978-0078112768 Chapter 5 Solution Manual Part 1

Unlock access to all the studying documents.

View Full Document

Please click here to access the new HRM Failures case associated with this chapter. HRM

Failures features real-life situations in which an HR conflict ended up in court. Each case

includes a discussion questions and possible answers for easy use in the classroom. HRM

Failures are not included in the text so that you can provide your students with additional

real-life content that helps engrain chapter concepts.

1 Chapter Summary

This chapter describes the process an organization uses to plan and recruit so that there will be

adequate human resources. The steps described are linking business strategies to future needs,

forecasting labor demand and supply, determining in what positions there will exist a labor

shortage or surplus, setting goals regarding future human resource needs, and identifying

strategies to solve the problems of shortages and/or surpluses. The ability to recruit successfully

is described as depending upon personnel policies such as job posting (an internal strategy), level

of pay in comparison to the market, and the extent of job security. The chapter describes sources

for recruiting as well as the use of yield ratios and costs to evaluate the effectiveness of sources.

Lastly, the role of the recruiter and how to enhance his or her impact on the candidate is

presented.

2 Learning Objectives

After studying this chapter, the student should be able to:

1. Discuss how to align a company’s strategic direction with its human resource planning.

2. Determine the labor demand of workers in various job categories.

3. Discuss the advantages and disadvantages of various ways of eliminating a labor surplus

or avoiding a labor shortage.

4. Describe the various recruitment policies organizations adopt to make job vacancies more

attractive.

5. List the various sources from which job applicants can be drawn, their relative

advantages and disadvantages, and the methods for evaluating them.

6. Explain the recruiter’s role in the recruitment process, the limits the recruiter faces, and

the opportunities available.

3 Extended Chapter Outline

Note: Key terms appear in boldface and are listed in the “Chapter Vocabulary” section.

4 Opening Vignette:

Made in America: A Source of Competitive Advantage?

After a long period of American companies outsourcing manufacturing, firms like Walmart,

Apple, Airbus, and Ashley Furniture are making moves that are beginning to rekindle the

manufacturing sector in the US. Cheaper energy costs, tighter safety and ethical controls, and a

more productive and technologically savvy workforce have started to make inroads in making

manufacturing in the US attractive and competitive again. And the benefits don’t stop at simply

adding jobs, it is the downstream effects like adding $1.48 to the economy for every $1.00

manufactured and allowing US companies the chance to innovate which results in US workers

having the opportunity to develop their skills that really have an impact. Apparently companies

in other countries are noticing the changes also. German-based Volkswagon and French-based

Michelin decided to open new facilities here in the US rather than their own hope countries.

Discussion Question

1. Explain how, in the midst very shakey economic times, there seems to be a resurgence in

interest in US manufacturing even with the higher cost of labor in the US. If you were an

HR professional in a company that competed for this talent, what might you do to help

your company sell the idea that manufacturing in the US can be competitive?

The reason for the resurgence is a combination of factors that over time should compound

Third, the US has tighter safety and ethical controls helping prevent issues with company

I. Introduction—Firms and the workers face challenges such as the “war for talent,” as

illustrated by this opening vignette. In particular, demand for expertise—such as

hardware and software expertise—creates constraints and opportunities, and

employers can respond in many ways.

a. Two of the major ways that societal trends and events affect employers are

through:

b. Keys to utilizing labor markets to the organizations own competitive advantages

are:

1. Companies must have a clear idea of their current level of human resources

(strengths and weaknesses).

II. The Human Resources Planning Process—The process consists of forecasting, goal

setting and strategic planning, and program implementation and evaluation (See

Figure 5.1 in text).

A. Forecasting is the attempts to determine the supply of and demand for various

types of human resources to predict areas within the organization where there will

be future labor shortages or surpluses..

1. Determining Labor Demand

a. Labor demand can be predicted by the use of statistical techniques

such as leading indicator, which is an objective measure that

accurately predicts future labor demand (for example, sales may be

directly related to a need for salespeople, but not sales support

positions).

b. Statistical planning models are useful when there is a long, stable

history that can be used to reliably detect relationships among

variables.

c. Statistical models are almost always complemented by subjective

judgments of people who have expertise in the area.

2. Determining Labor Supply

a. Internal labor supply is determined by a detailed analysis of how

many people are currently in various job categories, modified to

reflect changes in the near future caused by retirements,

promotions, transfers, voluntary turnovers, or terminations.

b. A transitional matrix is a table used to project internal labor

supply. The matrix shows the proportion or number, of employees

in different job categories at different times and how people move

from one job to another in the organization and how many people

enter and leave the organization (text Table 5.1). This method is

best combined with judgmental methods.

3. Determining Labor Surplus or Shortage—By comparing forecasts for

labor supply and demand for specific jobs, the organization can determine

what it needs to do.

