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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-1
Bateman Snell
Management
5thEdition
Competingin theNew Era
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-2
Part ThreeChapter 10 - Human Resources Management
Chapter OutlineStrategic Human Resources ManagementStaffing the OrganizationDeveloping the WorkforcePerformance AppraisalDesigning Reward SystemsLabor Relations
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Learning ObjectivesLearning Objectives
After studying Chapter 10, you will know: how companies use human resources management to gain
competitive advantage why companies recruit both internally and externally for new
hires the various methods available for selecting new employees why companies spend so much on training and development how to determine who should appraise an employee’s
performance how to analyze the fundamental aspects of a reward system
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Learning ObjectivesLearning Objectives
After studying Chapter 10, you will know: how unions influence human resources management how the legal system influences human resources
management
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Strategic Human Resources Management (HRM)
Strategic Human Resources Management (HRM)
Human Resources Management (HRM) formal systems for the management of people within the
organization human resources have a strategic impact
create valueare rareare difficult to imitateare organized
human capital - the knowledge, skills, and abilities of employees that have economic value
the emphasis on different HR activities depends on whether the organization is growing, declining, or standing skill
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-6
Strategic HRM (cont.)Strategic HRM (cont.)The HR planning process
a three-stage activity with a strategic purpose derived from the organization’s plans
planning - determine the organization’s plansprogramming - create specific HR activitiesevaluating - determine whether HR programs are producing the results needed to contribute to the organization
Demand forecasts - determine how many and what type of people are needed
derived from organizational plansbased on current sales and projected future sales growthdetermine the demand for different types of workers
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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An Overview Of The HR Planning Process
An Overview Of The HR Planning Process
•Labor markets•Technology•Legislation•Competition•Economy
•Demand forecast•Internal labor supply•External labor supply•Job analysis
HRMenvironmental
scanning
Humanresourcesplanning
Organizationalstrategicplanning
Planning
•Employee recruitment•Employee selection•Outplacement•Training and development•Performance appraisal•Reward systems•Labor relations
Humanresourcesactivities
Programming
•Productivity•Quality•Innovation•Satisfaction•Turnover•Absenteeism•Health
Results
Evaluation
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-8
Strategic HRM (cont.)Strategic HRM (cont.)
The HR planning process (cont.) Labor supply forecasts - estimates of how many and what
types of employees the organization actually will haveevaluate current employees and the available external supply of workers
forecasts of a diverse workforce have become fact Reconciling supply and demand
labor deficit - hire new employees, promote current employees to new positions, or train other employees to move in from other areas in the organization
labor surplus - lay off employees or transfer them to other areas
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-9
Strategic HRM (cont.)Strategic HRM (cont.)
The HR planning process (cont.) Job analysis - a tool for determining what is done on a given
job and what should be done on that job job description - tells about the job itself job specification - describes the employee characteristics needed to
perform the jobprovides the information that virtually every HR activity requires
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Staffing The OrganizationStaffing The Organization
Recruitment the development of a pool of applicants for jobs in the
organization Internal recruiting
advantages - employers know their employees employees know their organization provides opportunity to move up within the organization
drawbacks - yields limited applicant pool can inhibit a company that wants to change
job posting - a mechanism for advertising open positions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-11
Staffing The Organization (cont.)Staffing The Organization (cont.)
Recruitment (cont.) External recruiting - brings new blood into the organization
newspaper advertisements - popular recruiting source that is inexpensive and generates a large number of responses
employee referrals - some companies offer rewards for referralscampus recruiting - large pool of people
applicants have up-to-date training source of innovative ideas
Internet - becoming more common to advertise job openings and to gather applicant information
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-12
3.84
3.81
3.71
3.08
3.05
2.86
2.78
1.92
1.64
Employee referrals
Executive search firms
Want ads
Private employment agencies
Unions
College recruiting
Professional associations
Direct applications
Public employment agencies
Effectiveness Of Recruitment Sources
Effectiveness Of Recruitment Sources
Scale: 1 = not good, 3 = average, 5 = extremely good
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-13
Staffing The Organization (cont.)Staffing The Organization (cont.)Selection
choosing from among qualified applicants to hire Application and résumés - provide basic information to
prospective employerstend not to be useful for making final selection decisions
Interviews - most popular selection toolquestions that are not job related are prohibitedunstructured (nondirective) - interviewer asks different interviewees different questions
structured - interviewer asks all applicants the same questions situational interview - focuses on hypothetical situations behavioral description interview - explores applicant’s past behavior
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-14
Staffing The Organization (cont.)Staffing The Organization (cont.)
