CHAPTER 9
MANAGING HUMAN RESOURCES AND DIVERSITY
CHAPTER OUTLINE
New Manager Self-Test: Getting the Right People on the Bus
I. The Strategic Role of HRM Is to Drive Organizational Performance
A. The Strategic Approach
B. Building Human Capital to Drive Performance
II. The Impact of Federal Legislation on HRM
III. The Changing Nature of Careers
A. The Changing Social Contract
B. Innovations in HRM
IV. Finding the Right People
A. Human Resource Planning
B. Recruiting
C. Selecting
V. Developing Talent
A. Training and Development
B. Performance Appraisal
VI. Maintaining an Effective Workforce
A. Compensation
B. Benefits
C. Rightsizing the Organization
D. Termination
E. Managing Diversity
VII. Diversity in the Workplace
A. Diversity in Corporate America
B. Diversity on a Global Scale
VIII. Managing Diversity
A. Diversity and Inclusion
B. Diversity of Perspective
C. Dividends of Workplace Diversity
IX. Factors Shaping Personal Bias
New Manager Self-Test: Valuing Workplace Diversity
A. Workplace Prejudice, Discrimination, and Stereotypes
B. Ethnocentrism
X. Factors Affecting Women’s Careers
A. The Glass Ceiling
B. Opt-Out Trend
C. The Female Advantage
D. Increasing Awareness of Sexual Harassment
Managing Human Resources and Diversity •
ANNOTATED LEARNING OUTCOMES
After studying this chapter, students should be able to:
1. Explain the strategic role of human resource management.
The term human resource management (HRM) refers to activities undertaken to attract an
2. Describe federal legislation and societal trends that influence human resource management.
Several federal laws have been passed to ensure equal employment opportunity (EEO). The
3. Explain what the changing social contract between organizations and employees means for
workers and human resource managers.
Not since the advent of mass production and modern organizations has a redefinition of work
4. Show how organizations determine their future staffing needs through human resource
planning.
Human resource planning is the forecasting of human resource needs and the projected matching
5. Describe the tools managers use to recruit and select employees.
Recruiting involves practices that define the characteristics of applicants to whom selection
6. Describe the pervasive demographic changes occurring in the domestic and global
marketplace and how corporations are responding.
The importance of cultural diversity and employee attitudes that welcome cultural differences
will result from the inevitable changes taking place in the workplace, in our society, and in the
7. Summarize the factors that affect women’s opportunities, including the glass ceiling, the opt–
out trend, and the female advantage.
The glass ceiling is an invisible barrier that separates women and minorities from top
management positions. They can look up through the ceiling and see top management, but
Managing Human Resources and Diversity •
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aggressive environment that exists in most corporations. Critics argue that this is just another
way to blame women themselves for the dearth of female managers at higher levels.
Some people think women might actually be better managers, partly because of a more
collaborative, less hierarchical, relationship-oriented approach that is in tune with today’s global
and multicultural environment. As attitudes and values change with changing generations, the
qualities women seem to possess may lead to a gradual role reversal in organizations. Women of
all races and ethnic groups are outpacing men in earning bachelor’s and master’s degrees.
Overall, women’s participation in both the labor force and civic affairs has steadily increased
since the mid-1950s, while men’s participation has slowly but steadily declined.
LECTURE OUTLINE
NEW MANAGER SELF-TEST: GETTING THE RIGHT PEOPLE ON THE BUS
Most new managers are shocked at the large amount of time, effort, and skill required to recruit,
place, and retain the right people. The right people can make an organization great; the wrong
people can be catastrophic. This exercise helps students determine their expectations and beliefs
for handling the people part of their management jobs.
Human resource management refers to the design and application of formal systems in an
organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. This term includes activities undertaken to attract, develop, and maintain
an effective workforce. HRM is equally important for government and nonprofit organizations.
Over the past decade, human resource management has shed its old “personnel” image and
gained recognition as a vital player in corporate strategy. Today, all managers need to be skilled
in the basics of human resource management.
