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Managing Human Resources and Labor Relations

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1 Managing Human Resources and Labor Relations
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Managing Human Resources and Labor Relations CHAPTER 8 Human resources management and labor relations involve acquisition, development, use, and maintenance of a human resource mix to achieve organizational goals and objectives. © BananaStock/ Jupiterimages The Future of Business The Essentials 4th Edition Gitman & McDaniel Prepared by Deborah Baker Chapter 8 Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved

2 Learning Goals CHAPTER 8
Entrepreneurship: Starting and Managing Your Own Business What is the human resource management process, and how are human resource needs determined? 2 How do firms recruit applicants? 3 How do firms select qualified applicants? 4 What types of training and development do organizations offer their employees? CHAPTER 8

3 Learning Goals (continued)
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 5 How are performance appraisals used to evaluate employee performance? 6 What are the types of compensation and methods for paying workers? 7 What is a labor union and how is it organized? 8 What is collective bargaining, and what are some of the key negotiation issues? CHAPTER 8

4 Learning Goals (continued)
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 9 How are grievances between management and labor resolved, and what tactics are used to force a contract settlement? 10 What are the key laws and federal agencies affecting human resource management and labor relations? 11 What trends and issues are affecting human resource management and labor relations? CHAPTER 8

5 Human Resource Management
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 1 What is the human resource management process, and how are human resource needs determined? 1

6 Human Resource Management
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business human resource management The process of hiring, developing, motivating, and evaluating employees to achieve organizational goals. Human resource management is the process of hiring, developing, motivating, and evaluating employees to achieve organizational goals. Organizational strategies and objectives form the basis for making all human resource management decisions. All companies strive to hire and develop well-trained, motivated employees. In turn, employees are a key element for gaining competitive advantage. 1

7 Human Resource Management Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Compensation and benefits Performance planning and evaluation Training and development Strategies, goals, and market position Job analysis and design/ HR planning and forecasting Employee recruitment Employee selection Retention/ turnover HR outcomes To this end, the HR management process contains the following sequenced activities: Job analysis and design Human resource planning and forecasting Employee recruitment Employee selection Training and development Performance planning and evaluation Compensation and benefits The HR management process encourages the development of high-performance employees. Good HR practices using this sequence foster performance improvement, knowledge and skill development, and loyal employees. The sequential HR management process is shown in Exhibit 8.1 1 Exhibit 8.1

8 Human Resources Planning
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business human resources planning Creating a strategy for meeting future human resource needs. the right number of people, with the right training, in the right jobs, to meet goals Two important and parallel aspects of the HR management process determine employee needs of the firm and the jobs to be filled. Planners must know what skills different jobs require. 1

9 Job Analysis and Design
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Job Description The tasks and responsibilities of a job. Job Specification A list of the skills, knowledge, and abilities a person must have to fill the job. Job Analysis A study of the tasks required to do a particular job well. Information about a specific job is assembled through a job analysis, a study of the tasks required to do a job well. This information is used to specify the essential skills, knowledge, and abilities. The tasks and responsibilities of a job are listed in a job description. The skills, knowledge, and abilities a person must have to fill a job are spelled out in a job specification. These documents help human resource planners find the right people for specific jobs. 1

10 Human Resource Planning and Forecasting
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Determine the number of people needed by some future time The HR Demand Forecast Estimate the number of people currently employed who will be available to fill jobs at some future time Forecasting an organization’s HR needs, known as an HR demand forecast, is an essential aspect of HR planning. This process involves two forecasts: 1) determining the number of people needed by some future time, and 2) estimating the number of people currently involved by the organization who will be available to fill various jobs at some future time. This is an internal supply forecast. 1

11 CONCEPT check 1 Define human resource management.
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Define human resource management. Distinguish between job analysis, job description, and the job specification. Describe the human resource management process. 1

12 2 Employee Recruitment 2 How do firms recruit applicants? Chapter 5
Entrepreneurship: Starting and Managing Your Own Business 2 How do firms recruit applicants? When a firm creates a new position or has a vacancy in a existing one, it starts looking for qualified people. 2

