Griffin Mgmt12e IM Ch10

Management 12e by Ricky W.
Griffin
CHAPTER 13
Managing Human Resources in Organizations
CHAPTER SUMMARY
This chapter is about how organizations manage the people that comprise them. The set of processes by
which companies manage their people is called “human resource management,” or HRM. The chapter
starts by describing the environmental context of HRM. The text continues discussing how organizations
attract human resources. Next, the text describes how organizations seek to further develop the capacities
of their human resources. The text then examines how high-quality human resources are maintained by
organizations. The chapter concludes by discussing labor relations.
LEARNING OBJECTIVES
After covering this chapter, students should be able to:
1. Describe the environmental context of human resource management, including its strategic
importance and its relationship with legal and social factors.
2. Discuss how organizations attract human resources, including human resource planning, recruiting,
and selecting.
3. Describe how organizations develop human resources, including training and development,
performance appraisal, and performance feedback.
4. Discuss how organizations maintain human resources, including the determination of compensation
and benefits and career planning.
5. Discuss labor relations, including how employees form unions and the mechanics of collective
bargaining.
6. Describe the key issues associated with managing knowledge workers and contingent and temporary
workers.
MANAGEMENT IN ACTION
Elementary, Watson
The opening case discusses IBM’s Watson, a cognitive computing system that handles complex problems
in which there is ambiguity and uncertainty and draw inferences from data in a way that mimics the
human brain. In short, it can deal with the kinds of problems faced by real people. The case outlines how
Watson is already aiding the medical community by ingesting a large portion of the world’s medical
information. They system learns patterns, it learns outcomes, it learns what sources to trust. Working
with Watson, doctors focused on leukemia use him to expand capacity and increase speed. Will Watson
replace doctors? It seems they may soon be able to replace lawyers.
Discussion Starter: Ask students if they would personally trust Watson’s medical
diagnosis. Would they trust Watson more than they trust the doctor? How about legal
advice, would they trust Watson more than a lawyer? Is there a difference in taking
medical advice from a machine as opposed to taking legal advice from a machine?
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Chapter 13: Managing Human Resources in Organizations
LECTURE OUTLINE
I. THE ENVIRONMENTAL CONTEXT OF HUMAN RESOURCE MANAGEMENT
Human resource management (HRM) is the set of organizational activities directed at attracting,
developing, and maintaining an effective workforce.
HRM takes place within a complex and ever-changing environmental context. Three vital
components of this context are HRM’s strategic importance, the legal and the social environments
of HRM.
Teaching Tip: Most business programs have a separate course in human resource
management, and many offer a major or specialization in the area. If any of these apply to
your school, point them out to your students.
A. The Strategic Importance of HRM
1. Human resources are critical for both effectiveness and competiveness. HRMs growing
importance stems from increased legal complexities, the recognition that human
resources are a valuable means of improving productivity, and the increased costs
associated with poor HRM.
Effective HRM functions translate into effective organizations. Many firms develop
strategic HR plans and integrate those plans with other strategic planning activities.
2. Human capital reflects the organization’s investment in attracting, retaining, and
motivating an effective workforce. It serves as a tangible indicator of the value of the
people who comprise an organization. Talent management is also a term growing in
popularity.
Teaching Tip: Point out that all organizations can build similar factories, adopt similar
technology, and make similar products. However, the way in which they manage their
human resources may differ and can lead to competitive advantage.
B. The Legal Environment of HRM
A number of laws regulate employee-employer relations, especially in the areas of equal
employment opportunity, compensation and benefits, labor relations and occupational safety
and health.
Teaching Tip: Table 13.1 summarizes the discussion of employment laws.
Global Connection: Most foreign countries have far fewer laws regulating human
resource management practices than does the U.S.
1. Equal employment opportunity
a) Title VII of the Civil Rights Act of 1964 forbids discrimination on the basis of
sex, race, color, religion, or national origin in all areas of the employment
relationship. It applies to direct and indirect discrimination and requires
employment decisions be made based on an individual’s qualifications.
b) Tests for qualifications may not have an adverse impact. An employment test has
adverse impact when minority group members pass a selection standard at a rate
less than 80 percent of the pass rate of majority group members.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 12e by Ricky W. Griffin
Teaching Tip: Note that Title VII was really the beginning of the legal environment
regarding HRM.
c) The Equal Employment Opportunity Commission (EEOC) is a federal agency
charged with enforcing Title VII and other antidiscrimination laws.
d) The Age Discrimination in Employment Act outlaws discrimination against
people older than 40 years; passed in 1967, amended in 1978 and 1986.
e) Both the Age Discrimination in Employment Act and Title VII require passive
nondiscrimination, or equal employment opportunity. Employers are not required
to seek out and hire minorities or people over 40, but they must fairly treat all who
apply.
f) Affirmative action is intentionally seeking and hiring qualified or qualifiable
employees from racial, sexual, and ethnic groups that are underrepresented in an
organization. Employers holding government contracts require they engage in
affirmative action. They must have written action plans and employment goals.
They are required to act affirmatively in hiring Vietnam veterans as a result of the
Vietnam Era Veterans Readjustment Assistance Act. The Pregnancy
Discrimination Act forbids discrimination against women who are pregnant.
Discussion Starter: One of the most controversial issues in the United States today is
affirmative action. Some people believe that affirmative action has outlived its usefulness
and should be eliminated. Others think it still necessary. Ask students for their opinions.
g) The Americans with Disabilities Act (ADA) prohibits discrimination against
people with disabilities. Passed in 1990, the law requires employers make
reasonable accommodations for employees with disabilities.
h) The Civil Rights Act of 1991 amends the original Civil Rights Act, making it
easier to bring discrimination lawsuits while also limiting punitive damages.
2. Compensation and benefits
a) The Fair Labor Standards Act sets a minimum wage and requires overtime pay
for work in excess of 40 hours per week; passed in 1938 and amended frequently
since then. Salaried professional, executive, and administrative employees are
exempt from the minimum hourly wage and overtime provisions.
b) The Equal Pay Act of 1963 requires that men and women be paid the same amount
for doing the same job. Basing pay on seniority or performance is legal.
Extra Example: Female workers, on average, make only about 75 percent of what the
average male worker makes. Most of this difference is due to the women’s choice of
occupations because the traditional “female” careers such as nursing, teaching, and
clerical work pay far less than traditional “male” careers such as construction or business.
Also, women are more likely to work part time where pay rates are often lower.
c) The Employee Retirement Income Security Act of 1974 (ERISA) regulates how
organizations manage their pension funds.
d) The Family and Medical Leave Act of 1993 requires employers provide up to 12
weeks of unpaid leave for family and medical emergencies.
3. Labor relations
a) The National Labor Relations Act passed in 1935 to set up procedures for
employees to vote on whether to have a union; also known as the Wagner Act.
b) The National Labor Relations Board (NLRB) was established by the Wagner Act
to enforce its provisions.
c) The Labor-Management Relations Act was passed in 1947 to limit union power;
also known as the Taft-Hartley Act. The Taft-Hartley Act also contains the
National Emergency Strike provision, allowing the president to prevent or end a

