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Mgmt 371Chapter Fourteen

Managing Human Resources in Organizations

Much of the slide content was created by Dr, Charlie Cook, Houghton Mifflin, Co.©

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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.

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The Legal Environment of HRM (Equal Employment Opportunity) Equal Employment Opportunity

Title VII of the Civil Rights Act of 1964 Forbids discrimination in the employment relationship on

the basis of race, color, religion. sex, or national origin. 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 (EEOC) Federal agency charged with enforcing Title VII as well

as several other employment-related laws.

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The Legal Environment of HRM (Equal Employment Opportunity) Affirmative Action (E.O.11246)

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.

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The Legal Environment of HRM (Equal Employment Opportunity) Age Discrimination in Employment Act

of 1967 (ADEA) 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.

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The Legal Environment of HRM (Equal Employment Opportunity)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.

Prohibits race norming. Places burden of proof on complaining

parties initiating disparate impact charges. Provides for extraterritorial application of Title

VII. Provides for jury trials

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The Legal Environment of HRM (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.

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The Legal Environment of HRM (Compensation and Benefits) Employee Retirement Income Security

Act of 1974 (ERISA) Sets standards for pension plan

management and provides federal insurance if pension plans go bankrupt.

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The Legal Environment of HRM (Compensation and Benefits) Family and Medical Leave Act of

1993 (FMLA) Requires employers to provide up

to 12 weeks of unpaid leave for qualifying family and medical emergencies.

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The Legal Environment of HRM (Compensation and Benefits) Eligibility Requirements for FMLA

Must work for a covered employer (private with 50+ employees, state governments and agencies, or the federal government.

Employee must have worked for at least 12 months for a covered employer.

Employee must have worked in excess of 1,250 hours to be eligible. [156.25 work days, 31.25 work weeks]

Work at a facility with 50 or more employees who live within 75 miles of the place of employment

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The Legal Environment of HRM (Labor Relations) The National Labor Code

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.

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The Legal Environment of HRM (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 orientation harassment Alcohol and drug dependence AIDS

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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

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Change and HRM

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.

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Attracting Human Resources

Job Analysis A systematic analysis of jobs within an organization.

Job Description A listing of the job’s tasks, duties, and responsibilities

(TDR); its working conditions; and the tools, materials, and equipment use to perform the job.

Job Specification A listing of the knowledge, skills, abilities (KSA), and

other credentials the incumbent jobholder will need to do a job.

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Attracting Human Resources

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) (OCI)

A database of employees’ education, skills, work experience, and career expectations, usually computerized.

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Human Resource Planning (HRP)

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Recruiting Human Resources

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.

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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.

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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.

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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.

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Selecting Human Resources

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.

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Selecting Human Resources

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.

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Figure 14.2: The Training Process

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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

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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.

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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.

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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)

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Figure 14.3: Graphic Rating Scales for a Bank Teller

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Figure 14.4: Behaviorally Anchored Rating Scale

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Performance Appraisal Errors Recency Error - most raters can only recall

an employees last 30 to 60 days of performance (Critical Incident Method can reduce this error).

Central Tendency - rating all subordinates as average. Common to Graphic Rating Scales when comments must be

provided for below or above average ratings.

Leniency Error - everyone is rated above average (usually done to reduce or avoid conflict).

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Performance Appraisal Errors

Strictness Error - rating all subordinates as lower than their actual performance indicates.

Rater Bias - personal prejudices cloud the evaluation (women are perceived as passive leaders, e.g.).

Leniency Error - everyone is rated above average (usually done to reduce or avoid conflict).

Halo Effect - one (or a few) characteristic the ratee possesses is generalized to the employee’s entire performance evaluation. (A negative halo is sometimes called the horns effect).

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Performance Appraisal Errors

Contrast Error (Varying Standards)- rating employees performing similar jobs relative to one another rather than to established performance standards. Similar performance is rated differently A problem of all comparative methods.

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Developing Human Resources

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.

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Developing Human Resources

Performance Feedback Properly training managers can

help them conduct more effective feedback interviews.

“360 degree” (multi-source) feedback

Managers are evaluated by everyone around them.

Provides a richer array of performance information on which to base an appraisal.

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Maintaining Human Resources (Compensation) 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.

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Maintaining Human Resources (Compensation) 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.

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Maintaining Human Resources (Compensation)

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.

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Maintaining Human Resources (Compensation) 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.

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Maintaining Human Resources (Compensation)

Managing benefits effectively: Shop carefully for the best-cost providers. Avoid redundant coverage. Provide only the benefits that employees want.

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Maintaining Human Resources (Compensation) 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.

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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.

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The Union-Organizing Process

Authorization Card Campaign

Recognition[50% + 1]

Certification[30%]

File recognitionpetition

File CertificationPetition

Consent Election Decree

Formal ElectionHearing

Election [Simple Majority of Ballots Cast]

Collective Bargaining Begins

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Managing Labor Relations

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.

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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.

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New Challenges in the Changing Workplace 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.

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New Challenges in the Changing Workplace 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.