Essentials of Contemporary Management

Chapter

12

Effective Management of Human Resources

Learning Objectives
After studying the chapter, you should be able to:
Explain why strategic human resource management can help an organization gain a competitive advantage.
Describe the steps managers take to recruit and select organizational members. Discuss the training and development options that ensure organization members can effectively perform their jobs. Explain why performance appraisal and feedback is such a crucial activity.
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Learning Objectives (contd)

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

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Strategic Human Resource Management

Human Resource Management (HRM)
Activities that managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals.

HRM Activities
Recruitment and selection Training and development Performance appraisal and feedback Pay and benefits Labor relations

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Strategic Human Resource Management

Strategic Human Resource Management
The process by which managers design the components of a human resource system to be consistent with each other, with other elements of organizational structure, and with the organizations strategy and goals. The objective of strategic HRM is the development of an HRM system that enhances the organizations efficiency, quality, innovation, and responsiveness to customers.
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Components of a Human Resource Management System

Figure 12.1
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Overview of the Components of HRM

Recruitment and Selection
Developing a pool of qualified applicants. Determining relative qualifications of applicants and and their potential for a job.

Training and Development

Developing, on an ongoing basis, employees abilities and skills as necessitated by changes in technology and the competitive environment.

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Overview of HRM Components (contd)

Performance Appraisal and Feedback
Providing information about how to train, motivate, and reward workers such that managers can evaluate and then give feedback to enhance worker performance.

Pay and Benefits

Rewarding high performing employees with raises, bonuses and recognition.

Increased pay provides an additional incentive.

Benefits, such as health insurance, reward employee membership in firm.
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Overview of HRM Components (contd)

Labor Relations
Maintaining an effective relationship with labor unions that represent workers. Unions seek to participate, through collective bargaining with the employer, in the determination of pay rates and the setting of working conditions.

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The Legal Environment of HRM

Equal Employment Opportunity (EEO)
The equal right of all citizens to the opportunity to obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities. Equal Employment Opportunity Commission (EEOC) enforces employment laws. Management of diversity is crucial Managers must take steps to ensure discrimination does not occur.

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Major Equal Employment Opportunity Laws Affecting Human Resources Management

Federal Anti-Discrimination Laws
1963 Equal Pay Act 1964 Title VII of the Civil Rights Act 1967 Age Discrimination in Employment Act 1978 Pregnancy Discrimination Act 1990 Americans with Disabilities Act 1991 Civil Rights Act

1993 Family and Medical Leave Act

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Recruitment and Selection

Recruitment
Activities that managers engage in to develop a pool of candidates for open positions.

Selection
The process that managers use to determine the relative qualifications of job applicants and their potential for performing well in a particular job.

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The Recruitment and Selection System

Figure 11.2

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Human Resource Planning

Human Resource Planning (HRP)
Activities that managers engage in to forecast their current and future needs for human resources. HRP must be done prior to recruitment and selection. Demand forecasts Estimates of the number and qualifications of employees the firm will need. Supply forecasts Estimates of the availability and qualifications of current workers and those in the labor market.

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Human Resource Planning: Outsourcing

Outsourcing
Using outside suppliers and manufacturers to produce goods and services. Using contract workers rather than hiring them. More HR flexibility for the firm. Lower human capital costs.

Problems with Outsourcing

Loss of control: outsource labor contractors are not committed to the firm. Unions are against outsourcing that has the potential to 1218 eliminate members jobs.

Job Analysis
Job Analysis
Identifying the the tasks, duties and responsibilities that make up a job and the knowledge, skills, and abilities needed to perform the job.

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

Job analysis methods: Observing what current employees do.

Having workers/managers fill out questionnaires.

Current trend is toward flexible jobs where tasks and duties are not easily defined in advance.
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Recruitment
External Recruiting
Seeking outside the firm for people who have not worked at the firm previously. A multi-prong approach to external recruiting works best: newspapers advertisements, open houses, on-campus recruiting, employee referrals, and through the Internet. External recruiting challenges: Higher costs of external recruiting. Jobs that require employer-specific skills. Difficulty in assessing recruits qualifications.
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Recruitment
Internal Recruiting
Seeking to fill open positions with current employees from within the firm. Benefits of internal recruiting: Job candidates, their qualifications, and availability are already known. Current employees know the firms culture and are familiar with the organization.

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

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Selection Tools

Figure 11.3

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The Selection Process

Determining an applicants qualifications related to the job requirements.
Background information Education, prior employment, and college major. Interviews Structured interviews: managers ask each applicant the same job-related questions. Unstructured interviews: resemble normal conversations.

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The Selection Process (contd)

Interviews (contd) Structured interviews are preferred; not collecting necessary information and bias are possible problems in using unstructured interviews. Paper-and-pencil tests

Ability tests assess if applicants have the right skills for the job.
Personality tests seek to determine if applicants possess traits (e.g.,honesty) relevant to job performance. Tests must show reliability and validity to avoid costly discrimination lawsuits.
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Selection Process
Physical ability tests Measures of dexterity, strength, and stamina for physically demanding jobs. Measures must be job-related to avoid discrimination.

Performance tests
Tests that measure an applicants current ability to perform the job or part of the job such as requiring an applicant to take typing speed test. Tests must be related to job requirements.

