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Chapter 9. Human Resource Management, Motivation, and Labor-Management Relations. Learning Goals. 1. Explain the importance of human resource management. Describe how recruitment and selection contribute to placing the right person in a job.

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Chapter 9

Human Resource Management, Motivation, and Labor-Management Relations

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Learning Goals


Explain the importance of human resource management.

Describe how recruitment and selection contribute to placing the right person in a job.

Explain how training programs and performance appraisals help employees grow and develop.

Outline the methods employers use to compensate employees.

Discuss employee separation and the impact of downsizing and outsourcing.

Explain how Maslow’s hierarchy-of-needs theory, goal setting, job design, and managers’ attitudes relate to employee motivation.

Summarize the role of labor unions and the tactics of labor-management conflicts.







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Vital to All Organizations

Human resource management - function of attracting, developing, and retaining enough qualified employees to perform the activities necessary to accomplish organizational objectives. Three main objectives:

  • Providing qualified, well-trained employees for the organization.

  • Maximizing employee effectiveness in the organization.

  • Satisfying individual employee needs through monetary compensation, benefits, opportunities to advance, and job satisfaction.

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Recruitment & Selection

  • 25% of human resource professionals report a shortage of job candidates with degrees in science, engineering, technology and mathematics.

  • 78 million Baby Boomers will retire with only 46 million Generation X workers to replace them.

  • HR must be creative in searching for qualified employees.

  • Businesses look both internally and externally.

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Selecting and Hiring Employees

  • Must follow legal requirements.

  • Civil Rights Act of 1964

  • Equal Employment Opportunity Commission programs

  • Civil Rights Act of 1991

  • Failure to follow these exposes company to risk of litigation.

  • Hiring is a costly process for employers.

  • Some employers require employment tests.

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Orientation and Training

  • Newly hired employee often completes an orientation program

    • Inform employees about company policies

    • Employee manuals

    • Describe benefits/programs

    • Training

  • Training Programs

    • On-the-job Training

    • Classroom and Computer-based Training

    • Management Development

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Performance Appraisals

  • Performance appraisal - evaluation of an employee’s job performance

  • Some firms conduct peer reviews while other firms allow employees to review their supervisors and managers.

  • May conduct a 360-degree performance review, a process that gathers feedback from a review panel that includes co-workers, supervisors, team members, subordinates, and sometimes customers.

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  • Wages - compensation based on an hourly pay rate or the amount of output produced.

  • Salary - compensation calculated on a periodic basis, such as weekly or monthly.

  • Most firms base compensation decisions on five factors:

    • Salaries and wages paid by other companies that compete for the same people

    • Government legislation, including the federal, state, or local minimum wage

    • The cost of living

    • The firm’s ability to pay

    • Worker productivity

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Employee Benefits

  • Employee Benefits - Rewards such as retirement plans, health insurance, vacation, and tuition reimbursement provided for employees either entirely or in part at the company’s expense

  • 30% of total employee compensation.

  • Some benefits required by law:

    • Social Security and Medicare contributions

    • State unemployment insurance and workers’ compensation programs

  • Costs of health care are increasingly being shifted to workers.

  • Retirement plans have become a big area of concern for businesses.

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Flexible Benefits

  • Employees are provided a range of options from which they can choose.

    • Medical, dental, vision, life and disability insurance

  • Many companies also offer flexible time off policies instead of establishing a set number of holidays, vacations days and sick days.

  • 56% of companies surveyed use paid time off (PTO) programs.

    • More than ½ claim they have reduced unscheduled absences

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Flexible Work

  • Allow employees to adjust their working hours and places of work to accommodate their personal needs.

  • Flextime allows employees to set their own work hours within constraints specified by the firm.

  • A compressed workweek allows employees to work the regular number of weekly hours in fewer than the typical five days.

  • A job sharing program allows two or more employees to divide the tasks of one job.

  • A home-based work program allows employees, or telecommuters, to perform their jobs from home instead of at the workplace.

    • Nearly 75% of the U.S. workforce will soon have the ability to telecommute from home—or almost anywhere else.

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Employee Separation

  • Voluntary turnover: employees leave firms to start their own businesses, take jobs with other firms, move to another city, or retire.

    • Some firms ask employees who leave voluntarily to participate in exit interviews to find out why they decided to leave.

    • Successful companies are clearly focused on retaining their best workers.

  • Involuntary turnover: employers terminate employees because of poor job performance, negative attitudes toward work and co-workers, or misconduct such as dishonesty or sexual harassment.

    • Necessary because poor performers lower productivity and employee morale.

    • Employers must carefully document reasons when terminating employees.

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  • Downsizing - process of reducing the number of employees within a firm by eliminating jobs

  • Downsizing doesn’t guarantee improvements or cost savings.

  • Devastating impact on employee morale

  • Encourages employees to put individual career success ahead of company loyalty

  • Outsourcing- contracting with another business to perform tasks or functions previously handled by internal staff members

  • Focus on business competitiveness and flexibility

  • Get best price among competing bidders while avoiding long-term costs of in-house operations

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Motivating Employees

  • Motivation starts with good employee morale, the mental attitude of employees toward their employer and jobs.

