Chapter 7 – Managing Human Resources
CHAPTER
7
MANAGING
HUMAN
RESOURCES
LEARNING OUTCOMES
After reading this chapter, students should be able to:
7-1. Describe the key components of the human resource management process and the
important influences on that process.
7-2. Discuss the tasks associated with identifying and selecting competent employees.
7-3. Explain how employees are provided with needed skills and knowledge.
7-4. Describe strategies for retaining competent, high-performing employees.
7-5. Discuss contemporary issues in managing human resources.
Management Myth
Myth: Managers don’t need to know about human resources because that’s the job of the HR
department.
Truth: Although the HR department provides much needed advice, suggestions, and support
activities, managers do have important HR responsibilities and are involved with HR decisions
in their work units.
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Chapter 7 – Managing Human Resources
I. WHAT IS THE HUMAN RESOURCE MANAGEMENT PROCESS AND WHAT
INFLUENCES IT?
A. Introduction
1. The quality of an organization is determined by the quality of people it employs.
2. Staffing and human resource management decisions and methods are critical to
ensuring that the organization hires and keeps the right personnel.
3. Exhibit 7-1 introduces the key components of the human resource management
process.
a) It represents eight activities, or steps, that if properly executed, will staff an
organization with competent, high-performing employees.
4. The first three steps represent employment planning, the addition of staff through
recruitment, and the reduction in staff through downsizing, and selection.
a) Executed properly, these steps lead to the identification and selection of
competent employees.
5. Orientation, training and development help people to adapt to the organization and
ensure that their job skills and knowledge are kept current.
6. Finally, the HRM process helps to identify performance goals, correct performance
problems if necessary, and help employees sustain a high level of performance
(e.g., performance appraisal, compensation and benefits, and safety and health).
7. The external environment influences the entire employment process.
B. What is the Legal Environment of HRM?
1. Since the mid-1960s, the federal government in the United States has greatly
expanded its influence over HRM by enacting a number of laws and regulations.
2. See Exhibit 7-2 for the major laws affecting HRM.
3. Not many major federal employment discrimination laws have been passed
recently, but many state laws have been passed which add to the provisions of
federal laws.
4. Today’s employers must ensure that equal employment opportunities exist for job
applicants and current employees.
a) For example, decisions regarding who will be hired or which employees will
be chosen for a management training program must be made without regard to
race, sex, religion, age, color, national origin, or disability.
b) Exceptions can occur only when special circumstances exist.
c) For example, a community fire department can deny employment to a
firefighter applicant who is confined to a wheelchair.
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1) But if that same individual is applying for a desk job, such as fire
department dispatcher, the disability cannot be used as a reason to deny
employment.
d) For example, employment laws protect most employees whose religious
beliefs require a specific style of dress (robes, long shirts, long hair, etc.).
1) But if the specific style of dress may be hazardous or unsafe in the work
setting (e.g., when operating machinery), a company could refuse to hire a
person who would not adopt a safer dress code.
5. Balancing the “shoulds and should-nots” of complying with these laws often falls
under the realm of affirmative action.
a) Affirmative action programs ensure that decisions and practices enhance the
employment, upgrading, and retention of members of protected groups.
6. American managers are not completely free to choose whom they hire, promote, or
fire.
From the Past to the Present
Hugo Munsterberg was a pioneer in the field of industrial psychology and is “generally credited
with creating the field.” As an admirer of Frederick W. Taylor and the scientific management
movement, Munsterberg stated that “Taylor had introduced most valuable suggestions which the
industrial world cannot ignore.” Munsterberg stressed “the importance of efficiently using
workers to achieve economic production.” His research and work in showing organizations ways
to improve the performance and well-being of workers was fundamental to the emerging field of
management in the early 1960s. Today, industrial-organizational psychology is defined as the
scientific study of the workplace. Industrial-organizational (I/O) psychologists use scientific
principles and research-based designs to generate knowledge about workplace.
Discuss This:
Why is it important to scientifically study the workplace?
Do you think it is easier today to scientifically study the workplace than it was back in
Munsterberg’s days? Why or why not?
C. Are HRM Laws the Same Globally?
1. You need to know the laws and regulations that apply in your locale.
a) Canadian laws pertaining to HRM practices closely parallel those in the
United States.
1) The Canadian Human Rights Act provides federal legislation that
prohibits discrimination on the basis of race, religion, age, marital status,
sex, physical or mental disability, or national origin.
2) There is more decentralization of lawmaking to the provincial level in
Canada.
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b) In Mexico, unionization rates have been declining.
1) Labor matters in Mexico are governed by the Mexican Federal Labor
Law.
2) An employer has 28 days to evaluate a new employee’s work
performance and then the employee has job security—termination is
difficult and expensive.
3) Infractions of the Mexican Federal Labor Law are subject to severe
penalties, including criminal action.
c) Australia’s discrimination laws were not enacted until the 1980s.
