978-0134527604 Chapter 12

Chapter 12

Managing Human Resources

Once an organization’s structure is in place, it’s time to find the people to fill the

jobs that have been created. That’s where human resource management comes in.

It’s an important task that involves getting the right number of the right people in

the right place at the right time. Focus on the following learning objectives as you

read and study this chapter.

LEARNING OBJECTIVES

1. Explain the importance of the human resource management and the human

resource management process.

2. Describe the external influences that affect the human resource management

process.

3. Discuss the tasks associated with identifying and selecting competent employees.

5. Describe strategies for retaining competent, high-performing employees.

6. Discuss contemporary issues in managing human resources.

It’s Your Career

1. Do you want the job? This is perhaps the most important question you must

3. Make sense of the data. Look at whether companies in different industries pay

similarly

4. Prepare for the pay discussion. Think about your reservation pay rate; that is,

5. Have the discussion. Thank the organization’s representative for making the job

6. Communicate your decision. If you plan to accept the offer, tell the

representative that you will do so promptly after receiving written conﬁrmation.

12.1 WHY THE HRM IS IMPORTANT AND THE HRM PROCESS

Various studies have concluded that an organization’s human resources can be

2. HRM is an important part of organizational strategies.

3. Studies that have explored the link between HRM policies and

practices and organizational performance have found that certain

HRM policies and practices have a significant impact on

2. The human resource management process consists of eight

12-2. EXTERNAL FACTORS THAT AFFECT THE HRM PROCESS.

A number of environmental forces constrain human resource management

1. Recent economic changes have had a profound impact on the

nature of work. Unemployment (and under employment) is high in

1. Unionization can affect a company’s human resource

management activities.

a. A labor union is an organization that represents workers

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c. Only about 11.1 percent of the workforce in the United

States is unionized; that percentage is higher in other

countries.

C. Laws and Rulings.

1. Federal laws and regulations have greatly expanded the federal

government’s influence over HRM (see Exhibit 12-3).

a. Balance of the “should and should–not’s” of many of these

laws often fall within the realm of affirmative action—

programs that enhance the organizational status of

members of protected groups.

b. Managers that operate in an international context must

also be aware of specific laws that apply to the countries in

high degree of worker participation in management

through the use of work councils and board

representatives.

D. Demography.

1. Demographic trends will continue to play an important role in the

Human Resource function as the pool of workers change, i.e.,

1946) make up 6 percent of the workforce.

b. The baby boomers (those born between 1946 and 1964)

make up 41.5 percent of the workforce.

c. Gen Xers (those born from 1965 to 1977) make up almost

29 percent of the workforce.

d. Gen Yers (those born from 1978 to 1994) make up almost

24 percent of the workforce.

LEADER MAKING A DIFFERENCE

As senior vice president of people operations at Google Inc., Laszlo Bock knows and

understands people and work. You shouldn’t be surprised that the comprehensive (and

complicated) analysis that goes into Google’s search efforts also characterizes its

approach to managing its human resources. Bock’s current pursuit is a long-term study

of work (patterned after the long-running Framingham Heart Study that transformed what

we know about heart disease). Bock says, “I believe that the experience of work can

be—should be—so much better.” He and his team hope to learn more about work-life

balance, improving employee well-being, cultivating better leaders, doing a better job of

engaging Googlers (the name for Google employees) long-term, and how happiness and

work impact each other. Undoubtedly, there will be some interesting insights that result!

(P.S. If you’d like to work at Google and want to know more about getting hired, check

out the references cited above! There are good tips in there!)

What can you learn from this leader making a difference?

12.3 IDENTIFIYING AND SELECTING COMPETENT EMPLOYEES

The first phase of the HRM process involves three tasks: human resource

1. Current Assessment. Managers begin HR planning by conducting

a current assessment of the organization’s human resource

status.

a. This assessment is typically accomplished through a

2. Meeting Future HR Needs. Future HR needs are determined by

3. Increased Scrutiny in the Selection Process. Companies that do

not carefully scrutinize the qualifications or backgrounds of

1. Recruitment is the process of locating, identifying, and attracting

2. Decruitment is reducing an organization’s workforce. Decruitment

options include firing, layoffs, attrition, transfers, reduced

1. Prediction is important because any selection decision can result

in four possible outcomes (see Exhibit 12-6). The major aim of

2. Validity and Reliability. Validity is the proven relationship that

3. Types of Selection Devices. Managers can select employees

using numerous and varied selection devices. Exhibit 12-7 lists

the strengths and weaknesses of each of these devices.

