Chapter 10

Human Resource Management

Learning ObjectivesAfter reading this chapter, you should be able to:

Explain the role of human resource management in achieving a sustainable competitive advantage.

Identify the key factors in the environment affecting the management of human resources.

Describe the human resource planning process. Explain the key components of staffing and their

importance. Describe how training and career development

provide employees with tools to succeed once they are hired.

Identify the purposes of performance appraisal and how it might be conducted.

Describe the key objectives of the compensation system and its components.

Dealing effectively with Dealing effectively with human resource (HR) human resource (HR) issues is essential for all issues is essential for all managers.managers.

The human resource The human resource staff supports managers staff supports managers in carrying out HR in carrying out HR responsibilities.responsibilities.

Environment of Human Resources

Workforce Workforce DiversityDiversity

GlobalizationGlobalization

LegislationLegislationUnionsUnions

Key Federal Legislation and Regulations Affecting HR

Social Security Act (1935) Wagner Act (1935) Fair Labor Standards Act (1938) Taft-Hartley Act (1947) Landrum-Griffin Act (1959) Equal Pay Act (1963) Title VII of Civil Rights Act (1964) Executive Order 11246 (1965) Age Discrimination in Employment

Act (1967) Wage Garnishment Act (1968)

Occupational Safety and Health Act (1970)

Vocational Rehabilitation Act (1973)

Health Maintenance Organization Act (1973)

Employee Retirement Income Security Act (1974)

Vietnam-Era Veterans Readjustment Act (1974)

Privacy Protection Act (1974) Pregnancy Discrimination Act

(1978)

Key Federal Legislation and Regulations Affecting HR (cont)

Job Training Partnership Act (1982)

Consolidated Omnibus Budget Reconciliation Act (1985)

Immigration Reform and Control Act (1986)

Worker Adjustment and Retraining Act (1988)

Drug-Free Workplace Act (1988)

Employee Polygraph Protection Act (1988)

Americans with Disabilities Act (1990)

Civil Rights Act (1991) Family and Medical Leave Act

(1993) Health Insurance Portability

and Accountability Act (1996) Small Business Job Protection

Act (1996) Fair Credit Reporting Act

(1970, 1996)

Key HR Key HR Legislative Legislative

IssuesIssues

DiscriminationDiscrimination

Protected Protected ClassClass

Affirmative Affirmative ActionAction

Disparate Disparate TreatmentTreatment

Adverse Adverse ImpactImpactJob Job

RelatednessRelatedness

BFOQBFOQ

Sexual Sexual HarassmentHarassment

Employment Employment at Willat Will

Civil Rights Act of 1964 Designed to prevent discrimination Protected class includes persons of color

and women Affirmative action – fair employment Forms of discrimination

Disparate Adverse

Employer defenses include job relatedness, qualification, seniority

Other legislative influences Drug-free Workplace Act Family and Medical Leave act Sexual harassment (Civil Rights Act) Note Manager’s Notebook 10.1 on Don’ts

of Interviewing Could lead to interpretations that interviewer is

violating the law. These continue to be violated due to

ignorance.

UnionsMembership has been declining steadily (13%

in 2006)

Factors contributing to this decline:

Strong employer challenges to unionsPlant closures International competitionShrinking manufacturing sector

Labor Contract: Written agreement between union and management that specifies pay schedule, fringe benefits, COLA, and the like.

Unions (cont)

Union-related legislations: The Wagner Act (1935) – created the NLRB The Taft-Hartley Act (1947) – specified a set of

unfair labor practices by unions along with the remedies

The Landrum-Griffin Act (1959) – requires each union to report its financial activities and the financial interests of its leaders to the Department of Labor

In the U.S., labor relations are characterized by: Business unionism Job-based unionism Collective bargaining Voluntary contracts Adversarial relationships

Human Resource Management Process

Strategic HR Strategic HR PlanningPlanning

HR TacticsHR Tactics

StaffingStaffing OrientationOrientation TrainingTraining Career Career DevelopmentDevelopment

Performance Performance AppraisalAppraisal

Compensation Compensation and Benefitsand Benefits

Strategic Human Resource Planning (SHRP) The development of a

vision about where the company wants to be and how it can use human resources to get there.

The ultimate objective of SHRP is a sustained competitive advantage.