1) Generally apply to discrimination and affirmative action for women.
2) Labor and industrial relations laws were overhauled in 1997 with the goal
of increasing productivity and reducing union power.
3) The Workplace Relations Bill, passed in 1997, gives employers greater
flexibility to negotiate directly with employees on pay, hours, and
benefits and simplifies federal regulation of labor-management relations.
d) HRM practices in Germany are similar to those in most Western European
countries.
1) Legislation requires companies to practice representative participation.
2) Goal of representative participation is to put labor on a more equal
footing with the interests of management and stockholders.
(a) Work councils—groups of nominated or elected employees who must
be consulted when management makes decisions involving personnel.
(b) Board representatives—employees who sit on a company’s board of
directors and represent the interest of the firm’s employees.
A Question of Ethics
Here’s a challenging HR issue for managers: A business model that relies heavily on the
appearance of employees and balancing the rights of those employees. Hooters, the restaurant
chain that hires attractive waitresses who are expected to wear (and look good) in tight tops and
short shorts, uses that business model. However, when one of its waitresses had brain surgery to
remove a tumor, her manager initially said the woman could wear a “chemo cap” to cover her
scar and lack of hair. However, a regional manager later said that was not sufficient and a wig
was necessary. The waitress later filed a federal discrimination lawsuit against the restaurant
saying that she was forced out of her job for refusing to wear a wig.
Discuss This:
How might this issue affect—balancing the rights of employees against a business model
that’s based on employee appearances—HR processes such as recruitment, selection, and
performance management?
What possible HR ethical issue(s) do you see in this story?
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II. HOW DO MANAGERS IDENTIFY AND SELECT COMPETENT EMPLOYEES?
A What is Employment Planning?
2. Employment planning is the process by which management ensures that it has
the right number and kinds of people in the right places at the right times, who are
capable of effectively and efficiently completing those tasks that will help the
organization achieve its overall objectives.
3. Employment planning translates the organizational mission and objectives into a
personnel plan.
a) Assessing current and future human resources needs.
b) Developing a plan to meet those plans.
B. How does an Organization do a Current HR Assessment?
1Management begins by reviewing its current human resource status through a
human resource inventory.
c) The input for this report is derived from forms completed by employees (e.g.,
name, education, training, prior employment, languages spoken, capabilities,
specialized skills, etc.).
d) This inventory enables management to assess what talents and skills are currently
available in the organization.
4. Another part of the current assessment is the job analysis.
a) Job analysis is more fundamental than an inventory and is a lengthy process,
one in which workflows are analyzed and skills and behaviors that are
necessary to perform jobs are identified.
b) Ultimately, the purpose of job analysis is to determine the kinds of skills,
knowledge, and attitudes needed to successfully perform each job.
c) This information is then used to develop or revise job descriptions and job
specifications.
5. A job description is a written statement of what a jobholder does, how it is done,
and why.
a) It typically portrays job content, environment, and conditions of employment.
6. The job specification states the minimum qualifications that an incumbent must
possess to perform a given job successfully.
a) It identifies the knowledge, skills, and attitudes needed to do the job
effectively.
7. Both are important documents for recruiting and selecting.
a) The job description can be used to describe the job to potential candidates.
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b) The job specification keeps the manager’s attention on the list of qualifications
necessary for an incumbent to perform a job, and assist in determining whether
candidates are qualified.
C. Future human resource needs are determined by the organization’s strategic
direction.
1Demand for human resources is a result of demand for the organization’s products
or services.
8. Using estimated total revenue, management can attempt to establish the number
and mix of human resources needed to reach that revenue.
a) When particular skills are necessary and in scarce supply, the availability of
satisfactory human resources determines revenues.
1) For example, upscale chain of assisted-living retirement facilities where
revenues are limited by the ability to locate and hire a qualified nursing
staff to fully meet the needs of the residents.
9. In most cases, the overall organizational goals and the resulting revenue forecast
provide the major input in determining the organization’s human resource requirements.
10. After assessing current capabilities and future needs, a program can then be
developed that matches these estimates with forecasts of future labor supply.
D. How do Organizations Recruit Employees?
1Once managers know their current staffing levels—whether they are understaffed
or overstaffed—they can begin to do something about it.
11. To fill vacancies, they use recruitment—the process of locating, identifying, and
attracting capable applicants.
12. If employment planning indicates a surplus, management will want to reduce the
labor supply and initiate downsizing or layoff activities.
13. Where Does a Manager Recruit Applicants?
aCandidates can be found by using several sources, including the Internet.
a) See Exhibit 7-3.
14. Employee referrals generally produce the best candidates.
1) Applicants referred by current employees are prescreened by those
employees.
2) Current employees often make referrals when they are reasonably
confident that the referral won’t make them look bad.
b) Employee referrals may not increase the diversity and mix of employees.
A How does a Manager handle Layoffs?
15. Downsizing has become a relevant means of meeting the demands of a dynamic
environment.