Examples: It is likely that the U.S. is going to experience a labor shortage

of primary care physicians of up to 100,000 doctors by 2025 as a result of

the Affordable Care Act going in to effect. Conversely, there is an

anticipated surplus of 175,000 lawyers coming up.

B. Goal Setting and Strategic Planning—These tools define specific goals regarding

a desired end and provide benchmarks for determining the relative success of a

program aimed at addressing labor surpluses or shortages. A specific timetable is

set for when results should be achieved (See tables 5.2 and 5.3 in text). The point

should be clear that without planning by the organization, employees suffer the

most, especially in a labor surplus because of layoffs and pay reductions.

1. Options for reducing an expected labor surplus:

– Downsizing

– Pay reductions

2. Options for avoiding an expected labor shortage:

– Overtime

– Temporary employees

3. Downsizing – the planned elimination of large numbers of personnel

designed to enhance organizational competitiveness..

a. There were four major reasons that organizations engaged in

downsizing:

– Cost reduction through decreased labor.

– Closing outdated plants or introducing technological change

reduced the need for labor.

– Mergers and acquisitions reduced the need for large bureau–

cracies.

– For economic reasons, many firms relocated parts of oper-

ations. Although the jury is still our on whether these

downsizing efforts have led to enhanced organizational

effectiveness, some early reports indicate the results have not

met expectations.

Example: Yahoo cut 2,000 jobs in 2012 (15% of their workforce).

They anticipated $375 million in savings, which was partially

offset by approximately $145 million in severance pay expenses.

b. Although downsizing has an immediate effect on costs, much

evidence suggests that it has negative effects on long term

organizational effectiveness and even lower longer term profits.

Reasons include:

– Although the initial cost savings are a short-term plus, the

long-term effects of an improperly managed downsizing effort

can be negative.

– In the service industry, the effects of downsizing can be

exacerbated.

– When downsizing efforts are not complemented by changes in

the nature of work roles, performance can also suffer.

– In the age of blogs and text messaging, the once private

practice of laying off employees becomes increasingly

transparent, which can result in unwanted publicity.

– Angry employees can sue for loss of wages under the Worker

Adjustment and Training Act, which requires employers to give

workers 60 days warning regarding layoffs. There was a spike

in these lawsuits in 2009.

4. Early Retirement Programs and Buyouts—The average age of the U.S

worker is getting older. Because of improved health of the older worker

and decrease in physical demand of the job individuals are able to work

long past the traditional retirement age. Although older workers bring

experience to the table, they also create problems like being more costly

than younger workers because of seniority, higher medical costs, and

higher pension contributions. Many employers are stressing early

retirement by offering incentive programs to older employees. Figure 5.2

shows the aging population in the United States.

5. Employing Temporary Workers—Some strategies can be turned on and off

fairly painlessly, such as the use of overtime and/or temporary employees.

Operational flexibility is the primary reason for this, although the use of

temps also frees the firm from many administrative tasks and financial

burdens (health insurance, pension, worker’s compensation, life insurance,

etc.). Smaller companies may use temporary agencies to do their

employment screening for them. After 90 days, if the employee works

out, he or she is often offered a permanent position. Training may be done

by the agency as well. Finally, temporary employees bring a fresh

perspective to the firm, particularly if they have temped in a number of

other organizations. The potential conflicts between permanent and

temporary employees need to be managed. There are several key issues:

a. The organization needs to have bottomed out first in terms of

any downsizing before it starts bringing in temporaries.

b. If the organization is concerned about the reactions of full-time

workers to the temporaries, it may want to go out of its way to hire

“nonthreatening” temporaries.

c. The organization, however, must be careful not to create the

perception that temporary workers are second-class organizational

citizens.

d. Finally, HR staff can also prevent feelings of a two-tiered society

by ensuring that the temporary agency provides benefits to the

temporaries that are at least minimally comparable with those

enjoyed by the full-time workers with whom they interact.

6. Outsourcing—This occurs when a firm is interested in a broad set of

services performed by an outside organization.

a. Offshoring is a special case of outsourcing where the jobs that

move actually leave one country and go to another, like the

example in the opening vignette.

b. Steps to take that help ensure the success of outsourcing strategies

include:

– When choosing an outsourcing vendor, it is usually the

bigger and older the better.

– Jobs that are proprietary or require tight security should not

be outsourced.

– It is a good idea to start small and monitor constantly.

7. Altering pay hours—Many companies that are facing labor shortages are

forced to get more hours out of existing employees. Although employers

are forced to pay higher wages, many prefer this to hiring and training new

employees.

Competing Through Globalization:

Struggling to Find a Custom Fit in an Italian Town

The Tuscan city of Prato, which produces over 27% of Italy’s textile output, is

experiencing what many other urban areas across the globe are experiencing – a large and

rapid influx of immigrant labor. In the case of Prado, over the past 25 years the

immigrant population has changed such that 25% of Prado’s residents are Chinese and

nearly 4,000 of the garment-producing businesses are Chinese owned. And while these

businesses are able to produce clothes faster and cheaper than their Italian counterparts,

they have still been able to benefit from putting a “Made in Italy” tag on their products.

