1. Human Resource Management and Labor Relations
Chapter Ten
Human Resource Management and Labor Relations

2. L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to:
Define human resource management and explain how managers plan for their organization’s human resource needs.
Identify the tasks in staffing a company and discuss ways in which organizations select, develop, and appraise employee performance.
Describe the main components of a compensation system and describe some of the key legal issues involved in hiring, compensating, and managing workers in today’s workplace.
In this chapter, we will study human resource leadership and labor relations.
We will define human resource management and explain how managers plan for their organization's human resource needs. We will identify the tasks in staffing a company and discuss ways in which organizations select, develop, and appraise employee performance. And we will describe the main components of a compensation system and describe some of the key legal issues involved in hiring, compensating, and managing workers in today’s workplace.
Teaching Tips:
Form a team with another student. In your teams, please select one of the learning objectives we just reviewed. Please prepare a brief introduction to the topic. We will share our answers with the class.
Answers will vary. You can wait to comment on the answers until you have covered the material later in the chapter.

3. L E A R N I N G O B J E C T I V E S (cont.)
After reading this chapter, you should be able to:
Discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace.
Explain why workers organize into labor unions and describe the collective bargaining process.
We will also discuss workforce diversity, the management of knowledge workers, and the use of a contingent workforce as important changes in the contemporary workplace. Finally, we will explain why workers organize into labor unions and describe the collective bargaining process.
Teaching Tips:
In your student teams, please discuss workforce diversity and come up with two issues that you think fit within this topic. We will share our answers with the class.
Answers will vary. You can wait to comment on the answers until you have covered the material later in the chapter. 3

4. What’s in It for Me?
Why does effectively managing human resources matter to you?
By understanding the material in this chapter, you’ll be better able to understand:
The importance of properly managing human resources in a unit or business you own or supervise
Why and how your employer provides the working arrangements that most directly affect you
What’s in it for you? Why does effectively managing human resources matter to you?
By mastering the material in this chapter, you’ll benefit in two ways:
First, you will understand the importance of properly managing human resources in a unit or business you own or supervise.
Second, you will understand why and how your employer provides the working arrangements that most directly affect you.
Teaching Tips:
In your student teams, choose one of these two benefits we have just reviewed. Please discuss in your teams how you believe you will achieve the benefit.
Answers will vary. Your responses can wait until later in the class when the material has been covered.

5. The Foundations of Human Resource Management
Human Resource Management (HRM)
Activities directed at attracting, developing, and maintaining an effective workforce
The Strategic Importance of HRM
Human resources has a substantial impact on a firm’s bottom-line performance
Many firms are developing strategic HR plans
Chief officer reports to CEO
First let’s look at the foundations of human resource management.
What is human resource management? Human resource management includes activities directed at attracting, developing, and maintaining an effective workforce.
What is the strategic importance of HRM? The strategic importance of HRM include the following points:
Human resources has a substantial impact on a firm’s bottom-line performance.
Many firms are developing strategic HR plans.
Many chief HR officers report to the CEO of the organization.
Teaching Tips:
In your student teams, please make a list of three key activities that human resources personnel are engaged in that are directed at attracting, developing, and maintaining an effective workforce. For example, what types of activities do they do? We will share our examples with the class.
Answers will vary but should include key areas such as interviewing, hiring, managing employee benefits, etc.

6. Figure 10.1 The HR Planning Process
Let’s examine the HR planning process.
First, the HR department will conduct a job analysis.
Second, they will forecast a demand for labor.
This forecast will address the internal and external supplies of labor.
Finally, they will develop a plan to match demand with supply.
Teaching Tips:
In your student teams, please think of an example of how this model might be applied within an organization that produces toys in a recession economy. We will share our examples with the class.
Besides forecasting a demand for labor, the HR job analysis will examine the steps in the production process, as well as the current economic conditions. This should be reflected in the student answers. In a recession, people will not spend as much money on toys, thus the HR team should conclude that the forecast for the supply of labor will go down.