13 Employee Recruitment 2 Internal Labor Market External Labor Market
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Internal Labor Market External Labor Market Two sources of job applicants are the internal and external labor markets. The internal labor market consists of employees currently employed by the firm. The external labor market is the pool of potential applicants outside the firm. Promotions and job transfers are the most common results of internal recruiting. High-quality employees are the biggest contributors to growth, and one of the greatest operational challenges is finding, hiring, and retaining qualified workers. 2

14 Employee Recruitment 2 recruitment branding
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business recruitment branding Presenting an accurate and positive image of the firm to those being recruited by including current information about the firm in printed recruitment materials and Web-based job announcements. Integrating HR and marketing allows the company to excel at attracting talent and customers. 2

15 CONCEPT check 2 What are the two sources of job applicants?
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business What are the two sources of job applicants? What are some methods firms use to recruit applicants? What is meant by recruitment branding? 2

16 3 Employee Selection 3 How do firms select qualified applicants?
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 3 How do firms select qualified applicants? After qualified applicants are attracted, the selection process begins. 3

17 Employee Selection 3 selection
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business selection Presenting an accurate and positive image of the firm to those being recruited by including current information about the firm in printed recruitment materials and Web-based job announcements. 3

18 Employee Selection Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 1. Initial screening: application and interview 2. Employment testing 3. Selection interview 4. Background and reference checks 5. Physical exams and drug testing 6. Decision to hire Selection is the process of determining which persons in the applicant pool possess the qualifications necessary to be successful on the job. The steps or hurdles in the employee selection process are shown above. 3 Exhibit 8.4

19 CONCEPT check 3 Describe the employee selection process.
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Describe the employee selection process. What are some of the ways that prospective employees are tested? 3

20 Employee Training and Development
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 4 What types of training and development do organizations offer their employees? Organizations invest in training and development activities to ensure that employees have the knowledge and skills to perform their jobs successfully. 4

21 Employee Training and Development
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Employee Training and Development training and development Activities that provide learning situations in which an employee acquires additional knowledge or skills to increase job performance. Training is done: on-the-job off-the-job Training objectives specify performance improvements, reduction in errors, job knowledge to be gained, and/or other positive organizational results. Training can be done either on the job or off the job. © Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA) 4

22 Employee Training and Development Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Training Needs Assessment Feedback for Training Improvement Training Objective Design Training Program Conduct Training Program Training Program Evaluation Training and development involves learning situations in which the employee acquires additional knowledge or skills to increase job performance. The process of creating and implementing training and development activities begins with a training needs assessment. Once the program is developed and delivered to meet the training needs, it is evaluated, and improved. 4 Exhibit 8.6

23 On-the-Job Training 4 orientation
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business On-the-Job Training orientation Presentation to get the new employee ready to perform his or her job. Training for new employees begins with employee orientation. 4

24 Chapter 5 Entrepreneurship: Starting and Managing Your Own Business On-the-Job Training Job Rotation Reassignment of workers to several different jobs over time so that they can learn the basics of each job. Apprenticeship A form of on-the-job training that combines specific job instruction with classroom Instruction. Forms of on-the-job training are job rotation, apprenticeship, and mentoring. On-the-job training is job specific training, during which the employee learns the job by doing it with guidance from a supervisor or coworker. With mentoring, a senior employee or manager provides job- and career-related information to a protégé. Mentoring A form of on-the-job training in which a senior manager or other experienced employee provides job- and career-related information to a mentee. 4

25 Off-the-Job Training 4 Classroom training e-learning and e-training
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Off-the-Job Training Classroom training e-learning and e-training Programmed instruction Simulation Frequently, off-the-job training occurs in a classroom where cases, role plays, films, videos, lectures, and computer demonstrations are used to develop workplace skills. Web-based technology is being increasingly used along with more traditional training methods. 4

26 CONCEPT check 4 Describe several types of on-the-job training.
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Describe several types of on-the-job training. What are the advantages of simulation training? How is technology impacting off-the-job training? 4

27 Performance Planning and Evaluation
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 5 How are performance appraisals used to evaluate employee performance? 5

28 Performance Planning and Evaluation
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Performance Planning and Evaluation performance appraisal A comparison of actual performance with expected performance to assess an employee’s contributions to the organization. 5

