Chapter12Chapter12 PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved. Effective Management

ChapterChapter

1212ChapterChapter

1212

PowerPoint Presentation by Charlie Cook© Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved.

Effective Management Effective Management of Human Resourcesof Human Resources

Effective Management Effective Management of Human Resourcesof Human Resources

Essentials ofContemporary Management

© Copyright 2004 McGraw-Hill. All rights reserved. 12–2

Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

• After studying the chapter, you should be able to:After studying the chapter, you should be able to:

Explain why strategic human resource Explain why strategic human resource management can help an organization gain a management can help an organization gain a competitive advantagecompetitive advantage..

Describe the Describe the steps managers take to recruit steps managers take to recruit and selectand select organizational members. organizational members.

Discuss the Discuss the training and developmenttraining and development options that ensure organization members can options that ensure organization members can effectively perform their jobs.effectively perform their jobs.

Explain why Explain why performance appraisal and performance appraisal and feedbackfeedback is such a crucial activity. is such a crucial activity.


Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)

Explain the issues managers face in Explain the issues managers face in determining levels of pay and benefitsdetermining levels of pay and benefits..


Strategic Human Resource Strategic Human Resource ManagementManagement


• Human Resource Management (HRM)Human Resource Management (HRM)Activities that managers engage in to attract Activities that managers engage in to attract

and retain employees and to ensure that and retain employees and to ensure that they perform at a high level and contribute to they perform at a high level and contribute to the accomplishment of organizational goals.the accomplishment of organizational goals.

• HRM ActivitiesHRM ActivitiesRecruitment and selectionRecruitment and selectionTraining and developmentTraining and developmentPerformance appraisal and feedbackPerformance appraisal and feedbackPay and benefitsPay and benefitsLabor relationsLabor relations




• Strategic Human Resource ManagementStrategic Human Resource ManagementThe process by which managers design the The process by which managers design the

components of a human resource system to components of a human resource system to be consistent with each other, with other be consistent with each other, with other elements of organizational structure, and elements of organizational structure, and with the organization’s strategy and goals.with the organization’s strategy and goals.

The objective of strategic HRM is the The objective of strategic HRM is the development of an HRM system that development of an HRM system that enhances the organization’s efficiency, enhances the organization’s efficiency, quality, innovation, and responsiveness to quality, innovation, and responsiveness to customers.customers.


Components of a Components of a Human Resource Human Resource

Management Management SystemSystem

Components of a Components of a Human Resource Human Resource

Management Management SystemSystem

Figure 12.1


Overview of the Components of HRMOverview of the Components of HRMOverview of the Components of HRMOverview of the Components of HRM

• Recruitment and SelectionRecruitment and SelectionDeveloping a pool of qualified applicants.Developing a pool of qualified applicants.Determining relative qualifications of Determining relative qualifications of

applicants and and their potential for a job. applicants and and their potential for a job.

• Training and DevelopmentTraining and DevelopmentDeveloping, on an ongoing basis, employees’ Developing, on an ongoing basis, employees’

abilities and skills as necessitated by abilities and skills as necessitated by changes in technology and the competitive changes in technology and the competitive environment.environment.


Overview of HRM Components Overview of HRM Components (cont’d)(cont’d)


• Performance Appraisal and FeedbackPerformance Appraisal and FeedbackProviding information about how to train, Providing information about how to train,

motivate, and reward workers such that motivate, and reward workers such that managers can evaluate and then give managers can evaluate and then give feedback to enhance worker performance.feedback to enhance worker performance.

• Pay and BenefitsPay and BenefitsRewarding high performing employees with Rewarding high performing employees with

raises, bonuses and recognition. raises, bonuses and recognition.

• Increased pay provides an additional incentive. Increased pay provides an additional incentive.

• Benefits, such as health insurance, reward Benefits, such as health insurance, reward employee membership in firm.employee membership in firm.




• Labor RelationsLabor RelationsMaintaining an effective relationship with Maintaining an effective relationship with

labor unions that represent workers.labor unions that represent workers.Unions seek to participate, through collective Unions seek to participate, through collective

bargaining with the employer, in the bargaining with the employer, in the determination of pay rates and the setting of determination of pay rates and the setting of working conditions.working conditions.


