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
2. Discuss the tasks associated with identifying and selecting competent employees.
4. Describe strategies for retaining competent, high-performing employees.
5. Discuss contemporary issues in managing human resources.
It’s Your Career
Acing Your Interviews
You won’t be in college forever. Graduation is coming soon (hopefully) and you’ll be
looking for a job. A big hurdle in that search is the job interview. An interview allows
potential employers to solicit information about you and to see you “in action.” You want
to put your best foot forward and show that you’re a good catch! Here are some
suggestions for helping you “ace” that interview:
2. Research the industry and competitors. Familiarize yourself with this industry
and the main competitors.
3. Decide ahead of time how you will answer certain “standard” interview
4. Watch your body language. NO: bad posture, too weak/too forceful
6. Review your résumé with the critical eye of an interviewer. What stands out?
What would you ask a person who had those statements/descriptions on their
résumé?
CHAPTER OUTLINE
INTRODUCTION
The quality of an organization is, to a large degree, dependent upon the quality of
the people it hires and retains. Chapter 13 examines the concepts of human
resource management.
12.1 THE HUMAN RESOURCE MANAGEMENT PROCESS
Various studies have concluded that an organization’s human resources can be
an important strategic tool and can help establish a firm’s sustainable competitive
advantage.
A. Why Is Human Resource Management Important? Whether or not an
organization has a human resource department, every manager is
involved with human resource management activities.
1. 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
performance.
a. These high-performance work practices are human
2. The human resource management process consists of eight
activities necessary for staffing the organization and sustaining
high employee performance. See Exhibit 12-2.
B. External Factors that affect the HRM Process. A number of
environmental forces constrain human resource management activities.
The four factors most directly influencing the HRM process are economic
conditions, employee labor unions, governmental laws and regulations,
and demographic trends.
1. Recent economic changes have had a profound impact on the
nature of work. Unemployment (and under employment) is high in
2. Unionization can affect a company’s human resource
management activities.
a. A labor union is an organization that represents workers
and seeks to protect their interests through collective
bargaining.
3. 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
b. Managers that operate in an international context must
also be aware of specific laws that apply to the countries in
4. Demographic trends will continue to play an important role in the
Human Resource function as the pool of workers change i.e.
increase in older workers ready for retirement and greater ethnic
diversity due to an increasing number of Hispanics residing in the
U.S.
a. The oldest, most experienced workers (those born before
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?
12.2 IDENTIFIYING AND SELECTING COMPETENT EMPLOYEES
A. Human resource planning is ensuring that the organization has the right
number and kinds of capable people in the right places at the right times.
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 Human Resource Needs. Future HR needs are
which the organization will be understaffed or overstaffed.
B. Recruitment And Decruitment.
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
workweeks, early retirements, and job sharing (see Exhibit 12-5).
C. Selection. Selection is screening job applicants to ensure that the most
appropriate candidates are hired. Selection is an exercise in prediction.
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
12.3 PROVIDING EMPLOYEES WITH THE NEEDED SKILLS AND KNOWLEDGE
A. Orientation is introducing a new employee to his or her job and the
organization.
1. Work unit orientation familiarizes the employee with the goals of
2. Organization orientation informs the new employee about the
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
employees to ensure that their integration into the organization is
as smooth and as comfortable as possible.
B. Employee training is a critical component of the human resource
management program.
1. Types of training include general and specific. See Exhibit 12-8.
2. 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-
b. Technology-driven training methods. Today’s organizations
12.4 RETAINING COMPETENT, HIGH-PERFORMING EMPLOYEES
A. Employee Performance Management. Managers need to know
whether their employees are performing their jobs efficiently and
effectively or whether improvement is needed. A performance
management system establishes performance standards that are used
to evaluate employee performance.
1. Performance Appraisal Methods (Exhibit 12-10 summarizes the
advantages and disadvantages of each of these methods.)
c. The use of graphic rating scales is one of the oldest and
most popular performance appraisal methods. This method
d. Using behaviorally anchored rating scales (BARS) is an
appraisal approach that appraises performance using a
general descriptions or traits.
e. Multiperson comparison appraises performance by
comparing it with others’ performance.
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
differences (see Exhibit 12-11):
a. Under a skill-based pay system, employees are
compensated for the job skills they can demonstrate.
12.5 CONTEMPORARY ISSUES IN MANAGING HUMAN RESOURCES
A. Managing Downsizing
Downsizing is the planned elimination of jobs in an organization; it is a
challenge for management in a tight economy. Downsizing can occur
B. Managing Workforce Diversity
In a business environment where the composition of the workforce is
training.
C. Managing Sexual Harassment
Sexual harassment is any unwanted action or activity of a sexual nature
that explicitly or implicitly affects an individual’s employment,
performance, or work environment.
1. Workplace Romances; 40% of employees surveyed by the Wall
D. Managing Work-Life Balance
Family concerns, especially work-life balance, are another issue of
current importance in human resource management.
1. Organizations increasingly realize that employees cannot
completely leave their family needs and problems behind when
2. Many progressive organizations provide a variety of scheduling
3. Many progressive organizations provide a variety of scheduling
FUTURE VISION
Technology and globalization have played major roles in blurring the lines between work
and leisure time. It’s increasingly expected that today’s professional worker be available
24/7. The 24/7-work life eventually undermines real social relationships. Face-to-face
interactions with family and friends suffer and people are likely to feel stressed out and
emotionally empty. In response, employees are likely to demand real and virtual barriers
that can separate their work and personal lives. Employers will find that employees balk
at work demands outside defined work hours. In order to get and keep good employees,
organizations will need to restructure work communications so as to confine them to
more traditional hours.