29 Performance Planning and Appraisal Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Employee job task behavior Performance Planning: Setting standards and expectations Performance evaluation Rewards and job changes Performance Feedback The performance planning and appraisal process is shown here: The manager establishes performance standards. The employee works to meet the standards and expectations. The employee’s supervisor evaluates the employee’s work. Rewards and job change decisions are made. Rewards are positive feedback and provide reinforcement for the employee to work harder in the future. Information for performance appraisals can be assembled using rating scales, logs of employee job incidents, and reports of sales and production statistics. 5 Exhibit 8.7

30 CONCEPT check Chapter 5 Entrepreneurship: Starting and Managing Your Own Business What are the steps in the performance planning and appraisal process? What purposes do performance appraisals serve? Describe some sources of information for the performance appraisal. 5

31 Employee Compensation and Benefits
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 6 What are the types of compensation and methods for paying workers? 6

32 Types of Compensation or Pay
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business The wage or salary received by the employee. Direct pay Indirect Consists of various employee benefits or services. Base An hourly or monthly rate of pay received regardless of output level. Incentive Additional pay for attaining a specific goal. There are two types of compensation: direct and indirect. This slide shows the most common types of compensation. Incentive pay incentives also include bonuses and profit sharing. 6

33 Types of Indirect Pay 6 unemployment compensation
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Types of Indirect Pay unemployment compensation Government payment to unemployed former workers. worker’s compensation Pay for lost work time due to employment-related injuries. Indirect pay includes pensions, health insurance, and vacation. Some types of indirect pay are required by law: unemployment compensation, worker’s compensation, and Social Security. 6

34 Other Benefits 6 Paid time off Insurance
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Other Benefits Paid time off Insurance Pensions and retirement savings accounts Stock purchase options Additional benefits are not required by law. These include vacations, holidays, sick days, jury duty pay, insurance, pensions and retirement savings, and stock purchase options. 6

35 Employee Benefits 6 cafeteria-style benefit plan Chapter 5
Entrepreneurship: Starting and Managing Your Own Business Employee Benefits cafeteria-style benefit plan Employees are allowed to mix and match benefit items or select items based on individual needs. Some firms with numerous benefits provide selection of items based on individual needs. 6

36 CONCEPT check Chapter 5 Entrepreneurship: Starting and Managing Your Own Business How does a firm establish a pay scale for its employees? What is the difference between direct and indirect pay? Explain the concept of a cafeteria-style benefit plan. 6

37 The Labor Relations Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 7 What is a labor union and how is it organized? 7

38 Labor Unions 7 labor union collective bargaining
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Labor Unions labor union An organization that represents workers in dealing with management over disputes involving wages, hours, and working conditions. collective bargaining Negotiating a labor agreement. Tens of thousands of American firms are unionized and millions of American workers belong to unions. If you work in the mining, manufacturing, construction, or transportation industries, you will probably deal with or be affected by labor unions. 7

39 Labor Relations Process
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Administering the agreement Negotiating a labor agreement Union organizing Phase 3 Phase 2 Phase 1 The labor relations process that produces a union-management relationship consists of three phases: union organizing negotiating a labor agreement (collective bargaining) daily administering of the labor agreement 7

40 Benefits Stressed by Unions
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Benefits Stressed by Unions Almost always Often Seldom Grievance procedures Job security Improved benefits Higher pay More influence in decision making Better working conditions Lobbying opportunities Increased production Higher-quality products Technical training More job satisfaction A union organizing campaign is started from within, by unhappy employees, or from outside, by a union that has picked the employer for an organizing drive. During the union organizing phase, the union and the employer engage in a pre-election campaign to try to convince workers to vote in their favor. Exhibit 8.9, as summarized here and on the next slide, lists benefits usually stressed by the union and common arguments employers make to convince employees a union is unnecessary. 7 Exhibit 8.9

41 Employer Arguments Against Unionization
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Employer Arguments Against Unionization An employee can always come directly to management with a problem. As a union member, you will pay monthly union dues of $15 to $30. Merit-based decisions are better than seniority-based. Pay and benefits are similar to the leading firms in the industry. We meet all health and safety standards of OSHA. Performance and productivity are more important than union representation in determining pay raises. 7 Exhibit 8.9