4. Realistic Job Previews. A realistic job preview is a preview of a

12.4 PROVIDING EMPLOYEES WITH THE NEEDED SKILLS AND KNOWLEDGE

1. Work unit orientation familiarizes the employee with the goals of

2. Organization orientation informs the new employee about the

organization’s objectives, history, philosophy, procedures, and

rules.

3. Major objectives of orientation include the following:

a. To reduce initial anxiety.

4. Formal orientation programs are prevalent in many organizations,

particularly in large ones. Managers have an obligation to new

2. Training Methods. Exhibit 12-9 describes the major types of

training that organizations provide.

a. Traditional Training methods. On–the-job training is very

common, and it may involve job rotation. Job rotation is on-

12.5 RETAINING COMPETENT, HIGH-PERFORMING EMPLOYEES

A. Employee Performance Management. Managers need to know

1. Performance Appraisal Methods (Exhibit 12-10 summarizes the

advantages and disadvantages of each of these methods.)

a. A written essay appraises performance through a written

description of an employee’s strengths and weaknesses,

past performance, and potential.

c. The use of graphic rating scales is one of the oldest and

most popular performance appraisal methods. This method

appraises performance using a rating scale on a set of

performance factors. Graphic rating scales list a set of

performance factors; the evaluator goes down the list and

rates the employee on each factor, using an incremental

e. Multiperson comparison appraises performance by

comparing it with others’ performance.

f. Management by objectives (MBO) is another mechanism

for appraising performance. It is often used to assess the

performance of managers and professional employees.

g. 360 degree feedback appraises performance by using

feedback from supervisors, employees, and coworkers.

B. Compensation and Benefits.

How do organizations determine the compensation levels and benefits

that employees will receive?

1. The purpose of having an effective reward system is to attract and

2. A compensation system can include base wages and salaries,

3. What factors determine the compensation and benefits packages

for different employees? A number of factors influence these

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a. Under a skill–based pay system, employees are

compensated for the job skills they can demonstrate.

Research shows that skill-based pay systems tend to be

more successful in manufacturing organizations than in

service organizations.

b. Under a variable pay system, an individual’s

compensation is contingent on performance.

c. Flexibility is becoming a key consideration in the design of

an organization’s compensation system.

12.6 CONTEMPORARY ISSUES IN MANAGING HUMAN RESOURCES

A. Managing Downsizing. Downsizing is the planned elimination of jobs

1. Exhibit 12-12 lists some ways that managers can lessen the

trauma both for the employees being laid off and for the survivors

1. Sexual harassment isn’t a problem just in the United States. It’s a

global issue. Studies show that 40 to 50 percent of female

2. What can an organization do to protect itself against sexual

harassment claims? The courts want to know two things: First,

did the organization know about, or should it have known about,

the alleged behavior? And secondly, what did managers do to

stop it?

FUTURE VISION

Many organizations are exploring gamification as a way to engage employees and

potential job applicants. Games can be used during the hiring process, to orient new

employees, to provide training, to support career development, or even to help support

team–building efforts. Why does gamification work? It works because it taps into the

natural human instinct for competition and recognition – and because games are fun!

The following discussion questions are posed:

Talk About It 1: What would you think of a company that used a gaming application as

part of its hiring process?

Talk About It 2: What are some cautions for human resources practitioners in using

gamiﬁcation?

C. Controlling HR Costs.

1. Employee Health Care Costs. With health care costs rising

rapidly, it is important for employers to keep their portion of what

2. Employee Pension Plan Costs. Employee pension plans are other

ANSWERS TO REVIEW AND DISCUSSION QUESTIONS

Student answers to these questions will vary.

12-1. Discuss how human resource management practices can be a source of

competitive advantage for a company.

12-2. Discuss the external environmental factors that most directly affect the HRM

process.

12-3. Describe the different selection devices and which work best for different jobs.

The different selection devices include application forms (best used for gathering

employee information), written tests (must be job-related), work sampling (appropriate

12-4. What are the benefits and drawbacks of realistic job previews? (Consider this

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at RJPs from the employee’s viewpoint. In addition, students should be encouraged to

describe occasions when they have received an RJP in an interview setting. Students

could also be encouraged to share aspects or characteristics of jobs they currently hold

that should be communicated by an interviewer to prospective employees as part of an

RJP in an employment interview. (LO: 3, Discuss the tasks associated with identifying

and selecting competent employees, AACSB: Analytical thinking)

12-5. Describe the different types of orientation and training and how each of the types

of training might be provided.

Orientation is important because it results in an outsider-insider transition that makes the

new employee feel comfortable and fairly well adjusted, lowers the likelihood of poor

work performance, and reduces the probability of an early surprise resignation. The two

12-6. List the factors that influence employee compensation and benefits.

