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 Chapter 12 222

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
III. The Changing Nature of Careers
A. The Changing Social Contract
New Manager Self-Test: What Is Your Focus?
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

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
long term. These goals take place within the larger organizational environment including
competitive strategy, federal legislation, and societal trends. The organization’s competitive
strategy may include mergers and acquisitions, downsizing to increase efficiency, international
operations, or the acquisition of automated production technology. These strategic decisions
determine the demand for skills and employees. The human resource strategy, in turn, must
include the correct employee makeup to implement the organization’s strategy.

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223  Chapter 12

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
point of the laws is to stop discriminatory practices that are unfair to specific groups and to
define enforcement agencies for these laws. EEO legislation attempts to balance the pay given to
men and women; provide employment opportunities without regard to race, religion, national
origin, and sex; ensure fair treatment for employees of all ages; and avoid discrimination against
disabled individuals. More recent legislation pertains to illegal aliens.

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
herself or himself. Particularly in learning organizations, everyone is expected to be a self-
motivated worker who has excellent interpersonal relationships and is continuously acquiring
new skills. Employees take more responsibility and control in their jobs, becoming partners in
business improvement rather than cogs in a machine. Organizations provide challenging work
assignments as well as information and resources to enable workers to continuously learn new
skills. HRM departments can help organizations develop a mix of training, career development
opportunities, compensation packages, and rewards and incentives. They can provide career
information and assessment, combined with career coaching to help employees determine new
career directions. The new social contract can benefit both employees and organizations.

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:
What new technologies are emerging, and how will these affect the work system? What is the
volume of the business likely to be in the next five to ten years? What is the turnover rate, and
how much, if any, is avoidable? By anticipating future HRM needs, the organization can prepare
itself to meet competitive challenges more effectively than organizations that react to problems
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
recruiting, or promotion-from-within, policies to fill their higher-level positions. Internal
recruiting has several advantages because it is less costly, generates higher employee
commitment, development, and satisfaction and offers opportunities for career advancement to
employees rather than outsiders. External recruiting is recruiting newcomers from outside the
organization. A variety of outside sources provide applicants, including online recruiting
services, advertising, state employment services, private employment agencies, job fairs, and
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Managing Human Resources  224

employee referrals. Referrals are one of the cheapest and most reliable methods of external
recruiting.

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
lower-level or technical employees how to do their present jobs, while development refers to
teaching managers the skills needed for both present and future jobs. For simplicity, we will
refer to both as training. Performance appraisal is another technique for developing an effective
workforce. Performance appraisal comprises the steps of observing and assessing employee
performance, recording the assessment, and providing feedback to the employee. Managers use
performance appraisal to describe and evaluate the employees’ performance.

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
salaries and fringe benefits such as health insurance, paid vacations, or employee fitness centers.
A company’s compensation structure is designed to fit company strategy and to provide
compensation equity. The wage and salary structure is important in maintaining a productive
workforce. Equally important are the benefits offered by the organization. Benefits were once
called “fringe” benefits, but this term is no longer accurate because they are now a central part of
the compensation package. Benefits comprise more than one-third of labor costs and in some
industries nearly two-thirds. Terminations are valuable in maintaining an effective workforce.
Employees who are poor performers can be dismissed. Also, employers can conduct exit
interviews with departing employees. The exit interview is an excellent and inexpensive tool for
learning about pockets of dissatisfaction within the organization and, hence, reduce future
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
organizational goals. This term includes activities undertaken to attract, develop, and maintain
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225  Chapter 12

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

Human capital refers to the economic value of the combined knowledge, experience, skills,
and capabilities of employees.

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
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.

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 12.3

1. 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
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Managing Human Resources  226

support the sharing of knowledge and appropriately reward people for their
contributions to the organization.

II. THE IMPACT OF FEDERAL LEGISLATION ON HRM Exhibit 12.4

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.

A. 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.

B. 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.

C. 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.

D. 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?

NOTES________________________________________________________________________
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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
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.

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227  Chapter 12

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.

