1. Slide content created by Charlie Cook, The University of West Alabama Copyright © Houghton Mifflin Company. All rights reserved. Chapter Fourteen Managing Human Resources in Organizations

2. Copyright © Houghton Mifflin Company. All rights reserved.14–2 Learning Objectives After studying this chapter, you should be able to: 1.Describe the environmental context of human resource management, including its strategic importance and its relationship with legal and social factors. 2.Discuss how organizations attract human resources, including human resource planning, recruiting, and selecting. 3.Describe how organizations develop human resources, including training and development, performance appraisal, and performance feedback. 4.Discuss how organizations maintain human resources, including the determination of compensation and benefits and career planning.

3. Copyright © Houghton Mifflin Company. All rights reserved.14–3 Learning Objectives After studying this chapter, you should be able to: 5.Discuss labor relations, including how employees form unions and the mechanics of collective bargaining. 6.Describe the issues associated with managing knowledge and contingent and temporary workers.

4. Copyright © Houghton Mifflin Company. All rights reserved.14–4 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.

5. Copyright © Houghton Mifflin Company. All rights reserved.14–5 The Legal Environment of HRM Equal Employment Opportunity –Title VII of the Civil Rights Act of 1964 Forbids discrimination in the employment relationship. 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 Federal agency charged with enforcing Title VII as well as several other employment-related laws.

6. Copyright © Houghton Mifflin Company. All rights reserved.14–6 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (cont’d) –Affirmative Action 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. –Age Discrimination in Employment Act of 1967 Outlaws discrimination against persons older than 40 years of age.

7. Copyright © Houghton Mifflin Company. All rights reserved.14–7 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (cont’d) –Americans with Disabilities Act of 1990 (ADA) Forbids discrimination on the basis of disabilities and requires employers to provide reasonable accommodations for disabled employees.

8. Copyright © Houghton Mifflin Company. All rights reserved.14–8 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (cont’d) –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.

9. Copyright © Houghton Mifflin Company. All rights reserved.14–9 The Legal Environment of HRM (cont’d) 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 non-exempt 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.

10. Copyright © Houghton Mifflin Company. All rights reserved.14–10 The Legal Environment of HRM (cont’d) Compensation and Benefits (cont’d) –Employee Retirement Income Security Act of 1974 (ERISA) Sets standards for pension plan management and provides federal insurance if pension plans go bankrupt. –Family and Medical Leave Act of 1993 (FMLA) Requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies.

11. Copyright © Houghton Mifflin Company. All rights reserved.14–11 The Legal Environment of HRM (cont’d) Labor Relations –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 (Taft- Hartley 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.

12. Copyright © Houghton Mifflin Company. All rights reserved.14–12 The Legal Environment of HRM (cont’d) 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 harassment –Alcohol and drug dependence –AIDS

13. Copyright © Houghton Mifflin Company. All rights reserved.14–13 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

14. Copyright © Houghton Mifflin Company. All rights reserved.14–14 Change and HRM (cont’d) 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.

15. Copyright © Houghton Mifflin Company. All rights reserved.14–15 Attracting Human Resources Job Analysis –A systematic analysis of jobs within an organization. Job Description –A listing of the job’s duties; its working conditions; and the tools, materials, and equipment use to perform the job. Job Specification –A listing of the skills, abilities, and other credentials the incumbent jobholder will need to do a job.

16. Copyright © Houghton Mifflin Company. All rights reserved.14–16 Attracting Human Resources (cont’d) 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) A database of employees’ education, skills, work experience, and career expectations, usually computerized.

17. Copyright © Houghton Mifflin Company. All rights reserved.14–17 Figure 14.1: Human Resource Planning

18. Copyright © Houghton Mifflin Company. All rights reserved.14–18 Recruiting Human Resources (cont’d) 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.

19. Copyright © Houghton Mifflin Company. All rights reserved.14–19 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.

20. Copyright © Houghton Mifflin Company. All rights reserved.14–20 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.

21. Copyright © Houghton Mifflin Company. All rights reserved.14–21 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.

22. Copyright © Houghton Mifflin Company. All rights reserved.14–22 Selecting Human Resources (cont’d) 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.

23. Copyright © Houghton Mifflin Company. All rights reserved.14–23 Selecting Human Resources (cont’d) 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.