The Legal Environment of HRM The Legal Environment of HRM The Legal Environment of HRM The Legal Environment of HRM

• Equal Employment Opportunity (EEO)Equal Employment Opportunity (EEO)The equal right of all citizens to the The equal right of all citizens to the

opportunity to obtain employment regardless opportunity to obtain employment regardless of their gender, age, race, country of origin, of their gender, age, race, country of origin, religion, or disabilities.religion, or disabilities.

Equal Employment Opportunity Commission Equal Employment Opportunity Commission (EEOC) enforces employment laws.(EEOC) enforces employment laws.

• Management of diversity is crucialManagement of diversity is crucial

• Managers must take steps to ensure Managers must take steps to ensure discrimination does not occur.discrimination does not occur.


Major Equal Employment Opportunity Laws Major Equal Employment Opportunity Laws Affecting Human Resources ManagementAffecting Human Resources Management

Major Equal Employment Opportunity Laws Major Equal Employment Opportunity Laws Affecting Human Resources ManagementAffecting Human Resources Management

• Federal Anti-Discrimination LawsFederal Anti-Discrimination Laws19631963 Equal Pay ActEqual Pay Act19641964 Title VII of the Civil Rights ActTitle VII of the Civil Rights Act19671967 Age Discrimination in Employment Age Discrimination in Employment

ActAct19781978 Pregnancy Discrimination ActPregnancy Discrimination Act19901990 Americans with Disabilities Act Americans with Disabilities Act 19911991 Civil Rights ActCivil Rights Act19931993 Family and Medical Leave ActFamily and Medical Leave Act


Recruitment and SelectionRecruitment and SelectionRecruitment and SelectionRecruitment and Selection

• RecruitmentRecruitmentActivities that managers engage in to Activities that managers engage in to

develop a pool of candidates for open develop a pool of candidates for open positions.positions.

• SelectionSelectionThe process that managers use to determine The process that managers use to determine

the relative qualifications of job applicants the relative qualifications of job applicants and their potential for performing well in a and their potential for performing well in a particular job.particular job.


The Recruitment and Selection SystemThe Recruitment and Selection SystemThe Recruitment and Selection SystemThe Recruitment and Selection System

Figure 11.2


Human Resource PlanningHuman Resource PlanningHuman Resource PlanningHuman Resource Planning

• Human Resource Planning (HRP)Human Resource Planning (HRP)Activities that managers engage in to forecast Activities that managers engage in to forecast

their current and future needs for human their current and future needs for human resources.resources.

HRP must be done prior to recruitment and HRP must be done prior to recruitment and selection.selection.

Demand forecastsDemand forecasts

• Estimates of the number and qualifications of Estimates of the number and qualifications of employees the firm will need.employees the firm will need.

Supply forecastsSupply forecasts

• Estimates of the availability and qualifications of Estimates of the availability and qualifications of current workers and those in the labor market.current workers and those in the labor market.


Human Resource Planning: Human Resource Planning: OutsourcingOutsourcing

Human Resource Planning: Human Resource Planning: OutsourcingOutsourcing

• OutsourcingOutsourcingUsing outside suppliers and manufacturers to Using outside suppliers and manufacturers to

produce goods and services.produce goods and services.Using contract workers rather than hiring them.Using contract workers rather than hiring them.

• More HR flexibility for the firm.More HR flexibility for the firm.

• Lower human capital costs.Lower human capital costs.

• Problems with OutsourcingProblems with OutsourcingLoss of control: outsource labor contractors are Loss of control: outsource labor contractors are

not committed to the firm.not committed to the firm.Unions are against outsourcing that has the Unions are against outsourcing that has the

potential to eliminate member’s jobs.potential to eliminate member’s jobs.


Job AnalysisJob AnalysisJob AnalysisJob Analysis

• Job AnalysisJob AnalysisIdentifying the the tasks, duties and Identifying the the tasks, duties and

responsibilities that make up a job and the responsibilities that make up a job and the knowledge, skills, and abilities needed to knowledge, skills, and abilities needed to perform the job.perform the job.