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


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. Contingent workers are people who work for an organization, but not on a
permanent or full-time basis. Data from the U.S. Bureau of Labor Statistics
suggest that a third, and perhaps up to 40 percent, of American workers are in
part-time, contract, or other types of nonstandard positions.

b. People in these temporary jobs do everything from data entry to becoming the
interim CEO. Highly skilled supertemps do mission-critical work.

c. For organizations, the primary goals are to access specialized skills for specific
projects, enabling the company to maintain flexibility and keep costs low.

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Managing Human Resources  228

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.

Discussion Question #9: What might be some disadvantages of acqui-hiring? As a manager,


how would you draw up a contract with a new employee who was an acqui-hire? Include
considerations such as compensation and benefits, performance measures, training, and a
noncompete agreement.

NOTES________________________________________________________________________
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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:

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 five to ten 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?


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229  Chapter 12

3. Answers to these questions help define the direction for the organization’s HRM
strategy.

B. Recruiting Exhibit 12.7

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
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.

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. 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.

d. 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 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.

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Managing Human Resources  230

a. 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.

b. 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
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.

 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.

 Non-directive 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 #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.

NOTES________________________________________________________________________
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Exhibit 12.9
c. 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

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231  Chapter 12

teaser, is being used by companies that put a premium on innovativeness and


problem solving.

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
manager and respond to a number of memos in his or her in-basket within a
specific time period. Then, a panel assesses the applicant’s interpersonal,
communication, and problem-solving skills. Assessment centers have proven to
be valid predictors of managerial success, and some organizations now use them
for hiring front-line workers as well by administering work sample tests. These
tests require an applicant to complete simulated tasks that are a part of the desired
job.

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
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.

Discussion Question #8: 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?

NOTES_______________________________________________________________________
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V. DEVELOPING 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
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

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Managing Human Resources  232

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 grown 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 the 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
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.

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233  Chapter 12

3. Performance Evaluation Errors Exhibit 12.11

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.

Discussion Question #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.

NOTES_______________________________________________________________________
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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
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

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
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Managing Human Resources  234

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.

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?

Notes_________________________________________________________________________
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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.
Benefits make up 40 percent of labor costs in the U.S. 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.

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235  Chapter 12

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
the company and receive pay comparable to theirs.

b. Employers can use exit interviews as an inexpensive way to learn about pockets
of dissatisfaction within the organization and use that information to reduce future
turnover. An exit interview is an interview conducted with departing employees
to determine why they are leaving.

2. Companies have found that having people complete an online exit questionnaire
yields more open and honest information.

Discussion Question #1: Does it seem like a good idea to let a big data computer program make
hiring decisions, as some companies like Xerox are doing, as described in this chapter? What
types of positions do you think this might be suitable for? What might be some drawbacks to this
approach?

NOTES_______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Answers to End-of-Chapter Discussion Questions

1. Does it seem like a good idea to let a big data computer program make hiring decisions, as
some companies like Xerox are doing, as described in this chapter? What types of positions
do you think this might be suitable for? What might be some drawbacks to this approach?

Big data computer programs have a role in hiring, but should not be used exclusively because
they omit a personal interview. This is the main drawback to this approach. The personal
interview is a good indicator for measuring skills,and this would be omitted in a big data
computer program for hiring. The information obtained through personal interview for an
assembly-line worker in a manufacturing plant is practical in the exchange of information
regarding the applicant’s background and expectations and the job requirements. Beyond
that point, the personal interview may fail to accurately assess the potential of the worker as a
result of flaws in the system, such as prejudice on the part of the interviewer, or the
individual’s skill in providing answers the interviewer wants to hear.

A computerized performance test in which the skills needed on the assembly line are
simulated would be a good predictor of actual job performance for an assembly-line worker.

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Managing Human Resources  236

For management personnel, computerized intelligence, aptitude, and ability are good
indicators of potential because answers provide important information on skills and
intelligence in crucial areas. Aptitude tests and personality inventories are excellent sources
of information in putting together strong teams.

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?

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 in touch with changes that were occurring and projected the human
resource needs in advance. This way you have the right skills and the right mixture of people
in your workforce. This would have to be accomplished through effective recruiting and
selection techniques. Another vital thing you should have done is provided training and
development for your people so that they had the skills to work in teams, make decisions, and
use sophisticated technology. Having made this investment in people, you would also want
to have provided the compensation, including benefits, needed to maintain this effective
workforce.