strike that endangers national security.
Management Update: Former President Clinton did not use the Taft-Hartley Act to end a
1997 strike by United Parcel Service (UPS) workers. He and his advisors felt that UPS was
not sufficiently important to the U.S. economy to warrant stopping the strike. UPS lost about
25 percent of its business to rivals Federal Express and the U.S. Postal Service, and
customers were slow to return after the strike ended.
Management Update: President Clinton did, however, order an end to the 1997 strike by
American Airlines pilots. The airline was seen as vital to the continued well-being of the
U.S. economy because it carried 20 percent of all U.S. air passengers on any given day.
4. Health and safety
The Occupational Safety and Health Act of 1970 (OSHA) directly mandates the
provision of safe working conditions. It requires that employers (1) provide a place of
employment that is free from hazards that may cause death or serious physical harm and
(2) obey the safety and health standards established by the Department of Labor.
Management Update: A recent controversy about health and safety relates to employees
who work at home. Specifically, if an employee working at home suffers an accident due
to poor lighting or improper equipment, their employer is just as liable as if the problem
had occurred at work!
Discussion Starter: Ask students to comment on the pluses and minuses of each of the
various laws summarized above.
5. Sexual harassment, alcoholism, drug dependence, AIDS, and employee privacy have
emerged as significant legal issues for organizations.
Extra Example: The Michael Crichton book and movie Disclosure (with Michael
Douglas and Demi Moore) featured a case of sexual harassment as its major plot theme.
C. Social Change and HRM
Current examples of social change relevant to HRM are the increasing use of temporary
workers and an increase in dual-career families. Employment-at-will is a traditional view of
the workplace that says organizations can fire their employees for whatever reason they want;
recent court judgments are limiting employment-at-will.
Teaching Tip: Discuss with your students the extent to which the employment-at-will
doctrine is more or less relevant to your state or region.
II. ATTRACTING HUMAN RESOURCES
A. Human Resource Planning