7. HR Planning Job Analysis
Systematic analysis of jobs within an organization
Job Description
Lists the duties and responsibilities of a job; its working conditions; and the tools, materials equipment, and information used to perform it
Job Specification
Lists the skills, abilities, and other credentials and qualifications needed to perform the job effectively
Let’s focus more specifically on job analysis. Job analysis is a systematic analysis of jobs within an organization.
First there is the job description.
This lists the duties and responsibilities of a job; its working conditions; and the tools, materials, equipment, and information used to perform the job.
Second is the job specification.
This lists the skills, abilities, and other credentials and qualifications needed to perform the job effectively.
Teaching Tips:
In your student teams, please develop a job description for a customer service representative for a large toy manufacturer. Be sure to address the elements included in the job description we just discussed. Then please prepare the job specification for the same position, listing the skills, abilities, and other credentials and qualifications one might need to perform the customer service job effectively.
Answers will vary, but should reflect back on the elements of the job description and job specification listed above.

8. HR Planning (cont.) Forecasting HR Demand and Supply
Internal supply (people who will be in the firm at a future date)
Replacement charts
Employee information systems (skills inventories)
External supply (people who will be available for hiring from the labor market at large)
State employment commissions
Government reports
College information
Let’s discuss forecasting the demand and supply factors in Human Resources.
Forecasting internal supply—or the number/type of people who will be employed in the firm at a future date. To do this, HR uses replacement charts and employee information systems.
Replacement charts list which positions are anticipated to be open in the next months and years.
Employee information systems contain skills inventories of the current employees in the firm.
Forecasting external supply—or the number/type of people who will be available for hiring from the labor market at large. This process should include examining information available from:
State employment commissions
Government reports
College information
Teaching Tips:
Let’s revisit, in our teams of students, our example of a large toy manufacturer. How might the toy manufacturer forecast internal supply? What about getting information about the external supply of available employees? What issue might they face in a recessionary economy?
Answers will vary but should address the items reviewed in this slide, such as replacement charts and what they include and information from employee information systems. The answers should also address external supply by contacting state employment commissions, government reports, and college information on graduates. In a recessionary economy, the firm may be looking at how they can retain employees or how they will function once the economy returns to growth with the employees within their employee information systems.

9. HR Planning (cont.) Matching HR Supply and Demand
Alleviating Shortfalls
New hires, retraining current employees, retaining retirees, and installing more productive systems
Managing Overstaffing
Transferring extra employees, not replacing employees who quit (attrition), encouraging early retirement, laying off personnel
In addition, the HR department must consider matching HR supply with demand.
They must address alleviating shortfalls, which includes taking the following steps:
Seeking new hires
Retraining and transferring present employees
Retaining retirees
Installing more productive systems
They must also manage overstaffing. In this situation, HR managers must think about the following:
Transferring extra employees
Not replacing employees who quit (attrition)
Encouraging early retirement
Laying off personnel
Teaching Tips:
Let’s focus back on our large toy manufacturer. In a recessionary economy, please discuss in your teams which of these two methods might the firm employ to match HR supply and demand? We will share our answers with the class.
Answers should include the items under managing overstaffing noted above.

10. Staffing the Organization
Recruiting
Attracting qualified persons to apply for the jobs that are open
Internal
Considering present employees as candidates for openings
External
Attracting people outside of the organization to apply for jobs
As an HR manager staffs the organization, there are a couple of different types of recruiting that he or she may undertake.
First, let’s define recruiting as attracting qualified persons to apply for the jobs that are open.
Internal recruiting involves considering present employees as candidates for openings. These can include the following methods:
Promotion from within the employees already working for the company
Union contracts and job bidding
External recruiting includes attracting people outside of the organization to apply for a job with the organization. These sources can include:
State employment agencies
Private employment agencies
Advertisements
Teaching Tips:
In your student teams, please choose either internal or external recruiting. Then please provide two examples of how a large firm would go about the type of recruitment your team chose. We will share our answers with the class.
Answers should focus around the items reviewed on this slide.

