Management
Fourteenth Edition
Chapter 12
Managing Human Resources
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Learning Objectives
12.1 Explain the importance of human resource management and the
human resource management process.
12.2 Describe the external influences that affect the human resource
management process.
12.3 Discuss the tasks associated with identifying and selecting
competent employees.
Know how to write effective job descriptions.
Develop your skill at being a good interviewer.
12.4 Explain how companies provide employees with skills and
knowledge.
12.5 Describe strategies for retaining competent, high-performing
employees.
12.6 Discuss contemporary issues in managing human resources.
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Why Human Resource Management is Important
and the Human Resource Management Process
• Human resource management (HRM) can be a
significant source of competitive advantage
• HRM is an important part of organizational
strategies
• The way organizations treat their people can
significantly impact performance
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High-Performance Work Practices
• High-performance work practices: work
practices that lead to both high individual and high
organizational performance
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Exhibit 12-1
High-Performance Work Practices
Practices
Self-managed teams
Decentralized decision making
Training programs to develop knowledge, skills, and abilities
Flexible job assignments
Open communication
Performance-based compensation
Staffing based on person-job and person-organization fit
Extensive employee involvement
Giving employees more control over decision making
Increasing employee access to information
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Exhibit 12-2
HRM Process
Exhibit 12-2 shows the eight steps in the HRM process.
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External Factors that Affect the Human
Resource Management Process
• The economy: lasting impact of the Great
Recession
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Labor Unions
• Labor union: an organization that represents
workers and seeks to protect their interests
through collective bargaining
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Laws and Rulings
• Affirmative action: Organizational programs that
enhance the status of members of protected
groups
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Exhibit 12-3: Major HRM Laws—Equal
Employment Opportunity and Discrimination
Law or Ruling Year Description
Equal Pay Act 1963 Prohibits pay differences for equal work
based on gender
Civil Rights Act, Title VII 1964 Prohibits discrimination based on race,
(amended 1972) color, religion, national origin, or gender
Age Discrimination in 1967 Prohibits discrimination against employees
Employment Act (amended 1978) 40 years and older
Vocational Rehabilitation Act 1973 Prohibits discrimination on the basis of
physical or mental disabilities
Americans with Disabilities Act 1990 Prohibits discrimination against individuals
who have disabilities or chronic illnesses;
also requires reasonable accommodations
for these individuals
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Exhibit 12-3: Major HRM Laws—
Compensation/Benefits
Law or Ruling Year Description
Worker Adjustment and 1990 Requires employers with more than 100 employees
Retraining Notification Act to provide 60 days’ notice before a mass layoff or
facility closing
Family and Medical Leave Act 1993 Gives employees in organizations with 50 or more
employees up to 12 weeks of unpaid leave each year
for family or medical reasons
Health Insurance Portability and 1996 Permits portability of employees’ insurance from one
Accountability Act employer to another
Lilly Ledbetter Fair Pay Act 2009 Changes the statute of limitations on pay
discrimination to 180 days from each paycheck
Patient Protection and 2010 Health care legislation that puts in place
Affordable Care Act comprehensive health insurance reforms
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Exhibit 12-3: Major HRM Laws—
Health/Safety
Law or Ruling Year Description
Occupational Safety and Health 1970 Establishes mandatory safety and health
Act (OSHA) standards in organizations
Privacy Act 1974 Gives employees the legal right to examine
personnel files and letters of reference
Consolidated Omnibus 1985 Requires continued health coverage following
Reconciliation Act (COBRA) termination (paid by employee)
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Global HRM
• Work councils: groups of nominated or elected
employees who must be consulted when
management makes decisions involving personnel
• Board representatives: employees who sit on a
company’s board of directors and represent the
interests of the firm’s employees
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Demography
• The oldest, most experienced workers (those born
before 1946) make up 6% of the workforce
• Baby boomers make up 41.5% of the workforce
• Gen Xers make up almost 29% of the workforce
• Gen Yers make up almost 24% of the workforce
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Human Resource Planning
• Human resource planning: ensuring that the
organization has the right number and kinds of
capable people in the right places and at the right
times
• Two steps:
– Assessing current human resources
– Meeting future HR needs
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Current Assessment
• Job analysis: an assessment that defines jobs
and the behaviors necessary to perform them
• Job description (position description): a written
statement that describes a job
• Job specifications: a written statement of the
minimum qualifications a person must possess to
perform a given job successfully
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Meeting Future HR Needs/Increased
Scrutiny in Selection Process
• Future HR needs are determined by the
organization’s mission, goals, and strategies.