24. Copyright © Houghton Mifflin Company. All rights reserved.14–24 Figure 14.2: The Training Process

25. Copyright © Houghton Mifflin Company. All rights reserved.14–25 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 decision- making. On-the-job and vestibule training –Facilitates learning physical skills through practice and actual use of tools

26. Copyright © Houghton Mifflin Company. All rights reserved.14–26 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.

27. Copyright © Houghton Mifflin Company. All rights reserved.14–27 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.

28. Copyright © Houghton Mifflin Company. All rights reserved.14–28 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)

29. Copyright © Houghton Mifflin Company. All rights reserved.14–29 Figure 14.3: Graphic Rating Scales for a Bank Teller

30. Copyright © Houghton Mifflin Company. All rights reserved.14–30 Figure 14.4: Behaviorally Anchored Rating Scale

31. Copyright © Houghton Mifflin Company. All rights reserved.14–31 Developing Human Resources (cont’d) Performance Appraisal (Cont’d) –Performance appraisal errors Recency error Errors of leniency and strictness Halo error

32. Copyright © Houghton Mifflin Company. All rights reserved.14–32 Developing Human Resources (cont’d) 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.

33. Copyright © Houghton Mifflin Company. All rights reserved.14–33 Developing Human Resources (cont’d) Performance Feedback –Properly training managers can help them conduct more effective feedback interviews. –“360 degree” feedback Managers are evaluated by everyone around them. Provides a richer array of performance information on which to base an appraisal.

34. Copyright © Houghton Mifflin Company. All rights reserved.14–34 Maintaining Human Resources 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.

35. Copyright © Houghton Mifflin Company. All rights reserved.14–35 Maintaining Human Resources (cont’d) Determining Compensation (cont’d) –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.

36. Copyright © Houghton Mifflin Company. All rights reserved.14–36 Maintaining Human Resources (cont’d) Determining Compensation (cont’d) –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.

37. Copyright © Houghton Mifflin Company. All rights reserved.14–37 Maintaining Human Resources (cont’d) 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. –Managing benefits effectively: Shop carefully for the best-cost providers. Avoid redundant coverage. Provide only the benefits that employees want.

38. Copyright © Houghton Mifflin Company. All rights reserved.14–38 Maintaining Human Resources (cont’d) Determining Benefits (cont’d) –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 paid-leave programs.

39. Copyright © Houghton Mifflin Company. All rights reserved.14–39 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.

40. Copyright © Houghton Mifflin Company. All rights reserved.14–40 Figure 14.5: The Union- Organizing Process

41. Copyright © Houghton Mifflin Company. All rights reserved.14–41 Managing Labor Relations (cont’d) 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.

42. Copyright © Houghton Mifflin Company. All rights reserved.14–42 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.

43. Copyright © Houghton Mifflin Company. All rights reserved.14–43 New Challenges in the Changing Workplace (cont’d) 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.

44. Copyright © Houghton Mifflin Company. All rights reserved.14–44 New Challenges in the Changing Workplace (cont’d) 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.

45. Copyright © Houghton Mifflin Company. All rights reserved.14–45 Key Terms human resource management human capital Title VII of the Civil Rights Act of 1964 adverse impact Equal Employment Opportunity Commission Age Discrimination in Employment Act affirmative action Americans with Disabilities Act Civil Rights Act of 1991 Fair Labor Standards Act Equal Pay Act of 1963 Employee Retirement Income Security Act of 1974 Family and Medical Leave Act of 19933 National Labor Relations (Wagner) Act

46. Copyright © Houghton Mifflin Company. All rights reserved.14–46 Key Terms (cont’d) National Labor Relations Board (NLRB) Labor-Management Relations (Taft-Hartley) Act Occupational Safety and Health Act of 1970 (OSHA) employment-at-will job analysis replacement chart employee information system (skills inventory) recruiting internal recruiting external recruiting realistic job preview (RJP) validation training development Behaviorally Anchored Rating Scale (BARS) 360-degree feedback compensation

47. Copyright © Houghton Mifflin Company. All rights reserved.14–47 Key Terms (cont’d) performance appraisal job evaluation benefits labor relations collective bargaining grievance procedure knowledge workers