42 Union Organizing Process and Election
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 4. NLRB determination of bargaining unit 3. Petition for certification election 2. Authorization card campaign 1. Union contact with employees 6. Election 5. Employer and union preelection campaigns 7a. Certification of union and start of collective bargaining 7b. Rejection of union A nonunion employer becomes unionized through an organizing campaign. Once the union gets signed authorization cards from at least 30 percent of the employees, it can ask the National Labor Relations Board for a union certification election. This election, by secret ballot, determines whether the workers want to be represented by the union. The election is conducted by the NLRB. If a majority vote in favor, the employer has to bargain with the union over wages, hours, and other terms of employment. The complete organizing process is summarized in Exhibit 8.10. 7 Exhibit 8.10

43 Collective Bargaining
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 8 What is collective bargaining, and what are some of the key negotiation issues? 8

44 Negotiating Labor Agreements
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Union Security Management Rights Wages Job Benefits Job Security and Seniority The union contract is a legally binding agreement that covers certain bargaining issues as are shown on this slide, and discussed on the following slides. © ERIC ESPADA / CSM / Landov 8

45 Union Security 8 union shop agency shop open shop
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Union Security union shop Nonunion workers can be hired, but they must join the union. agency shop Does not require workers to join the union. open shop Workers can work at a unionized company without having to join the union (right-to-work law). Union Security: A union wants all employees to be union members. This can be accomplished by negotiating a union security clause. Today, the most common form of union security is the union shop, where nonunion workers must join the union within 30 or 60 days. An agency shop does not require union membership, but must pay the union a fee to cover its expenses in representing them. Under the Taft-Hartley Act, any state can make all forms of union security illegal by enacting right-to-work laws. In this arrangement, commonly known as an open shop, workers don’t have to join the union or pay dues or fees. 8

46 Management Rights 8 management rights clause
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Management Rights management rights clause A clause in the labor agreement that gives the employer all rights to manage the business except as specified in the contract. This list might secure management’s right to: Schedule work hours Hire and fire workers Set production standards Determine the number of supervisors Promote, demote, and transfer workers When a company becomes unionized, management loses some of its decision-making abilities. However, management has certain rights that can be negotiated in collective bargaining. Most union contracts have a management rights clause. 8

47 Wages and Benefits Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Higher wages for overtime, holiday work, and less desirable shifts Insurance programs Payment for certain nonwork time Pensions Income-maintenance plans Supplementary unemployment benefits Unemployment compensation In addition to requests for wage increases, unions usually want better fringe benefits. In some industries, such as steel and auto manufacturing, fringe benefits are 40 percent of the total cost of compensation. 8

48 Job Security and Seniority
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Job Security and Seniority job security The assurance, to some degree, that workers will keep their jobs. Depends primarily on the continued success and financial well-being of the company. seniority The length of an employee’s continuous service with a firm. Most financial security is directly related to job security—the assurance that workers will keep their jobs. Seniority is discussed in about 90 percent of all labor contracts. Seniority is a factor in job security, and unions usually want the workers with the most seniority to have the most job security. 8

49 CONCEPT check 8 Discuss the modern labor movement.
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Discuss the modern labor movement. What are the various topics that may be covered during collective bargaining? Explain the differences among a union shop, agency shop, and an open shop. 8

50 Managing Grievances and Conflicts
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 9 How are grievances between management and labor resolved, and what tactics are used to force a contract settlement? 9

51 Managing Grievances and Conflicts
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Managing Grievances and Conflicts grievance A formal complaint, filed by the employee or by the union, charging that management has violated the contract. arbitration The process of settling a labor-management dispute by having a third party make a decision, which is binding on both the union and the employer. The union’s main way of policing the contract is the grievance procedure. The typical grievance procedure is illustrated in Exhibit 8.12, shown on the following slide. If top management and the union president can’t resolve the grievance, it goes to arbitration. The decision is final and binding on the union and employer. 9

52 CONCEPT check 9 Describe the grievance procedure.
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Describe the grievance procedure. In what ways do arbitrators act like judges? What are some tactics for pressuring for a contract settlement? 9

53 Legal Environment of HR and Labor Relations
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business 10 What are the key laws and federal agencies affecting human resource management and labor relations? Federal laws help ensure that applicants and employees are treated fairly and not discriminated against. Hiring, training, and job placement must be unbiased. Promotion and compensation must be based on performance. These laws help all American workers who have talent, training, and the desire to succeed. 10

