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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)