The starting point in attracting qualified human resources is planning. HR planning involves
job analysis and forecasting the demand and supply of labor.
1. Job analysis is a systemized procedure for collecting and recording information about
jobs within an organization. There are two parts of a job analysis.
a) A job description lists the duties of a job, its working conditions, and the tools,
materials, and equipment used to perform it.
Teaching Tip: Obtain a copy of a job description and share it with your students.
b) A job specification describes the skills, abilities, and credentials required to

perform the job.
2. Forecasting human resource demand and supply requires managers to collect relevant
information, forecast the supply and demand of labor, and then develop appropriate
strategies for addressing differences. Forecasting the supply of labor is really two tasks:
forecasting the internal supply and the external supply.
Extra Example: There is currently a shortage of skilled workers in the United States.
a) Replacement charts can be used to plan for management positions. These list each
important managerial position, who occupies it now, how long he or she will
probably stay in it before moving up, and who is or soon will be qualified to move
into the position.
Extra Example: Disney experienced problems due to the lack of a replacement chart.
Michael Eisner (the firm’s top executive) was having emergency heart surgery, Frank
Wells (the firm’s number two executive) had just been killed in a plane crash, and Jeffrey
Katzenberg (the firm’s number three executive) left the firm after a highly publicized
altercation with Eisner (and subsequently formed Dreamworks with Stephen Spielberg
and David Geffen). This uncertainty created concern among major shareholders.
b) Employee information systems or skills inventory contains information on each
employee’s education, skills, experience, and career aspirations; usually
computerized.
Group Exercise: Have students brainstorm examples of the most important information
that should be included in an employee information system or skills inventory.
c) Forecasting the external supply of labor is a different problem altogether. Planners
must rely on information from outside sources such as state employment
commissions, government reports, and figures supplied by colleges on the number
of students in major fields.
3. Matching human resource supply and demand requires managers to plan and deal with
predicted human resources shortfalls or overstaffing. If hiring is needed, supply
forecasts helps managers plan how to recruit, based on whether the type of person needed
is readily available for scarce in the labor market. Temporary workers help managers
gain some extra flexibility. If overstaffing is expected, the main options are transferring
extra employees, not replacing those who quit, encouraging early retirement, and laying
people off.
B. Recruiting Employees
Recruiting is the process of attracting qualified individuals to apply for open jobs.
1. Internal recruiting considers current employees as applicants for higher-level jobs in
the organization. Promotion from within can build morale and keep high-quality
employees from leaving the firm. One disadvantage is the ripple effect. When an
employee moves to a different job, someone must fill their old job.
Teaching Tip: Ask students to recount any of their experiences involving internal
recruiting. For example, see if any of them have applied for and received a new job
within their current organization. If so, explore the various ramifications of that move.
2. External recruiting attracts persons outside the organization to apply for jobs. The
organization should treat all applicants with dignity and strive for a good person-job fit.
Teaching Tip: Most business sectors were expanding through the late 1990s, so many
firms were actively recruiting new employees. This pattern is in contrast to the cut backs
many firms have been making since 2008.
Teaching Tip: Bring in the “help wanted” section from a local paper and read a few ads
to your students. Select ads that reflect a diversity of jobs, companies, and so forth. Use
this to illustrate how firms recruit through external sources.
3. Realistic job previews provide applicants with a real picture of what it is like to perform
the job. If applicants have a realistic idea of the job, the person hired will be more likely
to remain in the job for a longer period of time.
Teaching Tip: Before they start work, Wal-Mart shows all of its potential new
employees a two-hour video illustrating what the job of an entry-level associate is like.
This realistic job preview helps the firm control turnover among its employees.
C. Selecting Employees
1. The organization wants to select applicants that have a high probability of success on the
job. Therefore they gather information about factors that are predictive of future success.
Validation is determining the extent to which a selection device is really predictive of
future job performance. There are two basic approaches to validation.
a) Predictive validation involves collecting the scores of employees or applicants on
the device to be validated and correlating their scores with actual job performance.
b) Content validation uses logic and job analysis data to establish that the selection
device measures the skills needed for successful job performance. The most critical
part of content validation is a careful job analysis.
2. There are many selection methods.
a) Application blanks require applicants to provide background information about
themselves; generally used to decide whether the candidate merits further
evaluation.
Teaching Tip: If possible, obtain a blank employment application and discuss its content
with your students. Point out what it asks (e.g., education and experience) and what it
does not ask (e.g., gender, ethnicity).
b) Tests of ability, skill, aptitude, or knowledge that is relevant to the job are usually
the best predictors of job success.
c) Interviews are a popular selection device but a poor predictor of job success.
Discussion Starter: Discuss with your students some of their own experiences (positive
and negative) with employment interviews.
d) Assessment centers are a popular method used to select managers and current
employees for promotion. The assessment center provides a content-valid
simulation of key parts of a managerial job that lasts two to three days. A variety of
techniques (for example, interviews or tests) are included in the assessment.
Extra Example: Tenneco is an example of a firm that makes frequent use of assessment
centers to identify and select managers for promotion to higher levels in the organization.
e) Other techniques include polygraph tests, physical exams, drug tests, and credit
checks.
Management Update: The use of polygraph tests today is highly regulated and can be
used only for hiring certain kinds of employees (e.g., police officers).
Extra Example: Another increasingly popular selection test today is honesty tests.
Organizations are finding that such tests are surprisingly good predictors of an
individual’s ethics and honesty in the workplace.
III. DEVELOPING HUMAN RESOURCES
Regardless of how effective a selection system is, most employees need additional training if they
are to grow and develop in their jobs. Evaluating their performance and providing feedback are also
necessary.
A. Training and Development
1. Training occurs when the firm teaches operational or technical employees how to do the
job for which they were hired.
Global Connection: Japanese firms spend far more on training than typical U.S. firms.
Extra Example: Chaparral Steel emphasizes training. New employees without a high
school degree must commit to three years of training (both general education and job-
related), which takes place two nights a week for two hours a night. High school
graduates must commit to two years of job-related training on the same schedule.
Extra Example: American Airlines uses a mock airplane cabin to train its flight crews.
Trainers play the roles of passengers, observe how flight crew members handle various
assignments and problems, and then provide feedback.
Extra Example: American Airlines also uses flight simulators to help train its pilots,
especially for emergency situations.
2. Development occurs when a firm teaches its managers and professionals the skills
needed for both present and future jobs.
Teaching Tip: Many business schools have on-site management or executive
development centers. Among the most noteworthy are those at Northwestern, Stanford,
the University of Pennsylvania, and the University of Michigan. Note whether your
school has a center or conducts similar programs for managers.
3. Firms usually have a training plan, which consists of several steps.
a) Assessing training needs is the first step, and it determines what training is needed.
b) Managers must select the methods they will use for training. The most important
consideration of method is the content of the training material. Common methods
include lecture, reading, role-playing, on-the-job training and simulation. Web-
based and other electronic training methods are becoming more popular. Some
firms have developed a corporate university, which is a company-owned, self-
contained training facility.
Extra Example: Microsoft has gone even further in its training and development
programs. It provides extensive training on-site and aids workers in attending advanced
training and higher education. It even refers to its work site as a “campus” and provides
college-like amenities, such as art museums and sports fields.
c) Managers must then evaluate the effectiveness of training. Typical evaluation