• A job analysis should be done for each job in the A job analysis should be done for each job in the organization.organization.

Job analysis methods:Job analysis methods:

• Observing what current employees do.Observing what current employees do.

• Having workers/managers fill out questionnaires.Having workers/managers fill out questionnaires.

Current trend is toward flexible jobs where tasks Current trend is toward flexible jobs where tasks and duties are not easily defined in advance.and duties are not easily defined in advance.


RecruitmentRecruitmentRecruitmentRecruitment

• External RecruitingExternal RecruitingSeeking outside the firm for people who have Seeking outside the firm for people who have

not worked at the firm previously.not worked at the firm previously.

• A multi-prong approach to external recruiting A multi-prong approach to external recruiting works best: newspapers advertisements, open works best: newspapers advertisements, open houses, on-campus recruiting, employee houses, on-campus recruiting, employee referrals, and through the Internet.referrals, and through the Internet.

External recruiting challenges:External recruiting challenges:

• Higher costs of external recruiting.Higher costs of external recruiting.

• Jobs that require employer-specific skills.Jobs that require employer-specific skills.

• Difficulty in assessing recruits’ qualifications.Difficulty in assessing recruits’ qualifications.


RecruitmentRecruitmentRecruitmentRecruitment

• Internal RecruitingInternal RecruitingSeeking to fill open positions with current Seeking to fill open positions with current

employees from within the firm.employees from within the firm.Benefits of internal recruiting:Benefits of internal recruiting:

• Job candidates, their qualifications, and Job candidates, their qualifications, and availability are already known.availability are already known.

• Current employees know the firm’s culture and Current employees know the firm’s culture and are familiar with the organization.are familiar with the organization.

• Internal advancement (promotion from within) Internal advancement (promotion from within) serves to motivate employees.serves to motivate employees.


Selection ToolsSelection ToolsSelection ToolsSelection Tools

Figure 11.3


The Selection ProcessThe Selection ProcessThe Selection ProcessThe Selection Process

• Determining an applicant’s qualifications Determining an applicant’s qualifications related to the job requirements.related to the job requirements.Background informationBackground information

• Education, prior employment, and college major.Education, prior employment, and college major.

InterviewsInterviews

• Structured interviews: managers ask each Structured interviews: managers ask each applicant the same job-related questions.applicant the same job-related questions.

• Unstructured interviews: resemble normal Unstructured interviews: resemble normal conversations. conversations.


The Selection Process (cont’d)The Selection Process (cont’d)The Selection Process (cont’d)The Selection Process (cont’d)

Interviews (cont’d)Interviews (cont’d)

• Structured interviews are preferred; not collecting Structured interviews are preferred; not collecting necessary information and bias are possible necessary information and bias are possible problems in using unstructured interviews. problems in using unstructured interviews.

Paper-and-pencil testsPaper-and-pencil tests

• Ability tests assess if applicants have the right Ability tests assess if applicants have the right skills for the job.skills for the job.

• Personality tests seek to determine if applicants Personality tests seek to determine if applicants possess traits (e.g.,“honesty”) relevant to job possess traits (e.g.,“honesty”) relevant to job performance.performance.

• Tests must show reliability and validity to avoid Tests must show reliability and validity to avoid costly discrimination lawsuits. costly discrimination lawsuits.


Selection ProcessSelection ProcessSelection ProcessSelection Process

Physical ability testsPhysical ability tests

• Measures of dexterity, strength, and stamina for Measures of dexterity, strength, and stamina for physically demanding jobs.physically demanding jobs.

• Measures must be job-related to avoid Measures must be job-related to avoid discrimination.discrimination.

Performance testsPerformance tests

• Tests that measure an applicant’s current ability Tests that measure an applicant’s current ability to perform the job or part of the job such as to perform the job or part of the job such as requiring an applicant to take typing speed test.requiring an applicant to take typing speed test.

• Tests must be related to job requirements.Tests must be related to job requirements.


Selection ProcessSelection ProcessSelection ProcessSelection Process

Specialized performance testsSpecialized performance tests

• Assessment centers are facilities where Assessment centers are facilities where managerial candidates are assessed on job-managerial candidates are assessed on job-related activities over a period of a few days.related activities over a period of a few days.