I. THE STRATEGIC ROLE OF HRM IS TO DRIVE ORGANIZATIONAL PERFORMANCE
A. The Strategic Approach Exhibit 9.1, Exhibit 9.2
The strategic approach to human resource management recognizes three key elements. First,
all managers are involved in human resource management. Second, employees are viewed as
assets. In today’s brutally competitive business environment, how a company manages its
workforce may be the single most important factor in sustained competitive success. Third,
HRM is a matching process, integrating the organization’s strategy and goals with the correct
approach to managing human capital. Current strategic issues of particular concern to
managers include:
• right people to become more competitive on a global basis;
• right people for improving quality, innovation, and customer service;
• right people to retain after mergers, acquisitions, or downsizing; and
• right people to apply new information technology for e-business.
Managing Human Resources and Diversity •
The three broad activities of HRM are to attract an effective workforce, develop the
workforce to its potential, and maintain the workforce over the long term. Achieving these
goals requires skills in planning, training, performance appraisal, wage and salary
administration, benefit programs, and termination techniques.
Discussion Question #2: Assume that it is the year 2027. In your company, central planning has
given way to frontline decision-making, and bureaucracy has given way to teamwork. Shop floor
workers use handheld devices and robots. A labor shortage currently affects many job openings,
and the few applicants you do attract lack skills to work in teams, make their own production
decisions, or use sophisticated technology. As vice president of HRM since 2013, what should
you have done to prepare for this situation?
NOTES________________________________________________________________________
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B. Building Human Capital to Drive Performance Exhibit 9.3
1. Human capital refers to the economic value of the combined knowledge, experience,
skills, and capabilities of employees. To build human capital, HRM develops
strategies for finding the best talent, enhancing their skills and knowledge with
training programs and opportunities for personal and professional development, and
providing compensation and benefits that support the sharing of knowledge and
appropriately reward people for their contributions to the organization.
II. THE IMPACT OF FEDERAL LEGISLATION ON HRM Exhibit 9.4
Several federal laws have been passed to insure equal employment opportunity (EEO). The
purpose of these laws is to stop discriminatory practices that are unfair to specific groups and
define enforcement agencies for these laws. EEO legislation attempts to balance the pay given to
men and women and provide employment opportunities without regard to race, religion, national
origin, sex, age, or disability. The Civil Rights Act of 1964 created the Equal Employment
Opportunity Commission (EEOC), the major agency involved with employment discrimination.
Discrimination occurs when some applicants are hired or promoted based on criteria that are not
job relevant. When discrimination is found, remedies include back pay and affirmative action.
Affirmative action requires an employer to take positive steps to guarantee equal employment
opportunities for people within protected groups. Failure to comply with EEO legislation can
result in substantial fines and penalties for employers.
One issue of growing concern is sexual harassment, which is a violation of Title VII of the Civil
Rights Act. The EEOC guidelines specify that behavior such as unwelcome advances, requests
for sexual favors, and other verbal and physical conduct of a sexual nature becomes sexual
harassment when submission to the conduct is tied to continued employment or advancement, or
when the behavior creates an intimidating, hostile, or offensive work environment.
III. THE CHANGING NATURE OF CAREERS
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A. The Changing Social Contract Exhibit 9.5
1. In the old social contract, the employee contributed ability, education, loyalty, and
commitment in return for the company providing wages and benefits, work,
advancement, and training. Volatile changes in the environment have disrupted this
contract. Organizations have downsized, and careers no longer necessarily progress
up a vertical hierarchy.
2. The new social contract is based on the concept of employability rather than lifetime
employment. Individuals are responsible for developing their own skills and abilities,
understanding their employer’s business needs, and demonstrating their value to the
organization. The employer, in turn, invests in creative training and development
opportunities so that people will be more employable when the company no longer
needs them.
3. The new social contract can benefit both employees and organizations. However,
some companies take the new approach as an excuse to treat people as economic
factors to be used when needed and then let go. Studies have found lower employee
and firm performance and decreased commitment in companies where the interaction
between employer and employee is treated as an economic exchange rather than a
genuine human and social relationship.
B. Innovations in HRM
1. Branding the Company as an Employer of Choice
a. An employer brand is similar to a product brand except that rather than
promoting a specific product, its aim is to make the organization seem like a
highly desirable place to work.
b. Employer-branding campaigns are like marketing campaigns to “sell” the
company and attract the best job candidates. However, many large, well-known
companies are also using employer branding as companies fight for talent.