  • High morale = sign of a well-managed organization

  • Poor morale shows up through absenteeism, employee turnover, strikes, falling productivity, and rising employee grievances

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Maslow’s Hierarchy of Needs Theory

  • Maslow’s hierarchy of needs: people have five levels of needs that they seek to satisfy.

  • A satisfied need is not a motivator; only needs that remain unsatisfied can influence behavior.

  • People’s needs are arranged in a hierarchy of importance; once they satisfy one need, at least partially, another emerges and demands satisfaction.

    • Physiological needs

    • Safety needs

    • Social (belongingness) needs

    • Esteem needs

    • Self-actualization needs

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Hygiene Factors

Job Environment


Job Security

Personal Life

Working Conditions


Interpersonal Relations


Company Policies

Motivator Factors




The job itself

Growth Opportunities


Herzberg’s Two-Factor Theory

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Expectancy Theory – the process people use to evaluate the likelihood their effort will yield the desired outcome and how much they want the outcome.

Equity Theory – individual’s perception of fair and equitable treatment.

Expectancy Theory and Equity Theory

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Goal-Setting Theory

  • Goal:target, objective, or result that someone tries to accomplish.

  • Goal-setting theory- people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement.

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Management by Objective

  • Systematic and organized approach that allows managers to focus on attainable goals and achieve the best results.

  • MBO helps motivate individuals by aligning their objectives with the goals of the organization.

  • MBO Principals:

    • A series of related organizations, goals, and objectives

    • Specific objectives for each individual

    • Participative decision making

    • Set time period to accomplish goals

    • Performance evaluation and feedback

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Job Design & Motivation

Job enlargement:job design that expands an employee’s responsibilities by increasing the number and variety of tasks assigned to the worker.

Job enrichment: change in job duties to increase employees’ authority in planning their work, deciding how it should be done, and learning new skills.

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Managers’ Attitudes and Motivation

  • Two assumptions manager make about employees, according to psychologist Douglas McGregor:

  • Theory X: employees dislike work and try to avoid it whenever possible; managers must coerce or control them or threaten punishment to achieve the organization’s goals.

  • Theory Y: typical person likes work and learns to accept and seek responsibilities; managers assume creative people solve work-related problems.

  • A third theory from management professor William Ouchi:

  • Theory Z: worker involvement is key to increased productivity for the company and improved quality of work life for employees.

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Labor-Management Relations

  • Labor union:group of workers who have banded together to achieve common goals in the areas of wages, hours, and working conditions.

  • Found at local, national, and international levels.

  • The organized efforts of Philadelphia printers in 1786 resulted in the first U.S. minimum wage - $1 a day.

  • 12% of the nation’s full-time workforce belong to labor unions.

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Labor Legislation

  • National Labor Relations Act of 1935 (Wagner Act) - legalized collective bargaining and required employers to negotiate with elected representatives of their employees.

  • Fair Labor Standards Act of 1938 - set the initial federal minimum wage and maximum basic workweek for workers employed in industries engaged in interstate commerce; outlawed child labor.

  • Taft-Hartley Act of 1947 (Labor-Management Relations Act) - limited unions’ power by prohibiting a variety of unfair practices, including coercing employees to join unions and coercing employers to discriminate against employees who are not union members.

  • Landrum-Griffin Act of 1959 (Labor-Management Reporting and Disclosure Act) - amended the Taft-Hartley Act to promote honesty and democracy in running unions’ internal affairs.

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The Collective Bargaining Process

  • Collective bargaining:process of negotiation between management and union representatives for the purpose of arriving at mutually acceptable wages and working conditions for employees.

    • Issues involved can include:

    • Wages

    • Work hours

    • Benefits

    • Union activities and responsibilities

    • Grievance handling and arbitration

    • Layoffs

    • Employee rights and seniority

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Settling Labor Management Disputes

  • Most labor-management negotiations result in a signed agreement without a work stoppage.

  • On average, 20 or fewer negotiations involve a work stoppage.

  • Mediation is the process of settling labor-management disputes through recommendations of a third party.

  • Arbitration adds a third-party who renders a legally binding decision.

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Competitive Tactics of Unions and Management

  • Union Tactics

  • Strikes - temporary work stoppage by employees until a dispute has been settled or a contract signed.

  • Picketing - workers marching at the entrances of the employer’s business as a public protest against some management practice.

  • Boycott - organized attempt to keep the public from purchasing the products of a firm.

  • Management Tactics

  • Lockout - a management strike to put pressure on union members by closing the firm.

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The Future of Labor Unions

  • Membership and influence are declining

  • 8% of private-sector workers are union members, but that is down from 17% in 1983

  • The large unions have been unable to organize any of the Japanese-owned automobile labels.

  • Unions need to appeal to a wider range of workers

  • Unions need to work in partnership with management