10-1

Chapter Human Resources Management 10 McGraw-Hill/Irwin Management, 7/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

10-3 Learning Objectives  After Studying Chapter 10, You will know:  How companies use human resources management to gain competitive advantage.  Why companies recruit both internally and externally for new hires.  The various methods available for selecting new employees.  Why companies spend so much on training and development.  How to determine who should appraise an employee’s performance.  How to analyze the fundamental aspects of a reward system.  How unions influence human resources management.  How the legal system influences human resources management.

10-4 Strategic Human Resources Management  Human Resource Management deals with formal systems for managing people at work  Strategic Human Resources Management  Creates Value  Is Rare – people are a source of competitive advantage when their skills, knowledge, and abilities are not equally available to all competitors  Is difficult to imitate  Is organized

10-5 The HR Planning Process  Meeting an organization’s staffing needs requires strategic human resources planning  An activity with a strategic purpose derived from the organization’s plans  The HR planning process occurs in three stages  Planning  Programming  Evaluating

10-6 The HR Planning Process

10-7 The HR Planning Process  Demand Forecasts: Determining how many and what type of people are needed to achieve organizational goals is perhaps the most difficult part of HR planning  Labor Supply Forecasts estimate how many and what types of employees the organization will actually have

10-8 The HR Planning Process  Reconciling Supply and Demand occurs when managers decide what must be done to ensure that the right amount of labor will be available to the organization when needed  Job Analysis is a tool for determining what is done on a given job and what should be done on that job  Job descriptions will provide the manager with essential tasks, duties, and responsibilities involved in performing the job  Job specifications will describe the skills, knowledge, abilities, and other characteristics needed to perform the job

10-9 Staffing the Organization  Once the planning phase has been completed managers will focus on staffing the organization  Staffing consists of three activities  Recruitment  Selection  Outplacement

10-10 Recruitment  Recruitment activities help increase the pool of candidates that might be selected for a job  Internal Recruiting  External Recruiting

10-11 Selection  Selection builds on the recruiting process and involves decisions about whom to hire  There are a number of selesction instruments from which to chose  Regardless of the method used to select employees managers must ensure that the process is reliable and valid  Reliability refers to the consistency of test scores over time and across alternative measurements  Validity refers to the degree to which a test actually predicts or correlates with job performance

10-12 Workforce Reductions  Managers will at times need to make decisions to terminate an individual’s employment  The demand for certain types of employees rises and falls as organizations and markets change  Some employees simply do not perform at a level required to justify continued employment

10-13 Workforce Reductions: Layoffs  Layoffs have occurred in organizations because of mergers and acquisitions, divestiture, and increased competition  When laying off employees some firms have tried to help people find employment elsewhere through outplacement programs

10-14 Workforce Reductions: Termination  People sometimes ‘get fired’ for poor performance or other reasons  Employment-at-will is the legal concept that an employee may be terminated for any reason  To avoid pitfalls associated with dismissal employers should develop a progressive and positive disciplinary procedure  A termination interview is a discussion between a manager and an employee about the employee’s dismissal

10-15 Termination Advice  Do  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  Provide written explanations of severance benefits  Provide outplacement services away from company headquarters  Be sure the employee hears about his or her termination from a manager, not a colleague  Express appreciation for what the employee has contributed, if appropriate  Don’t  Don’t leave room for confusion when firing; Tell the individual in the first sentence that he or she is terminated  Don’t allow time for debate during a termination session  Don’t make personal comments when firing someone; keep the conversation professional.  Don’t rush a fired employee offsite unless security is an issue  Don’t fire people on significant dates, like the 25th anniversary of their employment or the day their mother died  Don’t fire employees when they are on vacation or have just returned

10-16 Legal Issues  Many laws have been passed governing employment decisions and practices Many laws  Failure to comply with any these laws may expose the organization to charges of unfair practices, expensive lawsuits, and civil/criminal penalties  One common reasons employers are sued is due to adverse impact  An adverse impact occurs when a seemingly neutral employment practice has a disproportionately negative effect on a group protected by the Civil Rights Act

10-17 Developing the Workforce  US businesses spend more than $50 billion to provide each of their employees with an average of 26 hours of formal training annually  The American Society for Training and Development has argued that as a percentage of total payroll, the average organizational investment in training is too small

10-18 Training and Development  Training usually refers to teaching lower-level employees how to perform their present jobs  Development involves teaching managers and professional employees broader skills needed for their present and future jobs  Training is generally a four step process  Assess the need  Design the training program based upon the need  Decide which training method should be used  Evaluate the training program’s effectiveness

10-19 Methods of Training

10-20 Types of Training  Orientation training is designed to introduce new employees to the company and familiarize them with policies, procedures, culture, and the like  Team training provides employees with the skills and perspectives they need to work in collaboration with others  Diversity training focuses on identifying and reducing hidden biases against people with differences and developing the skills needed to manage a diversified workforce

10-21 Performance Appraisal  Performance appraisal is the assessment of an employee’s job performance  The performance appraisal has two basic purposes  Administrative purpose: it provides managers with the information they need to make salary, promotion, and dismissal decisions  Developmental purpose: the information gathered can be used to identify and plan additional training, learning, experience, or other areas of improvement

10-22 Performance Appraisal  There are three basic categories of performance appraisals  Trait appraisals involve subjective judgments about employee performance and include dimensions such as initiative, leadership, and attitude  Behavioral appraisals focus on observable aspects of performance  Results appraisals tend to be more objective and can focus on production data such s sales volume, units produced, profits, etc.