11. Staffing the Organization (cont.)
Selecting Human Resources
Application forms—no illegal questions
Tests—ability, skills, aptitude, knowledge, attitude
Interviews—validity is increased by:
Training interviewers to reduce individual bias
Using a structured interview format
Other Techniques
Polygraph tests
Physical examinations
Drug tests
Reference checks
As an HR manager goes about selecting the human resources, or employees, he or she will need to staff the organization, the following are items that can be used by the manager to accomplish the task:
Application forms; however, make sure the forms do not ask illegal questions such as one’s age, marital status, etc.
Using a structured interview format with job-related questions to improve consistency, reduce bias, and eliminate illegal questioning of applicants.
Other techniques that can be used:
Polygraph, or lie detector test. These are not used that frequently anymore.
Physical exams, but employers must be aware of the Americans with Disabilities Act, which forbids denying someone employment based on physical disability alone.
Drug tests
Reference checks
Teaching Tips:
In your student teams, please select two of the techniques that can be used by an HR manager. Please come up with examples of what those techniques might look like. We will share our answers with the class.
Answers will vary but should include the techniques listed in the slide above.

12. Developing the Workforce
Training
On-the-job
Off-the-job
Vestibule
Developing the workforce once it is hired requires training of employees. This can include:
On-the-job training: Working side-by-side as the employee learns the tasks required of the position.
Off-the-job training: Providing a separate training program for employees while they are away from their jobs.
Vestibule training: Also called “the teachable moment,” vestibule training occurs when a supervisor or manager discusses a training issue with an employee while they are walking in the office after encountering a specific situation.
Teaching Tips:
In your student teams, please choose one of the forms of training. Then please provide two example scenarios as to how the chosen type of training can be conducted. We will share our responses with the class.
Answers will vary.

13. Developing the Workforce (cont.)
Performance Appraisal
Defining performance standards
Observing performance
Writing up assessment
Discussing appraisal
Performance appraisals are another important part of human resources. Performance appraisals include:
Defining performance standards
Observing performance
Writing up the assessment
Discussing the appraisal
Teaching Tips:
In your student teams, please role play a brief performance appraisal. One of you will be the employee and the other the manager. Create your own scenario and company. Try to use one of each of the elements we have just discussed. We will share our experiences with the class. I am going to now put up a sample employee appraisal form for you to use in your teams.
Answers will vary. Let the students try to do this. Go to the next slide and let them work for 5 minutes.
Performance Appraisal
Evaluating job performance

14. FIGURE 10.2 Sample Performance Evaluation Form
Teaching Tips:
As I just mentioned, you are working in your teams to perform a sample performance evaluation. Feel free to use elements of this form. When you have finished, switch roles so you each have a chance to be the employee and the manager. We will share our results in five minutes.

15. Compensation and Benefits
Compensation System
Total package of rewards a company offers employees
Wages—money paid for time worked
Salary—money paid to perform a job
Factors affecting compensation
Competitors’ wage offerings
Internal wage and salary
Compensation and benefits are important areas in human resources. A compensation system is the total package of rewards that a company offers employees in return for their labor. These include:
Wages, which is money paid for time worked
Salary, which is money paid to perform a job
Let’s review a few factors affecting compensation:
Competitors’ wage offerings. What the market salary level is impacts salaries you set within your own firm.
Internal wage and salary structure, which includes:
Job value
Performance
Longevity
Teaching Tips:
In your teams, please discuss one of the factors affecting compensation. Please come up with two examples to share with the class.
Answers will vary, but should include the factors discussed above.

16. Compensation and Benefits (cont.)
Incentive programs
Special pay programs designed to motivate high performance
Individual incentives:
Bonuses
Merit salary systems
Pay for performance (variable pay)
Company-wide incentives:
Profit-sharing
Gain sharing
Pay-for-knowledge
Incentive programs are also an important part of compensation and benefits. Incentive programs are special pay programs designed to motivate high performance by an employee.
An incentive program can include individual incentives such as:
Bonuses
Merit salary systems
Pay for performance, which is also called variable pay
Incentive programs also include company-wide incentives. These include:
Profit-sharing plans
Gain sharing plans, which reward groups for their performance
Pay-for-knowledge plans, which encourage employees to gain new knowledge or skills
Teaching Tips:
In your student teams, assume you are working in the human resources department of the large toy company you discussed earlier. Please develop a basic incentive plan for the toy company workers based on either individual incentives or company-wide incentives.
Answers will vary.