Human Resource PlanningHuman Resource PlanningProduct Product DemandDemand

Labor Labor ProductivityProductivity

Labor DemandLabor Demand Labor SupplyLabor Supply

Internal Labor Internal Labor MarketMarket

External Labor External Labor MarketMarket

ConditionsConditions and Select Responsesand Select Responses1.1. Labor demand exceeds labor supplyLabor demand exceeds labor supply

Training or retrainingTraining or retraining Succession planningSuccession planning Promotion from withinPromotion from within Recruitment from outsideRecruitment from outside SubcontractingSubcontracting Use of contingent workersUse of contingent workers Use of overtimeUse of overtime

2.2. Labor supply exceeds labor demandLabor supply exceeds labor demand Pay cutsPay cuts Reduced hoursReduced hours Work sharingWork sharing Voluntary early retirementsVoluntary early retirements Inducements to quitInducements to quit LayoffsLayoffs

3.3. Labor demand equals labor supplyLabor demand equals labor supply Replacement of quits from Replacement of quits from

inside or outsideinside or outside Internal transfers and Internal transfers and

redeploymentredeployment

Staffing Process Recruitment – the process of

generating a pool of qualified candidates for a particular job.

An effective recruitment effort should create a pool of qualified applicants.

Selection – the screening process used to decide which of the applicants to hire.

Validity and Reliability of Selection Tools

Validity is how well a technique used to assess candidates is related to performance on the job.

Validity can be demonstrated by: Content Validity Empirical Validity

Reliability is a measure of the consistency of results of the selection method.

SELECTION SELECTION

TOOLSTOOLS

Application Application FormsForms

Letters of Letters of RecommendatioRecommendatio

nn

Ability TestsAbility Tests

Performance Performance Simulation TestsSimulation Tests

Personality Personality TestsTests

Psychological Psychological TestsTests Honesty TestsHonesty Tests

InterviewsInterviews Physical ExamsPhysical Exams

Orientation Helps new employees to:

Learn more about the company Learn what is expected of them in

the job Reduce the initial anxiety of a

transition Become familiar with co-workers Learn about work rules and

personnel policies

Employee Training Training is a planned effort

to provide employees with specific skills to improve their performance.

Effective training can also improve morale and increase an organization’s potential.

The Training Process

Needs Needs AssessmentAssessment

Develop and Develop and Conduct TrainingConduct Training

EvaluationEvaluation

• Organization NeedsOrganization Needs• Task NeedsTask Needs• Person NeedsPerson Needs

• LocationLocation• PresentationPresentation• TypeType

Training Presentation TechniquesSlides and Slides and VideotapesVideotapes

Computer-Computer-Assisted Assisted

Instruction (CAI)Instruction (CAI)

Classroom Classroom LecturesLectures

SimulationsSimulations

Virtual RealityVirtual RealityVestibule Vestibule TrainingTraining

Cross-functional Cross-functional TrainingTraining

Career Development Long-term effort in which the

organization helps employees utilize their full potential.

Involves three major phases: Assessment

Direction

Development

The Career Development Process

AssessmentAssessment

DirectionDirection

DevelopmentDevelopment

• Promotability forecastsPromotability forecasts• Succession planningSuccession planning• Individual career counselingIndividual career counseling• Job posting systemsJob posting systems• Career resource centersCareer resource centers

• MentoringMentoring• CoachingCoaching• Job rotationJob rotation• Tuition assistance programsTuition assistance programs

Performance Appraisal Performance appraisal has

three important objectives: Two-way communication

between supervisors and employees.

Constructive feedback to employees in order to capitalize on strengths and reduce weaknesses.

Help managers decide who should be paid more based on contribution.

Approaches to Performance Appraisal

Judgment Approaches Relative judgments Absolute judgments

Measure Approaches Traits Behaviors Behavioral

anchored rating scales

Outcomes MBO

Compensation Employees are paid for

their contributions to the company.

The three key objectives of the compensation system are to:

Attract high-quality workers from the labor market.

Retain the best employees the company already has.

Motivate employee performance.

Components of Total Compensation

Total CompensationTotal Compensation

Base CompensationBase Compensation Pay IncentivesPay Incentives Indirect Compensation / Indirect Compensation / BenefitsBenefits

Compensation System Should:Fit the firm’s strategic objectives

Fit with the firm’s characteristics and environment

Achieve internal equity (perception of fairness)

Achieve external equity

Be based on employee contributions

Video Summary: Patagonia What does workforce diversity mean at

Patagonia?

Individual/Collaborative Learning case 10.1 . . . P. 425 Discuss the Question 1 & 2 on p. 426 with

two other classmates. Write your thoughts on how you would

respond to the challenge posed in the Learning Exercise.

Give each member of your trio a chance to read your work (and read theirs.)

Discuss