The factors are: employee’s tenure and performance, kind of job performed, kind of

12-7. Describe the different performance appraisal methods.

A written essay appraises performance through a written description of an employee’s

strengths and weaknesses, past performance, and potential. Critical incidents are

used to appraise performance by focusing on the critical job behaviors. In this technique,

the appraiser writes anecdotes to describe what the employee did that was especially

12-8. What, in your view, constitutes sexual harassment? Describe how companies can

PERSONAL INVENTORY ASSESSMENTS

ETHICS DILEMMA

As the use of medical marijuana increases, companies will be forced to handle state

laws, federal laws, and company drug-use policies based on federal laws. Although

courts have generally ruled that companies do not have to accommodate medical

12–11. What ethical issues do you see here?

12-12. How might this issue affect HR processes such as recruitment, selection,

performance management, compensation and benefits, and safety and health?

12–13. What other stakeholders might be impacted by this? In what ways might they be

impacted?

While there is no right or wrong answer to this dilemma, students should be aware

that federal law still trumps state and local laws regarding this issue. Some students may

erroneously think that because local law enforcement does not actively pursue

marijuana users, that it is legal. In addition, companies should have their own policies

clearly stated to eliminate confusion. (LO: 6, Discuss contemporary issues in managing

human resources, AACSB: Reflective thinking)

SKILLS EXERCISE: DEVELOPING YOUR INTERVIEWING SKILLS

This exercise should help students develop their interviewing skills. After giving seven

tips for interviewing, students are asked to review and update their résumé. It would be

helpful if students were to have several friends who have experience in management

critique it. Next, students are asked to create an inventory of their interpersonal and

technical skills and any practical experiences that do not show up in their résumé.

Finally, students should draft a set of leading questions they would like to be asked in an

interview that would give them a chance to discuss the unique qualities and attributes

they could bring to the job. (LO: 3, Discuss the tasks associated with identifying and

selecting competent employees, AACSB: Written and oral communication)

WORKING TOGETHER: TEAM EXERCISE

(LO: 4, Explain how companies provide employees with skills and knowledge, AACSB:

Analytical thinking)

MY TURN TO BE A MANAGER

• Studies show that women’s salaries still lag behind men’s, and even with equal

opportunity laws and regulations, women are paid about 82 percent of what men

are paid.126 Do some research on designing a compensation system that would

address this issue. Write up your findings in a bulleted list format. (LO: 6, Discuss

contemporary issues in managing human resources, AACSB: Analytical thinking)

• Go to the Society for Human Resource Management website (www.shrm.org)

and look for the HR News. Pick one of the news stories to read. (Note: Some of

these may be available only to SHRM members, but others should be generally

available.) Write a summary of the information. At the end of your summary,

discuss the implications of the topic for managers. (LO: 6, Discuss contemporary

issues in managing human resources, AACSB: Reflective thinking)

• Visit an online job board and learn about how a company posts a job. Pick any

online job board such as www. monster.com, www.careerboard.com, or a local

job board in your area. Click on “Employers” tab and read about the process to

post a job. (LO: 3, Discuss the tasks associated with identifying and selecting

competent employees, AACSB: Multicultural and diversity understanding)

• Set up a profile on LinkedIn. Make sure you use a professional photo and provide

a complete profile. Click on the “Business Services” link to learn how companies

can use LinkedIn in the hiring process. (LO: 3, Discuss the tasks associated with

identifying and selecting competent employees, AACSB: Analytical thinking)

ANSWERS TO CASE APPLICATION 1

QUESTIONS

Hiring Right at the Mayo Clinic

12-14. Would you be interested in working at the Mayo Clinic?

12-15. How does the Mayo Clinic’s Talent Community help to recruit new applicants?

12–16. Why is it important for the Mayo Clinic to assess a job applicant’s values?

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reputation. The Mayo Clinic looks for key values including respect, compassion,

integrity, teamwork, innovation, and stewardship. (LO: 3, Discuss the tasks associated

with identifying and selecting competent employees, AACSB: Analytical thinking)

12–17. How does a panel interview process help the organization make better hiring

ANSWERS TO CASE APPLICATION 2

QUESTIONS

Stopping Traffic

12–18. Many managers say that evaluating an employee’s performance is one of their

most difficult tasks. Why do you think they feel this way? What can organizations (and

managers) do to make it an effective process?

12–19. What’s your impression of the color-coded system suggested by the former

CEO? As a store department supervisor, how would you have approached that?

12–20. What could JCPenney executives have done to make this process more

effective?

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standards and measurements to both employees and managers, JCPenney might have

had a system that better evaluated and developed its employees. (LO: 5, Describe

strategies for retaining competent, high-performing employees, AACSB: Analytical

thinking)