Contact references or former employers and educational institutions Background SSN verification, past employment/ education verification, criminal records and credit checks Internet searches (e.g. Google, MySpace, Facebook)

7-13 Termination Methods Downsizing laying off large numbers of managerial and other employees Termination dismissal of employees for poor performance or other reasons Employment-at-will legal concept that an employee may be terminated for any reason Termination interview discussion between a manager and an employee about the employee’s dismissal.

7-14 Termination Interview Do’s -Give as much warning as possible for mass layoffs -Sit down one on one with the individual, in a private office -Complete a termination session within 15 minutes -Be sure the employee hears about his or her termination from a manager, not a colleague Don’ts -Leave room for confusion when firing -Allow time for debate during a termination session -Make personal comments when firing someone -Rush a fired employees offsite unless security is an issue

7-15 Training and Development Training Teaching lower-level employees how to perform their present jobs. Development teaching managers and professional employees broad skills needed for their present and future jobs.

7-16 Types of Training Orientation familiarizes new employees with their jobs, work units, and organization in general Team training teaches employees skills they need to work together and helps them interact Diversity training identifying and reducing hidden biases against people with differences and developing skills needed to manage a diversified workforce Management training improving managers’ people skills

7-17 Performance Appraisal Assessment of employee’s job performance Administrative provides managers with information to make salary, promotion, and dismissal decisions helps employees understand and accept basis of those decisions Developmental identify and plan training, experience, or other improvement that employees require

7-18 Types of Performance Appraisals Trait appraisal involves judgments about employee performance traits such as initiative, leadership and attitude Behavioral appraisal focuses on observable aspects of performance Results appraisal focuses on quantitative data such as sales volume, units produced or profits

7-19 Guidelines for Performance Appraisals Base performance standards on job analysis Communicate performance standards to employees Evaluate employees on specific performance- related behaviors rather than on a single global or overall measure Document the performance appraisal process carefully Use more than one rater Take legal considerations into account

7-20 Who should do the appraisal? Managers and supervisors Peers and team members Subordinates Internal and external customers Self appraisals

7-21 Designing Reward Systems Effective reward systems take into account: Organization Position Individual

7-22 Pay Plan Factors Internal organization’s compensation policy, worth of each job, employee’s relative worth, and employer’s ability to pay External conditions of labor market, area wage rates, cost of living, use of collective bargaining (union negotiations) and legal requirements

7-23 Employee Incentives Individual incentive plan Compares worker’s performance against objective standard, with pay determined by employee’s performance. Group incentive plan pay is based on group performance.

7-24 Group Incentive Plans Gainsharing plans reward employees for increasing productivity or saving money in areas under their direct control. Profit-sharing plans implemented in division or organization although some incentives may be tailored to unit performance Merit pay systems pay raises and bonuses are based on the merit rating received from their boss

7-25 CEO Pay Controversy CEOs earned 500 times the average worker’s pay Median salary of $2.5 million for CEOs of companies in the Standard and Poor’s stock index Stock options are the fastest-growing part of executive compensation

7-26 What do You think? Are CEOs paid too much? Why? Why not? Should CEOs be given stock options as part of their compensation package? Why? Why not?

7-27 Employee Benefits Benefits required by law Worker’s Compensation Social Security Unemployment insurance Optional benefits - Pension plans - Medical insurance - Hospital insurance

7-28 Legal Requirements of Pay Systems Equal Pay Act of 1963 prohibits unequal pay for men and women who perform equal work. Pregnancy Discrimination Act of 1978 Pregnancy is a disability and qualifies a woman to receive the same benefits that she would with any other disability Employment Income Security Act of 1974 protects private pension programs from mismanagement.

7-29 What is OSHA? Occupational Safety and Health Act of 1970 Requires employers to pursue workplace safety Employers must maintain records of injuries and deaths caused by workplace accidents and submit to on-site inspection

7-30 Labor Relations The system of relations between workers and management Labor unions established to ensure that employees are treated fairly with respect to wages, working condition, and other issues National Labor Relations Act – declared labor organizations legal, established five unfair employer labor practices, and creating the National Labor Relations Board (NLRB)

7-31 Other Labor Relations Laws Labor-Management Relations Act protected employers Labor-Management Reporting and Disclosure Act established a Bill of Rights for union members, control over dues increases, and imposed reporting requirements for unions.

7-32 Four factors play a significant role 1. Economic factors 2. Job dissatisfaction 3. Belief that the union has power to obtain desired benefits can generate a pro-union vote 4. The image of the union

7-33 Collective Bargaining Agreements Security clause Wage component Individual rights Grievance procedure

7-34 Review Slides

7-35 Values for HR Leaders 1. Strategic 2. Ethical 3. Legal 4. Financial

7-36 YOU should be able to L01: Discuss how companies use human resources management to gain competitive advantage L02: Give reasons why companies recruit both internally and externally for new hires L03: Identify various methods for selecting new employees

7-37 YOU should be able to L04: Evaluate the importance of spending on training and development L05: Explain alternatives for who appraises an employee’s performance L06: Describe the fundamental aspects of a reward system. L07: Summarize how unions and labor laws influence human resources management

7-38 Practice and apply your knowledge by going online at

7-39 Test Your Knowledge Which of these methods has been found to be the way most job positions get filled? A)Want ads B)Employee referrals C)Private employment agencies D)Unions E)None of the above.

7-40 Test Your Knowledge Hammond University requires all applicants to their Masters of Business Administration Program to take the G.M.A.T. exam. This exam measures the test taker's aptitude for management by measuring things like verbal comprehension, mathematical calculations, and other necessary management skills. This type of test is classified as a(n): A)personality test. B)performance test. C)integrity test. D)cognitive ability test. E)none of the above.

7-41 Test Your Knowledge Companies invest in training to enhance individual performance and organizational productivity. Which of the following is NOT a typical training exercise? A)Orientation training B)Team training C)Personality training D)Diversity training E)All of the above

7-42 Test Your Knowledge Explain the alternatives for who should appraise an employee’s performance.

7-43 Test Your Knowledge Describe the fundamental aspects of a reward system

7-44 Test Your Knowledge Summarize how unions and labor laws influence human resources management What are the major labor laws that influence human resources management? How do unions influence human resources management?