17. Compensation and Benefits (cont.)
Benefits Programs
Mandatory (required by law)
Social Security retirement benefits
Workers’ compensation insurance
Discretionary (optional)
Health, life, and disability insurance
Vacations and holidays
Employee assistance programs
Retirement (pension) plans
Contain the costs of benefits
Cafeteria benefits plans
Benefits programs can be mandatory or discretionary.
Mandatory benefits programs, which are required by U.S. law, include:
Social Security retirement benefits: The employer pays 7.5% of your wages into Social Security and you, the employee, pay the same amount.
Worker’s compensation insurance: This insurance protects both you and the company in case you are hurt on the job.
Discretionary benefits programs are optional programs, but are provided by many employers. These plans include:
Health, life, and disability insurance
Vacations and holidays
Employee assistance programs
Retirement or pension plans, or, more likely, the ability to deposit funds into a 401K, which you control with a match from your employer if you participate
There are also benefits programs that contain the costs of benefits.
These are called cafeteria benefits plans. These plans set aside a certain amount of money for benefits for each employee, and those employees choose how they wish to spend those funds.
Teaching Tips:
In your student teams, now assume you are members of the Human Resources department, and the CEO has just asked you to develop a discretionary benefit plan. Please draw up a simple plan. We will share our suggestions with the class.
Answers will vary, but should include the elements of a discretionary plan just discussed.

18. The Legal Context of HRM
Equal Employment Opportunity Laws
Protect workers from unfair or inappropriate (non-job- related) discrimination in the workplace
Protected Classes
Individuals sharing common characteristics defined by law
Race, color, religion, gender, age, national origin, disability status, and status as a military veteran
Equal Employment Opportunity Commission (EEOC)
Federal agency that enforces discrimination-related laws
Affirmative Action
Written plan for actively recruiting, hiring, and developing members of protected classes
Now we will look at the legal context of human resources management. First we will look at equal opportunity laws. These laws protect workers from unfair or inappropriate (non-job-related) discrimination in the workplace.
Second, there are protected classes in the workplace. These individuals share common characteristics as defined by the law, which can include:
Race
Color
Religion
Gender
Age
National origin
Disability status
Status as a military veteran
The Equal Employment Opportunity Commission (EEOC) is the federal agency that enforces discrimination-related laws. This bureau is responsible for enforcing the Americans with Disabilities Act.
Affirmative Action involves preparation of a written plan for actively recruiting, hiring, and developing members of protected classes.
Teaching Tips:
In your student teams, please choose one of the four legal areas of HRM we have just discussed. Please list two examples that relate to the area your team chooses. We will share our examples with the class.
Answers will vary but should relate back to the four areas discussed in this slide.

19. The Legal Context of HRM (cont.)
Contemporary Legal Issues in HRM
Employee safety and health
Occupational Safety and Health Act of 1970 (OSHA)
Emerging areas of discrimination law
AIDS in the workplace
Sexual harassment
Quid pro quo
Hostile work environment
Employment-at-will
Wrongful discharge
The Patriot Act
Developed in response to 9/11/2001
Grants government investigators rights to what was privileged information
Bars certain “restricted” individuals (i.e., ex convicts, aliens) from working with restricted biological agents
Some contemporary legal issues in human resource management include:
Employee safety and health was addressed with the Occupational Safety and Health Act of 1970, also known as OSHA.
Emerging areas of discrimination law include the following areas:
AIDS in the workplace
Sexual harassment
Quid pro quo (exchanging something of value for sexual favors)
Hostile work environment (a subtler form of sexual harassment, such as off-color jokes, but has been expanded to include age, ethnicity, and religion as well)
Employment-at-will
This concept holds that either an employee or employer can terminate an employment contract.
In recent years, increasing numbers of employees have challenged their dismissals, citing wrongful discharge.
The Patriot Act
This act was developed in response to the terrorist attacks of 9/11/2001.
The act grants government investigators rights to what was privileged information.
The act bars certain “restricted” individuals, such as convicts and aliens, from working with restricted biological agents.
Teaching Tips:
In your student teams, please choose one area of emerging discrimination law. Please come up with two examples for your chosen area. We will share our examples with the class.
Answers can vary but can be judged against the four emerging areas discussed above.

