CHAPTER 5
Information for Making Human Resource
Decisions
Learning Objectives
After studying this chapter, the student should be able to:
1. Describe human resource planning as a source of information for decision making.
2. Discuss strategy as a source of information for making human resource decisions.
Chapter Outline
Opening Case: Forecasting the Future
Information plays a vital role in all organizational activities. Marketing managers need
information about customer preferences and competitors’ products. Operations managers need
information about inventories and product demand. Financial managers need information about
interest rates and cash flows. And human resource managers need information about all of these
Introduction
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Chapter 5: Information for Making Human Resource Decisions
With an understanding of the nature of HRM and the HR environment as a foundation, it is now
possible to begin a more focused and detailed analysis of the kinds of decisions that HR
managers must make and the information they need to make those decisions.
I. Human Resource Planning as a Source of Information
Probably the most important factor that affects the human resource management function is the
A. Forecasting the Supply of Human Resources
An important first step in HR planning is forecasting the future supply of human resources—
predicting the availability of current and potential employees with skills, abilities, and
motivation to perform jobs that the organization expects to have available. By looking
B. Labor Force Trends and Issues
Several changes in the labor force continues to emerge and affect human resource
management. Decades ago, the labor force in the United States was primarily male and white.
Now, however, the workforce is much more diverse in numerous ways. Several reasons have
contributed to this pattern:
• The baby boom generation continues to age.
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Chapter 5: Information for Making Human Resource Decisions
Changing ethnicity is also reflected in the workforce today. The percentage of whites in the
workforce is gradually dropping, while the percentage of Hispanics is climbing at an almost
comparable rate. The percentage of African Americans and Asians in the workforce is also
growing but at a much smaller rate. In addition to age, gender, and ethnicity, other diversity
forces are also affecting the labor force.
C. Forecasting the Demand for Human Resources
In addition to supply, strategic planning requires that HR managers must also develop
forecasts about future demand. In other words, they need to ascertain the numbers and types
of people the organization will actually need to employ in the future. One important
II. Strategy as a Source of Information
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Chapter 5: Information for Making Human Resource Decisions
The need for human resources in an organization depends to a large extent on the organization’s
HR in the 21st Century: Coming and Going
Managers attempting to forecast the future supply of and demand for jobs, and employees face
numerous uncertainties. One major uncertainty for long-term planning is the extent to which any
A. Implications of a Growth Strategy
A strategy of growth indicates growing sales, increasing demand, and expanding operations
for the organization. When the organization is growing and expanding, it most likely needs to
B. Implications of a Stability Strategy
In many ways, a stability strategy may be the easiest for the HR manager to implement
because the organization presumably must do what it has been doing all along. But, even here,
C. Implications of a Reduction Strategy
In some cases, an organization may find itself facing reductions. Sometimes these reductions
can be handled through normal attrition processes. A popular alternative to terminations and
layoffs, especially for managers, is early retirement.
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Chapter 5: Information for Making Human Resource Decisions
III. Economic Conditions as a Source of Information
The economy influences the supply of and demand for different types of employees, but the
economy also has a more general effect on the workforce that the HR manager must consider.
Many factors could affect a person’s decision to enter the labor market and seek employment.
A. Unemployment Rates
The rate of unemployment (or the rate of employment) is an important determinant of an
individual’s employment choices. The national unemployment rate is, of course, relevant, but
B. Market Wage Rates
A related factor that will influence decisions about joining the labor force is the market wage
rates. The differences in salaries and wage rates partly result from differences in the cost of
C. Human Capital Investments
Just as a firm can differentiate itself by paying higher wages, individuals can differentiate
themselves as well by making human capital investments. In other words, individuals can
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Chapter 5: Information for Making Human Resource Decisions
IV. Job Analysis as a Source of Information
Job analysis is the process of gathering and organizing detailed information about various jobs
within the organization so that managers can better understand the processes through which the
jobs are performed most effectively. Job analysis is a fundamental input and building block of
the planning process, but, as illustrated by Exhibit 5.3, it also relates to other HRM processes.