approaches include measuring one or more relevant criteria before and after the
training, and determining whether the criteria changed. Performance measures
collected when the trainee is on the job are the most important.
B. Performance Appraisal
Once employees are trained and settled into the job, one of management’s next concerns is
performance appraisal. Performance appraisal is a formal assessment of how well
employees are doing their jobs.
Teaching Tip: Most colleges and universities use teaching evaluations at the end of the
semester. Note for your students that this is a form of performance appraisal through
which they are evaluating your performance as a teacher.
Extra Example: Disney and American Express each use a performance appraisal system
in which supervisors randomly monitor calls between customer service representatives
and customers. The supervisors note positive and negative aspects of how representatives
handle various calls and provide feedback to them after the calls have been completed.
1. Common appraisal methods usually fall into one of two types: objective and judgmental.
a) Objective measures include actual output, scrap rate, dollar volume of sales, or any
other concrete measure of performance.
May be contaminated by “opportunity bias” is some persons have a better chance to
perform than others.
The special performance test assesses each employee under standardized
conditions. This eliminates opportunity bias but must be combined with other
methods to provide a complete picture of performance.
b) Judgmental methods require a manager to rate or rank the employees who report to
him or her.
Ranking compares employees directly with one another and orders from best to
worst.
Rating differs in that it compares each employee with a fixed standard rather than
with other employees.
c) One very useful method is the Behaviorally Anchored Rating Scale (BARS), is a
sophisticated rating method in which supervisors construct a rating scale associated
with behavioral anchors. Can be effective but costly.
Teaching Tip: If possible, obtain a copy of a graphic rating scale used to measure
performance. Display it for students, noting how it is used and its strengths/weaknesses.
Group Exercise: Have small groups of students develop sample graphic rating scales
that you could use to assess their performance.
Teaching Tip: Note the BARS displayed in Figure 13.3 in the text. Point out to your
students that the anchors reflect example behaviors for each scale point.
Extra Example: An extension of the BARS that some firms are trying is called a
Behavioral Observation Scale, or BOS. Like BARS, a BOS uses behavioral anchors, but
also provides an assessment of the frequency with which various behaviors are exhibited.
2. In any kind of rating or ranking system, errors or biases can occur.
a) Recency error can occur when an evaluator makes a judgment based on only the
most easily recalled recent performance.
b) Halo error occurs when an evaluator allows the worker’s performance in one
dimension of the job to ‘spread’ to all dimensions.
c) One way to reduce errors is the 360-degree feedback. This is a performance
appraisal system in which managers are evaluated by everyone around them—their
boss, their peers, and their subordinates, giving a more complete picture of true
performance.
C. Performance Feedback
The final step in the performance appraisal system is giving feedback to subordinates about
their performance. Individuals meet privately with the evaluator and discuss the appraisal.
Teaching Tip: Providing performance feedback is often a difficult undertaking for many
managers. This is especially true when the feedback is negative and/or when there are
strong personal feelings between the supervisor and the subordinate.
IV. MAINTAINING HUMAN RESOURCES
After attracting and developing an effective workforce, organizations must maintain that workforce.
To do requires effective compensation and benefits as well as career planning.
A. Determining Compensation
Compensation is the financial remuneration given by the organization to its employees in
exchange for their work. There are three basic forms of compensation. Wages are hourly
compensation, while salary is pay for total contribution, not just hours worked. Incentives are
pay tied to specific performance. Sales commissions and bonuses are the most common.
1. The wage-level decision is a management decision about whether the firm wants to pay
above, at, or below the going rate for labor in the industry or the geographic area. If a
company wants a reputation of a ‘wage leader’, they will pay more. The level of
unemployment affects wage levels. Pay declines when labor is plentiful. Managers use
wage surveys conducted either in-house or by outside organizations.
Extra Example: Wal-Mart has a corporate policy of never paying anyone the minimum
wage. Even if it is only a token amount (perhaps only 25 cents an hour more), the firm
wants its employees to know they are being paid more than the legal minimum.
2. Wage structures are usually set up through a procedure called job evaluation—an
attempt to assess the worth of each job relative to other jobs. The simplest method for
creating a wage structure is to rank jobs from those paid the most to those paid the least.
Jobs of equal value are grouped into wage grades for ease of administration.
Discussion Starter: CEO compensation is a controversial issue. Ask students whether
top managers are worth hundreds or thousands of times the average worker’s salary.
3. Individual wage decisions concern how much to pay each employee in a particular job.
Systems for setting individual rates include seniority, initial qualifications, or merit.
Extra Example: Professional sports teams provide a good source of examples to
illustrate individual wage decisions. Some players, like Aaron Rodgers of the Green Bay
Packers, are paid millions of dollars, whereas others, such as third-string defensive backs,
are paid much less.
B. Determining Benefits
Benefits are things of value (other than compensation) provided by the organization to its
workers such as sick leave, insurance, vacation, holidays, pension plans, and unemployment
compensation. Sometimes called indirect compensation.
1. Recently, organizations have begun to offer nontraditional benefits in an effort to attract
skilled workers. Nontraditional benefits can include health club memberships, on-site
childcare, legal assistance, and mortgage assistance.
2. Cafeteria benefits plans allow workers to choose additional benefits on top of some basic
benefits provided to all. Thus, a working parent can add daycare benefits while a
childless worker may choose more vacation time instead.
Management Update: Benefit costs—especially for healthcare—are becoming an
increasingly critical area of concern for many organizations.
Teaching Tip: Summarize for students the kinds of benefit options that are provided to
faculty at your college or university.
C. Career Planning
Career planning involves helping the employee find an appropriate career path. It can benefit
the company and the employee.
Extra Example: General Electric and Xerox are both recognized for having outstanding
career planning programs for their employees.
V. MANAGING LABOR RELATIONS
Labor relations is the process of dealing with employees who are represented by a “union.” Union
membership was at its largest from 1940-1955 when it declined steadily for several reasons:
(1) increased standards of living made union membership seem less important;
(2) traditionally unionized industries in the manufacturing sector began to decline; and
(3) the globalization of business operations caused many unionized jobs to be lost to foreign
workers.
Managing labor relations is an important part of HRM.
Teaching Tip: Note for your students the relative strength and importance of unions in
local and regional business. For example, unions tend to be stronger and more prevalent
in the north and northeast and less prevalent in the south and southwest.
A. How Employees Form Unions
1. Employees must be interested in having a union.
2. Thirty percent of employees must indicate their interest by signing authorization cards. If
thirty percent or more of the potential bargaining unit sign cards, then an election can be
held. Bargaining units consist of all employees who will be eligible to vote in the
election and to join and be represented by the union if one is formed.
3. The National Labor Relations Board holds a secret-ballot election.
4. If a simple majority of those voting agrees to the union, it becomes certified.
5. The union recruits members and elects officers.
B. Collective Bargaining
Collective bargaining is used to reach an agreement on a labor contract between management
and the union that is satisfactory to both parties.
Labor contracts are enforced by the grievance procedure. If an employee feels mistreated, he
or she files a grievance to correct the problem, and successively higher levels of the
organization attempt to correct the problem. Arbitration is the highest level.
Global Connection: Labor relations in England tend to be much more antagonistic than
is currently the case in the United States. English unions are often affiliated with political
parties, and strikes tend to be very common.
VI. NEW CHALLENGES IN THE CHANGING WORKPLACE
The chapter concludes with a look at two of the most important HRM issues today.
A. Managing Knowledge Workers
Employees traditionally added value to organizations because of their experience. In the
“information age” of today, employees add value because of what they know.
1. Knowledge workers are employees whose contributions to an organization are based on
what they know. They provide special challenges for the HR manager. They tend to
work in high-technology firms are usually experts in some abstract knowledge base.
They often like to work independently and tend to identify stronger with their profession
than with the organization.
2. Knowledge workers are increasingly in demand as technical fields grow in importance,
but these employees require extensive and highly specialized training. They also require
continued training as the “half-life” of a technical education in engineering is about three
years. Failure to update skills may result in the loss of a competitive advantage.
3. Even though overall demand for labor has slumped, the demand for knowledge workers
remains strong. As a result, organizations must pay them enough to keep them. High
starting salaries and sign-on bonuses are common.
B. Contingent and Temporary Workers
1. A contingent worker is anyone not employed full or part time. They are independent
contractors, temporary workers, leased employees, or simply part-time workers.
Currently about 13 percent of the U.S. workforce fits into this category.
2. Use of these workers increases flexibility, but it also makes planning more challenging
and can be very costly. Rather than call in workers sporadically, organizations try to
bring in specified numbers for well-defined periods of time. Managers must understand
the advantages and disadvantages of using contingent workers and realistic expectations.
Managers must also carefully assess the real cost of using contingent workers. Finally,
managers must fully understand their own strategies and decide in advance how they
intend to manage temporary workers, focusing on integrating them into the organization.
END OF CHAPTER QUESTIONS
Questions for Review