3. Is it wise for managers to evaluate a candidate’s tweets or postings on social networking


sites as grounds for rejection before even interviewing him or her? 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 the first state to make it illegal for employers to ask job candidates for their
social media passwords, and other states are considering similar laws. Using social
networking as a background check without disclosing the investigation to the candidate can
also open organizations to lawsuits. Moreover, because an online search often reveals
information such as race, gender, sexual orientation, and so forth, HR managers have to be
sure that this information isn't used in a way that could be construed as discriminatory.

4. 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
outplacement and early retirement. For a software firm that has a strategy of rapid growth,
HRM should be concerned with hiring new people and providing a ready supply of both
employees and managers. In a large manufacturing firm whose strategy is to have a good

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237  Chapter 12

relationship with the labor unions, HRM may concentrate on bargaining with union officials
and administering the union contract.

Each of the human resource activities should be tailored to the specific strategy. Recruiting
should target the type of employees best suited to strategic needs, whether they are college
graduates with degrees in aeronautical engineering or unskilled laborers. Performance
appraisal and compensation are especially important outcomes of strategy. They should
reflect the accomplishment of goals and objectives that help the organization accomplish its
strategy. If a university has a strategy of increasing the quality of faculty teaching,
performance appraisals should reflect data on professors’ teaching performance, and
promotion and compensation should also reflect teaching performance.

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:

Only use criteria for hiring and promotion that are job related. You must make sure that the
criteria are actually related to the job and not just nice to have or what has always been
expected.

Do not use any criteria for job decisions that might have an adverse impact on a protected
minority. For each criterion, you should ask yourself the question, “Could this factor have
more negative impact on one group than on another?”

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 should be a vital consideration while promoting the company. The question here is ‘what
would appeal to young software professionals’? Attractive benefits, flexible schedules, and a
lot of room to work independently are just some ways to attract potential candidates.
However, skilled candidates are often not motivated by monetary benefits alone. It is
important to also appeal to their intellectual need by offering challenging work.

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
question. It is much more likely for this type of communication to be accepted in companies
with younger management, especially the newer Internet companies and personal technology
companies. Companies with older management, or those in more traditional fields or with a
more traditionally professional culture will be less accepting of “textspeak”.

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Managing Human Resources  238

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 be helpful to a production line manager to help her/him gain the right perspective on
what happens in other areas of the organization and to better understand how the production
area fits into the big picture. For other topics, such as learning how to respond to various
employee questions, sexual harassment and ethics training, and training on how to evaluate
employee performance, classroom training would probably be best.

For an entry-level accountant, on-the-job training would be the most effective method of
training. Although much can be learned through computer-based training in this area, even
entry-level accounting can be rather complex and having someone to ask questions of while
working on day-to-day activities would help a new accountant learn the nuances of the job.

9. What might be some disadvantages of acqui-hiring? As a manager, how would you draw up a
contract with a new employee who was an acqui-hire? Include considerations such as
compensation and benefits, performance measures, training, and a noncompete agreement.

A disadvantage might be that an acqui-hire would feel resentful that his or her start-up was
being dismantled after such an investment in time, money, and effort. The job description for
an acqui-hire 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 over a given period,
as well as any meetings or other routine activities the employee must attend. Compensation
and benefits should be directly tied to productivity because there is no way to effectively
monitor the amount of time a telecommuter spends on work activities. Performance measures,
like compensation, must be directly tied to productivity. Training requirements should be
explicitly detailed, including the types of training required and the location and dates for the
training, and the potential for future training requirements must be left open. Again, any
grounds for dismissal in addition to standard company policies on the matter should be
explicitly stated and directly tied to productivity.

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
encourage innovation and motivation of employee performance by rewarding risk taking, idea
sharing, and productivity. A pay-for-performance plan is probably best in this situation.

For waitstaff in a restaurant, skills-based pay may work best because it would encourage
employees to acquire additional skills such as supervising other waitstaff, tending bar, opening

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239  Chapter 12

and closing the restaurant, etc., thus improving their potential to move into restaurant
management and give the restaurant more flexibility in scheduling.

