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10-1

Bateman Snell

Management Competing
in the
New Era

5th
Edition
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
10-2

Part Three
Chapter 10 - Human Resources Management

Chapter Outline
Strategic Human Resources Management
Staffing the Organization
Developing the Workforce
Performance Appraisal
Designing Reward Systems
Labor Relations

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-3

Learning Objectives
After studying Chapter 10, you will know:
 how companies use human resources management to gain
competitive advantage
 why companies recruit both internally and externally for new

hires
 the various methods available for selecting new employees

 why companies spend so much on training and development

 how to determine who should appraise an employee’s

performance
 how to analyze the fundamental aspects of a reward system

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-4

Learning Objectives
After studying Chapter 10, you will know:
 how unions influence human resources management
 how the legal system influences human resources

management

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-5

Strategic Human Resources


Management (HRM)
Human Resources Management (HRM)
 formal systems for the management of people within the
organization
 human resources have a strategic impact

create value
are rare

are difficult to imitate

are organized

 human capital - the knowledge, skills, and abilities of employees


that have economic value
 the emphasis on different HR activities depends on whether the

organization is growing, declining, or standing skill


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10-6

Strategic HRM (cont.)


The HR planning process
a three-stage activity with a strategic purpose derived from the
organization’s plans
planning - determine the organization’s plans
programming - create specific HR activities

evaluating - determine whether HR programs are producing the

results needed to contribute to the organization


 Demand forecasts - determine how many and what type of
people are needed
derivedfrom organizational plans
based on current sales and projected future sales growth

determine the demand for different types of workers

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An Overview Of The HR Planning


Process
Planning Programming Evaluation
Organizational
strategic
planning

HRM Human Human


environmental resources resources Results
scanning planning activities
•Labor markets •Demand forecast •Employee recruitment •Productivity
•Technology •Internal labor supply •Employee selection •Quality
•Legislation •External labor supply •Outplacement •Innovation
•Competition •Job analysis •Training and •Satisfaction
•Economy development •Turnover
•Performance appraisal •Absenteeism
•Reward systems •Health
•Labor relations
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
10-8

Strategic HRM (cont.)


The HR planning process (cont.)
 Labor supply forecasts - estimates of how many and what
types of employees the organization actually will have
evaluate current employees and the available external supply of
workers
forecasts of a diverse workforce have become fact

 Reconciling supply and demand


labor deficit - hire new employees, promote current employees
to new positions, or train other employees to move in from other
areas in the organization
labor surplus - lay off employees or transfer them to other areas

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-9

Strategic HRM (cont.)


The HR planning process (cont.)
 Job analysis - a tool for determining what is done on a given
job and what should be done on that job
 job description - tells about the job itself
 job specification - describes the employee characteristics needed to

perform the job


provides the information that virtually every HR activity
requires

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-10

Staffing The Organization


Recruitment
 the development of a pool of applicants for jobs in the
organization
 Internal recruiting

advantages - employers know their employees


 employees know their organization
 provides opportunity to move up within the organization

drawbacks - yields limited applicant pool


 can inhibit a company that wants to change
job posting - a mechanism for advertising open positions

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-11

Staffing The Organization (cont.)


Recruitment (cont.)
 External recruiting - brings new blood into the organization
newspaper advertisements - popular recruiting source that is
inexpensive and generates a large number of responses
employee referrals - some companies offer rewards for referrals

campus recruiting - large pool of people

 applicants have up-to-date training


 source of innovative ideas

Internet- becoming more common to advertise job openings


and to gather applicant information

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10-12

Effectiveness Of Recruitment
Sources

Unions 1.64
Public employment agencies 1.92
Private employment agencies 2.78
Direct applications 2.86
Want ads 3.05
Professional associations 3.08
Executive search firms 3.71
College recruiting 3.81
Employee referrals 3.84

Scale: 1 = not good, 3 = average, 5 = extremely good

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-13

Staffing The Organization (cont.)