• Companies that do not carefully scrutinize the
qualifications or backgrounds of employees surely
pose risks of increased liability, poor reputation,
and lower performance.
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Recruitment and Decruitment
• Recruitment: locating, identifying, and attracting
capable applicants
• Decruitment: reducing an organization’s
workforce
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Exhibit 12-4: Recruiting Sources
Source Advantages Disadvantages
Internet Reaches large numbers of people; can get Generates many unqualified
immediate feedback candidates
Employee Knowledge about the organization provided May not increase the diversity
referrals by current employee; can generate strong and mix of employees
candidates because a good referral reflects
on the recommender
Company Wide distribution; can be targeted to Generates many unqualified
website specific groups candidates
College Large centralized body of candidates Limited to entry-level positions
recruiting
Professional Good knowledge of industry challenges Little commitment to specific
recruiting and requirements organization
organizations
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Exhibit 12-5: Decruitment Options
Option Description
Firing Permanent involuntary termination
Layoffs Temporary involuntary termination; may last only a few days or extend
to years
Attrition Not filling openings created by voluntary resignations or normal
retirements
Transfers Moving employees either laterally or downward; usually does not
reduce costs but can reduce intraorganizational supply–demand
imbalances
Reduced workweeks Having employees work fewer hours per week, share jobs, or perform
their jobs on a part-time basis
Early retirements Providing incentives to older and more senior employees for retiring
before their normal retirement date
Job sharing Having employees share one full-time position
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Selection
• Selection: screening job applicants to ensure that
the most appropriate candidates are hired
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Exhibit 12-6
Selection Decision Outcomes
As shown in Exhibit 12-6, any selection decision can result in four possible outcomes—two
correct and two errors.
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Validity and Reliability
• A valid selection device is characterized by a
proven relationship between the selection device
and some relevant criterion.
• A reliable selection device indicates that it
measures the same thing consistently.
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Exhibit 12-7: Selection Tools
Tool Characteristics
Application forms Almost universally used
Most useful for gathering information
Can predict job performance but not easy to create one that does
Written tests Must be job-related
Include intelligence, aptitude, ability, personality, and interest tests
Are popular (e.g., personality tests; aptitude tests)
Relatively good predictor for supervisory positions
Performance Use actual job behaviors
simulation tests Work sampling—test applicants on tasks associated with that job; appropriate for routine
or standardized work
Assessment center—simulate jobs; appropriate for evaluating managerial potential
Interviews Almost universally used
Must know what can and cannot be asked
Can be useful for managerial positions
Background Used for verifying application data—valuable source of information
investigations Used for verifying reference checks—not a valuable source of information
Physical Are for jobs that have certain physical requirements
examinations Mostly used for insurance purposes
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Realistic Job Preview
• Realistic job preview (RJP): a preview of a job
that provides both positive and negative
information about the job and the company
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Orientation
• Orientation: introducing a new employee to his or
her job and the organization
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Employee Training
• On average, U.S. companies spent $702 per
employee for training.
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Exhibit 12-8
Types of Training
Exhibit 12-8 describes the major types of training that organizations provide.
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Exhibit 12-9: Traditional Training Methods
Method Characteristics
On-the-job Employees learn how to do tasks simply by performing them, usually
after an initial introduction to the task.
Job rotation Employees work at different jobs in a particular area, getting exposure
to a variety of tasks.
Mentoring Employees work with an experienced worker who provides
and coaching information, support, and encouragement; also called apprenticeships
in certain industries.
Experiential Employees participate in role-playing, simulations, or other face-to-
exercises face types of training.
Workbooks/ Employees refer to training workbooks and manuals for information.
manuals
Classroom Employees attend lectures designed to convey specific information.
lectures
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Exhibit 12-9: Technology-Based Training
Methods
Method Characteristics
CD-ROM/DVD/ Employees listen to or watch selected media that
videotapes/audiotapes/ convey information or demonstrate certain
podcasts techniques.
Videoconferencing/ Employees listen to or participate as information
teleconferencing/satellite TV is conveyed or techniques demonstrated.