2. Using Temporary and Part-Time Employees
a. Data from the U.S Bureau of Labor Statistics suggest that perhaps up to 40
percent of American workers are contingent workers. People in these temporary
jobs do everything from data entry to becoming the interim CEO. Highly skilled
supertemps do mission-critical work.
b. For organizations, the primary goals are to access specialized skills for specific
projects, enabling the company to maintain flexibility and keep costs low.
c. Contingent workers are people who work for an organization, but not on a
permanent or full-time basis. This may include temporary placements, contracted
professionals, leased employees, or part-time workers.
Managing Human Resources and Diversity •
d. Acqui-hiring has become common in the tech world. Established companies such
as Facebook, buy early-stage start-ups, often shutting them down, simply to
acquire their engineering talent.
NOTES________________________________________________________________________
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IV. FINDING THE RIGHT PEOPLE Exhibit 9.6
The first step in attracting a workforce is planning, predicting the need for new employees based
on the types of vacancies that exist. The second step is to communicate with potential
applicants; the third step is to select those with the best potential; finally, the new employee is
welcomed to the organization.
Underlying the organization’s effort to attract employees is a matching model, in which the
organization and the individual attempt to match the needs, interests, and values they offer each
other. Both the company and the employee are interested in finding a good match.
A. Human Resource Planning
1. Human resource planning is the forecasting of human resource needs and the
projected matching of individuals with expected job vacancies. Human resource
planning begins with several questions:
a. What new technologies are emerging, and how will they affect the work system?
b. What is the volume of business likely to be in the next 5 to 10 years?
c. What is the turnover rate, and how much, if any, is avoidable?
2. The responses to these questions are used to formulate specific questions pertaining to
HR activities, such as:
a. What types of engineers will we need, and how many?
b. How many administrative personnel will we need to support the additional
engineers?
c. Can we use temporary, part-time, or virtual workers to handle some tasks?
3. Answers to these questions help define the direction for the organization’s HRM
strategy.
B. Recruiting
Recruiting, sometimes referred to as talent acquisition, is defined as activities or
practices that define the characteristics of applicants to whom selection procedures are
Managing Human Resources and Diversity •
applied. Many organizations use internal recruiting (promote-from-within) policies.
Internal recruiting is less costly, generates higher employee commitment, and offers
career advancement. External recruiting gains newcomers from advertising, state
employment services, online recruiting services, private employment agencies, job fairs,
and employee referrals.
1. Assessing Jobs. Basic building blocks of human resource management include
job analysis, job descriptions, and job specifications. Job analysis is a systematic
process of gathering and interpreting information about the essential duties, tasks,
responsibilities, and context of a job. A written job description is a clear and
concise summary of the specific tasks, duties, and responsibilities of a job. A job
specification outlines the knowledge, skills, education, physical abilities, and
other characteristics needed to adequately perform the job.
2. Realistic job previews. A realistic job preview (RJP) gives applicants all
pertinent and realistic information, positive and negative, about the job and the
organization. RJPs enhance employee satisfaction and reduce turnover, because
they facilitate matching individuals, jobs, and organizations.
3. Social Media. Today, much of the recruiting is done via the Internet and social
media sites such as LinkedIn, Facebook, and Meetup. In a 2012 survey of global
HR executives, 46 percent reported using social media to find good candidates.
Companies still use online recruiting methods, but the trend is towards more
targeted online recruiting.
4. Internships. An internship is an arrangement whereby an intern, usually a high
school or college student, exchanges free or low-cost labor for the opportunity to
explore whether a particular career is appealing. Internships are an increasingly
popular approach to recruiting because they provide a way to “test–drive” a
potential employee.
C. Selecting
In the selection process, employers assess applicants’ characteristics in an attempt to
determine the “fit” between the job and applicant characteristics. The most frequently
used selection devices are the application form, interview, employment test, and
assessment center.
1. Application Form. The application form is used to collect information about the
applicant’s education, previous job experience, and other background
characteristics. Employers should avoid questions that are irrelevant to job
success. Additionally, the application form should not ask questions that create
an adverse impact on protected groups.