10-23 Performance Appraisal  Seven guidelines to choosing a system  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 PA process carefully  If possible, use more than one rater  Develop a formal appeal process  Always take legal considerations into account

10-24 Performance Appraisal  Who should conduct the Performance Appraisal?  Managers and supervisors  Peers  Customers  360 Degree Appraisal is a process that uses multiple sources of appraisal to gain a comprehensive perspective on one’s performance

10-25 How to Give Feedback  Appraisal feedback works best when it is  Specific and constructive  Related to clear goals or behaviors  Intended to help the employee  When giving negative feedback  Summarize the employee’s specific performance  Describe the expectations and standards, and be specific  Determine the causes for the low performance; get the employee’s input  Discuss solutions to the problem, and have the employee play a major role in the process  Agree to a solution. As a supervisor, you have input into the solution. Raise issues and questions, but also provide support  Agree to a timetable for improvement  Document the meeting

10-26 Designing Reward Systems  Traditionally pay has been the primary monetary reward considered  In recent years benefits have received increased attention  Benefits currently make up a far greater percentage of the total payroll than they did in the past  The typical employer today pays nearly 40% of payroll costs in benefits

10-27 Designing Reward Systems  Reward systems serve the strategic purposes of attracting, motivating, and retaining people  Three types of decisions are crucial  Pay level refers to the choice of whether to be a high-, average-, or low-paying company  Pay structure is the choice of how to price different jobs within the organization  Individual pay decisions concern different pay rates for jobs of similar worth within the same family

10-28 Designing Reward Systems  Individual incentive plans are the most common type of incentive plan and is based on the employee’s performance  Gain-sharing plan concentrate on rewarding employees for increasing productivity or saving money in areas under their direct control  Profit-sharing plans are usually implemented in the division or organization as a whole,  Merit Pay Systems are based on the judgmental merit rating they receive from their boss

10-29 Employee Benefits  Three basic required benefits  Workers’ compensation provides financial support to employees suffering a work-related injury  Social Security provides financial support to retirees  Unemployment insurance provides financial support to employees who are laid off for reasons they cannot control  Because of the wide variety of possible benefits and the considerable differences in employee preferences and needs companies often use cafeteria or flexible benefit programs

10-30 Legal Issues  The Equal Pay Act of 1963prohibts unequal pay for equal work  Comparable-worth doctrine implies that women who perform different jobs of equal worth as those performed by men should be paid the same wage  The Pregnancy Discrimination Act states that pregnancy is a disability and qualifies a woman to receive the same benefits that she would with any other disability

10-31 Legal Issues  The Employee Retirement Income Security Act of 1974 protects private pension programs from mismanagement  The Occupational Safety and health Act of 1970 requires employers to pursue workplace safety

10-32 Labor Relations  Labor relations is the system of relations between workers and management  The National Labor Relations Act ushered in an era of rapid unionization  Declaring labor organizations legal  Establishing five unfair employer labor practices  Creating a National Labor Relations Board

10-33 Labor Relations  Why do employees unionize?  Economic Factors are important – unions attempt to raise the average wage rate for members  Job dissatisfaction – poor supervisory practices, favoritism, lack of communication, etc  A belief that the union can obtain desired benefits  The image of the union

10-34 Collective Bargaining  A process of negotiating an agreement over wages, hours, and working conditions  Two types of disputes can arise during the process  Prior to the agreement being reached, the workers may go on strike to compel agreement on their terms  After the agreement is signed management and the union sometimes disagree over the interpretation of the agreement

10-35 Collective Bargaining  To settle a dispute organizations will use the process of arbitration  Arbitration is the use of a neutral third party to resolve the dispute  Collective bargaining agreement will normally specify if the organization is  Union Shop is an organization with a union and a union security clause specifying that workers must join the union after a set period of time  Right-to-Work is legislation that allows employees to work without having to join a union

10-36 Looking Ahead  Chapter 11 Managing the Diverse Workforce  How changes in the U.S. workforce make diversity a critical organizational and managerial issue.  The distinction between affirmative action and managing diversity.  How managers can gain a competitive edge by managing diversity effectively.  What challenges a manager is likely to encounter with a diverse workforce.  How managers and their organizations can take steps to cultivate diversity

10-37 Selection Instruments  Applications and Resumes  Interviews  Reference checks  Background checks  Personality tests  Drug testing  Cognitive ability tests  Performance tests  Integrity tests Return

10-38 Employment Laws Return