Chapter 8

Human Resource
Management
Learning Objectives

1 Explain the role of human resources: the 5 Discuss employee separation.

people behind the people.

2 Describe recruitment and selection.

6 Explain the different methods for
motivating employees.

3 Discuss orientation, training, and 7 Discuss labor-management

evaluation. relations.

Describe compensation.
4
HRM: Vital to ALL Organizations
Human resource management - function of attracting,
developing, and retaining employees who can perform
the activities necessary to accomplish organizational
objectives. Three main objectives:
1) Providing qualified, well-trained employees for the
organization.
2) Maximizing employee effectiveness in the
organization.
3) Satisfying individual employee needs through
monetary compensation, benefits, opportunities to
advance, and job satisfaction.
Human Resource Responsibilities
Recruitment and Selection

Recruiting techniques continue to evolve as

technology advances.
Internet recruiting is quick, efficient, and
inexpensive.
Reach a large pool of job seekers –
Use social networking sites
HR must be creative in searching for qualified
employees.
Businesses look both internally and externally.
Selecting and Hiring Employees
Must follow legal requirements.
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.
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
Performance Appraisals
Performance appraisal - evaluation of and feedback
on 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.
Compensation
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:
What competing companies are paying
Government regulation
The cost of living
Company profits
Employee’s productivity
Incentive Compensation
Employee Benefits
Employee Benefits - additional compensation, such as
vacation, retirement plans, profit-sharing, health insurance,
gym memberships, child and elder care, and tuition
reimbursement, paid entirely or in part by the company.
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.
Costs for Employee Compensation
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, vacation days, and sick days.
56% of companies surveyed use paid time off
(PTO) programs.
More than ½ claim they have reduced unscheduled
absences
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.
More than 70 percent of Generation Y professionals are concerned
with balancing career with personal life
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.
Downsizing/Outsourcing
Downsizing - process of Outsourcing – transferring
reducing the number of jobs from inside a firm to
employees within a firm by outside the firm
eliminating jobs To save expenses and
Downsizing has negative remain flexible, companies
effects: will try to outsource functions
Anxiety, health problems, that are not part of their core
and lost productivity business.
among remaining Although outsourcing might
workers work on paper, the reality
Expensive severance might be different.
packages paid to laid-off
workers
A domino effect on the
local economy
Motivating Employees
Motivation starts with good employee morale, the mental
attitude of employees toward their employer and job.
High employee morale occurs in organizations where workers feel
valued, heard, and empowered to contribute what they do best.
Poor morale shows up through absenteeism, voluntary turnover,
and lack of motivation.
Maslow’s Hierarchy of Needs
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
Herzberg’s Two-Factor Theory
Hygiene Factors – Motivator Factors –
result in satisfaction can produce high levels
Job Environment of motivation if present
Salary Achievement
Job Security Recognition
Personal Life Advancement
Working Conditions The Job Itself
Status Growth Opportunities
Interpersonal Relations Responsibility
Supervision
Company Policies
Expectancy Theory & Equity Theory
Expectancy Theory – Equity Theory –
describes the process individual’s perception of
people use to evaluate the fair and equitable
likelihood that their efforts
treatment
will yield the results they
want, along with the
degree to which they want
those results
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
Management by Objective
Systematic and organized approach that allows managers
to focus on attainable goals and to achieve the best
results based on the organization’s resources.
MBO helps motivate individuals by aligning their
objectives with the goals of the organization, increasing
overall organization performance.
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
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: involves an expansion of job duties

that empowers an employee to make decisions and
learn new skills leading toward career growth

Job rotation involves systematically moving

employees from one job to another.
Managers’ Attitudes & Motivation
Two assumptions managers make about employees,
according to psychologist Douglas McGregor:
Theory X: assumes that employees dislike work and try to avoid
it whenever possible, so management must coerce them to do
their jobs.
Theory Y: assumes that the typical person actually likes work
and will seek and accept greater responsibility.
Most people can think of creative ways to solve work-related problems.
Most people should be given the opportunity to participate in decision
making.
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.
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 belongs to
labor unions.
1/3 of government workers, 8% of private sector
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.
Collective Bargaining Process
Collective bargaining: process of negotiation
between management and union representatives
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.
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.
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 in public protest
against their employer.
Boycott - organized attempt to keep the public from
purchasing the goods and services of the firm.

Management Tactics
Lockout - a management strike to put pressure on
union members by closing the firm.
Future of Labor Unions
Membership and influence are declining, caused by
a shift from manufacturing industries to information
and service businesses.
8% of private-sector workers are union members,
but that is down from 17% in 1983.
52% of union members are government employees.
Unions need to be more flexible and adapt to a
global economy and diverse workforce.
Unions can recognize the potential for prosperity for
all—management and union workers included.