2. Interview. The interview serves as a two-way communication channel that allows
both the organization and the applicant to collect information that would
otherwise be difficult to obtain. This selection technique is used in the hiring
process in almost every job category in nearly every organization, but it is not
Managing Human Resources and Diversity •
generally a valid predictor of job performance, though it does have face validity
(i.e. it seems valid). This is another area in which employers can get into legal
trouble if they ask questions that violate EEO guidelines. Some organizations are
using panel interviews, in which the candidate meets with several interviewers
who take turns asking questions. Exhibit 9.7
• Structured interviews use a set of standardized questions that are asked of
every applicant so comparisons can easily be made. These may include
biographical interviews, which ask about the person’s previous life and work
experiences; behavioral interviews, which ask people to describe how they
have performed a certain task or handled a particular problem; and situational
interviews, which require people to describe how they might handle a
hypothetical situation.
• Nondirective interviews allow the applicant a great deal of freedom in
determining the course of the conversation, with the interviewer taking care
not to influence the person’s remarks.
• In addition, some firms are using offbeat approaches, also known as extreme
interviewing, to test job candidates’ ability to handle problems, cope with
change, think on their feet, and work well with others.
Discussion Question #3: Is it wise for managers to evaluate a promising candidate’s tweets or
postings on social networking sites as grounds for rejection before even interviewing him or her?
What might be some ethical and legal issues that managers should consider? Discuss.
NOTES________________________________________________________________________
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Exhibit 9.8
3. Employment Test. An employment test is a written or computer-based test
designed to measure particular attributes such as intelligence, aptitude, ability, or
personality. Many companies are particularly interested in personality inventories
that measure such characteristics as openness to learning, initiative, responsibility,
creativity, and emotional stability. Another unusual type of test, called a brain
teaser, is being used by companies that put a premium on innovativeness and
problem solving.
4. Online Checks. One of the newest ways of gauging whether a candidate is right
for the company is by seeing what the person has to say about him or herself on
blogs and social networking sites. HR managers may also search online for
criminal records, credit history, and other indications of the candidate’s honesty,
integrity, and stability. One way in which HR managers gauge an applicant’s
suitability for an open position is by checking what the applicant says on social
media sites. Maryland was the first state to pass a lawmaking it illegal to ask job
applicants for their social networking passwords.
Managing Human Resources and Diversity •
V. DEVELOPING TALENT
A. Training and Development Exhibit 9.9
1. On-the-Job Training. Training and development is a planned effort by an
organization for employees to learn job-related behaviors. The most common method
of training is on-the-job training (OJT), in which an experienced employee “adopts”
a new employee to teach him or her how to perform job duties. Cross-training places
an employee in a new position for as short as a few hours or for as long as a year to
develop new skills and give the organization flexibility.
2. Social Learning. Social learning basically means learning informally from others by
using social media tools, including mobile technologies, social networking, wikis and
blogs, virtual games, and so forth. The majority of organizational learning occurs
through informal rather than formal channels, so managers are supporting the use of
social media technology for learning in day-to-day work. These tools allow people to
share information, access knowledge, find resources, and collaborate in a natural way.
3. Corporate Universities. A corporate university is an in-house training and
education facility that offers broad-based learning opportunities for employees—and
frequently for customers, suppliers, and strategic partners as well—throughout their
careers.
4. Promotion from Within. Promoting from within helps companies retain valuable
employees. This provides challenging assignments, prescribes new responsibilities,
and helps employees grow by expanding and developing their abilities.
B. Performance Appraisal
1. Performance appraisal is observing and assessing employee performance, recording
the assessment, and providing feedback to the employee. During performance
appraisal, skilled managers give feedback and praise concerning the acceptable
elements of the employee’s performance. Performance appraisal can also reward
high performers with merit pay, recognition, and other rewards.
a. Recent thinking is that linking performance appraisal to rewards has unintended
consequences, and that it should be ongoing rather than something that is done
once a year as part of a consideration of raises. HRM professionals concentrate
on the accurate assessment of performance and on training managers to use the
performance appraisal interview effectively.
