2. Building and Managing Human Resources
Chapter 12
Building and Managing Human Resources

3. Learning Objectives
Explain why strategic human resource management can help an organization gain a competitive advantage.
Describe the steps managers take to recruit and select organizational members.
Discuss the training and development options that ensure organization members can effectively perform their jobs.

4. Learning Objectives
Explain why performance appraisal and feedback is such a crucial activity, and list the choices managers must make in designing effective performance appraisal and feedback procedures.
Explain the issues managers face in determining in determining levels of pay and benefits.

5. Strategic Human Resource Management
Human Resource Management (HRM)
Activities that managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals

6. Strategic Human Resource Management
HRM activities
Recruitment and selection
Training and development
Performance appraisal and feedback
Pay and benefits
Labor relations

7. Strategic Human Resource Management
The process by which managers design the components of a human resource system to be consistent with each other, with other elements of organizational structure, and with the organization’s strategy and goals
The objective of strategic HRM is the development of an HRM system that enhances the organization’s efficiency, quality, innovation, and responsiveness to customers.

8. Components of a Human Resource Management System
Figure 12.1

9. HRM Components Recruitment and Selection
Attract and hire new employees who have the abilities, skills, and experiences that will help an organization achieve its goals

10. HRM Components Training and Development
Developing, on an ongoing basis, employees’ abilities and skills as necessitated by changes in technology and the competitive environment

11. HRM Components Performance Appraisal and Feedback
Providing information about how to train, motivate, and reward workers such that managers can evaluate and then give feedback to enhance worker performance

12. HRM Components Pay and Benefits
Rewarding high performing employees with raises, bonuses and recognition.
Increased pay provides additional incentive.
Benefits, such as health insurance, reward membership in firm.

13. HRM Components Labor relations
Maintaining an effective relationship with labor unions that represent workers.

14. The Legal Environment of HRM
Equal Employment Opportunity (EEO)
The equal right of all citizens to the opportunity to obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities.
Equal Employment Opportunity Commission (EEOC) enforces employment laws.

15. The Legal Environment of HRM
Contemporary challenges
Eliminating sexual harassment
Making accommodations for employees with disabilities
Dealing with employees who have substance abuse problems
Managing HIV-positive employees

16. Major EEO Laws

17. Question?
What are activities that managers engage in to develop a pool of candidates for open positions?
Recruitment
Selection
Interviewing
Advertising
The correct answer is “B” – Selection. See slide

18. Recruitment and Selection
Activities that managers engage in to develop a pool of candidates for open positions
Selection
The process that managers use to determine the relative qualifications of job applicants and their potential for performing well in a particular job

19. The Recruitment and Selection System
Figure 12.2

20. Human Resource Planning
Human Resource Planning (HRP)
Activities that managers engage in to forecast their current and future needs for human resources.
HRP must be done prior to recruitment and selection.

21. Human Resource Planning
Demand forecasts
Estimates of the number and qualifications of employees the firm will need.
Supply forecasts
Estimates of the availability and qualifications of current workers and those in the labor market.

22. Human Resource Planning: Outsourcing
Using outside suppliers and manufacturers to produce goods and services.
Using contract workers rather than hiring them.
Outsourcing is more flexible for the firm.
Outsourcing provides human capital at a lower cost.

23. Human Resource Planning: Outsourcing
Problems with Outsourcing
Loss of control over output; outsource contractors are not committed to the firm.
Unions are against outsourcing that has potential to eliminate member’s jobs.

24. Question?
What is identifying the tasks, duties and responsibilities that make up a job and the knowledge, skills, and abilities needed to perform the job?
Job Description
Job Specification
Job Analysis
Job Identification
The correct answer is “C” – Job analysis. See slide 12-22

25. Job Analysis Job Analysis
Identifying the tasks, duties and responsibilities that make up a job and the knowledge, skills, and abilities needed to perform the job
Should be done for each job in the organization

26. Recruitment External Recruiting
Seeking outside the firm for people who have not worked at the firm previously.
Newspapers advertisements, open houses, on-campus recruiting, employee referrals, and through the Internet.
External recruitment is difficult since many new jobs have specific skill needs.
A multi-prong approach to external recruiting works best.

27. Recruitment Internal Recruiting
Seeking to fill open positions with current employees from within the firm
Lateral moves

28. Recruitment Benefits of internal recruiting:
Job candidates, their qualifications, and availability are already known.
Current employees know the firm’s culture and are familiar with the organization.
Internal advancement (promotion from within) can serve to motivate employees.

29. Selection Tools
Figure 12.3

30. The Selection Process Background information Interviews
Education, prior employment, and college major.
Interviews
Structured interviews where managers ask each applicant the same job-related questions.
Unstructured interviews that resemble normal conversations.