E-learning Internet-based learning where employees
participate in multimedia simulations or other
interactive modules.
Mobile learning Learning delivered via mobile devices.
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Employee Performance Management
• Performance management system: establishes
performance standards used to evaluate
employee performance
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Exhibit 12-10: Performance Appraisal
Methods (1 of 2)
Method Description Advantages/Disadvantages
Written Essay Evaluator writes a description of + Simple to use
employee’s strengths and weaknesses, − May be better measure of
past performance, and potential; evaluator’s writing ability than of
provides suggestions for improvement. employee’s actual performance
Critical Incident Evaluator focuses on critical behaviors + Rich examples, behaviorally based
that separate effective and ineffective − Time-consuming, lacks
performance. quantification
Graphic Rating Popular method that lists a set of + Provides quantitative data; not
Scale performance factors and an time-consuming
incremental scale; evaluator goes − Doesn’t provide in-depth
down the list and rates employee on information on job behavior
each factor.
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Exhibit 12-10: Performance Appraisal
Methods (2 of 2)
Method Description Advantages/Disadvantages
BARS Popular approach that combines + Focuses on specific and measurable
(Behaviorally elements from critical incident and job behaviors
Anchored graphic rating scale; evaluator uses − Time-consuming; difficult to develop
Rating Scale a rating scale, but items are
examples of actual job behaviors.
Multiperson Employees are rated in comparison + Compares employees with one
Comparison to others in work group. another
− Difficult with large number of
employees; legal concerns
MBO Employees are evaluated on how + Focuses on goals; results oriented
well they accomplish specific goals. − Time-consuming
360-Degree Utilizes feedback from supervisors, + Thorough
Appraisal employees, and coworkers. − Time-consuming
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Compensation and Benefits
• Skill-based pay: a pay system that rewards
employees for the job skills they can demonstrate
• Variable pay: a pay system in which an
individual’s compensation is contingent on
performance
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Exhibit 12-11
What Determines Pay and Benefits
Exhibit 12-11 summarizes the factors that influence the compensation and benefit
packages that different employees receive.
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Managing Downsizing
• Downsizing: the planned elimination of jobs in an
organization
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Exhibit 12-12: Tips for Managing Downsizing
Tip
Treat everyone with respect.
Communicate openly and honestly:
*Inform those being let go as soon as possible.
*Tell surviving employees the new goals and expectations.
*Explain impact of layoffs.
Follow any laws regulating severance pay or benefits.
Provide support/counseling for surviving (remaining) employees.
Reassign roles according to individuals’ talents and backgrounds.
Focus on boosting morale:
*Offer individualized reassurance.
*Continue to communicate, especially one-on-one.
*Remain involved and available.
Have a plan for the empty office spaces/cubicles so it isn’t so depressing for surviving
employees.
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Managing Sexual Harassment
• Sexual harassment: any unwanted action or
activity of a sexual nature that explicitly or
implicitly affects an individual’s employment,
performance, or work environment
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Controlling HR Costs
• Employee health-care costs
• Employee pension plan costs
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Review Learning Objective 12.1
• Explain the importance of human resource
management and the Human Resource
Management Process.
1. Competitive advantage
2. Organizational strategies
3. Impact of employee treatment on organizational
performance
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Review Learning Objective 12.2
• Describe the the external influences that affect
the human resources management process.
– Economy
– Labor unions
– Legal environment
– Demographic trends
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Review Learning Objective 12.3
• Discuss the tasks associated with identifying
and selecting competent employees.
– Planning:
Job analysis
Job description
Job specification
– Recruitment/decruitment
– Selection
– Realistic job preview
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Review Learning Objective 12.4
• Explain how companies provide employees
with skills and knowledge.
– Orientation
– Training:
Profession/industry-specific training
Management/supervisory skills
Mandatory/compliance information
Customer service training
– Traditional training versus technology-based methods
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Review Learning Objective 12.5
• Describe strategies for retaining competent,
high-performing employees.
– Performance management system
– Performance appraisal methods
– Factors influencing compensation and benefits
– Skill-based pay systems versus variable pay system
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Review Learning Objective 12.6
• Discuss contemporary issues in managing
human resources.
– Downsizing
– Sexual harassment
– Controlling HR costs
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Copyright
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