ReferencesReferences

• Obtaining relevant information can be difficult to Obtaining relevant information can be difficult to due to legal liability and privacy issues.due to legal liability and privacy issues.

• Employers must carefully check references of Employers must carefully check references of prospective employees where safety and risk to prospective employees where safety and risk to others is a concern.others is a concern.

• Failure to check references can create additional Failure to check references can create additional employer liability for an employee’s actions.employer liability for an employee’s actions.


Reliability and ValidityReliability and ValidityReliability and ValidityReliability and Validity

• Selection tools must be reliable and valid.Selection tools must be reliable and valid.Reliability is the degree to which the tool Reliability is the degree to which the tool

measures the same thing each time it is measures the same thing each time it is used.used.

• Example: scores should be similar for the same Example: scores should be similar for the same person taking the same test over time.person taking the same test over time.

Validity is the degree to which the test Validity is the degree to which the test measures what it is supposed to measure.measures what it is supposed to measure.

• Example: how well a physical ability test predicts Example: how well a physical ability test predicts the job performance of a firefighter.the job performance of a firefighter.

Managers have both an ethical obligation and Managers have both an ethical obligation and a legal duty to develop good selection tools.a legal duty to develop good selection tools.


Training and DevelopmentTraining and DevelopmentTraining and DevelopmentTraining and Development

• TrainingTrainingTeaching organizational members how to Teaching organizational members how to

perform current jobs and helping them to perform current jobs and helping them to acquire the knowledge and skills they need acquire the knowledge and skills they need to be effective performers.to be effective performers.

• DevelopmentDevelopmentBuilding the knowledge and skills of Building the knowledge and skills of

organizational members to enable them to organizational members to enable them to take on new duties and challenges.take on new duties and challenges.

• Training is used more often at lower levels of Training is used more often at lower levels of firm; development is common with managers.firm; development is common with managers.


Training and Development (cont’d)Training and Development (cont’d)Training and Development (cont’d)Training and Development (cont’d)

• Needs AssessmentNeeds AssessmentAn assessment of which employees need An assessment of which employees need

training or development and what type of training or development and what type of skills or knowledge they need to acquire. skills or knowledge they need to acquire.

Figure 12.4


Types of TrainingTypes of TrainingTypes of TrainingTypes of Training

• Classroom InstructionClassroom InstructionEmployees acquire skills in a classroom Employees acquire skills in a classroom

setting.setting.

• Includes use of lectures, videos, role-playing, and Includes use of lectures, videos, role-playing, and work simulations.work simulations.

• On-the-Job TrainingOn-the-Job TrainingEmployee learning occurs in the work setting Employee learning occurs in the work setting

as new worker does the job.as new worker does the job.

• Training is given by co-workers and can be done Training is given by co-workers and can be done continuously to update the skills of current continuously to update the skills of current employees.employees.


Types of Managerial DevelopmentTypes of Managerial DevelopmentTypes of Managerial DevelopmentTypes of Managerial Development

• Varied Work ExperiencesVaried Work ExperiencesTop managers have need to and must build Top managers have need to and must build

expertise in many areas.expertise in many areas.

• Employees identified as possible top managers Employees identified as possible top managers are assigned different tasks and a variety of are assigned different tasks and a variety of positions in an organization.positions in an organization.

• Formal EducationFormal EducationTuition reimbursement is common for Tuition reimbursement is common for

managers taking classes for MBA or job-managers taking classes for MBA or job-related degrees.related degrees.

• Long-distance learning can be used to reduce Long-distance learning can be used to reduce travel and expenses for managerial training.travel and expenses for managerial training.


Performance Appraisal and FeedbackPerformance Appraisal and FeedbackPerformance Appraisal and FeedbackPerformance Appraisal and Feedback

• Performance AppraisalPerformance AppraisalThe evaluation of employees’ job The evaluation of employees’ job

performance and contributions to their performance and contributions to their organization.organization.

• Performance FeedbackPerformance FeedbackThe process through which managers share The process through which managers share

performance appraisal information, give performance appraisal information, give subordinates an opportunity to reflect on subordinates an opportunity to reflect on their own performance, and develop, with their own performance, and develop, with subordinates, plans for the future.subordinates, plans for the future.