Selection (cont.) Reference checks - reference information is becoming
increasingly difficult to obtain Personality tests -may be difficult to defend in court
nonetheless, regaining popularity Drug testing
Drug-Free Workplace Act of 1988genetic testing - identifies the likelihood of contracting a disease
Cognitive ability tests - measure intellectual abilities Performance tests - require performing a sample of the job
have been developed for almost every occupation
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-15
Staffing The Organization (cont.)Staffing The Organization (cont.)
Selection (cont.) Assessment center - managerial performance test in which
candidates participate in a variety of exercises and situationstaps a number of critical managerial dimensionsassessors generally are line managers from the organization
Integrity tests - assess a job candidate’s honestypolygraphs (lie detector tests) - banned for most employment purposes
paper-and-pencil tests - more recent tests of integrity evidence of validity
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Staffing The Organization (cont.)Staffing The Organization (cont.)Selection (cont.)
Reliability - the consistency of test scores over time and across alternative measurements
Validitycriterion-related validity - degree to which a test actually predicts or correlates with job performance
reliance on scatterplots to depict the relationship between test scores and job performance
content validity - degree to which selection tests measure a representative sample of the knowledge, skills, and abilities required for the job
more subjective (less statistical) than criterion-related validity not less important than criterion-related validity
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-17
HighLowTest score
HighLowTest score
High
Low
Per
form
ance
High
Low
Per
form
ance
Coefficient of correlation = .00 Coefficient of correlation = .75
Correlation ScatterplotsCorrelation Scatterplots
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-18
Staffing The Organization (cont.)Staffing The Organization (cont.)
Workforce reductions Layoffs(downsizing) - laying off large numbers of
employees as a result of restructuring in the industryvictims - lose self-esteem, suffer demoralizing job searches, and are stigmatized by being out of work
outplacement - process of helping people who have been dismissed to regain employment elsewhere
survivors - suffer disenchantment, distrust, and lethargy a good performance appraisal process helps survivors avoid feeling
that they retained their jobs due to arbitrary decision making
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-19
Staffing The Organization (cont.)Staffing The Organization (cont.)
Workforce reductions (cont.) Termination - “firing” an at-will employee
if the employee can quit for any reason, employer should be able to fire for any reason
courts in most states have made exceptions to this doctrine public policy exceptions
progressive discipline - graduated steps used to correct workplace behavior
termination interview - stressful situation for all parties used to discuss the company’s position with the employee often good to have a third party present conduct the interview in a neutral location
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-20
Staffing The Organization (cont.)Staffing The Organization (cont.)
