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Chapter

8
Human Resource Management

Learning Goals
1

Explain the role and responsibilities of human resource management. Describe how recruitment and selection contribute to placing the right person in a job. Discuss how orientation, training programs, and performance appraisals help companies develop their employees. Describe how firms compensate employees through pay systems and benefit programs.

Discuss employee separation and the impact of downsizing and outsourcing. Explain the different methods and theories of motivation. Discuss the role of labor unions, the collective bargaining process, and methods for settling labormanagement disputes.

HRM: Vital to ALL Organizations


Human resource management - function of attracting, developing, and retaining employees who can perform the activities necessary to accomplish organizational objectives. Three main objectives: 1) Providing qualified, well-trained employees for the organization. 2) Maximizing employee effectiveness in the organization. 3) Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction. 4) Maintain compliance

Human Resource Responsibilities

Recruitment and Selection


Recruiting techniques continue to evolve as technology advances. Internet recruiting is quick, efficient, and inexpensive.
Reach a large pool of job seekers monster.com Use social networking sites

HR must be creative in searching for qualified employees. Businesses look both internally and externally.

Selecting and Hiring Employees


Must follow legal requirements. Civil Rights Act of 1964 American with Disabilities Act Equal Employment Opportunity Commission programs Civil Rights Act of 1991 Failure to follow these exposes company to risk of litigation. Hiring is a costly process for employers. Some employers require employment tests.

Orientation and Training


Newly-hired employee often completes an orientation program Inform employees about company policies Employee manuals Describe benefits/programs Training Training Programs On-the-job training Classroom and computer-based training Management development

Performance Appraisals
Performance appraisal - evaluation of and feedback on an employees job performance. Some firms conduct peer reviews while other firms allow employees to review their supervisors and managers. May conduct a 360-degree performance review, a process that gathers feedback from a review panel that includes co-workers, supervisors, team members, subordinates, and sometimes customers.

Compensation
Wages - compensation based on an hourly pay rate or the amount of output produced. Salary - compensation calculated on a periodic basis, such as weekly or monthly. Most firms base compensation decisions on five factors: What competing companies are paying Government regulation The cost of living Company profits Employees productivity

Incentive Compensation

Employee Benefits
Employee Benefits - additional compensation, such as vacation, retirement plans, profit-sharing, health insurance, gym memberships, child and elder care, and tuition reimbursement, paid entirely or in part by the company. 30% of total employee compensation. Some benefits required by law:
Social Security and Medicare contributions State unemployment insurance and workers compensation programs

Costs of health care are increasingly being shifted to workers. Retirement plans have become a big area of concern for businesses.

Costs for Employee Compensation

Flexible Benefits
Employees are provided a range of options from which they can choose.
Medical, dental, vision, life, and disability insurance

Many companies also offer flexible time off policies instead of establishing a set number of holidays, vacation days, and sick days. 56% of companies surveyed use paid time off (PTO) programs.
More than claim they have reduced unscheduled absences

Flexible Work
Allow employees to adjust their working hours and places of work to accommodate their personal needs. Flextime allows employees to set their own work hours within constraints specified by the firm. A compressed workweek allows employees to work the regular number of weekly hours in fewer than the typical five days. A job sharing program allows two or more employees to divide the tasks of one job. A home-based work program allows employees, or telecommuters, to perform their jobs from home instead of at the workplace.
More than 70 percent of Generation Y professionals are concerned with balancing career with personal life

Employee Separation
Voluntary turnover: employees leave firms to start their own businesses, take jobs with other firms, move to another city, or retire.
Some firms ask employees who leave voluntarily to participate in exit interviews to find out why they decided to leave. Successful companies are clearly focused on retaining their best workers.

Involuntary turnover: employers terminate employees because of poor job performance, negative attitudes toward work and co-workers, or misconduct such as dishonesty or sexual harassment.
Necessary because poor performers lower productivity and employee morale. Employers must carefully document reasons when terminating employees.

Downsizing/Outsourcing
Downsizing - process of reducing the number of employees within a firm by eliminating jobs Downsizing has negative effects: Anxiety, health problems, and lost productivity among remaining workers Expensive severance packages paid to laid-off workers A domino effect on the local economy Outsourcing transferring jobs from inside a firm to outside the firm To save expenses and remain flexible, companies will try to outsource functions that are not part of their core business. Although outsourcing might work on paper, the reality might be different.

Motivating Employees
Motivation starts with good employee morale, the mental attitude of employees toward their employer and job. High employee morale occurs in organizations where workers feel valued, heard, and empowered to contribute what they do best. Poor morale shows up through absenteeism, voluntary turnover, and lack of motivation.