The following discussion questions are posed:
Talk About It 1: As the title says, is the Internet a necessary ingredient of the global
world? Why or why not?
Talk About It 2: Why is this an HRM issue? Or is it? Discuss.
Student answers to these questions will vary.
E. Controlling HR Costs
1. With health care costs rising an average of 15 percent per year, it
is important for employers to keep their portion of what they pay
2. Employee pension plans are other increasing costs. The choice
ANSWERS TO REVIEW AND DISCUSSION
QUESTIONS
Student answers to these questions will vary.
12-1. Discuss the external environmental factors that most directly affect the HRM
process.
12-2. Some critics claim that corporate HR departments have outlived their usefulness
and are not there to help employees, but to keep the organization from legal problems.
What do you think? What benefits are there to having a formal HRM process? What
drawbacks?
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
question from the perspective of both the organization and the employee.)
This question would be a good springboard for debate as well, with half of the class
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
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
minimize sexual harassment in the workplace.
You might provide an opportunity for small group discussion of this question and
PERSONAL INVENTORY ASSESSMENTS
Student answers to these questions will vary.
ETHICS DILEMMA
Student answers to these questions will vary.
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
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
WORKING TOGETHER: TEAM EXERCISE
Form small groups of three to four students. The team’s task is to come up with a dress
code and grooming policy that clearly spells out guidelines as far as body art and what is
permitted. This can be done as a bulleted list. Students should be prepared to share the
proposed policy with the class. Among traditional students, tattoos are becoming more
popular and this exercise should elicit strong opinions. It may be interesting to ask what
should be done if the tattoo is part of the person’s cultural heritage, i.e. Pacific Islanders.
While some students may believe that it is ‘illegal’ to discriminate against students with
MY TURN TO BE A MANAGER
• Use the Internet to research five different companies that interest you and check
out what they say about careers or their employees. Put this information in a
bulleted-format report. Be prepared to make a presentation to the class about
• Work on your résumé. If you don’t have one already, research what a good
• If you’re working, note what types of HRM activities your managers do (such as
interview and appraise performance). Ask them what they’ve found to be
effective in getting and keeping good employees. What hasn’t been effective?
What can you learn from this? If you’re not working, interview three different
• Research your chosen career by finding out what it’s going to take to be
successful in that career in terms of education, skills, experience, and so forth.
• Complete the skill building modules Interviewing and Valuing Diversity found on
• Steve’s and Mary’s suggested readings: Thomas W. Malone, The Future of Work
(Harvard Business School Press, 2004); Charles A. O’Reilly III and Jeffrey
Pfeffer, Hidden Value (Harvard Business School Press, 2000); Jeffrey Pfeffer,
The Human Equation (Harvard Business School Press, 1998); Richard W. Judy
and Carol D’Amico, Workforce 2020 (Hudson Institute, 1997); and Robert
• Pick one of the five topics in the section “Contemporary Issues in Managing
Human Resources.” Research this topic and write a paper about it. Focus on
finding current information and current examples of companies dealing with these
• In your own words, write down three things you learned in this chapter about
being a good manager. (LO: 1, Explain the importance of the human resource
management process and the external influences that might affect that process,
AACSB: Reflective thinking) (LO: 2, Discuss the tasks associated with identifying
• Self-knowledge can be a powerful learning tool. Go to mymanagementlab and
complete these self-assessment exercises: How Good Am I at Giving Feedback?
How Satisfied Am I with My Job? Am I Experiencing Work–Family Conflict? and
What Are My Attitudes Toward Workplace Diversity? Using the results of your
assessments, identify personal strengths and weaknesses. What will you do to
ANSWERS TO CASE APPLICATION 1
QUESTIONS
Student answers to these questions will vary.
Thinking Outside the Box
12-14. What external factors were affecting UPS’s HR practices? How did UPS respond
to these trends?
12-15. Why is efficiency and safety so important to UPS? What role do the company’s
industrial engineers play in how employees do their work?
12–16. What changes did the company make to its driver training program? What do you
think of these changes?
12–17. What advantages and drawbacks do you see to this training approach for (a) the
trainee and (b) the company?
It appears that the use of simulations and the other new programs implemented by UPS
ANSWERS TO CASE APPLICATION 2
QUESTIONS
Student answers to these questions will vary.
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?
The color-coded system was likely doomed from the start. Such a simple system
doesn’t adequately evaluate an employee’s performance. JCPenney’s implementation
ADDITIONAL CHAPTER INFORMATION
The article “People and Plans: Training’s Role in Homeland and Workplace Security”
focuses on the role of training in the homeland and in the workplace. In the United
States, news of homeland security appears daily in newspapers, on television, in metro
stations and airports, and in workplaces. Security in the private industry is one of the
You can read an informative article1 from the Department of Homeland Security about
HRM practices relating to another aspect of safety and security in the workplace. This
article describes the efforts of U.S. companies and federal agencies to provide
emergency preparedness tools and training for businesses in the years following the
tragic devastation suffered as a result of Hurricanes Katrina and Rita.