31. The Selection Process Physical ability tests
Measures of dexterity, strength, and stamina for physically demanding jobs.
Measures must be job related to avoid discrimination.

32. The Selection Process Paper-and-Pencil Tests
Ability tests assess if applicants have the right skills for the job.
Personality tests seek to determine if applicants possess traits relevant to job performance.

33. The Selection Process Performance Tests
Tests that measure an applicant’s current ability to perform the job or part of the job such as requiring an applicant to take typing speed test.
Assessment centers are facilities where managerial candidates are assessed on job-related activities over a period of a few days.

34. The Selection Process References
Obtaining relevant information can be difficult to due to legal liability and privacy issues

35. Reliability and Validity
the degree to which the tool measures the same thing each time it is used.
Validity
the degree to which the test measures what it is supposed to measure.
Selection tools must be reliable and valid.
Reliability is the degree to which the tool measures the same thing each time it is used.
Example: scores should be similar for the same person taking the same test over time.
Validity is the degree to which the test measures what it is supposed to measure
Example: how well a physical ability test predicts the job performance of a firefighter.

36. Training and Development
Figure 12.4

37. Training and Development
Teaching organizational members how to perform current jobs and helping them to acquire the knowledge and skills they need to be effective performers.

38. Training and Development
Building the knowledge and skills of organizational members to enable them to take on new duties and challenges.

39. Training and Development
Needs Assessment
An assessment of which employees need training or development and what type of skills or knowledge they need to acquire

40. Types of Training Classroom Instruction On-the-Job Training
Employees acquire skills in a classroom setting
Includes use of videos, role-playing, and simulations
On-the-Job Training
Training that takes place in the work setting as employees perform their job tasks

41. Types of Development Varied Work Experiences Formal Education
Top managers have need to and must build expertise in many areas.
Formal Education
Tuition reimbursement is common for managers taking classes for MBA or job-related degrees.
Varied Work Experiences
Top managers have need to and must build expertise in many areas.
Employees identified as possible top managers are assigned different tasks and a variety of positions in an organization.
Formal Education
Tuition reimbursement is common for managers taking classes for MBA or job-related degrees.
Long-distance learning can also be used to reduce travel and other expenses for managerial training.

42. Performance Appraisal and Feedback
The evaluation of employees’ job performance and contributions to their organization.

43. Performance Appraisal and Feedback
Performance Feedback
The process through which managers share performance appraisal information, give subordinates an opportunity to reflect on their own performance, and develop, with subordinates, plans for the future

44. Discussion Question
What type of performance appraisal is most effective?
Trait Appraisal
Behavior Appraisal
Results appraisal
Subjective appraisal
There is no one best answer. Students can discuss the advantages and disadvantages of each type. Also, situations where each type is best suited.

45. Performance Appraisal and Feedback
Trait Appraisals
Assessing subordinates on personal characteristics that are relevant to job performance.

46. Performance Appraisal and Feedback
Disadvantages of trait appraisals
Employees with a particular trait may choose not to use that particular trait on the job.
Traits and performance are not always obviously linked.
It is difficult to give feedback on traits.

47. Performance Appraisal and Feedback
Behavior Appraisals
Assesses how workers perform their jobs—the actual actions and behaviors that exhibit on the job.
Focuses on what a worker does right and wrong and provides good feedback for employees to change their behaviors.

48. Performance Appraisal and Feedback
Results appraisals
Assesses what a worker accomplishes or the results they obtain from performing their jobs.

49. Performance Appraisal and Feedback
Objective appraisals
Assesses performance based on facts and is likely to be numerical.
Subjective appraisals
Assessments based on a manager’s perceptions of traits, behavior, or results.

50. Who Appraises Performance?
Figure 12.5

51. Who Appraises Performance?
Self
Self appraisals can supplement manager view.
Peer appraisal
Coworkers provide appraisal; common in team settings.
Customers
Provide assessments of employee performance in terms of responsiveness and quality of service.

52. Who Appraises Performance?
360 Degree
A performance appraisal by peers, subordinates, superiors, and clients who are in a position to evaluate a manager’s performance

53. Effective Performance Feedback
Formal appraisals
An appraisal conducted at a set time during the year and based on performance dimensions that were specified in advance
Informal appraisals
An unscheduled appraisal of ongoing progress and areas for improvement

54. Effective Feedback Tips
Be specific and focus on behaviors or outcomes that are correctable and within a worker’s ability to improve
Approach performance appraisal as an exercise in problem solving and solution finding, not criticizing
Express confidence in subordinate’s ability to improve

55. Effective Feedback Tips
Use both formal and informal feedback.
Avoid personal criticisms and treat subordinates with respect
Agree to a timetable for performance improvements

56. Pay and Benefits Pay level
The relative position of an organization’s incentives in comparison with those of other firms in the same industry employing similar kinds of workers
Pay level
The relative position of an organization’s incentives in comparison with those of other firms in the same industry employing similar kinds of workers
Managers can decide to offer low, average or high relative wages.
High wages attract and retain high performers but raise costs; low wages can cause turnover and lack of motivation but provide lower costs.