Types of Performance AppraisalTypes of Performance AppraisalTypes of Performance AppraisalTypes of Performance Appraisal

• Trait AppraisalsTrait AppraisalsAssessing subordinates on personal Assessing subordinates on personal

characteristics that are relevant to job characteristics that are relevant to job performance.performance.

Disadvantages of trait appraisalsDisadvantages of trait appraisals

• Employees with a particular trait may choose not Employees with a particular trait may choose not to use that particular trait on the job.to use that particular trait on the job.

• Traits and performance are not always obviously Traits and performance are not always obviously linked.linked.

• It is difficult to give feedback on traits.It is difficult to give feedback on traits.


Types of Performance AppraisalTypes of Performance AppraisalTypes of Performance AppraisalTypes of Performance Appraisal

• Behavior AppraisalsBehavior AppraisalsAssesses how workers perform their jobsAssesses how workers perform their jobs——

the actual actions and behaviors that the actual actions and behaviors that exhibit exhibit on the job.on the job.

Focuses on what a worker does right and Focuses on what a worker does right and wrong and provides good feedback for wrong and provides good feedback for employees to change their behaviors.employees to change their behaviors.

• Results AppraisalsResults AppraisalsAssesses what a worker accomplishes or the Assesses what a worker accomplishes or the

results they obtain from performing their results they obtain from performing their jobs.jobs.


Performance Appraisal and FeedbackPerformance Appraisal and FeedbackPerformance Appraisal and FeedbackPerformance Appraisal and Feedback

• Objective AppraisalsObjective AppraisalsAssesses performance based on facts (e.g., Assesses performance based on facts (e.g.,

sales figures).sales figures).

• Subjective AppraisalsSubjective AppraisalsAssessments based on a manager’s Assessments based on a manager’s

perceptions of traits, behavior, or results.perceptions of traits, behavior, or results.


Who Appraises Performance?Who Appraises Performance?Who Appraises Performance?Who Appraises Performance?

Figure 11.6


Who Appraises Performance? (cont’d)Who Appraises Performance? (cont’d)Who Appraises Performance? (cont’d)Who Appraises Performance? (cont’d)

• SelfSelfSelf appraisals can supplement manager Self appraisals can supplement manager

view.view.

• Peer AppraisalPeer AppraisalCoworkers provide appraisal; common in Coworkers provide appraisal; common in

team settings.team settings.

• 360 Degree Performance Appraisals360 Degree Performance AppraisalsA performance appraisal by peers, A performance appraisal by peers,

subordinates, superiors, and clients who are subordinates, superiors, and clients who are in a position to evaluate a manager’s in a position to evaluate a manager’s performance.performance.


Effective Performance FeedbackEffective Performance FeedbackEffective Performance FeedbackEffective Performance Feedback

• Formal AppraisalsFormal AppraisalsAn appraisal conducted at a set time during An appraisal conducted at a set time during

the year and based on performance the year and based on performance dimensions that were specified in advance.dimensions that were specified in advance.

• Informal AppraisalsInformal AppraisalsAn unscheduled appraisal of ongoing An unscheduled appraisal of ongoing

progress and areas for improvement.progress and areas for improvement.


Effective Feedback GuidelinesEffective Feedback GuidelinesEffective Feedback GuidelinesEffective Feedback Guidelines

• Be specific and focus on correctable behavior. Be specific and focus on correctable behavior. Provide a suggested improvement.Provide a suggested improvement.

• Focus on problem-solving and improvement, Focus on problem-solving and improvement, not criticism.not criticism.

• Express confidence in the employee’s ability Express confidence in the employee’s ability to improve.to improve.

• Provide both formal and informal feedback.Provide both formal and informal feedback.

• Treat subordinates with respect and praise Treat subordinates with respect and praise achievements.achievements.

• Set up a timetable for agreed-to changes.Set up a timetable for agreed-to changes.


Pay and BenefitsPay and BenefitsPay and BenefitsPay and Benefits

• Pay LevelPay LevelThe relative position of an organization’s The relative position of an organization’s

incentives in comparison with those of other incentives in comparison with those of other firms in the same industry employing similar firms in the same industry employing similar kinds of workers.kinds of workers.