Selection
 choosing from among qualified applicants to hire
 Application and résumés - provide basic information to

prospective employers
tend not to be useful for making final selection decisions
 Interviews - most popular selection tool
questions that are not job related are prohibited
unstructured (nondirective) - interviewer asks different

interviewees different questions


structured - interviewer asks all applicants the same questions

 situational interview - focuses on hypothetical situations


 behavioral description interview - explores applicant’s past behavior

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10-14

Staffing The Organization (cont.)


Selection (cont.)
 Reference checks - reference information is becoming
increasingly difficult to obtain
 Personality tests -may be difficult to defend in court

 nonetheless, regaining popularity


 Drug testing
Drug-Free Workplace Act of 1988
genetic testing - identifies the likelihood of contracting a disease

 Cognitive
ability tests - measure intellectual abilities
 Performance tests - require performing a sample of the job

have been developed for almost every occupation

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-15

Staffing The Organization (cont.)


Selection (cont.)
 Assessment center - managerial performance test in which
candidates participate in a variety of exercises and situations
taps a number of critical managerial dimensions
assessors generally are line managers from the organization

 Integrity tests - assess a job candidate’s honesty


polygraphs (lie detector tests) - banned for most employment
purposes
paper-and-pencil tests - more recent tests of integrity

 evidence of validity

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-16

Staffing The Organization (cont.)


Selection (cont.)
 Reliability - the consistency of test scores over time and across
alternative measurements
 Validity

criterion-related validity - degree to which a test actually predicts or


correlates with job performance
 reliance on scatterplots to depict the relationship between test scores
and job performance
content validity - degree to which selection tests measure a
representative sample of the knowledge, skills, and abilities required
for the job
 more subjective (less statistical) than criterion-related validity
 not less important than criterion-related validity

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-17

Correlation Scatterplots

Coefficient of correlation = .00 Coefficient of correlation = .75


High High
Performance

Performance
Low Low
Low High Low High
Test score Test score
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
10-18

Staffing The Organization (cont.)


Workforce reductions
 Layoffs(downsizing) - laying off large numbers of
employees as a result of restructuring in the industry
victims - lose self-esteem, suffer demoralizing job searches, and
are stigmatized by being out of work
outplacement - process of helping people who have been

dismissed to regain employment elsewhere


survivors - suffer disenchantment, distrust, and lethargy

 a good performance appraisal process helps survivors avoid feeling


that they retained their jobs due to arbitrary decision making

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-19

Staffing The Organization (cont.)


Workforce reductions (cont.)
 Termination - “firing” an at-will employee
ifthe employee can quit for any reason, employer should be
able to fire for any reason
courts in most states have made exceptions to this doctrine

 public policy exceptions


progressivediscipline - graduated steps used to correct
workplace behavior
termination interview - stressful situation for all parties

 used to discuss the company’s position with the employee


 often good to have a third party present

 conduct the interview in a neutral location

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-20

Staffing The Organization (cont.)


Legal issues and equal employment opportunity
 Civil Rights Act of 1964
TitleVII forbids discrimination in employment decisions based
on race, sex, color, national origin, and religion
created the Equal Employment Opportunity Commission

(EEOC) - enforces Title VII


 CivilRights Act of 1991 - provides for punitive damages
 Uniform Guidelines on Employee Selection Procedures -

describe the development of employment practices that


comply with the law
adverse impact - an apparently neutral employment practice
adversely affects a protected class
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
10-21

Developing The Workforce


Training and development
 Training - teaching lower-level employees how to perform
their present jobs
 Developing - teaching managers and professional employees

broad skills needed for their present and future jobs


Overview of the training process
 phase one - needs assessment
identify the jobs, people, and departments which need training
 phase two - design the training to meet training goals
 phase three - decide what training methods to use

 phase four - evaluate the training’s effectiveness

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-22

Developing The Workforce (cont)