1. Describe the steps in the process of human resource planning. Explain the relationships
between the steps.
The first step is job analysis, in which the content and requirements of each of the organization’s jobs is
defined. Then human resource managers must forecast the organization’s labor needs and supply in
each job by looking at internal and external information. Finally, the demand and supply of workers in
each job must be matched, which can involve increasing or decreasing the number of workers.
2. Describe the common selection methods. Which method or methods are the best predictors of
future job performance? Which are the worst? Why?
Common selection methods include application blanks in which applicants provide factual
information about their background and experiences. Test may range from skills-based to
personality tests. Interviews are another technique. Assessment centers provide realistic tasks for the
applicant to complete under observation. The best predictors include assessment center and tests if
the assessments are related to future job requirements. Application blanks are only able to obtain
limited information. Interviews are often the worst indicators of job performance because of
interviewer biases and lack of relation to job requirements.
3. Compare training and development, noting any similarities and differences. What are some
commonly used training methods?
Training and development both involve teaching skills to employees. However, training focuses on
operational or technical employees and on their current job needs. Development is typically offered
to managers and professionals and often is more future-oriented.
4. Define wages and benefits. List different benefits that organizations can offer. What are the
three decisions that managers must make to determine compensation and benefits? Explain
each decision.
Wages are one type of compensation and refer to the hourly compensation paid to operating
employees. Benefits include everything of value that organizations use to reward employees except
compensation. Benefits could include such things as leave time, insurance, pensions, dependent
care, free meals or use of gym facilities, and paid parking, and it may also include unusual or
innovative rewards. The wage-level decision asks a firm to choose whether to offer compensation
that is above, at, or below the average wages for that industry and region. The wage-structure
decisions require choices about the relative worth of different tasks to the organization. Individual
wage decisions are made for each person. They are influenced by the firm’s wage-level and wage-
structure decisions as well as an evaluation of an individual’s experience, qualifications, and merit.
Questions for Analysis

