1. PowerPoint Presentation by Charlie Cook The University of West Alabama © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

2. 14–2 The Environmental Context of HRM Human Resource Management (HRM)Human Resource Management (HRM)  The set of organizational activities directed at attracting, developing, and maintaining an effective work force. The Strategic Importance of HRMThe 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.

3. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–3 The Legal Environment of HRM Equal Employment Opportunity Compensation and Benefits Labor Relations Health and Safety Title VII of Civil Rights Act of 1964 Fair Labor Standards Act of 1938 (FLSA) National Labor Relations Act of 1935 (Wagner Act) Occupational Safety and Health Act of 1970 (OSHA) Pregnancy Discrimination Act Equal Pay Act of 1963 Labor Management Relations Act of 1947 (Taft-Hartley Act) Age Discrimination in Employment Act Employee Retirement Income Security Act of 1974 (ERISA) Americans with Disabilities Act Family and Medical Leave Act of 1993 (FMLA) Civil Rights Act of 1991

4. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–4 The Legal Environment of HRM Equal Employment OpportunityEqual 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.

5. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–5 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (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.

6. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–6 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (cont’d)Equal Employment Opportunity (cont’d)  Age Discrimination in Employment Act of 1967  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.

7. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–7 Management Challenge Question Tim Chong has asked for permission to bring his service animal to work. He claims the animal can warn him when Tim is about to experience a diabetic seizure.Tim Chong has asked for permission to bring his service animal to work. He claims the animal can warn him when Tim is about to experience a diabetic seizure. Are you required to allow him to bring his service animal to work?Are you required to allow him to bring his service animal to work? What if the service animal turns out to be a seven foot- long boa constrictor?What if the service animal turns out to be a seven foot- long boa constrictor?

8. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–8 The Legal Environment of HRM (cont’d) Equal Employment Opportunity (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. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–9 Management Challenge Question The intent of EEO laws and regulations is the provision of equal opportunity in the workplace for all individuals.The intent of EEO laws and regulations is the provision of equal opportunity in the workplace for all individuals. Will “equal opportunity” for individuals eventually result in “equal outcomes” for individuals?Will “equal opportunity” for individuals eventually result in “equal outcomes” for individuals?

10. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–10 The Legal Environment of HRM (cont’d) Compensation and BenefitsCompensation 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.

11. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–11 Management Challenge Question The total premium charged by your insurance carrier for your employees’ group health insurance rises as the average age of your group of employees (36 years) increases.The total premium charged by your insurance carrier for your employees’ group health insurance rises as the average age of your group of employees (36 years) increases. You have two equally-qualified applicants for a job with your firm. One is 28 and the other is 52.You have two equally-qualified applicants for a job with your firm. One is 28 and the other is 52. If you choose the younger applicant to keep the insurance premium from rising, would you be engaging in age discrimination?If you choose the younger applicant to keep the insurance premium from rising, would you be engaging in age discrimination?

12. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–12 Equal Pay? Women's Earnings as a Percent Of Men's, By Race And Ethnicity, 1979–2008 Source: Department of Labor, Bureau of Labor Statistics, http://www.bls.gov/opub/ted/2009/ted_20091014_data.htm, accessed October 20, 2009.

13. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–13 The Legal Environment of HRM (cont’d) Compensation and Benefits (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.

14. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–14 The Legal Environment of HRM (cont’d) Labor RelationsLabor 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 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.

15. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–15 The Legal Environment of HRM (cont’d) Health and SafetyHealth 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).

16. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–16 The Legal Environment of HRM (cont’d) Alcohol and drug dependencies AIDS in the workplace Sexual harassment Emerging Legal Issues

17. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–17 Social Change and HRM Temporary WorkersTemporary Workers  An increasing trend is to use more temporary workers without the risk that the organization may have to eliminate their jobs. Dual-Career FamiliesDual-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

18. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–18 Change and HRM (cont’d) Employment-at-WillEmployment-at-Will  A traditional view of the workplace in which an employer can fire an employee for any or no reason. Just Cause—The New ArgumentJust Cause—The New Argument  An organization should be able to fire only people who are poor performers or who violate rules.  Courts have limited an employer’s ability to terminate employees by requiring just cause for firing or dismissal as part of an organization-wide cutback.

19. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–19 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 knowledge, skills, abilities, and other credentials the incumbent jobholder will need to do a job.

20. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–20 Attracting Human Resources (cont’d) Forecasting HR Demand and SupplyForecasting 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.

21. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–21 14.1 Human Resource Planning Predict demand Forecast internal supplyForecast external supply Assess trends in External labor markets Current employees Future organizational plans General economic trends Compare future demand and internal supply Plan for dealing with predict- ed shortfalls or overstaffing

22. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–22 Recruiting Human Resources (cont’d) RecruitingRecruiting  The process of attracting qualified persons to apply for jobs that are open. Internal RecruitingInternal Recruiting  Promotion from within: considering current employees as candidates for openings.  Advantage: can build morale and reduce turnover of high- quality employees.  Disadvantage: can create a “ripple effect” of having to successively fill vacated positions.

23. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–23 Recruiting Human Resources (cont’d) Realistic Job Preview (RJP)Realistic Job Preview (RJP)  is considered a successful method to ensure person- job fit. Executive search firms Union halls Employee referrals Sources of External Recruits Advertising Campus interviews Employment agencies Walk-ins

24. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–24 Selecting Human Resources Validation:Validation:  Determining the extent to which a selection device is 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.

25. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–25 Selecting Human Resources (cont’d) Application BlanksApplication 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. TestsTests  Ability, skill, aptitude, or knowledge tests are usually the best predictors of job success.  Must be validated, administered, and scored consistently.

26. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–26 Selecting Human Resources (cont’d) InterviewsInterviews  Interviews can be poor predictors of job success due to interviewer biases.  Interview validity can be improved by training interviewers and using structured interviews.

27. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–27 Selecting Human Resources (cont’d) Assessment CentersAssessment Centers  Are a popular method for selecting that is particularly good for selecting current managers for promotion.  Provides content validation for major parts of the managerial job. Other TechniquesOther 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.

28. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–28 Developing Human Resources Training and DevelopmentTraining and Development  Training  Teaching operational or technical employees how to do the job for which they were hired.  Development  Teaching managers and professionals the skills need for both present and future jobs.

29. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–29 14.2 The Training Process Assess training needs Who needs to be trained? What do they need to know? What do they already know? Plan training evaluation Did trainees like the training? Can they meet the training objectives? Do they perform better on the job? Develop training program Content Methods Duration Location Trainers Set training objectives Specific Measurable Conduct training Modify training program based on evaluation Evaluate training

30. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–30 Developing Human Resources (cont’d) Assessing Training NeedsAssessing Training Needs  Determining what needs exist is the first step in developing a training plan. Lectures Role play and case studies On-the-job and vestibule training Common Training Methods Web-based and electronic training

31. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–31 Developing Human Resources Evaluation of trainingEvaluation of training  Training and development programs should always be evaluated.  Approaches include measuring relevant job performance criteria before (pretest) and after the training (post-test) to determine the effect of training.

32. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–32 Developing Human Resources (cont’d) Performance AppraisalPerformance Appraisal  A formal assessment of how well workers do their jobs. Reasons for performance appraisalReasons for performance appraisal  Validates the selection process and the effects of training.  Aids in making pay raise, promotion, and training decisions.  Provides feedback to workers to improve their performance and plan future careers.

33. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–33 Developing Human Resources (cont’d) Objective Measures of PerformanceObjective Measures of Performance  Can be actual output (units produced), scrap rate, dollar volume of sales, and 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 assess each employee under standardized conditions.  Performance tests measure ability and not motivation.

34. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–34 Developing Human Resources (cont’d) Judgmental Methods of AppraisalJudgmental Methods of Appraisal  Ranking—compares employees to 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 employee to a fixed standard.  Graphic rating scales  Behaviorally-anchored rating scale (BARS)

35. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–35 14.3 Graphic Rating Scales for a Bank Teller

36. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–36 14.4 Behaviorally Anchored Rating Scale

37. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–37 Developing Human Resources (cont’d) Errors of leniency and strictness Halo error Recency error Rater Errors in Performance Appraisal

38. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–38 Developing Human Resources (cont’d) Performance FeedbackPerformance 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.  Properly training managers can help them conduct more effective feedback interviews.

39. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–39 Developing Human Resources (cont’d) “360 degree” Feedback“360 degree” Feedback  Managers are evaluated by everyone around them:  Boss  Subordinates  Peers  Provides a richer array of performance information on which to base an appraisal.

40. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–40 Maintaining Human Resources Determining CompensationDetermining Compensation  Compensation  The financial remuneration given by the organization to its employees in exchange for their work. –Wages –Salary –Incentives  Purposes of compensation  Provide means to maintain a reasonable standard of living.  Provide a tangible measure of the value of the individual to the organization.

41. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–41 Compensation Decisions Wage-level DecisionWage-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 affecting the wage-level decision:Factors affecting the wage-level decision:  The size and current success of the firm.  The level of unemployment in the labor force. Area wage surveysArea wage surveys  Provide information about maximum, minimum, and average wages for a particular job in a labor market.

42. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–42 Compensation Decisions (cont’d) Wage-structure decisionWage-structure decision  Job evaluations  Wage surveys data and the wage structure Individual wage decisionIndividual wage decision  Factors such as seniority, initial qualifications, individual merit, and labor market conditions influence wage decisions.

43. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–43 Maintaining Human Resources (cont’d) Determining BenefitsDetermining 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.

44. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–44 Maintaining Human Resources (cont’d) Shop carefully for best-cost providers Avoid redundant coverage Provide only benefits that employees want Managing Benefits Effectively

45. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–45 Maintaining Human Resources (cont’d) Determining Benefits (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.

46. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–46 Managing Labor Relations Labor RelationsLabor 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. Why Unions Have DeclinedWhy Unions Have Declined  Increased standards of living made union membership less important.  Unionized manufacturing industries have declined.  Globalization of business has caused many unionized jobs to be lost overseas.

47. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–47 Managing Labor Relations (cont’d) Provide a complaint and appeal system Avoid favoritism Provide fair treatment with clear standards Avoiding Unionization

48. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–48 14.5 The Union-Organizing Process

49. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–49 Managing Labor Relations (cont’d) Collective BargainingCollective 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 ProcedureGrievance 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 the employees have not been treated fairly under the contract.

50. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–50 Managing Knowledge Workers Knowledge WorkersKnowledge Workers  Contribute to an organization based on what they know (e.g., computer scientists, engineers, and physical scientists). Characteristics of Knowledge WorkersCharacteristics of Knowledge Workers  Tend to work in high-technology areas.  Are abstract knowledge experts.  Like to work independently and identify strongly with their professions.  Have skills that require continual updating and additional training.

51. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–51 Managing Knowledge Workers (cont’d) Knowledge Worker Labor MarketsKnowledge Worker Labor Markets  Current demand is strong for knowledge workers.  External labor market pressures  Internal labor market pressures

52. © 2010 South-Western, Cengage Learning, Inc. All rights reserved.14–52 Contingent and Temporary Workers Trends in Contingent and Temporary WorkersTrends in Contingent and Temporary Workers  Consistent increases in contingent workers—10% of the U.S. workforce is either contingent or temporary. Challenges in Managing Contingent WorkersChallenges in Managing Contingent Workers  Integrating contingent workers into the organization in a coordinated fashion.  Understanding their advantages and disadvantages.  Calculating labor-cost savings of contingent workers.  Deciding how similarly contingent employees will be treated relative to permanent employees.