Chapter 8 Human Resources Management Human Resource Management

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Chapter 8

Human Resource Management

  • Human resource management (HRM)
    • The organizational activities needed to acquire, develop, retain, and utilize human resources.
  • HRM issues
    • Equal employment opportunity
    • Human resource planning
    • Recruitment
    • Selection
    • Training and development
    • Performance evaluation
    • Compensation
    • Benefits and services

Equal Employment Opportunity

  • Equal employment opportunity (EEO)
    • The employment of individuals in a fair and unbiased manner utilizing employment policies that incorporate laws, executive orders, court decisions, and regulations to end job discrimination.
  • Affirmative action
    • Making a concerted effort to hire persons who were discriminated against in the past.
    • Using—at least in part—the race, sex, or age of a person in reaching an employment decision.

Equal Employment Opportunity (cont’d)

  • Equal Pay Act of 1963
  • Requires all employers covered by the Fair Labor Standards Act and others to provide equal pay for equal work regardless of sex.
  • Title VII of Civil Rights Act of 1964 (amended in 1972, 1991, and 1994)
  • Prohibits discrimination in employment on the basis of race, color, religion, sex, or national origin; created the Equal Employment Opportunity Commission (EEOC) to enforce the provisions of Title VII.
  • Age Discrimination in Employment Act of 1967
  • Prohibits private and public employers from discriminating against persons 40 years of age or older in any area of employment because of age; exceptions are permitted where age is a bona fide occupational qualification.
  • Equal Employment Opportunity Act of 1972
  • Amended Title VII of Civil Rights Act of 1964; strengthens EEOC’s enforcement powers and extends coverage of Title VII to government employees, faculty in higher education, and other employers and employees.
  • Management Highlight
  • A selected Sample of Federal Employment Laws

Equal Employment Opportunity (cont’d)

  • Americans with Disabilities Act of 1990
  • Prohibits discrimination in employment against persons with physical or mental disabilities or the chronically ill; enjoins employers to make reasonable accommodation to the employment needs of the disabled; covers employers with 15 or more employees.
  • Civil Rights Act of 1991
  • Provides for compensatory and punitive damages and jury trials in cases involving intentional discrimination; requires employers to demonstrate that job practices are job related and consistent with business necessity; extends coverage to U.S. citizens working for American companies overseas.
  • Family and Medical Leave Act of 1993
  • Requires all employers with 50 or more employees to provide 12 weeks of unpaid leave for family and medical emergencies.
  • Uniformed Services Employment and Reemployment Rights Act of 1994
  • Protects the employment rights of individuals who enter the military for short periods of service.
  • Management Highlight (cont’d)

Human Resource Planning

  • Human resource planning
    • A two-step process that involves forecasting future human resource needs and then planning how to adequately fulfill and manage these needs.

Human Resource Planning (cont’d)

  • Human resource inventories
    • The skills, abilities, and knowledge that exist within the firm already.
  • Human resource forecast
    • The firm’s future requirements based on numbers available, skill mix, and external labor supply.
  • Action plans
    • The recruitment, selection, training, orientation, promotion, development, and compensation plans used.
  • Control and evaluation
    • The monitoring system used to determine the degree of attainment of human resource goals.

The Human Resource Planning Process

  • Exhibit 8 . 1


  • Recruitment
    • The set of activities used to attract qualified job candidates with the abilities and attitudes needed to help an organization achieve its objectives.
  • Sources of candidates
    • Current employees
    • Employee referrals
    • Advertisements
    • College campuses
    • Employment agencies
    • Executive search firms
    • State employment agencies


  • Selection
    • The process by which an organization chooses from a list of applicants the person or persons who best meet the criteria for the position available, considering current environmental and financial conditions.
    • Selection process involves:
      • Screening
      • Interviewing
      • Hiring
    • All selection methods must show job-relatedness—a relationship to successful job performance

Selection (cont’d)

  • Screening interviews
    • Structured interview—the interviewer asks the same, specific questions of all interviewees.
    • Semistructured interview—a less structured approach allows the interviewer more flexibility to discuss whatever they think can be important; comparing interviewees is difficult.
    • Situational interview—job candidates role-play in mock job scenarios; is the most accurate of any type of interview in predicting job performance.

