Managing Human Resources

The Foundations of Human

Resource Management
(HRM)

Human Resource Management (HRM)

Set of organizational activities directed at attracting,
developing, and maintaining an effective workforce
The Strategic Importance of
HRMHRM’s importance has grown dramatically in
the last two decades. This new importance
stems from:

 Increased legal complexities

 The recognition that human resources are a

valuable means for improving productivity

 The awareness today of the costs associated

with poor human resource management
Human Resource Planning
HR planning involves job analysis and forecasting the
demand for and supply of labor.

Job Analysis
Systematic analysis of jobs in an organization

Job Description
Systematic evaluation of the duties, working
conditions, tools, materials, and equipment related to
the performance of a job

Job Specification
Description of the skills, abilities, and other credentials
required by a job
The Human Resource Planning Process
Perform Job Analysis

Forecast Demand for Labor

Forecast Internal Forecast External

Supply of Labor Supply of Labor

Develop Plan to Match

Demand with Supply
Forecasting HR Demand &
Supply
Forecasting the supply of labor is really two
tasks:
Forecasting Internal Supply
The number and type of employees who will be in
the firm at some future date

Forecasting External Supply

The number and type of people who will be
available for hiring from the labor market at large
Forecasting HR Demand & Supply
Replacement Charts
Listing of each managerial position, who occupies
it, how long that person will likely stay in the job,
and who is qualified as a replacement

Employee Information System (or Skills

Inventory)
Computerized system containing information on
each employee’s education, skills, work
experiences, and career aspirations
Matching HR Supply & Demand
 After comparing future demand and internal supply,
managers can make plans to manage predicted
shortfalls or overstaffing.
 If a shortfall is predicted:
 New employees can be hired.
 Present employees can be retrained and
transferred into understaffed areas.
 Individuals approaching retirement can be
convinced to stay on.
 Labor-saving or productivity-enhancing systems
can be installed .
Staffing the
Organization
External Staffing
The process of acquiring staff from outside the
company

Internal Staffing
The process of promoting staff from within the
company
Recruiting Human Resources
Recruiting
Process of attracting qualified persons to apply for
open jobs

Internal Recruiting
Practice of considering present employees as
candidates for job openings

External Recruiting
Practice of attracting people outside an
organization to apply for jobs
Selecting Human Resources
 Application Forms (Blanks)
 Tests
 Interviews
 Other Techniques

Validation
Process of determining the predictive value of
information
Developing Human
Resources

Orientation
Process of introducing new employees to
the organization so that they can become
effective contributors more quickly.
Assessing Training &
Development Needs

Needs Analysis
Determines the organization’s true needs and the
training programs necessary to meet them

What knowledge, skills, and abilities does the

organization need to compete?

What skills must its workforce possess in order to

perform the organization’s work effectively?
Training & Development
Techniques & Methods
Work-Based Program
Training technique that ties training and development
activities directly to task performance
 On-the-Job Training: Work‑based training, sometimes
informal, conducted while an employee is in actual work
situation
 Vestibule Training: Worked‑based training conducted in a
simulated environment away from the work site
 Systematic Job Rotation & Transfer: Work‑based training in
which employees are systematically moved from one job to
another so that they can learn a wider array of tasks and skills
Training & Development
Techniques & Methods
Instructional-Based Program
Training designed to impart new knowledge and
information
 Lecture or Discussion Approach: Instructional‑based training
in which knowledge and information are descriptively
presented
 Computer-Assisted Training: Instruction‑based training in
which is knowledge and information are presented via
computer
Training & Development
Techniques & Methods

Training Technology
Video Teleconferencing
Trainers in centralized locations deliver material
live by satellite hookup to remote sites

Interactive Video
Material is presented via video technology on a
monitor from a central serving mechanism, a
video disk, CD-ROM, or web site
Training & Development
Techniques & Methods

Team Building & Group‑Based Training

More and more organizations are using teams as a

basis for doing their jobs.

Many of the same companies are developing

training programs specifically designed to facilitate
intragroup cooperation among members of teams.
Evaluating Employee
Performance

Performance Appraisal

Formal evaluation of an employee’s job

performance in order to determine the
degree to which the employee is
performing effectively
The Performance Appraisal
Process
 Conducting the Performance Appraisal
Who should conduct the performance appraisal?
What sources of information should be used?
 Providing Feedback
360° Feedback: Performance appraisal system in
which information is provided from all sources—
supervisors, employees, peers, and so forth
The Performance Appraisal
Process
Methods for Appraising Performance
Ranking Methods
Simple Ranking Method: Performance appraisal method that ranks
employees from best to worst
Forced Distribution Method: Performance appraisal method that
classifies employees into different performance categories based on a
predetermined distribution

Rating Methods
Graphic Rating Scale: Performance rating method using a numerical
scale to rate performance along a set of dimensions
Critical Incident Method: Performance rating method based on stated
examples that reflect especially good or poor performance
Providing Compensation
& Benefits

Compensation
Set of rewards that organizations
provide to individuals in return for
their willingness to perform various
jobs and tasks
Determining Basic Compensation
Basic Compensation
The base level of wages or salary paid to an
employee

Wages: Compensation in the form of money paid

for time worked

Salary: Compensation in the form of money paid

for discharging the responsibilities of a job
Determining Basic Compensation
Pay Surveys in Compensation
Method used to obtain information about
compensation paid to employees by other employers

Job Evaluation
Methods for determining the relative worth of jobs in
order to set compensation levels

Establishing a Pay Structure

Compensation for different jobs is based on the
organization’s assessment of the relative value to the
organization of each job class.
Performance-Based Compensation

Merit Pay Plan

Performance‑based pay plan basing part of
compensation on employee merit

Skill-Based or Knowledge-Based Pay

Performance‑based pay plan rewarding employees for
acquiring new skills or knowledge
Incentive Compensation
Systems
Piece-Rate Incentive Plan
Incentive‑based pay plan that provides payment for each unit
produced

Individual Incentive Plan

Incentive‑based pay plan that rewards individual performance
on a real-time basis

Sales Commission
Individual incentive plan rewarding employees with a
percentage of sales volume that they generate
Team & Group Incentive
Systems
Gainsharing Program
Group‑based incentive plan that gives rewards for
productivity improvements

Profit Sharing
Group‑based incentive plan in which employees are paid
a share of company profits
Indirect Compensation &
Benefits

Benefits
Compensation other than wages and
salaries
Mandated Protection Plans
Protect employees when their income is
threatened or reduced by illness, disability,
death, unemployment, or retirement.

Unemployment Insurance: Mandated coverage protecting

employees who are laid off

Social Security: Mandated federal retirement program

Worker’s Compensation Insurance: Legally required

insurance covering workers who are injured or become ill on
the job
Optional Protection Plans
Protect employees in the same manner as
mandatory plans, except companies can
choose whether or not to provide them.

Private Pension Plan: Prearranged company pensions

provided to retired employees
Paid Time Off
Paid holidays, paid vacations, sick leave, & personal
leave

Other Types of Benefits

Wellness Program: Benefit in the form of programs
designed to help employees from becoming sick
Childcare: These plans might include scheduling help,
referrals to various types of services, or reimbursement
accounts for childcare expenses. In many cases, they
actually include company‑paid day care.
Cafeteria Benefit Plan: Benefit plan that sets limits on
benefits per employee, each of whom may choose
from a variety of alternative benefits
The Legal Context of Human
Resource Management

Equal Employment Opportunity

Legally mandated nondiscrimination in employment on the
basis of race, creed, sex, or national origin
Illegal Discrimination
Discrimination against protected classes that causes them to
be unfairly differentiated from others
Protected Class
Set of individuals who by nature of one or more common
characteristics are protected by law from discrimination on the
basis of any of those characteristics
Enforcing Equal Employment
Opportunity
Equal Employment Opportunity Commission (EECO)
Agency created by Title VII to enforce discrimination-related laws

Affirmative Action Program

Practice of recruiting qualified employees belonging to racial,
gender, or ethnic groups who are underrepresented in an
organization

Reverse Discrimination
Practice of discriminating against well-represented groups by over-
hiring members of underrepresented groups
Legal Issues in
Compensation
Laws Affecting Total Compensation
Fair Labor Standards Act: Federal law setting
minimum‑wage and over‑time pay requirements

Laws Affecting Other Forms of Compensation

Employee Retirement Income Security Act of 1974
(ERISA): Federal law regulating private pension plans
Contemporary Legal Issues
in HR Management
Occupational Safety and Health Act of 1970 (OSHA)
Federal law setting and enforcing guidelines for protecting
workers from unsafe conditions and potential health hazards in
the workplace

Emerging Areas of Discrimination Law

 AIDS in the Workplace
 Sexual Harassment
 Quid Pro Quo Harassment
 Hostile Work Environment
 Employment-at-Will
New Challenges in the
Changing Workplace

Managing Workforce
Diversity
Range of workers’ attitudes,
values, and behaviors that
differ by gender, race, and
ethnicity
New Challenges in the
Changing Workplace

Managing Knowledge
Workers
Employee who is of value
because of the knowledge that
he or she possesses
New Challenges in the
Changing Workplace

Contingent Worker
Employee hired on something
other than a full-time basis to
supplement an organization’s
permanent work force