57. Pay and Benefits Pay Structure
The arrangement of jobs into categories based on their relative importance to the organization and its goals, level of skills, and other characteristics

58. Pay and Benefits
Legally required: social security, workers’ compensation
Voluntary: health insurance, retirement, day care
Cafeteria-style benefits plans allow employees to choose the best mix of benefits for them; can be hard to manage

59. Labor Relations Labor Relations
The activities managers engage in to ensure they have effective working relationships with the labor unions that represent their employees interests.

60. Labor Relations
Fair Labor Standards Act (1938) prohibits child labor, sets a minimum wage and maximum working hours.
Equal Pay Act (1963) men and women doing equal work will get equal pay.
Work Place Safety (1970) OSHA mandates procedures for safe working conditions.

61. Unions
Unions
Represent workers’ interests to management in organizations.
The power that a manager has over an individual worker causes workers to join together in unions to try to prevent this.
Unions are permitted by the National Labor Relations Act (1935) which also created the NLRB to oversee the relationship between employers and unions.
Not all workers want unions. Union membership costs money in dues and workers might not want to strike.
Union membership is lower today than 40 years ago.

62. Unions Collective bargaining
Negotiation between labor and management to resolve conflicts and disputes about issues such as working hours, wages, benefits, working conditions, and job security.

63. Video Case: Patagonia
Why are people a critical component of Patagonia’s success?
How do employees help the firm gain a competitive advantage?
Video Summary: Patagonia is a very unique company that encourages its employees to focus upon environmentalism, as well as other social issues about which they are passionate. Its employees love their jobs and are devoted to their employer. The company never has to recruit, since it receives approximately 900 applications for every one new hire. This video explores the human resources policies embraced by Patagonia that have led to such unusually high levels of employee commitment and customer satisfaction.
Questions:
What core values are important at Patagonia? How do these core values play an important role in recruiting and retaining top employees?
Patagonia’s organizational culture rests upon its commitment to the environment, family, and other social issues. It believes that the earth comes first and profits are a secondary consideration. The company is inundated with resumes from persons who share its values, thereby eliminating the need to spend very much money on recruiting. And because employees come to work each day with the attitude that they are making a difference, turnover is very, very low.
Why is Patagonia ranked annually as one of the best companies for which to work?
Patagonia has created an environment that helps employees balance the demands of the job, family responsibilities, and their commitment to environmental causes. For example, the company offers onsite childcare and workers are allowed the flexibility to set their own schedules. They also are given the opportunity to serve as interns for an environmental group for two months while remaining on the company payroll and to serve on grant committees that fund proposals from local environmental activists using funds donated by the company.
Why are people a critical component of Patagonia’s success? How do employees help the firm gain a competitive advantage?
Patagonia’s success was built upon its ability to serve an unmet market need by delivering high quality, innovative products that also reflect the core values of its customers. It is the organization’s employees who continually remind customers what Patagonia stands for and why customers should remain loyal to it, thereby creating an advantage over competitors.

64. Movie Example: Double Indemnity
What are the advantages of internal recruiting?
What could have made Keyes successful in recruiting Walter?
Overview
This clip is a good example of internal recruiting. Mr. Keyes (Edward G. Robinson) needs an assistant and thinks that Walter (Fred MacMurray) would make a good one. He tells Walter he’s too good to be a salesman (Walter’s current job) and gives Walter the characteristics of the job he wants him to take. He does acknowledge that Walter would have to take a cut in pay. This is part of a realistic job preview. Students should be willing to share their experiences in being recruited and their expectations of new jobs.
Discussion Questions
What are the advantages of internal recruiting?
Internal applicants are already familiar with the organization. Managers already know the candidates. It can help boost levels of employee motivation and morale
Is Keyes, the boss, giving Walter a realistic job preview? Why or why not?
Yes. Keyes lets Walter know right away that he will be taking a cut in pay.
What could have made him successful in recruiting Walter?
Keyes can look for possible non-monetary compensation, such as paid time off (Friday afternoons). Another option might be to allow Walter to keep commissions from a few current clients. He can also let Walter know the long term career path of changing. It’s difficult to recruit employees by offering more responsibility along with a pay cut.