Chapter 13: Managing Human Resources in Organizations

Human Resource Management (HRM)

The set of organizational activities directed at attracting,

developing, and maintaining an effective work force. Reflects the organization's investment in attracting retaining, and motivating an effective workforce and represents the people that contribute to the success of the organization

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

Title VII of the Civil Rights Act of 1964

- Forbids discrimination in the employment relationship.

- Employers are not required to seek out and hire minorities but they must treat fairly all who apply.

- Protects classes including race or color, national origin, sex, and religion

Adverse impact

When minority group members pass a selection standard at a rate less than 80% of the rate of the majority group.Any age over 40 becomes a minority.

Equal Employment Opportunity Commission

Federal agency charged with enforcing Title VII as well as several other employment-related laws

Affirmative Action

- 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.

Age Discrimination in Employment Act of 1967

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.

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

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. Not about the person but about the job.

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.

Employee Retirement Income Security Act of 1974 (ERISA)

Sets standards for pension plan management and provides federal insurance if pension plans go bankrupt.

Family and Medical Leave Act of 1993 (FMLA)

Requires employers to provide up to 12 weeks of unpaid leave for family and medical emergencies.

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 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.

Labor-Management Reporting and Disclosure Act of 1959 (Landrum-Griffin Act)

Viewed as pro employee; regulates labor unions' internal affairs and their officials' relationship with employers

National Labor Code

The combination of National Labor Relations Act of 1935 (Wagner Act), Labor Management Relations Act of 1947 (Taft-Hartley Act), and Labor-Management Reporting and Disclosure Act of 1959 (Landrum-Griffin Act)

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 Harassment: Quid Pro Quo (based on power), Hostile Work Environment (happens more than once)

- Alcohol and drug dependencies

- AIDS/HIV+ in the workplace

Health Insurance Portability and Accountability Act (HIPAA)

Federal law that protects personal medical information and recognizes the rights to relevant medical information of family caregivers and other directly involved in providing or paying for care

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

Employment-at-Will

A traditional view of the workplace in which an employer can fire an employee for any or no reason.

Just Cause—The New Argument

- An organization should be able to fire only people who are poor performers or who violate rules.

- Courts have limited an employer's ability to terminate employees by requiring just cause for firing or dismissal as part of an organization-wide cutback

Job Analysis

A systematic analysis of jobs within an organization. Includes Job description and job specification.

Job Description

A listing of the job's duties; its working conditions; and the tools, materials, and equipment use to perform the job.

Job Specification

A listing of knowledge, skills, abilities, and other credentials the incumbent job holder will need to do a job

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)

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

Recruiting

The process of attracting qualified persons to apply for jobs that are open.

Internal Recruiting

Promotion from within: considering current employees as candidates for openings.

- Advantage: can build morale and reduce turnover of high-

quality employees.

- Disadvantage: can create a "ripple effect" of having to

successively fill vacated positions.

Sources of External Recruits

Advertising, campus interviews, employment agencies, executive search firms, employee referrals, walk-ins

Realistic Job Preview (RJP)

Is considered a successful method to ensure person-job fit

Validation

Determining the extent to which a selection device is 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.

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

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.

Assessment Centers

- Are a popular method for selecting that is particularly good for selecting current managers for promotion.

- Provides content validation for major parts of the managerial job.

Other Techniques of Selecting Human Resources

- 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.

Training

Teaching operational or technical employees how to do the job for which they were hired.

Development

Teaching managers and professionals the skills need for both present and future jobs

Assessing Training Needs

Determining what needs exist is the first step in developing a training plan.

Common Training Methods

Lectures; role play and case studies; and on-the-job and vestibule training

Evaluation of Training

- Training and development programs should always be evaluated.

- Approaches include measuring relevant job performance criteria before (pretest) and after the training (post-test) to determine the effect of training.

Performance Appraisal

A formal assessment of how well workers do their jobs.

Reasons for performance appraisal

- Validates the selection process and the effects of training.

- Aids in making pay raise, promotion, and training decisions.

- Provides feedback to workers to improve their performance and plan future careers.

Objective Measures of Performance

- Can be actual output (units produced), scrap rate, dollar volume of sales, and 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 assess each employee under standardized conditions.

- Performance tests measure ability and not motivation.

Ranking

Compares employees to 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 employee to a fixed standard.

- Graphic rating scales

- Behaviorally-anchored rating scale (BARS)

Recency error

the tendency of the evaluator to base judgments on the subordinate's most recent performance because it is the most easily recalled.

Errors of leniency and strictness

Being too lenient, too strict, or tending to rate all employees as "average."

Halo error

Allowing the assessment of the employee on one dimension to spread to that employee's ratings on other dimensions. One characteristic positively takes over everything (ex: being nice).

Central Tendency Error

Occurs when a rater gives all the workers the same rating in order to avoid conflict between workers

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.

- Properly training managers can help them conduct more

effective feedback interviews.

- Final and most difficult part of appraisal

"360 degree" Feedback

- Managers are evaluated by everyone around them- boss, subordinates, and peers

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

Compensation

The financial remuneration given by the organization to its employees in exchange for their work. Includes wages, salary, and incentives.

Wages

Hourly compensation paid for operating employees

Salary

Refers to compensation paid for the total contribution of

an employee and is not based on total hours worked.

Incentives

Represent special compensation opportunities (e.g., sales commissions) that are usually tied to performance.

Purposes of compensation

- Provide means to maintain a reasonable standard of living.

- Provide a tangible measure of the value of the individual to the

organization.

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 affecting the wage-level decision

- The size and current success of the firm.

- The level of unemployment in the labor force

Area wage surveys

Provide information about maximum, minimum, and average wages for a particular job in a labor market.

Wage-structure decision

- Job evaluations are the basis for determining the worth of each job relative to other jobs in the organizational wage-structure.

- Wage surveys data and the wage structure are combined to set the actual wages for a job.

Individual wage decision

Factors such as seniority, initial qualifications, individual merit, and labor market conditions influence wage decisions.

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.

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.

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.

Why Unions Have Declined

- Increased standards of living made union membership less important.

- Unionized manufacturing industries have declined.

- Globalization of business has caused many unionized jobs to be lost overseas

Avoiding Unionization

- Provide fair treatment with clear standards

- Provide a complaint and appeal system

- Avoid favoritism

Collective Bargaining

- Establish by the Wagner Act

- 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.