Typical Selection Decision Steps

  • Exhibit 8 . 2
  • Step 1 Preliminary Screening Interview
  • Step 3 Employment Interview
  • Step 2 Application Blank Completed
  • Step 4
  • Employment
  • Tests
  • Step 5 More
  • Interviews
  • Step 7
  • Conditional
  • Offer
  • Step 8
  • Physical
  • Examination
  • Step 9 Decision

Selection (cont’d)

  • Selection tests
    • A means of obtaining a standardized sample of a person’s behavior.
  • Test validity
    • How well a test score predicts job success.
  • Test reliability
    • Test provides consistency of measurement.
  • Benefits that valid and reliable tests provide:
    • Improved accuracy in selecting employees
    • An objective means for judging
    • Information on present employees’ needs

Selection (cont’d)

  • The Hiring Decision
    • Exercising “qualified privilege”—responding to firms checking an applicant’s references and work history:
      • Determine that the prospective employer has a job-related need to know.
      • Release only truthful information about the former employee.
      • Do not release EEO-related information such as race, age, or ethnic background.

Training and Development

  • Terminology
    • Training: the systematic process of altering employees’ behavior to further organizational goals.
    • Development: the acquisition of knowledge and skills that employees may use in the present or future.
    • Formal training program: an effort by the employer to provide opportunities for the employee to acquire job-related skills, attitudes, and knowledge.

Training and Development (cont’d)

  • Terminology (cont’d)
    • Learning: the act by which individuals acquire skills, knowledge, and abilities that result in a relatively permanent change in their behavior.
    • Skill: any behavior that has been learned and applied; therefore, the goal of training is to improve skills.
      • Motor skills, cognitive skills, and interpersonal skills are targets of training programs.

Performance Evaluation

  • Purposes of formal evaluations:
    • Make decisions easier involving promotion, transfer, pay raises, and termination.
    • Help establish training and development programs and evaluate their success.
    • Provide employees with feedback about strengths and weaknesses.
    • Predict whether recruitment and selection activities lead to the best-qualified human resources.
    • Help determine what type of individual can be successful within the organization.

Performance Evaluation (cont’d)

  • Graphic rating scales distinguished by:
    • How exactly the categories are defined.
    • The degree to which the person interpreting the ratings (e.g., the ratee) can tell what response was intended by the rater.
    • How carefully the performance dimension is defined for the rater.

Performance Evaluation (cont’d)

  • Ranking methods
    • Identifies the best and worst performers, who are placed in the first and last positions on the ranking list.
    • Ranking continues until all subordinates are on the list.
    • The rater is forced to discriminate by the rank-order performance evaluation method.

Performance Evaluation (cont’d)

  • Descriptive essays
    • Requires that the rater describe each ratee’s strong and weak points.
    • Provides little opportunity to compare ratees on specific performance dimensions.
    • Method is limited by variations in raters’ skills at writing descriptive analyses of subordinates’ strengths and weaknesses.

Performance Evaluation (cont’d)

  • Rating errors
    • Rater biases and lack of skill can create problems and errors in performance evaluations.
      • Strictness
      • Leniency
      • Central tendency

Performance Evaluation (cont’d)

  • Rating errors can be minimized if:
    • Each dimension addresses a single job activity rather than a group of activities.
    • Raters observe ratees’ behavior on a regular basis.
    • Terms are clearly defined since different raters react differently to such words.
    • Rater does not evaluate large groups of subordinates.
    • Raters are trained to avoid leniency, strictness, and other rating errors.
    • The dimensions being evaluated are meaningful, clearly stated, and important.

Typical Graphic Rating Scale

  • Exhibit 8 . 3


  • Direct financial compensation
    • The pay an employee receives in the form of wages, salary, bonuses, and commissions.
  • Indirect financial compensation (benefits)
    • All financial rewards, such as vacation and insurance, that are not included in direct financial compensation.