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16. What are downsizing options?
a) See Exhibit 7-4.
b) Regardless of the method chosen, employees may suffer.
F. How do Managers Select Job Applicants?
1The selection process is a prediction exercise—it seeks to predict which
applicants will be “successful” if hired.
17. Successful in this case means performing well on the criteria the organization uses
to evaluate its employees.
18. Any selection decision can result in four possible outcomes. (See Exhibit 7-5.)
19. A decision is correct when:
a) The applicant was predicted to be successful (was accepted) and later proved
to be successful on the job, or
b) The applicant was predicted to be unsuccessful (was rejected), and, if hired,
would not have been able to do the job.
20. Problems occur, however, when managers make reject errors or accept errors.
a) Reject errors occur when we reject candidates who, if hired, would have
performed successfully on the job.
b) Reject errors can open the organization to charges of employment
discrimination.
c) Accept errors occur when we accept those who subsequently perform poorly.
d) Accept errors cost the organization—training costs, costs generated or profits
foregone because of the employee’s incompetence, the cost of severance, and
subsequent costs of additional recruiting and selection screening.
21. The major objective of any selection activity is to reduce the probability of making
reject errors or accept errors while increasing the probability of making correct
decisions.
22. What is reliability?
a) Reliability addresses whether a selection device measures the same
characteristic consistently.
b) If a test is reliable, an individual’s score should remain fairly stable over time,
assuming that the characteristics it is measuring are also stable.
c) No selection device can be effective if it is low in reliability.
d) To be effective predictors, selection devices must possess an acceptable level
of consistency.
23. What is validity?
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a) Any selection device that a manager uses where there is a proven relationship
between the selection device used and some relevant measure.
b) The law prohibits management from using any selection device that cannot be
shown to be directly related to successful job performance.
c) This constraint also applies to entrance tests. Management must be able to
demonstrate that, once on the job, individuals with high scores on this test
outperform individuals with low scores.
d) The burden is on management to verify that any selection device it uses to
differentiate applicants is related to job performance.
24. How Effective Are Tests and Interviews as Selection Devices?
aManagers can use a number of selection devices to reduce accept and reject
errors.
a) The best-known devices include written and performance-simulation tests, and
interviews.
1) Written tests fell out of favor in the late 1960s because they were
frequently characterized as discriminatory, and many organizations could
not validate that their written tests were job related. Today, written tests
have made a comeback, although most of them are now Internet-based.
25. What are performance-simulation tests?
a) Determine if an applicant can do a job by having him/her do it.
b) Based on job analysis data and therefore are more job related than written
tests.
c) Performance-simulation tests are made up of actual job behaviors rather than
substitutes.
d) The best-known performance-simulation tests are:
1) Work sampling—a miniature replica of the job.
(a) Suited to routine jobs.
2) Assessment centers—simulating real problems one may face on the job.
(a) For selecting managerial personnel.
e) The advantage of performance simulation over traditional testing methods—
because content is essentially identical to job content, performance-simulation
should be a better predictor of short-term job performance and should minimize
potential employment discrimination allegations.
f) Well-constructed performance-simulation tests are valid predictors.
26. Is the interview effective?
a) The interview, along with the application form, is an almost universal selection
device.
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b) The value of the interview as a selection device has been the subject of
considerable debate.
c) Interviews are reliable and valid selection tools when structured, well
organized, and have interviewers asking relevant questions.
d) The typical interview often provides little in the way of valuable information.
e) All kinds of potential biases can creep into interviews.
1) Prior knowledge about the applicant will bias the interviewer’s
evaluation.
2) The interviewer tends to hold a stereotype of what represents a “good”
applicant.
3) The interviewer tends to favor applicants who share his/her own attitudes.
4) The order in which applicants are interviewed will influence evaluations.
5) The order in which information is elicited during the interview will
influence evaluations.
6) Negative information is given unduly high weight.
7) Deciding on an applicant’s suitability within the first four or five minutes
of the interview.
8) Forgetting much of the interview’s content within minutes of its
conclusion.
9) Most valid in determining an applicant’s intelligence, level of motivation,
and interpersonal skills.
10) Structured and well-organized interviews are more reliable.
27. How can you “close the deal”?
a) Every job applicant acquires a set of expectations about the company and the
job.
b) Excessively inflated information can have negative effects on the company.
1) Mismatched applicants are less likely to withdraw from the search
process.
2) Inflated information builds unrealistic expectations, quicker
dissatisfaction.
3) New hires are prone to become disillusioned and less committed to the
organization if they feel they were misled.
4) In many case, these individuals feel that they were misled during the
hiring process and may become problem employees.
c) A realistic job preview (RJP) includes both positive and negative information
about the job and the company.
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1) Applicants given a realistic job preview hold lower and more realistic job
expectations.
2) The result is fewer unexpected resignations by new employees.
3) For managers, realistic job previews offer a major insight into the HRM
process; retaining good people is as important as hiring them.
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