• Managers can decide to offer low, average or Managers can decide to offer low, average or high relative wages.high relative wages.

• High wages attract and retain high performers High wages attract and retain high performers but raise costs; low wages can cause turnover but raise costs; low wages can cause turnover and lack of motivation but provide lower costs.and lack of motivation but provide lower costs.


Pay and Benefits (cont’d)Pay and Benefits (cont’d)Pay and Benefits (cont’d)Pay and Benefits (cont’d)

• Pay StructurePay StructureThe arrangement of jobs into categories based on The arrangement of jobs into categories based on

their relative importance to the organization and their relative importance to the organization and its goals, level of skills, and other characteristics.its goals, level of skills, and other characteristics.

• BenefitsBenefitsLegally required: Social Security, unemployment Legally required: Social Security, unemployment

insurance and workers’ compensation.insurance and workers’ compensation.Voluntary: health insurance, retirement, day care.Voluntary: health insurance, retirement, day care.Cafeteria-style benefits plans allow employees to Cafeteria-style benefits plans allow employees to

choose the best mix of benefits for them; such choose the best mix of benefits for them; such plans can be hard to manage.plans can be hard to manage.


Labor RelationsLabor RelationsLabor RelationsLabor Relations

• Labor RelationsLabor RelationsThe activities managers engage in to ensure they The activities managers engage in to ensure they

have effective working relationships with the have effective working relationships with the labor unions that represent their employees labor unions that represent their employees interests.interests.

Laws regulating areas of employment.Laws regulating areas of employment.

• Fair Labor Standards Act (1938) prohibits child labor, Fair Labor Standards Act (1938) prohibits child labor, sets a minimum wage and maximum working hours.sets a minimum wage and maximum working hours.

• Equal Pay Act (1963) requires that men and women Equal Pay Act (1963) requires that men and women doing equal work will get equal pay.doing equal work will get equal pay.

• Work Place Safety (1970) OSHA mandates Work Place Safety (1970) OSHA mandates procedures for safe working conditions.procedures for safe working conditions.


UnionsUnionsUnionsUnions

• UnionsUnionsRepresent worker’s interests to management Represent worker’s interests to management

in organizations.in organizations.The power that managers has over an The power that managers has over an

individual worker causes workers to join individual worker causes workers to join together in unions to try to counter together in unions to try to counter management’s strength.management’s strength.

Unions are permitted by the National Labor Unions are permitted by the National Labor Relations Act (1935) which also created the Relations Act (1935) which also created the National Labor Relations Board (NLRB) to National Labor Relations Board (NLRB) to oversee the relationship between employers oversee the relationship between employers and unions.and unions.


Unions (cont’d)Unions (cont’d)Unions (cont’d)Unions (cont’d)

• Unions and WorkersUnions and WorkersNot all workers want unions.Not all workers want unions.

• Union membership costs money in dues and Union membership costs money in dues and workers might not want to strike.workers might not want to strike.

Union membership is lower now than 40 Union membership is lower now than 40 years ago.years ago.

• The manufacturing and heavy industries where The manufacturing and heavy industries where unions are dominant have declined.unions are dominant have declined.

• Workers no longer see the need for union Workers no longer see the need for union representation in the work place.representation in the work place.


Unions (cont’d)Unions (cont’d)Unions (cont’d)Unions (cont’d)

• Collective bargainingCollective bargainingNegotiation between labor and management Negotiation between labor and management

to resolve conflicts and disputes about issues to resolve conflicts and disputes about issues such as working hours, wages, benefits, such as working hours, wages, benefits, working conditions, and job security.working conditions, and job security.

The process that unions and management go The process that unions and management go through to negotiate work agreements that through to negotiate work agreements that are included in a contract which spells out are included in a contract which spells out agreed-upon terms such as the grievance agreed-upon terms such as the grievance procedure for resolving differences between procedure for resolving differences between the union and management over the union and management over management’s administration of the management’s administration of the contract.contract.

Documents

Chapter12Chapter12 PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved. Effective Management