5. The Family and Medical Leave Act of 1993 is seen as providing much-needed flexibility and
security for families and workers. Others think that it places an unnecessary burden on
business. Yet another opinion is that the act hurts women, who are more likely to ask for leave,
and shuffles them off to a low-paid “mommy track” career path. In your opinion, what are the
likely consequences of the act? You can adopt one of the viewpoints expressed above or develop
another. Explain your answer.
Some students will describe the benefit to workers, organizations, and society that come with the
provision of leave to workers experiencing family or medical emergencies. Other students will
argue that organizations should not bear the costs associated with the leave—that workers
themselves or society as a whole should do so instead. Still others are likely to focus on the
differential usage of the Act by men and women, which tends to put female workers at a
disadvantage in their careers.
6. How do you know a selection device is valid? What are the possible consequences of using
invalid selection methods? How can an organization ensure that its selection methods are
valid?
The information gained from a selection device must be able to predict future job success, which is
known as validation. There are two forms of validation: (1) predictive validation—collecting
information from employees or applicants and correlating it with actual job performance and (2)
content validation—assessing actual job skills (determined by a job analysis) in a “work-sample
testing” of applicants to measure their skill level. The use of invalid selection methods would tend to
exclude applicants who would be high-performers if hired and to cause the organization to instead
hire workers who do not have the characteristics necessary for success. Validity can best be
achieved by ensuring that all predictors used for selection are performance based.
7. In a right-to-work state, workers are permitted to decide for themselves whether to join a
union. In other states, workers may be required to join a union to obtain certain types of
employment. If you live in a right-to-work state, do you agree that the choice to join a union
should be made by each individual worker? If you do not live in a right-to-work state, do you
agree that individuals should be required to join a union? Finally, if the choice were yours to
make, would you join a union? Explain your answers. (Hint: Right-to-work states are
generally in the South, Midwest, and parts of the West. If you do not know whether you live in
a right-to-work state, visit the National Right to Work Legal Defense Foundation website at
www.nrtw.org/rtws.htm.)
Students’ opinions will vary, of course. Those in favor of right-to-work legislation may point out
that the law tends to create jobs, provides more control to organizations, and rewards individual
performance, which can increase incentives for hard work, training, and so on. Those who do not
favor right-to-work legislation will probably focus on the uneven balance of power between an
organization and an individual worker, and they will see unions as one way of redressing that
imbalance. Students’ desire to join a union may be tied to their theoretical or political leanings, or it
may be motivated by financial considerations.
Questions for Application