Further, imagine the implications of an organization fusing to hire a disabled applicant because a
manager assumes that the individual cannot perform the job. The individual might have grounds
for a discrimination claim if ambiguity exists about exactly which job elements are essential to
the organization and which are less essential or optional and if the applicant can demonstrate a
capacity for performing the job. Thus, it becomes more important than ever for managers to
determine the essential functions of the jobs within the organization because they must identify
those parts of jobs (e.g., tasks, duties) that must be carried out effectively for the person to be
successful in performing the job.
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Chapter 5: Information for Making Human Resource Decisions
In addition to its fundamental role in HR planning and other aspects of the HR function, job
analysis is also important to line managers for various general reasons. First, they must
thoroughly understand the work-flow processes that characterize their particular work units. To
develop this understanding, of course, they must also have a fundamental insight into the basic
mechanics, character, and nature of each job. Also, because line managers are often involved in
hiring and appraisal decisions, they must rely on the information provided by job analysis to help
determine who should be hired and how well employees are doing their jobs.
These job families can be quite useful in several ways. First, if the jobs within a job family have
similar KSA requirements, then it might be possible to train employees so that they can apply
what they have learned to the entire family of jobs, making them much more flexible resources
for the organization. Well-conceived job families can also be used to help organizations in career
planning.
V. The Job Analysis Process
The job-analysis process itself is generally clear and straightforward. As illustrated in Figure 5.4
the job analysis process generally follows three steps:
• Determining information needs
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Chapter 5: Information for Making Human Resource Decisions
Other useful information that may be collected includes details regarding the job context.
Information may also be collected regarding the organizational context and social context on the
job. In addition, details regarding work schedule, various financial and nonfinancial incentives,
and personal requirements are usually desirable pieces of information.
Someone other than the incumbent who is also knowledgeable about the job can also be
interviewed. Any such person, whether the incumbent or someone like the supervisor, is referred
to as a subject matter expert (SME). SMEs are the individuals from whom job analysts obtain
data for the job analysis; they may be existing job incumbents, supervisors, or other
knowledgeable employees such as higher-level managers, or industrial engineers.
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Chapter 5: Information for Making Human Resource Decisions
For each occupation, information is provided about the relative importance of worker
characteristics, including fifty-two separate abilities for effective job performance. These
abilities are classified as representing:
• Cognitive abilities such as oral comprehension, deductive reasoning, and spatial orientation
A. Job Analysis Techniques
The most commonly used methods are the straight narrative, the Fleishman job-analysis
system, task-analysis inventory, functional job analysis, the Position Analysis Questionnaire,
the Managerial Position Description Questionnaire, and the critical incidents approach.
• Narrative Job Analysis—the most common approach to job analysis is simply to have
one or more SMEs prepare a written narrative or text description, of the job. To some
extent, the quality of the information depends on the writing skills of the job analyst.
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Chapter 5: Information for Making Human Resource Decisions
B. Job Descriptions and Job Specifications
A job description lists the tasks, duties, and responsibilities that a particular job entails. A
job specification focuses more on the individual who will perform the job. Specifically, a job
C. Modeling Competencies and the End of the “Job”
Given the rate of change in work, some scholars and other HR experts have argued that the
nature of work is changing so much that the concept of a “job” is becoming obsolete. In these
settings, people usually work on teams where the focus is on getting the tasks accomplished
D. Legal Issues in Job Analysis
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Chapter 5: Information for Making Human Resource Decisions
The Americans with Disabilities Act of 1990 (ADA) and its recent modification raise
additional legal issues associated with job analysis. The ADA states that an employer must
offer a reasonable accommodation to any employee who has a disability and who can perform
the “essential functions” of the job.
Closing Case: Low Pay for Hazardous Work
Case Summary
Business magazines and newspapers regularly publish articles about the changing nature of work
in the United States and about how many jobs are being changed. Indeed, because so much has
been made of the shift toward service-sector and professional jobs, many people might assume
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Chapter 5: Information for Making Human Resource Decisions
Case Questions
1. How relevant are the concepts of competencies to the jobs in a chicken-processing plant?
If the competencies under consideration are things like problem-solving ability or skill in
2. What information sources would be of most significance regarding jobs in a chicken-
processing plant?
The most noteworthy sources of information about jobs performed in a chicken-processing
3. Are dirty, dangerous, and unpleasant jobs an inevitable part of any economy?
Students will admit that certain jobs must be performed in any economy or any society,
and that some of them have undesirable characteristics. For example, someone must clean,
The following items appear on the in-text Instructor Prep Cards. These notes and
suggested talking points should help instructors conduct these exercises with the students.
