1. Learning Objectives
LO 1 Discuss how companies use human resources management to gain competitive advantage.
LO 2 Give reasons why companies recruit both internally and externally for new hires.
LO 3 Understand various methods for selecting new employees and equal employment opportunity laws.
LO 4 Evaluate the importance of spending on training and development.

2. Managing Human Resources
Chapter Eight
© 2013 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 

3. Learning Objectives (cont.)
LO 5 Explain alternatives for who appraises an employee’s performance.
LO 6 Describe the fundamental aspects of a reward system.
LO 7 Summarize how unions and labor laws influence human resources management.

4. Human Resource Management
Human resources management (HRM)
system of organizational activities to attract, develop, and motivate an effective and qualified workforce. Also known as talent, human capital, or personnel management.

5. Human Resources Management
People and management policies, like other resources, become a competitive advantage for a company when they:
create value
are rare
are difficult to imitate
are organized
Because employee skills, knowledge, and abilities are among the most distinctive and renewable resources upon which a company can draw, their strategic management is more important than ever.
Human capital is often used today to describe the strategic value of employee skills and knowledge.

6. Strategic Human Resources Management
Creates value
Is rare
Is difficult
Is organized

7. HR Planning Involves Three Stages
Programming
Evaluating
1. Planning —To ensure that the right number and types of people
are available, HR managers must know the organization’s business
plans—where the company is headed, in what businesses
it plans to be, what future growth is expected, and so forth.
2. Programming —The organization implements specific human
resources activities, such as recruitment, training, and
pay systems.
3. Evaluating —Human resources activities are evaluated to
determine whether they are producing the results needed to
contribute to the organization’s business plans.

8. HR Planning Involves Three Stages
Planning ensures that the right number and types of people are available, where the company is headed, in what businesses it plans to be, what future growth is expected, and so forth.
Programming of specific human resources activities such as recruitment, training, or layoffs. The company’s plans are implemented.
Evaluating determines whether they are producing the results needed to contribute to the organization’s business plans.

9. HR Planning Process
Figure 8.1

10. The HR Planning Process
Demand forecasts
determining how many and what type of people are needed
Demand forecasts for people needs are derived from organizational plans.
The number of labor-hours required operating a plant, selling the product, distributing it, and service customers can be calculated.
Supply of labor
Estimates of how many and what types of employees the organization actually will have.
In performing a supply analysis, the organization estimates the number and quality of its current employees as well as the available external supply of workers.
Forecasts of a diverse workforce have become fact.

11. Direct Managerial Input Statistical/ Historical Ratios
Forecast Methods
Direct Managerial Input
Best Guess
Statistical/ Historical Ratios
Based on projections of cash flows, expenses, or financial measures
Based on managers’ assessment of current head count, plus a guess on relevant internal/external factors
Based on statistical methods, such as multiple regression, in combination with historical data

12. The Planning Process Reconciling supply and demand
Once managers have a good idea of both the supply and demand for various types of employees, they can start developing approaches for reconciling the two.
Organizations may find that they need more people than they currently have.
Organizations may find that they have more people than they need.

13. The Planning Process Job analysis
It tells the HR manager about the job itself: the essential tasks, duties, and responsibilities involved in performing the job.
It describes the skills, knowledge, ability and other characteristics needed to perform the job.
It provides the information that virtually every human resources activity requires.

14. Job Analysis Job Description Specification
written description of the basic tasks, duties, and responsibilities required
of an employee holding a particular job
Specification
a written summary of the qualifications needed to successfully perform a job
2.1

15. Job Analysis and HR HR Subsystems Job Specification Job Description
Recruiting
Selection
Training
Performance
Appraisal
Separation
Job Analysis
Job analysis is a "purposeful, systematic process for collecting information on the important work-related aspects of a job.” Job descriptions and job specifications are two of the most important results of a job analysis. A job description is a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job. Job specifications, which are often included as a separate section of a job description, are a summary of the qualifications needed to successfully perform the job.
Job analyses, job descriptions, and job specifications also help companies meet the legal requirement that their human resource decisions be job related. To be judged job related, recruitment, selection, training, performance appraisals, and employee separations must be valid and be directly related to the important aspects of the job, as identified by a careful job analysis.