Types of training
 Orientation- training designed to introduce new employees
to the company and familiarize them with policies,
procedures, culture, and the like
benefitsmay include lower turnover, increased morale, higher
productivity, and lower recruiting and training costs
 Team training - provides employees with the skills and
perspectives they need to work in collaboration with others
 Diversity training - focuses on identifying and reducing

hidden biases against people with differences and developing


the skills needed to effectively manage a diversified
workforce
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10-23

Selected Instructional Methods


And Media
100
Classroom programs -
live

80 Videotapes

Internet/WWW
Percentage using

60 Games/Simulations
(computer-based)

Videoconferencing
40 (to group)

Satellite/
Broadcast TV
20 Outdoor experiential
programs

Videoconferencing
0 Overall 100-499 500-999 1,000-2,499 2,500-9,999 10,000 (individual desktops)
or more
Number of employees
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10-24

Performance Appraisal
Performance appraisal
 theassessment of an employee’s job performance
 two basic purposes

administrative - provides information for making salary, promotion,


and layoff decisions
developmental - diagnoses training needs and enables career

planning
What do you appraise?
 Traitappraisals - subjective judgments about employee
performance
oftenleads to personal bias
may not be suitable for obtaining useful feedback

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-25

Performance Appraisal (cont.)


What do you appraise? (cont.)
 Behavioral
appraisals - focus on more observable aspects of
performance
helpsensure that all parties understand what the ratings are really
measuring
 Results appraisals - tend to be more objective
focus on production data
Management By Objectives (MBO) - subordinate and supervisor

agree on specific performance goals


 develop a plan for attaining the goals
 identify criteria for determining whether goals have been reached

 useful when managers want to empower employees

 may focus on short-term achievement and ignore long-term goals

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-26

Example Of BARS Used For


Evaluating Quality
Uses measures of quality and well-defined
Outstanding 7 processes to achieve project goals.
Defines quality from the client’s perspective.

6 Look for/identifies ways to continually improve the process.

Clearly communicates quality management to others.


5 Develops a plan that defines how the team will participate in quality.
Appreciates TQM as an investment.

Average 4 Has measures of quality that define tolerance levels.

Views quality as costly.


3 Legislates quality.

2 Focuses her/his concerns only on outputs and


deliverables, ignoring the underlying process.

Blames others for absence of quality.


Poor 1 Gives lip service only to quality concerns.

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-27

Guidelines For Choosing An


Appraisal System
Attend to
legal
considerations
Develop a formal Use job analysis
appeal process for performance
standards

Appraisal
Use more than Communicate
System
one rater where performance
possible standards

Document Evaluate on
the process specific
carefully behaviors
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10-28

Performance Appraisal (cont.)


Who should do the appraisal?
 managers and supervisors - traditional source of appraisal
information
 peers and team members - best at identifying leadership potential

and interpersonal skills


 subordinates - provide feedback to supervisors

 internal and external customers

internal
customers include anyone inside the organization who
depends upon an employee’s work output
 self-appraisals
- increases worker’s involvement in appraisal
 360 degree appraisal - uses multiple sources to gain

comprehensive perspective of one’s performance


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10-29

Performance Appraisal (cont.)


How do you give employees feedback?
 performance feedback is a stressful task for all parties
most difficult interviews are with employees who are
performing poorly
 no “one best way” to perform the appraisal interview
 follow-up meetings may be necessary

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-30

Designing Reward Systems


Pay decisions
 effective reward systems attract, motivate, and retain people
 three types of decisions are crucial

pay level - choice of whether to be a high-, average-, or low-paying


company
pay structure - choice of how to price different jobs within the

organization
 jobs similar in worth are grouped into families
individual pay decisions - concern different pay rates for jobs of
similar worth within the same family
 decisions based on:
 seniority

 performance

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10-31

Factors Affecting The Wage Mix

Internal factors External factors


Compensation policy Conditions of the
of organization labor market

Area wage rates


Worth of job
Wage Cost of living
Mix
Employee’s
relative worth Collective bargaining

Employer’s ability to pay Legal requirements

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Pay Structure

Maximum rate
8.00

7.50 Wage curve

7.00
Minimum rate
Wage rates

6.50

6.00 Range steps


5.50
Range Range overlap
5.00

4.50 Midpoint
150 200 250 300 350 400 450 500
Job worth (total points)
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10-33