Compensation (cont’d)

  • Exhibit 8 . 4
  • Types of Compensation

Compensation (cont’d)

  • Effective compensation should be:
    • Adequate
    • Equitable
    • Balanced
    • Cost-effective
    • Secure
    • Incentive-providing
    • Acceptable to the employee

Compensation (cont’d)

  • Determining pay
    • Pay-level decision
      • Employees working on similar jobs in other organizations
    • Pay structure decision
    • Individual-pay decision
      • Employees working on the same job within the organization

Compensation (cont’d)

  • Selected compensation methods
    • Flat rates
      • In the unionized firm, where wages are established by collective bargaining, single flat rates (one job, one rate) rather than different rates are often paid.
    • Individual incentive plans
      • The employee is paid for units produced or sold.

Compensation (cont’d)

  • Selected compensation methods (cont’d)
    • Gainsharing plans
      • Companywide group incentive plans that unite organizational elements in a pursuit of improved organizational effectiveness by allowing employees to share in the proceeds.
      • Factors impacting on a gainsharing plan’s success:
        • Company size and age of the plan
        • Company’s financial stability and technology
        • Unionization
        • Employees’ and managers’ attitudes

Compensation (cont’d)

  • The Equal Pay Act
    • Requires equal pay for equal work for men and women.
    • Defines equal work as employment requiring equal skills, effort, and responsibility under similar working conditions.
    • Different rates are permissible on the basis of:

Compensation (cont’d)

  • Comparable worth
    • Attempts to prove and remedy the allegation that employers systematically discriminate by paying women employees less than their work is intrinsically worth, relative to what they pay men who work in comparable professions.
    • Relates jobs that are dissimilar in their content (for example, nurse and plumber) and contends that individuals who perform jobs that require similar skills, efforts, and responsibilities under similar work conditions should be compensated equally.

Benefits and Services

  • Benefits required by law
    • Social Security
    • Workers’ compensation
    • Unemployment insurance
  • Discretionary benefits
    • Time-not-worked (vacations, holidays, sick leave)
    • Insurance
    • Health care
    • Retirement plans
    • Childcare and eldercare

Special Issues in Human Resources

  • AIDS (Acquired Immunodeficiency Syndrome)
    • The Americans with Disabilities Act (ADA) protects individuals with AIDS from being discriminated against in the areas of hiring, advancement, compensation, training, or other conditions of employment.
    • A major concern of organizations is finding a balance between the rights of a person with AIDS and the rights of their coworkers to a healthy, safe environment.

Special Issues (cont’d)

  • Sexual harassment
    • Quid pro quo harassment
      • Occurs when an employee’s career path is directly affected by a supervisor’s unwelcome requests for sexual favors or other sexual advances.
    • Hostile work environment
      • Occurs when the actions of others in the workplace create a workplace environment that is intimidating to “a reasonable person” and affects his or her employment.

Special Issues (cont’d)

  • Developing a sexual harassment program
    • A company-based program involves:
      • Developing a sexual harassment policy and complaint resolution procedure.
      • Training managers to implement policy and procedure.
      • Educating employees to recognize and confront harassment.
      • Providing follow-up care after harassment incidents.
      • Monitoring the workplace for awareness of and compliance with sexual harassment policies.

Special Issues (cont’d)

  • Substance abuse
  • Signs of possible substance abuse:
    • Difficulty in recalling instructions
    • Frequent tardiness and absence
    • Numerous restroom breaks
    • Difficulty in getting along with coworkers
    • Increased off- and on-the-job accidents
    • Dramatic change in personality

Special Issues (cont’d)

  • Developing a substance abuse policy
    • Companies need a policy and program that:
      • Explains the company’s philosophy on substance abuse.
      • Describes the firm’s policy on testing.
      • Implements a discipline and rehabilitation program.
      • Communicates the program to all employees.
      • Educates managers on how to enforce a fair substance abuse policy and program.

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