Legal issues and equal employment opportunity Civil Rights Act of 1964
Title VII forbids discrimination in employment decisions based on race, sex, color, national origin, and religion
created the Equal Employment Opportunity Commission (EEOC) - enforces Title VII
Civil Rights Act of 1991 - provides for punitive damages Uniform Guidelines on Employee Selection Procedures -
describe the development of employment practices that comply with the law
adverse impact - an apparently neutral employment practice adversely affects a protected class
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Developing The WorkforceDeveloping The WorkforceTraining and development
Training - teaching lower-level employees how to perform their present jobs
Developing - teaching managers and professional employees broad skills needed for their present and future jobs
Overview of the training process phase one - needs assessment
identify the jobs, people, and departments which need training phase two - design the training to meet training goals phase three - decide what training methods to use phase four - evaluate the training’s effectiveness
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Developing The Workforce (cont)Developing The Workforce (cont)
Types of training Orientation - training designed to introduce new employees
to the company and familiarize them with policies, procedures, culture, and the like
benefits may include lower turnover, increased morale, higher productivity, and lower recruiting and training costs
Team training - provides employees with the skills and perspectives they need to work in collaboration with others
Diversity training - focuses on identifying and reducing hidden biases against people with differences and developing the skills needed to effectively manage a diversified workforce
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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100
80
60
40
20
0
Per
cen
tage
usi
ng
Overall 10,000or more
2,500-9,9991,000-2,499500-999100-499
Number of employees
Classroom programs - live
Videotapes
Videoconferencing(individual desktops)
Outdoor experiential programs
Satellite/ Broadcast TV
Videoconferencing (to group)
Games/Simulations (computer-based)
Internet/WWW
Selected Instructional Methods And Media
Selected Instructional Methods And Media
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Performance AppraisalPerformance AppraisalPerformance appraisal
the assessment of an employee’s job performance two basic purposes
administrative - provides information for making salary, promotion, and layoff decisions
developmental - diagnoses training needs and enables career planning
What do you appraise? Trait appraisals - subjective judgments about employee
performanceoften leads to personal biasmay not be suitable for obtaining useful feedback
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-25
Performance Appraisal (cont.)Performance Appraisal (cont.)What do you appraise? (cont.)
Behavioral appraisals - focus on more observable aspects of performance
helps ensure that all parties understand what the ratings are really measuring
Results appraisals - tend to be more objectivefocus on production dataManagement By Objectives (MBO) - subordinate and supervisor agree on specific performance goals
develop a plan for attaining the goals identify criteria for determining whether goals have been reached useful when managers want to empower employees may focus on short-term achievement and ignore long-term goals
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Example Of BARS Used For Evaluating Quality
Example Of BARS Used For Evaluating Quality
Uses measures of quality and well-definedprocesses to achieve project goals.Defines quality from the client’s perspective.
Look for/identifies ways to continually improve the process.
Clearly communicates quality management to others.Develops a plan that defines how the team will participate in quality.
Appreciates TQM as an investment.
Has measures of quality that define tolerance levels.
Views quality as costly.Legislates quality.
Focuses her/his concerns only on outputs anddeliverables, ignoring the underlying process.
Blames others for absence of quality.Gives lip service only to quality concerns.
7
6
5
4
3
2
1
Outstanding
Average
Poor
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Guidelines For Choosing An Appraisal System
Guidelines For Choosing An Appraisal System
Evaluate onspecific
behaviors
Documentthe processcarefully
Attend tolegal
considerations
AppraisalSystem
Use job analysisfor performance
standards
Develop a formalappeal process
Use more thanone rater where
possible
Communicateperformance
standards
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-28
Performance Appraisal (cont.)Performance Appraisal (cont.)Who should do the appraisal?
managers and supervisors - traditional source of appraisal information
peers and team members - best at identifying leadership potential and interpersonal skills
subordinates - provide feedback to supervisors internal and external customers
internal customers include anyone inside the organization who depends upon an employee’s work output
self-appraisals - increases worker’s involvement in appraisal 360 degree appraisal - uses multiple sources to gain
comprehensive perspective of one’s performance
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Performance Appraisal (cont.)Performance Appraisal (cont.)
How do you give employees feedback? performance feedback is a stressful task for all parties
most difficult interviews are with employees who are performing poorly
no “one best way” to perform the appraisal interview follow-up meetings may be necessary
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Designing Reward SystemsDesigning Reward SystemsPay decisions
effective reward systems attract, motivate, and retain people three types of decisions are crucial
pay level - choice of whether to be a high-, average-, or low-paying company
pay structure - choice of how to price different jobs within the organization
jobs similar in worth are grouped into familiesindividual pay decisions - concern different pay rates for jobs of similar worth within the same family
decisions based on: seniority performance
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Factors Affecting The Wage MixFactors Affecting The Wage Mix
WageMix
Internal factors External factors
Compensation policyof organization
Employer’s ability to pay
Employee’srelative worth
Worth of job
Conditions of thelabor market
Area wage rates
Cost of living
Collective bargaining
Legal requirements
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Pay StructurePay Structure
Range
150 500450400350300250200
Job worth (total points)
Range overlap
Range steps
Midpoint4.50
8.00
7.50
7.00
6.50
6.00
5.50
5.00
Wag
e ra
tes
Maximum rate
Wage curve
Minimum rate
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Designing Reward Systems (cont.)