16. Staffing the Organization
Recruitment
The development of a pool of applicants for jobs in an organization
Internal, external
Selection
Choosing from among qualified applicants to hire into an organization

17. Methods for External Recruiting
Advertising
Employee referrals
Walk-ins
Outside organizations
Employment services
Special events
Internet job sites
External recruiting is the process of developing a pool of qualified job applicants from outside the company. External recruitment methods include advertising (newspapers, magazines, direct mail, radio, or television), employee referrals (asking current employees to recommend possible job applicants), walk-ins (people who apply on their own), outside organizations (universities, technical/trade schools, professional societies), employment services (state or private employment agencies, temporary agencies, and professional search firms), special events (career conferences or job fairs), and Internet job sites.
Which external recruiting method should you use? Studies show that employee referrals, walk-ins, newspaper advertisements, and state employment agencies tend to be used most frequently for office/clerical and production/service employees. By contrast, newspaper advertisements and college/university recruiting are used most frequently for professional/technical employees. When recruiting managers, organizations tend to rely most heavily on newspaper advertisements, employee referrals, and search firms.

18. Internal Recruiting
A pool of applicants who already work for the company
“Promotion from within”
Improves employee morale and motivation
Reduces employer time and cost
Job posting is the procedure for internal advertising
Career path is a planned sequence of jobs
Internal recruiting, sometimes called "promotion from within," improves employee commitment, morale, and motivation. Recruiting current employees also reduces recruitment startup time and costs and, because employees are already familiar with the company's culture and procedures, generally increases workers' chances of success in new jobs. Job posting is a procedure for advertising job openings within the company to existing employees. A job description and requirements are typically posted on a bulletin board, in a company newsletter, or in an internal computerized job bank that is only accessible to employees. Job posting helps organizations discover hidden talent, allows employees to take responsibility for career planning, and makes it easier for companies to retain talented workers who are dissatisfied in their current jobs and would otherwise leave the company. A career path is a planned sequence of jobs through which employees may advance within an organization. For example, a person who starts as a sales representative may then move up to sales manager, and then to district or regional sales manager. Career paths help employees focus on long-term goals and development while also helping companies do succession or replacement planning.

19. Applications and Résumés Cognitive Ability Tests
Selection Methods
Applications and Résumés
Reference Checks
Drug Testing
Cognitive Ability Tests
Performance Tests
Integrity Tests
Interviews
Background Checks
Personality Tests

20. Selection Methods
Applications and resumes provide basic information to prospective employers. Typically include information about the applicant’s name, educational background, citizenship, work experience, certifications, and the like.
Interviews are the most popular selection tool. Structured interviews conduct the same interview with each applicant.
Situational interview focuses on hypothetical situations.
Behavioral description interview explores what candidates have actually done in the past.
Reference checks are another commonly used screening device.
Background checks provide a higher level of scrutiny.
Personality tests are less popular for employee selection, largely because they are hard to defend in court.
Drug testing is done by 80% of U.S. Firms
Genetic testing is among the most controversial screening instruments.
Cognitive ability tests measure a range of intellectual abilities, including verbal comprehension and numerical aptitude. (See Figure 10.3)
Performance tests are procedures in which the test taker performs a sample of the job.
Integrity tests are used to assess job candidate’s honesty. Two forms are polygraphs and paper-and-pencil honesty tests.

21. Reliability and Validity
Reliability refers to the consistency of test scores over time and across alternative measurements.
Validity moves beyond reliability to assess the accuracy of the selection test. The criterion-related validity refers to the degree to which a test actually predicts or correlates with job performance. Content validity concerns the degree to which selection tests measure a representative sample of the knowledge, skills, and abilities required for the job.

22. Reliability as Stability over Time
HIGH RELIABILITY TEST RETEST
APPLICANT SCORE SCORE
Smith 90 93
Perez 65 62
Riley
Chan 80 78
VERY LOW RELIABILITY TEST RETEST
APPLICANT SCORE SCORE
Smith 90 72
Perez 65 88
Riley
Chan
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

23. Reliability as Consistency (Interrater Reliability)
HIGH RELIABILITY
APPLICANT Rater #1 Rater #2 Rater #3
Smith 9 8 8
Perez 5 6 5
Riley 4 5 5
Chan 8 8 8
VERY LOW RELIABILITY
Smith 9 5 6
Perez 5 9 4
Riley 4 2 7
Chan 8 4 2
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

