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Chapter 9 Human Resource Management, Motivation, and Labor-Management Relations. Learning Goals. Discuss employee separation and the impact of downsizing and outsourcing.

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Chapter 9

Human Resource Management, Motivation, and Labor-Management Relations

Learning Goals

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.


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 appraisal help employees grow and develop.

Outline the methods employers use to compensate employees.









  • 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.


  • Finding Qualified Candidates
  • • HR managers face challenges finding qualified workers.
  • • Eight in 10 manufacturers report moderate or severe shortage of highly qualified workers.
  • • 77 million baby boomers are set to retire in next five years, but only 46 million Generation X workers are available to take their places.
  • • Must be creative in searches, looking both internally and externally.

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.
  • • Society for Human Resources Management offers more information about litigation issues.
  • • Hiring is a costly process for employers.
  • • Some employers require employment tests.


  • • During orientation, employer representatives inform employees about company policies regarding their rights and benefits.
  • Training Programs
  • • A good investment for employers.
  • On-the-Job Training
  • • Prepares employees for job duties by allowing them to perform tasks under the guidance of experienced employees.

Classroom and Computer-Based Training

  • • Off-the-job training involving some form of classroom instruction such as lectures, conferences, audiovisual aids, computer instruction, and special machines.
  • • Frequently involves the use of the Internet.
  • Management Development
  • • Provides training designed to improve the skills and broaden the knowledge of current and potential executives.
  • • May involve benchmarking, or learning the best practices of the best companies so they can serve as performance standards.

Performance Appraisals

  • Performance appraisalEvaluation of an employee’s job performance that compares actual results with desired outcomes.
  • • Some firms conduct peer reviews, in which employees assess the performance of coworkers, 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.
  • • A majority of large U.S. firms use multirater system.


  • WagesCompensation based on an hourly pay rate or the amount of output produced
  • SalaryCompensation 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

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
  • • Typically account for 30 percent of total employee compensation.
  • • Costs of health care are increasingly being shifted to workers.
  • • Some benefits required by law:
  • • Social Security and Medicare contributions
  • • State unemployment insurance and workers’ compensation programs
  • • Pensions and retirement plans are also areas of rising costs.

Flexible Benefits

  • • Also called cafeteria plans.
  • • Employees provided a range of options from which they can choose, including different types of
  • • Medical insurance
  • • Dental and vision plans
  • • Life and disability insurance
  • • Employees choose how too allocate their benefit allowance among the choices.
  • • “Family-friendly” benefits
  • • Paid time off instead of set holidays, including for volunteering
  • • Flexible hours
  • • Dependent care accounts

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.
  • • 45 million Americans have telecommuted from home.
  • • 22 million telecommute from home at least once a week.


  • Voluntary and Involuntary Turnover
  • • 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.


  • DownsizingProcess of reducing the number of employees within a firm by eliminating jobs.
  • • Two most common reasons:
  • •  Cut overhead costs
  • •  Streamline organizational structure
  • • Studies show downsizing doesn’t guarantee improvements.
  • • Devastating impact on employee morale
  • • Encourages employees to put individual career success ahead of company loyalty


  • OutsourcingContracting with another business to perform tasks or functions previously handled by internal staff members.
  • • Complements today’s focus on business competitiveness and flexibility.
  • • Get best price among competing bidders while avoiding long-term costs of in-house operations.


  • • 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 in many ways, including absenteeism, employee turnover, strikes, falling productivity, and rising employee grievances

Maslow’s Hierarchy-of-Needs Theory

  • Maslow’s hierarchy of needsTheory of motivation proposed by Abraham Maslow. According to the theory, people have five levels of needs that they seek to satisfy: physiological, safety, social, esteem, and self-actualization.
  • Based on these assumptions:
  • • People’s needs depend on what they already possess.
  • • 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.

Goal-Setting Theory

  • GoalTarget, objective, or result that someone tries to accomplish.
  • Goal-setting theoryTheory that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement.

• Goal specificity The extent to which goals are detailed, exact, and unambiguous.

  • • Goal difficulty The extent to which a goal is hard or challenging to accomplish.
  • • Goal acceptance The extent to which people consciously understand and agree to goals.
  • • Performance feedback Information about the quality or quantity of past performance that indicates whether progress is being made toward accomplishing a goal.

Job Design and Motivation

  • Job enlargementJob design that expands an employee’s responsibilities by increasing the number and variety of tasks assigned to the worker.
  • Job enrichmentChange in job duties to increase employees’ authority in planning their work, deciding how it should be done, and learning new skills.

Managers’ Attitudes and Motivation

  • • Employees feel needs beyond those satisfied by monetary rewards.
  • • 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 key to increased productivity for the company and improved quality of work life for employees.


  • Development of Labor Unions
  • Labor unionGroup 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.
  • • Approximate rates of unionization in the United States today:

Total full-time workforce: 13 percent

Private-sector workforce: 8 percent

Government workforce: 33 percent


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.

The Collective Bargaining Process

  • Collective bargainingProcess 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

Settling Labor-Management Disputes

  • • Most labor-management negotiations result in a signed agreement without a work stoppage.
  • • Approximately 140,000 union contracts are in force in the U.S.
  • • On average 20 or fewer negotiations involve a work stoppage.
  • • Disagreements can be handled through grievance process.

Settling Labor-Management Disputes

  • • Most labor-management negotiations result in a signed agreement without a work stoppage.
  • • Approximately 140,000 union contracts are in force in the U.S.
  • • On average 20 or fewer negotiations involve a work stoppage.
  • • Disagreements can be handled through grievance process.
  • • May also be handled through mediation, the process of settling disputes with the suggestions and advice of a neutral third party.
  • • May go to arbitration, in which a neutral third party renders a legally binding decision.

Competitive Tactics of Unions and Management

  • Union Tactics
  • • Strikes A 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 An 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.

The Future of Labor Unions

  • • Membership and influence grew through the 20th century, but both are now declining.

Private-sector union members today: 8 percent

Private-sector union members in 1983: 17 percent


• Why the decline?

  • • Competitive compensation and benefit packages at nonunion employers.
  • • Effective communications by management.
  • • Emphasis on promotions from within.
  • • Employee empowerment.
  • • Employee participation in goal setting and grievance handling.
  • • How will labor unions maintain their relevance?
  • • Reach out to nonmanufacturing workers.
  • • Offer affiliate or partial memberships.
  • • Overcome widespread belief that they can’t win unless management loses.