8. Choose three occupations that interest you. (The Labor Department’s website has a full list, if
you need help choosing.) Then access the Department of Labor, Bureau of Labor Statistics,
online Occupational Outlook Handbook at www.bls.gov/oco. What are the job prospects like in
each of these fields? Based on what you read at the website, do you think you would enjoy any
of these occupations? Why or why not?
Clearly, students’ answers will vary. Here is an example response: “One occupation that interests
me is that of a public accountant. According to the BLS, the demand for accountants will continue
to grow at about an average rate, keeping pace with the growth in the economy. I would enjoy
working as an accountant because I enjoy detailed work, my math skills are good, and I like using
computers. I might not like the relative isolation that is part of an accounting career, so I would
probably tend to seek a position that involved a lot of client contact.”
9. Consider a job that you have held or with which you are familiar. Describe how you think an
organization could best provide a realistic job preview for that position. What types of
information and experiences should be conveyed to applicants? What techniques should be

used to convey the information and experiences?
Students will offer a variety of answers to this question. Their responses should include a
description of the most important skills, traits, or experiences that a qualified applicant should have
and an explanation of how those characteristics can be tested and observed through the use of a
simulated job task or situation. For example, an applicant for a management consulting position
might be required, in a short period of time and under pressure, to perform a financial and strategic
analysis of a case study and present their conclusions to a mock “board of directors.”
10. Contact a local organization to determine how that organization evaluates the performance of
employees in complex jobs such as middle- or higher-level manager, scientist, lawyer, or
market researcher. What problems with performance appraisal can you note?
Most of the answers will revolve around the individual’s contributions to the department or
organization. Actual outcomes will be more important to the evaluation than job behaviors. For
example, two scientists may have very different work habits but both may provide the company
with new and creative projects. Ask the students why this occurs. One of the problems that may be
encountered is the period of time that these individuals are allowed to work before they develop an
acceptable project. This can lead to a number of equity concerns among people in the same
department or area.
END OF CHAPTER EXERCISES
Building Effective Decision-Making Skills

I. Purpose
This decision-making exercise is designed to provide students with practice in data analysis and
choice in issues related to career planning.
II. Format
This exercise should be performed by individual students outside of class and should take about 30
minutes to complete. Questions 6 and 7 may be used as the basis of an in-class discussion.
III. Follow-Up
A. Access a summary of the Department of Labor’s National Compensation Survey at
http://stats.bls.gov/ncs/ocs/sp/ncbl0449.pdf. (If the page has been moved, search by the survey
title.) Find the detailed data related to the occupation that you regard as your most likely career
choice when you graduate. Then, locate detailed data about two other occupations that you
might consider -- one with a salary that’s higher than that of your number-one career choice
and one with a salary that’s lower.
B. Next, record the hourly salary data for each of your three choices, and then use the hourly salary
to project an expected annual income. (Hint: Full-time jobs require about 2,000 hours annually.)
C. Based purely on salary information, which occupation would be the “best” for you?
Students’ answers will vary, depending on the occupations they choose and the information
they find. The students will agree that, if salary is the only variable under consideration, higher
salaries are preferable to lower ones.
D. Now, go to www.bls.gov/oco and access job descriptions for various occupations. Review the
description for each of the three career choices that you’ve already investigated.
E. Based purely on job characteristics, which occupation would be the “best” for you?
Again, answers will vary, based on the occupations chosen and the students’ preferences. Every
student should be able to find an occupation that would be interesting and rewarding to them.
F. Is there any conflict between your answers to Questions 3 and 5? If so, how do you plan to
resolve it?
For some students, the highest-paid occupation also has the most desirable other
characteristics. However, some students will find that their most desired jobs are not the most
highly-paid. Students will have a variety of answers to the second part of the question ranging
from plans to accept lower pay for a more desirable job to plans to “put up with” an
undesirable job in order to achieve more pay. Creative solutions are possible, such as holding
two jobs or working in a desirable field as a volunteer or part-time worker. It may be
instructive for students to hear each others’ answers to this question because it may suggest
new, creative solutions to them.
G. Are there any job characteristics that you desire strongly enough to sacrifice compensation in
order to get them? What are they? What are the limits, if any, on your willingness to sacrifice
pay for these job characteristics?
Opinions will vary. Every student, however, will identify some “floor” of acceptable pay and
would refuse to accept any job, even the most desirable, if that minimum is not met. For some
students, the floor may be relatively high, while for others it would be barely enough to cover
survival essentials.
Building Effective Technical Skills