24. Valid and Invalid Tests
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

25. Approaches to Validation
Criterion-related Validity
The extent to which a selection tool predicts, or significantly correlates with, important elements of work behavior.
Performance on a test is compared with actual production records, supervisor ratings, training outcomes, and other measures of success that are appropriate to each type of job.
In a sales job, it is common to use sales figures as a basis for comparison.
In production jobs, quantity and quality of output may provide the best criteria for job success.
A high score indicates high job performance potential; a low score is predictive of low job performance.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

26. Criterion-Related Validity
Types of Criterion-Related Validity
Concurrent Validity
The extent to which test scores (or other predictor information) match criterion data obtained at about the same time from current employees.
High or low test scores for employees match their respective job performance.
Predictive Validity
The extent to which applicants’ test scores match criterion data obtained from those applicants/ employees after they have been on the job for some indefinite period.
A high or low test score at hiring predicts high or low job performance at a point in time after hiring.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

27. Interviews Structured interview Unstructured interview
Selection technique that involves asking all applicants the same questions and comparing their responses to a standardized set of answers.
Unstructured interview
Free-flow of questions

28. Performance Tests Assessment center
A managerial performance test in which candidates participate in a variety of exercises and situations.

29. Sometimes Employees Must Be Let Go
Layoffs
a result of the massive restructuring of American industry brought about by mergers and acquisitions, divestiture, and increased competition.
Outplacement
The process of helping people who have been dismissed from the company regain employment elsewhere.
Termination interview
the manager discusses the company’s position with the employee, is a stressful situation for both parties.

30. Termination Employment-at-will
The legal concept that an employee may be terminated for any reason.

31. Advice on Termination
Do give as much warning as possible for mass layoffs.
Do sit down one on one with the individual, in a private office.
Do complete a termination session within 15 minutes.
Don’t allow time for debate during a termination session.
Don’t make personal comments when firing someone.

32. U.S. Equal Employment Laws
Exhibit 8.3

33. U.S. Equal Employment Laws (cont.)
Exhibit 8.3

34. Fair Labor Standards Act
Nonexempt Employees
Employees covered by the overtime provisions of the Fair Labor Standards Act.
They must be paid time and one-half their regular pay for all work performed after forty regular hours of work in a workweek.
Exempt Employees
Employees who not covered in the overtime provisions of the Fair Labor Standards Act.
Managers, supervisors, and white-collar professional employees are exempted on the basis of their exercise of independent judgment and other criteria.

35. Federal Employment Laws
Equal Pay Act of 1963
Civil Rights Act of 1964
Age Discrimination in Employment Act of 1967
Pregnancy Discrimination Act of 1978
prohibits unequal pay for males and females doing similar work
prohibits discrimination on basis of
race, color, religion, gender, origin
prohibits discrimination against persons age 40 and over
prohibits discrimination in employment
against pregnant women
Exhibit 11.2 lists the major federal employment laws and their Web sites. Except for the Family and Medical Leave Act and the Uniformed Services Employment and Reemployment Rights Act , which are administered by the Department of Labor ( all of these laws are administered by the EEOC (
Employers who use gender, age, race, or religion to make employment‑related decisions when those factors are unrelated to an applicant's or employee's ability to perform a job may face charges of discrimination from the EEOC.
1.1

36. Federal Employment Laws (cont.)
Americans with Disabilities Act of 1990
Civil Rights Act of 1991
Family & Medical Leave
Act of 1993
prohibits discrimination on the basis of
physical or mental disabilities
strengthened the Civil Rights Act of 1964
permits workers to take up to 12 weeks of unpaid leave for pregnancy, etc.
Adapted from Exhibit 11.2
Uniformed Services Employment & Reemployment Rights Act
prohibits discrimination against those serving in the Armed Forces
Except for the Department of Labor ( which administers the Family and Medical Leave Act, all of these laws are administered by the EEOC ( Employers who use gender, age, race, or religion to make employment‑related decisions when those factors are unrelated to an applicant's or employee's ability to perform a job may face charges of discrimination from the EEOC.
1.1

37. Equal Employment Opportunity Commission
The EEOC has investigatory, enforcement, and informational responsibilities.
It investigates charges of discrimination, enforces the provisions of these laws in federal court, and publishes guidelines (Uniform Guidelines on Employee Selection Procedures)that organizations can use to ensure they are in compliance with the law.
These guidelines define two important criteria that are used to determine whether companies have engaged in discriminatory practices:
Disparate treatment
Adverse Impact