20. New Challenges in the Changing Workplace
Managing Workforce Diversity
Workforce diversity:
The range of workers’ attitudes, values, beliefs, and behaviors that differ by gender, race, age, ethnicity, physical ability, and other relevant characteristics
Organizations are recognizing that diversity can be a competitive advantage
There are some new challenges in the changing workplace that HR managers need to address.
One of these is managing workforce diversity. Workforce diversity includes the range of workers’ attitudes, values, beliefs, and behaviors that differ by gender, race, age, ethnicity, physical ability, and other relevant characteristics.
Organizations are recognizing that diversity can be a competitive advantage.
Teaching Tips:
In your student teams, please choose two areas of workforce diversity. Please develop a scenario for what might occur if faced with that element of diversity in your large toy manufacturing company.
Answers will vary but should be related to one of the workforce diversity examples just discussed.

21. FIGURE 10.3a Distribution of the Labor Force by Race – 2050 FIGURE 10.3b Hispanic Share of Civilian Labor
These two graphs present an interesting perspective of the distribution of the workforce in the United States.
The first is by race. Notice the changes across the years.
The second is the Hispanic share of the civilian labor workforce. Notice how the Hispanic share of the workforce has risen.
Teaching Tips:
In your teams discuss why you believe these trends are occurring.
Answer includes the fact that immigration patterns in the U.S. have changed to include many more Hispanic immigrants and that the number of African Americans, Asian Americans, and other nationalities have increased as well.

22. New Challenges in the Changing Workplace (cont.)
Managing Knowledge Workers
Knowledge workers add value because of what they know
Computer scientists
Physical scientists
Engineers
Another new challenge in the changing workplace is managing knowledge workers. Knowledge workers add value because of what they know. These include such careers as:
Computer scientists
Physical scientists
Engineers
Hiring and retaining knowledge workers is a critical HR challenge.
Teaching Tips:
In your student teams, please give two examples of knowledge workers who might be employed by a large toy manufacturer. We will share our examples with the class.
Answers could include design engineers, physical scientists who work with plastics or other materials for tooling or production of toys.
Hiring and retaining knowledge workers is a critical HR challenge

23. New Challenges in the Changing Workplace (cont.)
Contingent Workers
A person who works for an organization on something other than a permanent or full-time basis
Independent contractors
On-call workers
Temporary employees
Contract and leased employees
Part-time workers
Another new challenge in the changing workplace are contingent workers.
A contingent worker is a person who works for an organization on something other than a permanent or full-time basis. These can include:
Independent contractors
On-call workers
Temporary employees
Contract and leased employees
Part-time workers
Teaching Tips:
In your student teams, please make a list of three examples of contingent workers, what type of company might they work for, and what their title might be. We will discuss our examples with the class.
Answers will vary, but should relate back to the five types of contingent workers presented in this slide.

24. New Challenges in the Changing Workplace (cont.)
Managing Contingent and Temporary Workers
Careful planning
Developing a strategy for integrating contingent workers into the organization
Understanding the advantages and disadvantages of contingent workers
Assessing the true cost
Managing contingent and temporary workers is also a new challenge in the changing workplace. Some of these challenges include:
Careful planning for coordinated use of temporary workers
Understanding the advantages and disadvantages of contingent workers
Assessing the true cost of using contingent workers
Developing a strategy for integrating contingent workers into the organization
Teaching Tips:
In your student teams, please choose one of the four challenges of managing contingent and temporary workers we have just discussed. Then please discuss why the challenge your team chose is important for any corporation.
Answers will vary but should support one of the four challenges.

25. Dealing with Organized Labor
Labor Union
A group of individuals working together to achieve shared job-related goals: higher pay, shorter working hours, job security, greater benefits, better working conditions
Labor Relations
The process of dealing with employees who are represented by a union
Collective Bargaining
The process by which union leaders and managers negotiate common terms and conditions of employment for the workers represented by unions
Dealing with organized labor or unions is another human resources challenge.
A labor union is a group of individuals working together to achieve shared job-related goals, such as higher pay, shorter working hours, more job security, greater benefits, or better working conditions.
Labor relations is the process of dealing with employees who are represented by a union.
Collective bargaining is the process by which union leaders and managers negotiate common terms and conditions of employment for the workers represented by unions.
Teaching Tips:
In your teams, discuss why toy workers in your large manufacturing company might be unionized. We will share our answers with the class.
Answers should include the benefits discussed on this slide.