Discussion Question

1. How does one balance the rights and responsibilities of labor market newcomers versus

established players when transforming from a historically important but non-viable

business model to a new and uncertain business model??

This is a tricky situation and students’ answers may vary greatly. On the one hand, it is

C. Program implementation and evaluation are critical elements to ensure that an

individual is held accountable for achieving the stated goals and has the necessary

authority and resources to accomplish goals. Program evaluation examines

results:

1. It considers whether the company has avoided any predicted shortages or

surpluses.

2. It examines the programs implemented to ensure that they had the desired

results and whether the programs were implemented as planned.

3. It is also crucial to examine the process in addition to the results, however.

For example, ultimately, human resources planning should reduce

instances of over-and- under supply of human resources. It will do this

with increasing effectiveness only if forecasts and projections become

increasingly accurate.

4.1.1.1.1 D. The Special Case of Affirmative Action Planning

Consider underutilization for voluntary affirmative action to promote diversity

and/or as a requirement of serving as a contractor to the federal government.

1. Work-force utilization review is a comparison that examines the

proportion of a company’s workers in a subgroup to the proportion that

each subgroup represents in the relevant labor market. This comparison is

used to determine whether any subgroups may be underutilized.

Underutilization occurs when the proportion of the subgroup in the

organization is lower than that of the labor market.

a. A voluntary affirmative action program may be implemented in

which selection programs may be reviewed and revised to decrease

the underutilization and/or increase the diversity of the

organization and decrease the likelihood of a lawsuit. Steps for

implementation are identical to the generic planning process

discussed earlier.

b. Students should be aware, however, that voluntary affirmative

action programs may be subject to lawsuits alleging reverse

discrimination. Court-ordered affirmative action plans are

mandated by the courts as part of the settlement of discrimination

complaints.

III. The Human Resource Recruitment Process—Human resource recruitment is any orga-

nizational activity that is designed to affect the number of people who apply for

vacancies, the type of people who apply for them, and/or the likelihood that those

applying for vacancies will accept positions if offered. The goal of recruitment is to

ensure that when a vacancy occurs, the organization has a number of reasonably qualified

applicants to choose from (Figure 5.4 in text).

A. Personnel policies, in relationship to recruitment, affect the nature of the

vacancies for which people are required and impact the ability of the organization

to recruit and its level of requiring success.

1. Internal versus External Recruiting: Job Security—A decision must be

made on whether to recruit from within or outside the organization.

Companies that recruit from within often use a job posting program in

which vacancies are publicized on bulletin boards, in company

newsletters, or in memos. Employees can apply and typically receive first

consideration before the organization searches externally. Such policies

make it clear that there are opportunities to advance and increase the level

of skills within the organization.

Example: A good example of the power of tapping internal sources of recruits is

provided Edwards Lifesciences, a medical device maker that has grown an average of 7

percent a year for the last 10 years. Edwards Lifesciences identifies the 75 most critical

jobs in the company, and then identifies two or three individuals who would serve as

potential excellent replacements or successors. Identifying candidates early allows the

company to invest in them slowly but surely and gives the company “bench strength.”

2. Employment-at-Will Policies

a. Employment-at-will policies state that either party in the

employment relationship can terminate that relationship at any

rime, regardless of cause. Many legal protections exist that make

it difficult for organizations to manage employment entirely “at

will.”

b. Companies that do not have employment at will typically have

extensive due process policies that describe steps an employee can

take to appeal a termination decision. Employment-at-will

companies are only considered equally attractive to due process

companies when the lack of job security is offset by

higher-than-average total compensation.

3. Extrinsic and Intrinsic Rewards—Lead-the-market pay strategy is a policy

of paying higher-than current market wages. This creates a distinct

advantage in recruiting since higher pay can make up for a job’s less

attractive features. However, employees in today’s labor pool are attracted

to other incentives besides money. There is also pressure on human

resources to deliver the best employees, so higher productivity, quality,

and so on, are achieved.

4. Image advertising promotes an organization as a good place to work in

general and may be particularly important for organizations in highly

competitive labor markets that perceive themselves as having a bad image.

B. Recruitment Sources—Since recruitment sources are unlimited, an organization

must decide how to reach the best sources of potential employees.

1. Internal versus External Sources—Relying on internal sources is useful

since employees are well known and are knowledgeable about the

organization and jobs. However, there may not be enough internal recruits

(especially for entry-level jobs); internal recruiting does not encourage

creativity or change; and, if the current force is not diverse, internal

recruiting will lead to a homogeneous work force, which can pose legal

threats