Designing Reward Systems (cont.)
Incentive systems and variable pay individual incentive plans - most common type
consists of an objective standard against which a worker’s performance is compared
group incentive plansgainsharing - concentrate on saving moneyprofit-sharing - incentives based on unit, department, plant, or company productivity
each group has a production standard pay is based on the amount of production over the standard
merit pay system - used in the absence of an objective standard bonuses based on supervisor’s judgment of employee’s merit
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-34
Designing Reward Systems (cont.)
Designing Reward Systems (cont.)
Employee benefits benefits required by law
workers’ compensation - provides financial support to employees suffering from a work-related injury or illness
social security - provides financial support to retirees also covers disabled employees
unemployment insurance - provides financial support to employees who are laid off for reasons beyond their control
benefits not required by lawcafeteria benefit plan - employees choose from a menu of options to create a benefit package tailored to their needs
flexible benefit plan - employees are given credits to spend on benefits that fit their unique needs
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-35
Designing Reward Systems (cont.)
Designing Reward Systems (cont.)
Legal issues in compensation and benefits Fair Labor Standards Act (FLSA) of 1938 - set minimum
wages, maximum hours, child labor standards, and overtime pay provisions
nonexempt employees - entitled to premium pay for overtimeexempt employees - not subject to overtime or minimum wage provisions
Equal Pay Act (EPA) of 1963 - prohibits unequal pay for men and women who perform equal work
exceptions permitted where pay differential is based on seniority, a merit system, or an incentive system
comparable worth - principle of equal pay for different jobs of equal worth
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-36
Designing Reward Systems (cont.)
Designing Reward Systems (cont.)
Health and safety Occupational Safety and Health Act (OSHA) of 1970 -
requires employers to pursue workplace safetyemployers must maintain records of injuries and deaths caused by workplace accidents
employers must submit to work-site inspections
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-37
Labor RelationsLabor Relations
Labor relations system of relations between workers and management
Labor laws National Labor Relations Act (NLRA) - Wagner Act
declared labor organizations legalestablished five unfair employer labor practicescreated the National Labor Relations Board
conducts certification elections hears unfair labor practices complaints issues injunctions against offending employers
greatly assisted the growth of unions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Labor laws (cont.) Labor-Management Relations Act - Taft-Hartley Act
intended to restore the balance of power between unions and management
protected employers’ free-speech rights defined unfair labor practices by unions permitted workers to decertify unions
Labor-Management Reporting and Disclosure Act - Landrum-Griffin Act
designed to curb abuses by union leadership and rid unions of corruption
declared a bill of rights for union members
Labor Relations (cont.)Labor Relations (cont.)
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Unionization authorization cards - collected by union locals to determine
whether workers want to be represented for the purpose of collective bargaining
NLRB will conduct certification elections if union has collected cards from 30 percent of the bargaining unit
simple majority of those voting required to determine a winnerif union wins, it is certified as the bargaining unit representative
union and management obliged to negotiate in good faith to obtain a collective bargain agreement
Labor Relations (cont.)Labor Relations (cont.)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-40
Determinants Of Union Voting Behavior
Determinants Of Union Voting Behavior
Union image•Corrupt?
•Too powerful?•Unnecessary given•current legislation
Job attitudes•Job dissatisfaction•Unfair supervision
•Poor communication
Union vote:YesorNo
Beliefs in union power•Wages•Power
•Working conditions
Economic needs•Wages•Hours
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
10-41
Labor Relations (cont.)Labor Relations (cont.)Collective bargaining
to reach an agreement, workers may conduct an economic strike arbitration - use of a neutral third party to resolve a labor
disputeused to deal with disagreements about interpretation of the contractavoids wildcat strikes in which workers walk off the job in violation of the contract
union shop - union security clause specifying that workers must join the union after a set period of time on the job
right to work - state legislation that prohibits the negotiation of union shop clauses