38. Adverse Impact and Employment Discrimination
Four-Fifths
Rule
Adverse Impact
Disparate Treatment
Intentional discrimination that results in equally qualified people being treated differently
Unintentional discrimination that works to the disadvantage of member of protected groups
Comparison of selection rates of a protected to a nonprotected group, to determine if adverse impact has occurred
The EEOC has investigatory, enforcement, and informational responsibilities. Therefore, it investigates charges of discrimination, enforces the provisions of these laws in federal court, and publishes guidelines that organizations can use to ensure they are in compliance with the law.
Disparate treatment, which is intentional discrimination, occurs when people who, because of their of race, sex, ethnic group national origin, religious beliefs, etc., are purposively not given the same hiring, promotion, or membership opportunities as other employees, despite being qualified. Legally, one of the key parts of discrimination lawsuits is establishing motive, that the employer intended to discriminate.
If no motive can be established, then a case of disparate treatment may actually be a case of adverse impact. Adverse impact, which is unintentional discrimination, is a substantially different rate of selection in hiring, promotion, or other employment decisions that works to the disadvantage of members of a particular race, sex, or ethnic group.
The courts and federal enforcement agencies use the four-fifths rule to determine if adverse impact has occurred. Adverse impact occurs if the selection rate for a protected group of people is less than four fifths (or 80%) of the selection rate for a nonprotected group (usually white males). However, violation of the four-fifths rule is not an automatic indication of discrimination. If an employer can demonstrate that a selection procedure or test is valid, meaning that the test accurately predicts job performance or that the test is job related because it assesses applicants on specific tasks actually used in the job, then the organization may continue to use the test. However, if validity cannot be established, then a violation of the four-fifths rule may likely result in a lawsuit brought by employees, job applicants, or the EEOC itself.
1.2

39. Determining Adverse Impact: The Four-fifths Rule
Source: Adoption of Questions and Answers to Clarify and Provide a Common Interpretation of the Uniform Guidelines on Employee Selection Procedures, Federal Register 44, no. 43 (March 2, 1979):

40. Exemptions From Antidiscrimination Regulations
Bona Fide Occupational Qualification (BFOQ)
Suitable defense against a discrimination charge only where age, religion, sex, or national origin is an actual qualification for performing the job.
Business Necessity
Work-related practice that is necessary to the safe and efficient operation of an organization.

41. Legal Issues and Equal Employment Opportunity
Adverse impact
When a seemingly neutral employment practice has a disproportionately negative effect on a protected group.

42. Training and Development
Annual spending by employers on formal training is over $55 billion.
Adding informal educational and development experiences to that and the number balloons to $200 billion.

43. Training and Development
Training usually refers to teaching lower-level employees how to perform their present jobs.
Development involves teaching managers and professional employees broader skills needed for their present and future jobs.
Phase one of the training process should include needs assessment
Phase two involves the design of training programs
Phase three involves decisions about the training methods to be used.
Phase four should evaluate the program’s effectiveness in terms of employee reactions, learning, behavior transferred to the job, and bottom-line results.

44. Training and Development
Needs assessment
An analysis identifying the jobs, people, and departments for which training is necessary.

45. Percentage of companies increasing spending on specific training areas in 2011
Exhibit 8.4

46. Types of Training Orientation training Team training
Training designed to introduce new employees to the company and familiarize them with policies, procedures, culture, and the like
Team training
Training that provides employees with the skills and perspectives they need to collaborate with others.

47. Types of Training Diversity training
Programs that focus on identifying and reducing hidden biases against people with differences and developing the skills needed to manage a diversified workforce.

48. Performance Appraisal
Performance appraisal (PA)
Assessment of an employee’s job performance.
Performance appraisal has two basic purposes:
a. Administrative purposes
b. Developmental purposes.

49. Types of Appraisals
Trait
Results
Behavior

50. What Do You Appraise?
Trait appraisals involve subjective judgments about employee performance. They contain dimensions such as initiative, leadership, and attitude, and ask raters to indicate how much of each trait the employee possesses.
Behavioral appraisals focus more on observable aspects of performance. They focus on specific, prescribed behaviors, which can help ensure that all parties understand what the ratings are really measuring.

51. Performance Appraisal
Results appraisals focus on production data such as sales volume, units produced, or profits. Management by objectives (MBO) involves a subordinate and a supervisor agreeing on specific performance goals.