Salespeople in an insurance company would likely do well with a combination of skill-based


pay and pay-for-performance. The skills-based pay would encourage salespeople to learn
about a broad variety of products, as well as to learn other aspects of the insurance company’s
activities. Pay-for-performance would reward those with higher sales.

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
managers are expected to master. Any questions for which you receive a four or five would be
strong areas for you. If you aspire to becoming an HR manager it would be good to study the
entire model.

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
improve on those competencies. Students are asked to make notes for each of several
competencies provided in the exercise, then discuss their notes in groups and agree on the
expected behaviors for each competency. Then, students should take turns stating the
competencies they believe will be easiest and hardest for them to master.

Apply Your Skills: Ethical Dilemma

A Conflict of Responsibilities

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
reputation) on the line. If Winston doesn’t prove to be reliable, you may suffer the
repercussions.

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.

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Managing Human Resources  240

In today’s litigious environment, this option may be best.

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.

It is never a good idea to expect someone else to read between the lines in a situation like
this. The potential for misinterpretation is too great.

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 provides wages and benefits throughout the employee's working life. Cunningham,
however, assumes a new social contract which is based on the concept of employability
rather than lifetime employment. While the new social contract offers several benefits to both
the employees as well as the organizations, Cunningham appears to be using this approach to
treat people as economic factors to be used when needed and then let go.

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 the short-term, the strategy is more likely to have a negative impact in the long run. If
employees are treated merely as economic factors to be used when needed and then let go,
they are less likely to be committed to organizational performance. Studies in both the United
States and China 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.
Kirby’s approach might take a little longer in helping the company recover from the crisis,
but it is more likely to be effective in the long run.

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


needed and then let go — will have a negative impact on performance. Studies in both the
United States and China 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.
Kirby’s approach, while being a little traditional, is more likely to have a greater positive
impact on performance.
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241  Chapter 12

On the Job Video Case Answers


Barcelona Restaurant Group: Managing Human Resources

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) managing talent, and (3) maintaining an effective workforce over the long term. The video
on Barcelona Restaurant Group deals primarily with finding the right people. In particular, the
video focuses on the process of recruiting and selecting candidates. It is clear in the interviews
that Lawton believes finding the right people is the human resource activity most critical to
Barcelona’s success—a perspective no doubt related to the industry’s high turnover.

2. Of the various steps in Barcelona’s employee selection process, the job interview is the most
brief. 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
of recruiters, interviews, and various employment tests, the company places little significance
on the interview, allowing no more than 20 minutes per candidate. According to COO Scott
Lawton, interviews provide little dependable information about the fitness of the applicant.
Lawton says he doesn’t get anything out of the actual conversation with candidates, and he
notes that many impressive interviewees over the years “ended up being a dud.” As a result,
only 10 percent of Barcelona’s job applicants are refused during the interview stage of
selection.

Instead of trying to judge the candidate’s personality and work attitudes during an interview,
Barcelona uses interviews to provide applicants with company information and to set up a
series of assessments that ultimately reveal the proper match between the company’s needs
and the employee’s expertise.

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:

(1) The interview – managers at Barcelona use interviews to give candidates information
about the company and to set up a series of employment test and assessment exercises. COO
Scott Lawton says that interviews do not reveal much useful information about job fit. As a
result, only 10 percent of candidates are refused at this stage.

(2) The “shop” – this employee assessment activity requires that candidates dine at a
Barcelona restaurant, observe their experience, and write an essay that grades the
presentation of food and performance of the wait staff. According to Lawton, sending
applicants on a shop provides significant insight into candidates’ thought processes,
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Managing Human Resources  242

perception, attitudes, education, skills, and work ethic. The activity also reveals if the
potential hire is paying attention to the kinds of details that are important at all the Barcelona
restaurants. This selection activity eliminates approximately 60 percent of applicants.

(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 customers, and demonstrate their abilities. Top managers observe the candidate and
make a decision whether to hire the person. This assessment reveals the personal, technical,
and people skills of the applicant. Only one in four candidates who performs a “trail” can
expect to be hired at Barcelona.

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