2. Assessing Performance Accurately
a. To obtain an accurate performance rating, managers must acknowledge that jobs
are multidimensional and performance may be multidimensional as well. The
360-degree feedback is a process that uses multiple raters, including self-rating,
as a way to increase self-awareness of strengths and weaknesses and guide
employee development. Members of the appraisal group may include
Managing Human Resources and Diversity •
supervisors, co-workers, and customers to provide appraisal of the employee from
a variety of perspectives.
b. Performance review ranking system is a method in which managers evaluate
direct reports relative to one another and categorizes each on a scale. These
systems rank employees according to their relative performance: 20 percent
would be placed in the top group of performers; 70 percent have to be ranked in
the middle; and 10 percent are ranked at the bottom. The bottom tier are given a
set period of time to improve their performance, and if they don’t improve, they
are fired. The advantages of this system include identifying the best and worst
performers, and creating and sustaining a high performance culture in which
people continuously improve. The disadvantages are that it may increase
cutthroat competition among employees, discourage collaboration and teamwork,
and potentially harm morale.
3. Performance Evaluation Errors Exhibit 9.10
a. Stereotyping occurs when a rater places an employee into a class or category
based on one or a few traits or characteristics.
b. Halo effect refers to giving an employee the same rating on all dimensions of the
job even if performance is good on some dimensions and not good on others.
c. The behaviorally anchored rating scale (BARS) is developed from critical
incidents pertaining to job performance and is designed to help raters avoid
performance evaluation errors. Each job performance scale is anchored with
specific behavioral statements that describe varying degrees of performance.
VI. MAINTAINING AN EFFECTIVE WORKFORCE
A. Compensation
1. Compensation refers to all monetary payments and all goods or commodities used in
lieu of money to reward employees. Developing an effective compensation system is
an important part of human resource management because it helps to attract and
retain talented workers. A company’s compensation system has an impact on
strategic performance. Human resource managers design the pay and benefit systems
to fit the company strategy and to provide compensation equity.
2. Wage and Salary Systems
a. Management’s strategy for the organization should be a critical determinant of the
features and operations of the pay system. Job-based pay links compensation to
the specific tasks that an employee performs. Skill-based pay systems encourage
employees to develop skills and competencies, making them more valuable to the
organization and more employable if they leave.
3. Compensation Equity
Managing Human Resources and Diversity •
a. Good managers strive to maintain a sense of fairness and equity within the pay
structure to maintain employee morale. Job evaluation is the process of
determining the worth of jobs within the organization through an examination of
job content. The intent is to pay employees fairly. Wage and salary surveys
show what other organizations pay incumbents in jobs that match a sample of
“key” jobs selected by the organization.
4. Pay-for-Performance
a. Pay-for-performance, also called incentive pay, ties at least part of the
compensation to employee effort and performance through merit-based pay,
bonuses, team incentives, gainsharing or profit sharing. With pay-for-
performance, incentives are aligned with the behaviors needed to help the
organization achieve its strategic goals. However, recent years have shown the
potential dangers of misdirected pay-for-performance plans.
B. Benefits
1. The best human resource managers know a compensation package requires more than
money. Although salary is an important component, benefits are equally important.
Some benefits are required by law such as Social Security, unemployment
compensation, and worker’s compensation. One reason that benefits make up such a
large portion of the compensation package is that health care costs have been
increasing so quickly.
2. Other types of benefits, such as health insurance, vacations, or educational
reimbursement are not required by law but are provided by organizations to maintain
an effective workforce.
C. Rightsizing the Organization
1. Rightsizing, also called downsizing, refers to intentionally reducing the company’s
workforce to the point where the number of employees is deemed to be right for the
company’s current situation. The goal is to make the company stronger and more
competitive by aligning the size of the workforce with the company’s current needs.
2. Unless HRM departments carefully manage the rightsizing process, layoffs can lead
to decreased morale and performance. Managers can smooth the rightsizing process
by regularly communicating with employees and providing them with as much
information as possible. Managers can also use training and development to help
address the emotional needs of remaining employees.
D. Termination
1. Despite the best efforts of line managers and HRM professionals, the organization
will lose employees. Terminations are valuable in maintaining an effective workforce
in two ways.