26. Dealing with Organized Labor (cont.)
Trends in Union Membership
Since the mid-1950s, membership has declined at a steady rate.
The percentage of successful union-organizing campaigns has also declined.
Trends in Union-Management Relations
In most sectors, unions are in a weakened position and have taken more conciliatory stances in their relations with management.
There has been a downward trend in union membership. Since the mid-1950s, membership has declined at a steady rate to its present level of 12.1% in 2007.
The percentage of successful union-organizing campaigns has also declined.
Trends in union-management relations have shown that in most sectors, unions are in a weakened position, and have taken more conciliatory stances in their relations with management.
Teaching Tips:
With your student partner, discuss what is the biggest union in the U.S. today.
The United Auto Workers is the biggest union today.

27. Collective Bargaining
An ongoing process involving both the drafting and the administering of the terms of a labor contract.
Contract Issues
Compensation
Benefits
Job security
Management rights
Collective bargaining is an ongoing process involving both the drafting and the administering of the terms of a labor contract. Contract issues that come up for collective bargaining include:
Compensation
Cost-of-living adjustment (COLA) clauses
Benefits
Job security
Management rights
Teaching Tips:
In your student teams, please choose one of the contract issues we just discussed. Then please think of a company where union workers have addressed one of these issues in the news during the last year or two. We will share our examples.
Answers will vary, but certainly the airline industry and auto workers should be in the forefront, based on 2008 issues.

28. Collective Bargaining (cont.)
Union Tactics When Bargaining Fails
Strike
Picketing
Boycott
Work slowdown
Management Tactics When Bargaining Fails
Lockouts
Strikebreakers
Sometimes collective bargaining fails. What can a union do and what tactics can it use when this happens?
Strike
Picketing
Boycott: Union members will not buy products from a specific firm.
Work slowdown: Workers don’t walk off the job, but slow work processes or call in sick.
Management tactics used when bargaining fails include:
Lockouts: Workers are locked out of company facilities.
Hiring strikebreakers who cross the picket lines.
Teaching Tips:
In your student teams, choose one of the four union tactics that the union of toy manufacturing workers might use if bargaining with the company fails. Develop a brief scenario for what would occur with the tactic your union would choose. We will share our answers with the class.
Answers will vary but should be based on one of the four union tactics noted above.

29. Collective Bargaining (cont.)
Resolving Disputes
Mediation
Voluntary Arbitration
Compulsory Arbitration
Resolving union disputes includes:
Mediation, where the parties sit down at the bargaining table to try to work things out with a mediator.
Arbitration, either voluntary or compulsory, which calls for a third party to judge the situation and make a decision on the appropriate solution. Some arbitration is binding, which means that both sides agree to abide by the arbitrator’s decision as law.
Teaching Tips:
In your student teams, please choose one of the three methods for resolving disputes we have just reviewed and prepare a description of it to share with the class.
Answers will vary.

30. Key Terms affirmative action plan benefits bonus boycott
cafeteria benefits plan
collective bargaining
compensation system
compulsory arbitration
contingent worker
cost-of-living adjustment (COLA)
economic strike
employee information system (skills inventory)
employment at will
equal employment opportunity
Equal Employment Opportunity Commission (EEOC)
There are many key terms that we learned in this chapter.
Teaching Tips:
Please form teams of two students. Each team will be assigned a number of terms. Your team should write an appropriate sentence using the key terms assigned to your group, which we will share with the class.

31. Key Terms (cont.) external recruiting job specification
gain sharing plan
hostile work environment
human resource management (HRM)
incentive program
internal recruiting
job analysis
job description
job specification
knowledge workers
labor relations
labor union
lockout
mediation
merit salary system
There are many key terms that we learned in this chapter.
Teaching Tips:
Please form teams of two students. Each team will be assigned a number of terms. Your team should write an appropriate sentence using the key terms assigned to your group, which we will share with the class.