Designing Reward Systems


(cont.)
Incentive systems and variable pay
 individual incentive plans - most common type
consistsof an objective standard against which a worker’s
performance is compared
 group incentive plans
gainsharing - concentrate on saving money
profit-sharing - incentives based on unit, department, plant, or

company productivity
 each group has a production standard
 pay is based on the amount of production over the standard

merit pay system - used in the absence of an objective standard


 bonuses based on supervisor’s judgment of employee’s merit
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
10-34

Designing Reward Systems


(cont.)
Employee benefits
 benefits required by law
workers’ compensation - provides financial support to employees
suffering from a work-related injury or illness
social security - provides financial support to retirees

 also covers disabled employees


unemployment insurance - provides financial support to employees
who are laid off for reasons beyond their control
 benefits not required by law
cafeteria benefit plan - employees choose from a menu of options to
create a benefit package tailored to their needs
flexible benefit plan - employees are given credits to spend on

benefits that fit their unique needs

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


10-35

Designing Reward Systems


(cont.)
Legal issues in compensation and benefits
 FairLabor Standards Act (FLSA) of 1938 - set minimum wages,
maximum hours, child labor standards, and overtime pay
provisions
nonexempt employees - entitled to premium pay for overtime
exempt employees - not subject to overtime or minimum wage

provisions
 Equal
Pay Act (EPA) of 1963 - prohibits unequal pay for men and
women who perform equal work
exceptions permitted where pay differential is based on seniority, a
merit system, or an incentive system
comparable worth - principle of equal pay for different jobs of equal

worth
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10-36

Designing Reward Systems


(cont.)
Health and safety
 Occupational Safety and Health Act (OSHA) of 1970 -
requires employers to pursue workplace safety
employers must maintain records of injuries and deaths caused
by workplace accidents
employers must submit to work-site inspections

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10-37

Labor Relations
Labor relations
 system of relations between workers and management
Labor laws
 National Labor Relations Act (NLRA) - Wagner Act
declared labor organizations legal
established five unfair employer labor practices

created the National Labor Relations Board

 conducts certification elections


 hears unfair labor practices complaints

 issues injunctions against offending employers

greatly assisted the growth of unions


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10-38

Labor Relations (cont.)


Labor laws (cont.)
 Labor-Management Relations Act - Taft-Hartley Act
intended
to restore the balance of power between unions and
management
 protected employers’ free-speech rights
 defined unfair labor practices by unions

 permitted workers to decertify unions

 Labor-Management Reporting and Disclosure Act -


Landrum-Griffin Act
designed to curb abuses by union leadership and rid unions of
corruption
declared a bill of rights for union members

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10-39

Labor Relations (cont.)


Unionization
 authorization cards - collected by union locals to determine
whether workers want to be represented for the purpose of
collective bargaining
 NLRB will conduct certification elections if union has

collected cards from 30 percent of the bargaining unit


simple majority of those voting required to determine a winner
if union wins, it is certified as the bargaining unit representative

 union and management obliged to negotiate in good faith to obtain


a collective bargain agreement

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10-40

Determinants Of Union Voting


Behavior
Beliefs in union power
Economic needs •Wages
•Wages •Power
•Hours •Working conditions

Union vote:
Yes
or
No Union image
Job attitudes •Corrupt?
•Job dissatisfaction •Too powerful?
•Unfair supervision •Unnecessary given
•Poor communication •current legislation
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10-41

Labor Relations (cont.)


Collective bargaining
 toreach an agreement, workers may conduct an economic strike
 arbitration - use of a neutral third party to resolve a labor dispute

used to deal with disagreements about interpretation of the contract


avoids wildcat strikes in which workers walk off the job in violation of

the contract
 union shop - union security clause specifying that workers must
join the union after a set period of time on the job
 right to work - state legislation that prohibits the negotiation of

union shop clauses

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved