Managing Human Resources

Managing Human Resources Chapter 13

Learning Goals • Explain the strategic importance of managing human resources effectively • Describe several important laws and government regulations that affect how organizations manage their human resources • Explain the objective of human resources planning and describe how organizations respond to the unpredictability of future business needs (continued)

Learning Goals (cont'd) • Describe the hiring process • Describe several types of training and development programs • Describe several principles for improving the accuracy of managers’ appraisals of employee performance • Describe the basic elements of a monetary compensation package

Strategic Importance • Human resources management (HRM):the philosophies, policies, and practices that an organization uses to affect the behaviors of people who work for the organization • Strategic use of HRM activities can improve organizational effectiveness

Shared Responsibilities for Managing Human Resources: Planning Activity Line Managers HR Professionals Employees • Include HRprofessionals inthe formulationand implementation of business strategy and discussions of its HR implications • Stay informed ofthe latest technical principles for managing human resources • Accept responsibility for managing their own behavior and careers in organizations

Shared Responsibilities for Managing Human Resources:Recruitment and Selection Activity Line Managers HR Professionals Employees • Help disseminate information about open positions to all potentially qualified internal applicants • Understand and abide by all legal regulations • Develop a recruiting plan to guarantee a diverse pool of applicants • Participate in recruiting by making referrals and answering questions about the organization

Shared Responsibilities for Managing Human Resources: Training and Development Activity Line Managers HR Professionals Employees • Develop and administer training and development programs • Inform employees of opportunities for training and development • Identify own training and development needs • Actively seek out and participate inactivities that help build own competencies • Assist in socialization and training of other employees • Work with employees to identify their training and development needs • Provide on-the-job socialization and training

Shared Responsibilities for Managing Human Resources: Performance Appraisal Activity Line Managers HR Professionals Employees • Develop performance appraisal tools and train managers to use them • Train managers in how to conduct performance review sessions • Candidly appraise the performance of others when askedto participate in 360-degree appraisals • Help develop performance measures • Conduct performance appraisals

Shared Responsibilities for Managing Human Resources: Performance Appraisal Activity (cont’d) Line Managers HR Professionals Employees • Monitor managers’ decisions to be sure they are performance-based • Seek and use honest feedback to improve own performance • Use performance information to make decisions about pay raises, promotions, firing etc • Provide feedback to employees to help them improve future performance

Shared Responsibilities for Managing Human Resources: Compensation Activity Line Managers HR Professionals Employees • Assist in developing incentive and bonus plans • Establish appropriate rates of base pay in compliance with legal requirements • Work with managers to design and develop incentives and bonus plans • Work with accounting and financial staff to monitor compensation costs • Develop an accurate understanding of all elements of the organization’s pay practices • Be alert to dysfunctional and possible unethical attempts to “game” performance-based pay practices

Conditions for Gaining a Sustainable Competitive Advantage Through HRM Competitors must not be able to easily copy the company’s approach to HRM Employees must be “rare” or unique in some way Employees mustbe a source ofadded value

Changes in HR Practices at GE to Encourage Innovation • Recruiting more managers from outside the company • Hiring more employees from the countries where GE sells its products and services • Setting goals for managers to develop creative new business ideas and tying compensation to meeting these goals • Rewarding managers for revenue growth and customer satisfaction • Urging people to stay in their jobs longer so they can develop deeper knowledge of their industry

Social Consequences of HRM: Snapshot “Our aim is to treat our jobcandidates as well as we treat our customers,to do something memorable for them. You can’t treat people shabbily, especially in a world where there are far more open jobs than there is available talent to fill them. We strive to put the humanity back into the recruiting experience.” Jason S. Warner, Director of North American Recruiting, Starbucks Corporation

Legal and Regulatory Environment: Equal Employment Opportunity [EEO] • Job applicants and employees should be: • Judged on characteristics that are related to the work that they are being hired to do 2. Judged on their job performance after being hired 3. Protected from discrimination based on their personal background characteristics, such as gender, race, ethnicity, religion, and so forth

Title VII of the Civil Rights Act (1964 with amendments in 1978 and 1991) • Prohibits discrimination by employers, employment agencies, and unions with 15 or more employees on the basis of: • Race • Color • Religion • Sex • National origin • Pregnancy (Pregnancy Discrimination Act, 1978) • Identifies pregnancy as a disability and entitles the woman to the same benefits as any other disability • 1991 Amendment clarifies how cases brought under the act should proceed

Enforcement of U.S. EEO Laws Makes rules to implement and interpret EEO laws Conducts investigations and may file lawsuits in federal courts Equal EmploymentOpportunityCommission (EEOC) Imposessanctions Makes judgments about guilt, which may be appealed to federal courts

EEO in the Global Arena: Who’s Protected Where by Legislation? Country United States India Canada China United Kingdom Mexico • Race or Color • Sex • Religion • Age No No No (continued)

EEO in the Global Arena: Who’s Protected Where by Legislation? Country United States India Canada China United Kingdom Mexico • Disability No • Sexual Orientation No No No • PoliticalIdeology No No No No • NationalOrigin No • Marital orFamily Status No No No

Legal and Regulatory Environment: Compensation and Benefits • Fair Labor Standards Act (1938) • Establishes a minimum wage, which may be raised by individual states • Controls hours through premium pay for overtime • Controls working hours for children • Applies to most nonmanagerial employees in private industry • Equal Pay Act (1963) • Requires men and women to be paid equally when they are doing equal work (in terms of skill, effort, responsibility, and working conditions) in the same organization

Compensation and Benefits: Comparable Worth • Some states extend the Equal Pay Act by requiring employers to assess the worth of all jobs and ensure that jobs of comparable worth are paid similarly

Human Resource Planning • Involves forecasting the organization’s human resources needs and developing the steps to be taken to meet them • Contingent workers: employees who are hired by companies for specific tasks or short periods of time with the understanding that their employment may be ended atany time • Layoffs: a strategy of last resort. Potential negative effects of layoffs: • More gossip • Lower morale • More resignations • Less employee loyalty • More charges of discrimination • More workplace violence

Historical Trend in Growth Rate of the U.S. Workforce (adapted from Figure 13.1)

60 -60 -40 -20 0 20 40 Percent Percent reporting an increase or decrease after layoffs Effects of Layoffs as Reported by Human Resource Managers in Companies That Reduce Their Workforce(adapted from Figure 13.2) More profits More gossip Lower morale More resignations Less employee loyalty More charges of discrimination More workplace violence

Human Resource Planning(cont’d) • Competency inventory:a detailed file maintained for each employee that lists level of education, training, experience, length of service, current job title and salary, and performance history • Purpose of competency models To keep track of the talent in the organization so that it can be nurtured and used effectively

Hiring Process • Activities related to the recruitment of applicants to fill open positions in an organization and the selection of the best applicants for a position • Vacancies stimulate the hiring process through:*

Vacancies Stimulate the Hiring Process(adapted from Figure 13.3) Organizational Growth • Internal • Movement • Promotion • Demotion • Transfer Vacancy Created Recruitment Selection Exit from Organization (Turnover)

0 10 20 30 40 50 60 Percent Percent reporting problems Problems Encountered When Applying for Jobs on the Internet(adapted from Figure 13.4) Difficult to navigate site Difficult to use Wanted more personal contact Concerns about security of personal data Lack of relevant information about the company Not enough jobs listed to make it worth the effort Slow feedback and follow-up

Hiring Process: Recruitment Organization web site Internal job positions, paper-based and Intranet Common recruitment methods Announcementsin newspapers,magazines, employment websites, etc. Employee referrals

Hiring Process: Employee Selection • A process that involves deciding which of these recruits should actually be hired and for which positions Résumés Reference checks Commoninformationsources Tests Interviews

Hiring Process: Examples of Questions to Use in a Structured Interview • Competency Being Assessed: Teamwork • Sketch out two or three key strengths you have in working as part of a work team. Can you illustrate the first strength with a recent example? [repeat this question and the following probes for each strength]: Probes: • When did this example take place? • What possible negative outcomes were avoided by the way you handled the situation? • How often do situations like this happen? • What happened in the next time it came up? (continued)

Hiring Process: Examples of Questions to Use in a Structured Interview (cont’d) • Competency Being Assessed: Teamwork 2. Tell me about a time when you used your teamwork competency to solve a problem with a customer Probes: • Where did this take place? • What did the customer say? • What did you tell your teammates? • Did the team have any problems dealing with the situations? Explain • How did the customer respond?

Training and Development • Training:activities that help employees overcome limitations and improve performance in their current jobs Orientation training Basic skills training Commontrainingapproaches E-learning Team training

Training and Development (cont'd) • Development:practices that help employees gain the competencies they will need in the future in order to advance in their careers Career development Coredevelopmentapproaches Coaching Mentoring

Performance Appraisal • A formal, structured system for evaluating an employee’s job performance • Common uses of performance appraisal • To make decisions about who will be promoted, demoted, transferred, or dismissed • To make decisions about pay raises • To improve future performance of employees

Performance Appraisal: Performance Feedback Sessions • Managers and their subordinates meet to exchange performance information and discuss how to improve future performance • Performance information increasingly includes: • Employee’s own assessment of performance • Assessment by teammates • Information from customers

Performance Appraisal Accuracy • Difficult for managers to accurately assess performance of subordinates • Two approaches to improve accuracy: • Use appropriate rating scales that provide specific descriptions of what each level of performance means • Use multiple raters • One example. 360-degree appraisal—measures performance by obtaining assessments of the employee from a variety of sources: supervisors, subordinates, colleagues inside the company, people outside the organization with whom the employee does business, and even a self-appraisal by the employee

Performance Appraisals for Teams • Some teams may have full responsibility for constructing and conducting their own performance appraisals of each other • Team self-appraisal of each member is difficult • Manager to whom the team reports is often responsible for collecting performance information from the team and discussing it with each team member privately

bonus Compensation: Two Components • Nonmonetary compensation:the many forms of social and psychological rewards, such as recognition and respect from others and opportunities for self-development • Monetary compensation:the direct payments such as salary, wages, and bonuses, as well as benefits such as covering the costs of insurance plans

Compensation: Pay Fairness • What people believe they deserve to be paid in relation to what others deserve to be paid • However, compensation must be externally competitive to attract qualified applicants • Components of pay system employees consider in evaluating fairness • Base pay—perceived fairness increases if at or above market average • Incentive pay—such as commissions, bonuses, and profit sharing • Employee benefits—some required by law and others are voluntary

Average Annual Monetary Benefits and Earnings(adapted from Figure 13.6)

Vacationing Around the World(adapted from Figure 13.7) Italy France Germany Brazil Britain Canada South Korea Japan U.S. 0 5 10 15 20 25 30 35 40 45 Days Average annual vacation days

Managing Human Resources