Maslows Hierarchy of Needs


Maslows Hierarchy of Needs: people have five levels of needs that they seek to satisfy. A satisfied need is not a motivator; only needs that remain unsatisfied can influence behavior. Peoples needs are arranged in a hierarchy of importance; once they satisfy one need, at least partially, another emerges and demands satisfaction. Physiological needs Safety needs Social (belongingness) needs Esteem needs Self-actualization needs

Herzbergs Two-Factor Theory


Hygiene Factors result in satisfaction
Job Environment Salary Job Security Personal Life Working Conditions Status Interpersonal Relations Supervision Company Policies

Motivator Factors can produce high levels of motivation if present


Achievement Recognition Advancement The Job Itself Growth Opportunities Responsibility

Expectancy Theory & Equity Theory


Expectancy Theory
describes the process people use to evaluate the likelihood that their efforts will yield the results they want, along with the degree to which they want those results

Equity Theory individuals perception of fair and equitable treatment

Goal-Setting Theory
Goal: target, objective, or result that someone tries to accomplish Goal-setting theory -people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement

Management by Objective
Systematic and organized approach that allows managers to focus on attainable goals and to achieve the best results based on the organizations resources. MBO helps motivate individuals by aligning their objectives with the goals of the organization, increasing overall organization performance. MBO principals:
A series of related organizations, goals, and objectives Specific objectives for each individual Participative decision making Set time period to accomplish goals Performance evaluation and feedback

Job Design & Motivation


Job enlargement: job design that expands an employees responsibilities by increasing the number and variety of tasks assigned to the worker Job enrichment: involves an expansion of job duties that empowers an employee to make decisions and learn new skills leading toward career growth Job rotation involves systematically moving employees from one job to another.

Managers Attitudes & Motivation


Two assumptions managers make about employees, according to psychologist Douglas McGregor: Theory X: assumes that employees dislike work and try to avoid it whenever possible, so management must coerce them to do their jobs. Theory Y: assumes that the typical person actually likes work and will seek and accept greater responsibility.
Most people can think of creative ways to solve work-related problems. Most people should be given the opportunity to participate in decision making.

A third theory from management professor William Ouchi: Theory Z: worker involvement is key to increased productivity for the company and improved quality of work life for employees.

Labor-Management Relations
Labor union: group of workers who have banded together to achieve common goals in the areas of wages, hours, and working conditions. Found at local, national, and international levels. The organized efforts of Philadelphia printers in 1786 resulted in the first U.S. minimum wage - $1 a day. 12% of the nations full-time workforce belongs to labor unions.
1/3 of government workers, 8% of private sector

Labor Legislation
National Labor Relations Act of 1935 (Wagner Act) legalized collective bargaining and required employers to negotiate with elected representatives of their employees. Fair Labor Standards Act of 1938 set the initial federal minimum wage and maximum basic workweek for workers employed in industries engaged in interstate commerce; outlawed child labor. Taft-Hartley Act of 1947 (Labor-Management Relations Act) limited unions power by prohibiting a variety of unfair practices, including coercing employees to join unions and coercing employers to discriminate against employees who are not union members. Landrum-Griffin Act of 1959 (Labor-Management Reporting and Disclosure Act) amended the Taft-Hartley Act to promote honesty and democracy in running unions internal affairs.

Collective Bargaining Process


Collective bargaining: process of negotiation between management and union representatives Issues involved can include:
Wages Work hours Benefits Union activities and responsibilities Grievance handling and arbitration Layoffs Employee rights and seniority

Settling Labor-Management Disputes


Most labor-management negotiations result in a signed agreement without a work stoppage. On average, 20 or fewer negotiations involve a work stoppage. Mediation is the process of settling labor-management disputes through recommendations of a third party. Arbitration adds a third party who renders a legally binding decision.

Competitive Tactics of Unions and Management


Union Tactics
Strikes - temporary work stoppage by employees until a dispute has been settled or a contract signed. Picketing - workers marching in public protest against their employer. Boycott - organized attempt to keep the public from purchasing the goods and services of the firm.

Management Tactics
Lockout - a management strike to put pressure on union members by closing the firm.

Future of Labor Unions


Membership and influence are declining, caused by a shift from manufacturing industries to information and service businesses. 8% of private-sector workers are union members, but that is down from 17% in 1983. 52% of union members are government employees. Unions need to be more flexible and adapt to a global economy and diverse workforce. Unions can recognize the potential for prosperity for allmanagement and union workers included.