54 Wagner and Taft-Hartley Acts
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Wagner and Taft-Hartley Acts Employees have the right to unionize and bargain collectively Employers must deal with the union fairly, bargain in good faith, and not discriminate against employees who belong to a union Unions must represent all employees covered by a labor agreement and deal with the employer in good faith The Wagner and Taft-Hartley Acts govern the relationship between an employer and union. They establish rights for employees, employers, as well as unions. 10

55 Functions of the EEOC 10 Processing discrimination complaints
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Functions of the EEOC Processing discrimination complaints Issuing written regulations The EEOC was created by the 1964 Civil Rights Act. It is one of the most influential agencies for enforcing employment laws. Its three basic functions are shown above. Information gathering and dissemination 10

56 Affirmative Action 10 protected classes affirmative action programs
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Affirmative Action protected classes The specific groups who have legal protection against employment discrimination. Includes women, African Americans, Hispanic Americans, Native Americans, and others. affirmative action programs Programs established by organizations to expand job opportunities for women and minorities. An employment discrimination complaint can be filed by an individual or a protected class of employees who work for the company. The protected group may pursue a class action complaint that may eventually become a lawsuit. As a measure to prevent discrimination, many employers set up affirmative action programs to expand job opportunities for women and minorities. 10

57 Federal Mediation and Conciliation Service
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Specialist that facilitates labor-management contract discussions and suggests compromises. Mediator Specialist in labor-management negotiations that acts as a go-between for management and the unions and helps focus on the problems. Conciliator The Federal Mediation and Conciliation Service helps unions and employers negotiate labor agreements, through use of conciliation and mediation. Both of these processes require expert communication and persuasion. 10

58 CONCEPT check Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Discuss the laws that govern wages, pensions, and employee compensation. Describe the Americans with Disabilities Act. How do the Wagner and Taft-Hartley Acts impact labor-management relations? 10

59 Trends in HR Management and Labor Relations
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Trends in HR Management and Labor Relations 11 What trends and issues are affecting human resource management and labor relations? 11

60 Trends in HR Management and Labor Relations
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Trends in HR Management and Labor Relations Hiring employees who fit the organizational culture Improving efficiency through outsourcing and technology Using employee diversity as a competitive advantage Potential surge in labor union membership American society and its workforce are becoming increasingly more diverse in terms of racial and ethnic status, age, educational background, work experience and gender. Companies with a demographic employee profile that resembles its customers may gain competitive advantage. HR outsourcing is done when another firm can perform a task better and more efficiently, thus saving costs. 53 percent of all companies outsource some portion of their HR tasks. For many growing firms, corporate culture can be a key aspect of developing employees into a competitive advantage for a firm. Furthermore, firms are hiring for technical knowledge and skills to fit the job. Although organized labor has faced tumultuous times during the last several decades, union leaders are optimistic that unions will grow as low-wage service workers organize labor unions. 11

61 Competitive Advantage
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business competitive advantage A set of unique features of an organization that are perceived by customers and potential customers as significant and superior to the competition. Below is a list of companies with competitive advantage in their industries. Competitive advantage can come from various sources. For example: Southwest Airlines—route structure and high asset utilization Ritz-Carlton—high quality guest services Toyota—manufacturing efficiency and product durability Starbucks—location, service, and products The human resource practice can also provide a competitive advantage because of employee diversity, a strong reputation for hiring women and minorities, adaptation to change, and more robust product solutions. 11

62 Service Workers in 2012 11 Job Projected Growth Cashier 13%
Chapter 5 Entrepreneurship: Starting and Managing Your Own Business Job Projected Growth Cashier 13% Customer Service 24% Food preparation 23% Janitorial 18% Nursing aide 25% The Service Employees International Union believes that the service industry provides a target of opportunity for union membership, with the largest expected employment growth through 2012 in low-paid local services. 11

63 CONCEPT check Chapter 5 Entrepreneurship: Starting and Managing Your Own Business How can employee diversity give a company a competitive advantage? Explain the concept of hiring for fit. Why does the service industry provide an opportunity for labor union growth? 11


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