I. Purpose
This exercise will develop the students’ understanding of the issues that must be considered when
selecting job candidates.
II. Format
This technical skills exercise is best performed individually and should take about 20–30 minutes.
III. Follow-Up
A. Identify the most basic skills needed to perform each of the two jobs effectively.
B. Identify the general indicators or predictors of whether a given individual can perform each job.
Answers will vary depending on the jobs selected. Depending on which skills are mentioned in
Question 1, Question 2 answers might include prior job experiences, formal education,
performance on skills assessments, and personality traits, among others.
C. Develop a brief set of interview questions that you might use to determine whether an
applicant has the qualifications for each job.
The questions will depend upon the answers to Question 2. Most students will mention asking
about prior jobs, education, skills, and traits.
D. How important is it for you, as a manager hiring an employee to perform a job, to possess the
technical skills to perform the job that you’re trying to fill?
Most students will reply that it is not important to have the technical skills. Managers often do
not have the skills, but they are able to select candidates based on impartial assessments of
those skills such as prior experiences or test scores. However, mangers need to be informed
about which skills are needed; otherwise, they will not be able to select effectively.
MANAGEMENT AT WORK
The Benefits of the ACA (aka Obamacare)
The case briefly describes the 2010 Patient Protection and Affordable Care Act (ACA, aka Obamacare).
This case specifically centers on two provisions of the ACA and Walmart’s reaction to the new law. The
provisions are that as of January 2014, Americans must carry health insurance or face a tax penalty and
that companies must offer health coverage to those who work at least 30 hours per week. Walmart,
predictably cut all health care benefits for workers who worked fewer than 30 hours per week. Some
experts see this as the first step toward moving away from employer provided healthcare.
Discussion Starter: Ask students if they are covered under the ACA or know anyone
who is covered under the ACA. Do they feel this is good legislation?
1. Case Question 1: What about you? What “things of value” do you want most in a benefits package
offered by an employer? If you were offered a “cafeteria benefit plan,” what additional or enhanced
benefits would you choose? Why?
Student’s answers will vary according to the things they value. Some might value the optical plan if
they wear glasses, or the dental plan may be important if they visit a dentist often.
2. Case Question 2: Do you have healthcare? If so, what part of the coverage best satisfies your
needs? Do you need any kind of coverage that you can’t get or can’t afford? Do you think you
might be better off if you got your coverage under the Affordable Care Act?
Again, answers will vary widely with this question. Some may feel that choosing their doctor is an
important aspect of the coverage while others feel the prescription coverage is the most important.
Some students may already be covered under the ACA and feel this is their best option.
3. Case Question 3: In your opinion, what kind of healthcare coverage does the average American
worker (and his or her family) need? Is there any level of coverage to which, in your opinion, the
average American worker should be entitled at a reasonable cost? What sources should provide the
money to pay for this coverage?
Due to the question asking for opinions, answers will vary widely.
4. Case Question 4: Person for person, according to Consumer Reports, healthcare in the U.S. costs
about twice as much as it does in the rest of the developed world. In 2000, the average family
health plan costs U.S. companies $6,438 per worker; by 2013, that figure had reached $16,351. In
the same period, average wages increased 20 percent (just barely keeping up with an inflation rate of
18 percent) while the cost of family health coverage went up by 87 percent. “Higher healthcare
costs,” the report reminds us, “mean higher premiums for everyone.”*
Why do you think healthcare costs are so high in the U.S.? How are healthcare prices set? What
does the former CEO of one giant health maintenance organization mean when he says that
healthcare “prices are made up depending on who the payer is”?
Answers will vary widely due to students’ opinions and experiences with the ACA and the medical
community.
*”It’s Time to Get Mad about the Outrageous Cost of Healthcare,” Consumer Reports, September
2014, http://consumerreports.org, on January 27, 2015.

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Management 12e by Ricky W.

I. THE ENVIRONMENTAL CONTEXT OF HUMAN RESOURCE MANAGEMENT

National Emergency Strike provision, allowing the president to prevent or end a

II. ATTRACTING HUMAN RESOURCES

A. Human Resource Planning

b) A job specification describes the skills, abilities, and credentials required to

III. DEVELOPING HUMAN RESOURCES

c) Managers must then evaluate the effectiveness of training. Typical evaluation

IV. MAINTAINING HUMAN RESOURCES

V. MANAGING LABOR RELATIONS

VI. NEW CHALLENGES IN THE CHANGING WORKPLACE

END OF CHAPTER QUESTIONS

Questions for Review

Questions for Analysis

Questions for Application

information and experiences should be conveyed to applicants? What techniques should be

END OF CHAPTER EXERCISES

Building Effective Decision-Making Skills

Building Effective Technical Skills

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