52. Performance Appraisal
360-degree appraisal
Process of using multiple sources of appraisal to gain a comprehensive perspective on one’s performance

53. Subjective Performance Appraisal Scales

54. Question
___________ is the process of using multiple sources of appraisal to gain a comprehensive perspective on one’s performance.
360-degree appraisal
Peer appraisal
Content appraisal
Equity appraisal
The correct answer is a – 360 degree appraisal. See next slide.

55. Performance Appraisal
In choosing an appraisal method, the following guidelines may prove helpful:
Base performance standards on job analysis.
Communicate performance standards to employees.
Evaluate employees on specific performance-related behaviors rather then on a single global or overall measure.
Document the PA process carefully.
If possible, use more than one rater.
Develop a formal appeal process.
Always take legal considerations into account.

56. Performance Appraisal
Who should do the appraisal?
Managers and supervisors are the traditional source of appraisal information since they are often in the best position to observe an employee’s performance.
Internal and external customers are also used as sources of performance appraisal information.
Self-appraisals help increase the employee’s involvement in the review process, and are a starting point for establishing future goals.

57. How do you give employees feedback?
Providing growth and development requires understanding and support; however, the manager must be impersonal and be able to make tough decisions.
A useful interview format to use when an employee is performing below acceptable standards is as follows:
Summarize the employee’s specific performance.
Describe the expectations and standards, and be specific.
Determine the causes for the low performance; get the employee’s input.
Discuss solutions to the problem, and have the employee play a major role in the process.
Agree to a solution.
Agree to a timetable for improvement.
Document the meeting.

58. How do you give employees feedback?
Follow-up meetings may be needed. Guidelines for giving feedback to an average employee:
Summarize the employee’s performance, and be specific
Explain why the employee’s work is important to the organization.
Thank the employee for doing the job.
Raise any relevant issues, such as areas for improvement.
Express confidence in the employee’s future good performance.

59. Designing reward systems
Pay decisions consider the company, position and the individual
Pay level refers to the choice of whether to be a high-, average-, or low-paying company.
Pay structure decision is the choice of how to price different jobs within the organization.
Individual pay decisions concern different pay rates for jobs of similar worth within the same family.

60. Incentive Pay
Individual incentive plans consist of an objective standard against which a worker’s performance is compared.
Gainsharing plans concentrate on saving money.
Profit-sharing plans give employee incentives based on unit, department, plant, or company productivity.
Merit pay systems are used when objective performance measures are not available but the company still wants to base pay on performance.

61. © 2010 South-Western, a part of Cengage Learning. All rights reserved.
The Wage Mix
Internal and external factors combine to influence what jobs will be paid.
The combination of these factors is called the “wage mix.”
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

62. Factors Affecting the Wage Mix
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

63. Pay Structure
Exhibit 8.6

64. Pay and Benefits Must Meet Legal Requirements
Comparable worth
principle of equal pay for different jobs of equal worth

65. Employee Benefits Three basic required benefits are:
Workers’ compensation
Social security
Unemployment insurance
A large number of benefits are not required but employer provided:
Pension plans
Medical and hospital insurance
Dental insurance
Life insurance
Vacation time

66. Employee Benefits Cafeteria benefit program Flexible benefit programs
An employee benefit program in which employees choose from a menu of options to create a benefit package tailored to their needs.
Flexible benefit programs
Benefit programs in which employees are given credits to spend on benefits that fit their unique needs.

67. Safety and Health: It’s the Law
In 2006 there were 4.1 million injuries/illnesses among private-sector firms.
Back problems cost employers $50 billion yearly in workers’ compensation costs and $50 billion in indirect costs
Each year the cost of occupational injuries and illness totals more than $156 billion.
In any year, approximately 75 million working days are lost because of on-the-job injuries.
In 2006, 5,840 employees died from work accidents.
© 2010 South-Western, a part of Cengage Learning. All rights reserved.

68. Employee Health
The Occupational Safety and Health Act (OSHA) of 1970 requires employers to pursue workplace safety.

69. Labor Relations Labor relations
The system of relations between workers and management.

70. Why Do workers Vote For or Against a Union?
Economic factors
Job dissatisfaction
Belief that union has power to obtain desired benefits
Image of the union

71. Collective Bargaining
Union shop
An organization with a union and a union security clause specifying that workers must join the union after a set period of time.
Right-to-work
Legislation that allows employees to work without having to join a union.

73. Video: Google
Why does Google provide free food and free luxury bus transportation for employees?
Why don’t other firms offer a similar package of benefits?