CHAPTER 12
MANAGING HUMAN RESOURCES
CHAPTER OUTLINE
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
New Manager Self-Test: What Is Your Focus?
III. The Changing Nature of Careers
A. The Changing Social Contract
B. Innovations in HRM
ANNOTATED LEARNING OBJECTIVES
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
effective workforce, develop the workforce to its potential, and maintain the workforce over the
2. Describe federal legislation and societal trends that influence human resource management.
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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
and career been so profound. Under the emerging social contract, each person must take care of
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
of individuals with expected vacancies. Human resource planning begins with several questions:
only as they arise.
5. Describe the tools managers use to recruit and select employees.
Recruiting involves practices that define the characteristics of applicants to whom selection
procedures are ultimately applied. Today, much of the recruiting is done via the Internet and
social media sites such as LinkedIn, Facebook, and Meetup. Many organizations use internal
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6. Describe how organizations develop an effective workforce through training and
performance appraisal.
Training and development represent a planned effort by an organization to facilitate employees’
learning of job-related behaviors. Some authors use the term “training” to refer to teaching
7. Explain how organizations maintain a workforce through the administration of wages and
salaries, benefits, and terminations.
Compensation refers to all monetary payments and all goods or commodities used in lieu of
money to reward employees. An organization’s compensation structure includes wages and/or
turnover.
LECTURE OUTLINE
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
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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 12.1, Exhibit 12.2
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
Discussion Question #1: Assume that it is the year 2025. 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 2010, what should
you have done to prepare for this situation?
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B. Building Human Capital to Drive Performance Exhibit 12.3
1. Human capital refers to the economic value of the combined knowledge, experience,
skills, and capabilities of employees. To build human capital, HRM develops
II. THE IMPACT OF FEDERAL LEGISLATION ON HRM Exhibit 12.4
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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
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.
Discussion Question #5: If you were asked to advise a private company about its EEO
responsibilities, what two points would you emphasize as most important?
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III. THE CHANGING NATURE OF CAREERS Exhibit 12.5
A. The Changing Social Contract
1. In the old social contract, the employee contributed ability, education, loyalty, and
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,
3. The new social contract can benefit both employees and organizations. However,
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NEW MANAGER SELF-TEST: WHAT IS YOUR FOCUS?
The HR department is typically responsible for monitoring compliance with federal laws, and it
provides detailed and specific employee procedures and records for an organization. Every new
manager is involved in HR activities for his or her direct reports, which involves systematic
record keeping, awareness of applicable laws, and follow through. This exercise helps students
determine their orientation toward day-to-day work issues related to HR activities.
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
2. Using Temporary and Part-Time Employees
a. A 2012 survey by Workforce Management has found that nearly 44 percent of
employers are using more contingent workers than a decade ago. People in these
3. Promoting Work-Life Balance
a. Telecommuting, or using computers and telecommunications equipment to do
work without going to an office, is one way organizations are helping employees
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Discussion Question #9: As a manager, how would you draw up a telecommuting contract with
a new employee? Include considerations such as job description, compensation and benefits,
performance measures, training, and grounds for dismissal.
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IV. FINDING THE RIGHT PEOPLE Exhibit 12.6
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:
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. Recruiting Exhibit 12.7
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1. Recruiting, sometimes referred to as talent acquisition, is defined as activities or
practices that define the characteristics of applicants to whom selection procedures
are 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.
a. Assessing Jobs. Basic building blocks of human resource management include
job analysis, job descriptions, and job specifications. Job analysis is a systematic
b. 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.
C. Selecting Exhibit 12.8
1. 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.
a. Application Form. The application form is used to collect information about the
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b. Interview. Some type of interview is used as a selection technique in almost
every job category in nearly every organization. This is another area in which
• 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
Discussion Question #4: Which selection criteria (personal interview, employment test,
assessment center) do you think would be most valuable for predicting effective job performance
for a college professor? For an assembly-line worker in a manufacturing plant? Discuss.
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Exhibit 12.9
c. Employment Test. Employment tests may include cognitive ability tests,
physical ability tests, personality inventories, and other assessments. Cognitive
ability tests measure an applicant’s thinking, reasoning, verbal, and mathematical
d. Assessment Center. Assessment centers present a series of simulated managerial
situations to groups of applicants over a two- or three-day period. One technique
is the in-basket simulation, which requires the applicant to play the role of a
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e. 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
V. MANAGING TALENT Exhibit 12.10
A. Training and Development
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
2. Social Learning. Social learning basically means learning informally from others by
using social media tools, including mobile technologies, social networking, wikis and
3. Corporate Universities. A corporate university is an in-house training and education
4. Promotion from Within. Promoting from within helps companies retain valuable
B. Performance Appraisal
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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
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,
3. Performance Evaluation Errors Exhibit 12.11
i. Stereotyping occurs when a rater places an employee into a class or
category based on one or a few traits or characteristics.
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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
2. Wage and Salary Systems
a. Management’s strategy for the organization should be a critical determinant of the
3. Compensation Equity
a. Good managers strive to maintain a sense of fairness and equity within the pay
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,
Discussion Question #10: How would you go about deciding whether to use a job-based, skills-
based, or pay-for-performance compensation plan for employees in a textile manufacturing
plant? For waitstaff in a restaurant? For salespeople in an insurance company?
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B. Benefits
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1. An effective compensation package requires more than money. Although salary is an
important component, benefits are equally important. Organizations are required by
2. Other types of benefits, such as health insurance, vacations, or educational
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
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.
a. Employees who are poor performers can be dismissed. Productive employees
often resent disruptive, low-performing employees who are allowed to stay with
Answers to End-of-Chapter Discussion Questions
1. Assume that it is the year 2025. 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
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decisions, or use sophisticated technology. As vice president of HRM since 2010, what
should you have done to prepare for this situation?