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Selection Process
Specialized performance tests Assessment centers are facilities where managerial candidates are assessed on jobrelated activities over a period of a few days. References

Obtaining relevant information can be difficult to due to legal liability and privacy issues.
Employers must carefully check references of prospective employees where safety and risk to others is a concern. Failure to check references can create additional employer liability for an employees actions.
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Reliability and Validity

Selection tools must be reliable and valid.
Reliability is the degree to which the tool measures the same thing each time it is used. Example: scores should be similar for the same person taking the same test over time.

Validity is the degree to which the test measures what it is supposed to measure.
Example: how well a physical ability test predicts the job performance of a firefighter. Managers have both an ethical obligation and a legal duty to develop good selection tools.
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Training and Development

Training
Teaching organizational members how to perform current jobs and helping them to acquire the knowledge and skills they need to be effective performers.

Development
Building the knowledge and skills of organizational members to enable them to take on new duties and challenges.

Training is used more often at lower levels of firm; development is common with managers.
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Training and Development (contd)

Needs Assessment
An assessment of which employees need training or development and what type of skills or knowledge they need to acquire.

Figure 12.4

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Types of Training
Classroom Instruction
Employees acquire skills in a classroom setting. Includes use of lectures, videos, role-playing, and work simulations.

On-the-Job Training
Employee learning occurs in the work setting as new worker does the job. Training is given by co-workers and can be done continuously to update the skills of current employees.

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Types of Managerial Development

Varied Work Experiences
Top managers have need to and must build expertise in many areas. Employees identified as possible top managers are assigned different tasks and a variety of positions in an organization.

Formal Education
Tuition reimbursement is common for managers taking classes for MBA or job-related degrees. Long-distance learning can be used to reduce travel and expenses for managerial training.
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Performance Appraisal and Feedback

Performance Appraisal
The evaluation of employees job performance and contributions to their organization.

Performance Feedback
The process through which managers share performance appraisal information, give subordinates an opportunity to reflect on their own performance, and develop, with subordinates, plans for the future.

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Types of Performance Appraisal

Trait Appraisals
Assessing subordinates on personal characteristics that are relevant to job performance. Disadvantages of trait appraisals Employees with a particular trait may choose not to use that particular trait on the job. Traits and performance are not always obviously linked.

It is difficult to give feedback on traits.

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Types of Performance Appraisal

Behavior Appraisals
Assesses how workers perform their jobsthe actual actions and behaviors that exhibit on the job. Focuses on what a worker does right and wrong and provides good feedback for employees to change their behaviors.

Results Appraisals
Assesses what a worker accomplishes or the results they obtain from performing their jobs.

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Performance Appraisal and Feedback

Objective Appraisals
Assesses performance based on facts (e.g., sales figures).

Subjective Appraisals
Assessments based on a managers perceptions of traits, behavior, or results.

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Who Appraises Performance?

Figure 11.6

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Who Appraises Performance? (contd)

Self
Self appraisals can supplement manager view.

Peer Appraisal
Coworkers provide appraisal; common in team settings.

360 Degree Performance Appraisals

A performance appraisal by peers, subordinates, superiors, and clients who are in a position to evaluate a managers performance.

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Effective Performance Feedback

Formal Appraisals
An appraisal conducted at a set time during the year and based on performance dimensions that were specified in advance.

Informal Appraisals
An unscheduled appraisal of ongoing progress and areas for improvement.

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Effective Feedback Guidelines

Be specific and focus on correctable behavior. Provide a suggested improvement. Focus on problem-solving and improvement, not criticism. Express confidence in the employees ability to improve. Provide both formal and informal feedback.

Treat subordinates with respect and praise achievements.

Set up a timetable for agreed-to changes.
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Pay and Benefits

Pay Level
The relative position of an organizations incentives in comparison with those of other firms in the same industry employing similar kinds of workers. Managers can decide to offer low, average or high relative wages. High wages attract and retain high performers but raise costs; low wages can cause turnover and lack of motivation but provide lower costs.

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Pay and Benefits (contd)

Pay Structure
The arrangement of jobs into categories based on their relative importance to the organization and its goals, level of skills, and other characteristics.

Benefits
Legally required: Social Security, unemployment insurance and workers compensation. Voluntary: health insurance, retirement, day care.

Cafeteria-style benefits plans allow employees to choose the best mix of benefits for them; such plans can be hard to manage.
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Labor Relations
Labor Relations
The activities managers engage in to ensure they have effective working relationships with the labor unions that represent their employees interests. Laws regulating areas of employment.

Fair Labor Standards Act (1938) prohibits child labor, sets a minimum wage and maximum working hours.
Equal Pay Act (1963) requires that men and women doing equal work will get equal pay. Work Place Safety (1970) OSHA mandates procedures for safe working conditions.
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Unions
Unions
Represent workers interests to management in organizations. The power that managers has over an individual worker causes workers to join together in unions to try to counter managements strength. Unions are permitted by the National Labor Relations Act (1935) which also created the National Labor Relations Board (NLRB) to oversee the relationship between employers and unions.

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Unions (contd)
Unions and Workers
Not all workers want unions. Union membership costs money in dues and workers might not want to strike. Union membership is lower now than 40 years ago. The manufacturing and heavy industries where unions are dominant have declined. Workers no longer see the need for union representation in the work place.

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Unions (contd)
Collective bargaining
Negotiation between labor and management to resolve conflicts and disputes about issues such as working hours, wages, benefits, working conditions, and job security.

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

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