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Chapter 5: Information for Making Human Resource Decisions
Discussion Questions
1. Describe the essential elements of forecasting the supply of and demand for human
resources.
When forecasting the supply of human resources, a company can use the internal records
2. Summarize the basic implications for human resource decisions of three different
strategies.
Implementing a growth strategy usually requires a company to hire more personnel as the
3. What are the basic economic conditions that are especially relevant to human resource
managers?
The economy impacts the workforce by influencing the decisions that potential employees
make about labor markets and work. The rate of unemployment can influence
4. List the steps in job analysis.
The first step is determining the organization’s precise information needs, depending on
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Chapter 5: Information for Making Human Resource Decisions
5. Compare and contrast job descriptions and job specifications.
A job description lists the tasks, duties, and responsibilities that a particular job entails. A
6. Compare and contrast the major techniques that organizations use for job analysis.
Narrative job analysis is the most common approach, in which one or more SMEs prepare
The task analysis inventory refers to a family of job analysis methods that focus on
analyzing all the tasks performed in the focal job. SMEs generate a list of tasks performed
in a job, and the job analyst subsequently evaluates each task on dimensions such as time
spent, frequency, relative importance, relative difficulty, and time necessary to learn the
task. Task inventories require time and effort to develop, but they are relatively easy to use
once developed. Information is very useful for establishing the KSA requirements and
training needs of employees. It is difficult to make comparisons across job families.
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Chapter 5: Information for Making Human Resource Decisions
The Position Analysis Questionnaire (PAQ) is a standardized job analysis instrument
consisting of 194 items reflecting work behavior, working conditions, or job characteristics
that apply to a wide variety of jobs. The six sections of the PAQ are information inputs,
mental processes, work output, relationships with other people, job context, and other
characteristics. The analyst rates each item on six scales: extent of use, amount of time,
importance of the job, possibility of occurrence, applicability, and special code. The PAQ
focuses on what a worker does on the job, rather than on what gets done. Its length allows
a much richer picture of what happens on the job, and a considerable database from past
use attests to its reliability and validity. It is relatively complex, however, and requires a
college-graduate reading level to complete.
7. Can all jobs be analyzed? Why or why not?
All jobs can be analyzed to some extent. However, some jobs are easier to analyze than
others. Simple jobs or jobs requiring observable behaviors such as mechanical skills are
8. Are there circumstances when managers might choose not to have job descriptions or job
specifications?
Managers may choose not to have job descriptions or job specifications for some jobs, but
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Chapter 5: Information for Making Human Resource Decisions
9. Distinguish between job behaviors and job competencies.
Job behaviors describe the actions that workers will take as they fulfill their jobs. Job
behaviors would include items such as preparing reports, welding, or administering
medication. Job behaviors would be an important part of a job description, which lists the
10. Summarize the basic legal issues related to job analysis.
Most of the federal regulations governing human resource management practices require
that any action undertaken by an organization must be for job-related reasons. That is,
employees can only be hired, promoted, compensated, and terminated for reasons related to
their job performance, not for any personal characteristics, such as race, gender, age,
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Chapter 5: Information for Making Human Resource Decisions
Ethical Dilemmas in HR Management
Scenario Summary
The student is to assume that he or she is a plant manager for a manufacturing company. For
years, the firm’s low-wage workers have complained about their pay and general working
conditions. They have presented the plant manager with a list of demands and have signed a
Questions
1. What are the ethical issues in this situation?
This situation asks the students to examine the tradeoffs that must be made by a firm as it
considers the demands of its low-wage workers. The workers would clearly prefer jobs that
2. What are the basic arguments for each course of action?
On the one hand, if the plant manager does nothing then workers may leave due to
dissatisfaction and this will also lead to the workers having negative feelings toward the
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Chapter 5: Information for Making Human Resource Decisions
3. What do you think most managers would do? What would you do?
Students’ answers to this opinion question will vary, but here is one example. Most
Assignment
Purpose: The purpose of this exercise is to provide students with insights into the processes
associated with job analysis.
Step 1 (5 minutes): Instructors should divide the class into small groups of four or five members
each.