This question should get the point across that the field of human resources is always changing.
One of the things that should have been done is human resource planning. You should have kept
2. Is it wise for managers to evaluate a candidate’s posting on social networking sites such as
Facebook as grounds for rejection before even interviewing a promising candidate? What
might be ethical and legal issues managers should consider? Discuss.
While online checks may seem like an effective way to perform background checks on potential
candidates, it is important to consider the ethical and legal implications of it. Maryland became
3. What does it mean to say that HRM plays a strategic role in driving organizational
performance? Consider recruiting, performance appraisal, and compensation strategies as
part of your answer.
Human resource management should reflect what the organization is trying to accomplish.
Human resource management does not consist of the same practices and procedures in every
organization. If an organization is undergoing downsizing, HRM should concentrate on
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4. Which selection criteria (personal interview, employment test, assessment center) do you
think would be most valuable for predicting effective job performance for a college
professor? For an assembly-line worker in a manufacturing plant? Discuss.
Because college professors must present vast quantities of complex material to students within a
limited time, communication skills are very important. The personal interview is a good
indicator for measuring such skill and for ascertaining the professor’s vision for the class and for
the profession. The pencil-and-paper test would be a weak predictor of effectiveness because
5. If you were asked to advise a private company about its EEO responsibilities, what two
points would you emphasize as most important?
The two major points to remember are:
6. As HR manager for a small company that makes computer games and software, what are
some steps that you might take to create an employer brand?
Potential candidates for a company that makes computer games are more likely to be young. This
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7. One human resource manager recently got a thank you note on her iPhone that said “Thx 4
the Iview! Wud ♥ to wrk 4 u!!!☻” The manager had liked the candidate’s interview, but
after getting the note, she put him in the reject pile. Do you think it was fair for the manager
to automatically reject the candidate? Should “textspeak” be considered acceptable
workplace communication? Discuss.
The answer to this question may depend to some extent on the culture of the company in
8. If you are in charge of training and development, which training option or options—such as
OJT, cross-training, classroom—would you be likely to choose for your company’s
production line manager? A customer service representative? An entry-level accountant?
Production managers should already have basic production skills when they are hired. The
majority of their training will be information-based rather than skill-based. Cross-training would
9. As a manager, how would you draw up a telecommuting contract with an employee? Include
considerations such as job description, compensation and benefits, performance measures,
training, and grounds for dismissal.
The job description for a telecommuter should, in addition to the details of what work is to be
done, include specific language regarding the frequency and amount of time to be spent on site
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10. How would you go about deciding whether to use a job-based, skills-based, or pay-for-
performance compensation plan for employees in a textile manufacturing plant? For
waitstaff in a restaurant? For salespeople in an insurance company?
The decision of what type of compensation plan to use should reflect the organization’s overall
strategy. Because the textile industry is quite mature, the textile manufacturing plant’s strategy
is likely to be focused on innovation and quality. Accordingly, the compensation plan should
Apply Your Skills: Experiential Exercise
Do You Want to Be an HR Manager?
There are no correct answers to the questions. The subscales (Bringing HR to the Business,
Partnering with Business, etc.) represent elements of the HR Capability Model that APS HR
Apply Your Skills: Small Group Breakout
Management Competencies
An important responsibility of the Human Resources Department at many companies is to
develop a list of management competencies and then to provide training to help managers
Apply Your Skills: Ethical Dilemma
A Conflict of Responsibilities
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1. Honor the agreement, trusting Winston’s rehabilitation is complete on all levels and that he
is now ready for a responsible position. Give a good recommendation.
This is a reasonable option, but you are putting your reputation (and perhaps your company’s
2. Contact the vice president of sales and ask him to release you from the agreement or to give
the reference himself. After all, he made the agreement. You don’t want to lie.
3. Without mentioning specifics, give Winston such an unenthusiastic reference that you hope
the other human resources director can read between the lines and believe that Winston will
be a poor choice.
Apply Your Skills: Case for Critical Analysis
The Right Way with Employees?
1. What kind of employee social contract is assumed by Kirby and Cunningham? Explain.
Kirby appears to assume a more traditional social contract that is based on the concept that the
employee contributes ability, education, loyalty, and commitment and in return the company
2. If you were an HR manager at the company, which view would you support? Why?
While Cunningham’s proposed across-the-border cuts in employees might help the company in
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3. HR departments hire and develop human capital to serve the organization’s strategy and
drive performance. Which approach—Kirby’s or Cunningham’s — is more likely to have a
greater positive impact on performance? Discuss.
Cunningham’s approach of treating employees as economic factors — to be used when
On the Job Video Case Answers
Barcelona Restaurant Group
1. List the three main activities of human resource management (HRM) and identify which
activity is examined at length in the video.
The three activities and goals of human resource management are (1) finding the right people, (2)
2. Of the various steps in Barcelona’s employee selection process, the job interview is the
briefest. Do you agree with the company’s approach to interviewing? Why or why not?
Students’ opinions will vary. For most firms, the selection process involves multiple tools for
assessing the “fit” between the job candidate and the organization. While Barcelona makes use
3. Identify Barcelona’s three-stage process for matching job applicants with its organizational
objectives, and explain how each stage reveals the fit between job applicants and the needs of the
restaurant.
The video highlights Barcelona’s three-stage selection process:
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(3) The “trail” – this assessment asks candidates to pretend that they have been with the company
for six months, and it asks applicants to take command of the floor, talk to the staff, engage