MANAGING

HUMAN
RESOURCES

12

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 LEARNING OBJECTIVES
1. Explain the importance of the human resource
management process and the external influences
that might affect that process.
2. Discuss the tasks associated with identifying and
selecting competent employees.
▪ Know how to be a good interviewee.
▪ Develop your skill at being a good interviewer.
3. Explain the different types of orientation and training.
4. Describe strategies for retaining competent,
high-performing employees.
5. Discuss contemporary issues in managing human
resources.

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 WHY IS HRM IMPORTANT?

▶ As a significant source of competitive

advantage:
– People-oriented HR creates superior shareholder
value
• As an important strategic tool
– Achieve competitive success through people by
treating employees as partners
• To improve organizational performance
– High performance work practices lead to both high
individual and high organizational performance

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 WHY IS HRM IMPORTANT? (CONT.)

▶ High – performance work practices – work

practices that lead to both high individual and high
organizational performance.
▶ Companies such as Microsoft and BT hired HR
directors from outside the HR discipline

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 EXHIBIT 12-1
HIGH-PERFORMANCE WORK PRACTICES

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 EXHIBIT 12-2 HRM PROCESS

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 EXTERNAL FACTORS THAT AFFECT THE
HRM PROCESS
▶ The Economy's Effect on HRM
– The global economic downturn has left, what
many experts believe to be, an enduring mark
on HRM practices worldwide.
– U.S. workers have dramatically lowered their
career and retirement expectations for the
foreseeable future.

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 EXTERNAL FACTORS THAT AFFECT THE
HRM PROCESS (CONT.)
▶ Employee Labor Unions
– Labor union – an organization that represents
workers and seeks to protect their interests
through collective bargaining.
– Work stops, labor disputes, and negotiations
between management and labor are just a few
of the challenges organizations and managers
face when their workforce is unionized

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 EXTERNAL FACTORS THAT AFFECT THE
HRM PROCESS (CONT.)
▶ Legal Environment of HRM
– Affirmative action – organizational programs
that enhance the status of members of
protected groups.
– Two current U.S. laws that each have the
potential to affect future HRM practices:
• Protection and Affordable Care Act (PPACA;
commonly called the Health Care Reform Act)
• Social Networking Online Protection Act (SNOPA)

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 EXHIBIT 12-3
MAJOR HRM LAWS

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 EXHIBIT 12-3
MAJOR HRM LAWS (CONT.)

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 EXHIBIT 12-3
MAJOR HRM LAWS (CONT.)

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 GLOBAL HRM LAWS
• Work councils – groups of nominated or
elected employees who must be consulted when
management makes decisions involving
personnel.
• Board representatives – employees who sit on
a company’s board of directors and represent
the interests of the firm’s employees.

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 EXTERNAL FACTORS THAT AFFECT THE
HRM PROCESS (CONT.)
▶ Demographic Trends
– The oldest, most experienced workers (those born
before 1946) make up 6 percent of the workforce.
– The baby boomers (those born between 1946 and
1964) make up 41.5 percent of the workforce.
– Gen Xers (those born 1965 to 1977) make up almost
29 percent of the workforce.
– Gen Yers (those born 1978 to 1994) make up almost
24 percent of the workforce.

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 HUMAN RESOURCES TRANSFORMATION

▶ Dave Ulrich (born 1954) pioneered a new way of looking at

corporations' human resources departments. He was
named as the most influential person in human resources
by HR Magazine for both 2006 and 2007.
▶ Starting with the widely accepted idea that human
resources were becoming the most valuable asset in a
knowledge-based economy where talent was at a premium,
Ulrich argued that traditional corporate HR departments
were entirely inadequate for the task of ensuring that
companies got the right talent when they needed it.

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 HUMAN RESOURCES TRANSFORMATION
(CONT.)

▶ HR personnel were so involved in the detail of pay,

pensions and disputes that they had no time for the higher
strategic thinking required for the knowledge economy.
▶ Ulrich suggested that companies should transform their HR
departments, and he proposed a three part model that has
since been widely adopted around the world—so much so
that it has come to be known as the Ulrich Model.
▶ At its core, the model tries to free HR staff to think
strategically about their organization's human resources.
Ulrich says they must “grasp and master the concept of
value”. People in HR departments have too little
understanding of how a business actually works.

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 HUMAN RESOURCES TRANSFORMATION
(CONT.)
▶ Human resources transformation refers to the massive
restructuring of corporate human resources (HR)
departments that took place in the decade or so after 1995.
Before that, the staff in HR departments had generally been
seen as administrators, not as people to be involved in
high-level strategic discussions. HR staff saw themselves as
lifetime career specialists with little need for knowledge or
experience of what the rest of the business was about.
▶ But with the growing appreciation of the value of a
company's human assets, and a need to ensure that the
talent that an organization requires is not just on board but
also properly motivated, the role of HR has more and more
come to be seen as strategic. The old-style HR that dealt
with strikes, bonuses and gripes was rarely suited to this
task.
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 HUMAN RESOURCES TRANSFORMATION (CONT.)
▶ So companies began to look at ways to revamp their HR
departments. They were heavily influenced by the ideas of Dave
Ulrich, a professor of business at the Ross School of Business at
the University of Michigan and author of a 1997 bestseller, “Human
Resource Champions”, the book that more than any other set the
HR transformation ball rolling. Ulrich's idea was that the HR
function should be divided into three:
• what are normally called shared service centres (SSCs), groups
that deliver the traditional HR services (and do jobs that can
often be easily outsourced);
• something described as centres of expertise (COEs), which
house the designers of remuneration packages that ensure an
organization can attract the people that it needs;
• business partners, HR people whose job it is to do strategic
thinking.
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 HUMAN RESOURCE PLANNING

▶ Human resource planning – ensuring that the

organization has the right number and kinds of
capable people in the right places and at the
right times. Through planning, organizations
avoid sudden people shortages and surpluses.
HR planning entails two steps: (1) assessing
current human resources and (2) meeting future
HR needs.
• Job analysis – an assessment that defines
jobs and the behaviors necessary to perform
them.
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 HUMAN RESOURCE PLANNING (CONT.)
• An important part of a current assessment is job
analysis. Information for a job analysis is gathered by
directly observing individuals on the job, interviewing
employees individually or in a group, having employees
complete a questionnaire or record daily activities in a
diary, or having job “experts” (usually managers) identify
a job’s specific characteristics.
• Job description (position description) – a written
statement that describes a job—typically job content,
environment, and conditions of employment.
• Job specification – a written statement of the
minimum qualifications a person must possess to
perform a given job successfully. It identifies the
knowledge, skills, and attitudes needed to do the job
effectively. Both the job description and job specification
are important documents when managers begin
recruiting and selecting personnel.
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 RECRUITMENT AND DECRUITMENT
▶ Recruitment – locating, identifying, and attracting
capable applicants.
▶ Decruitment – reducing an organization’s workforce.
▶ If employee vacancies exist, managers should use the
information gathered through job analysis to guide
them in recruitment.
▶ On the other hand, if HR planning shows a surplus of
employees, managers may want to reduce the
organization’s workforce through decruitment.

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 EXHIBIT 12-4
RECRUITING SOURCES

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 EXHIBIT 12-5
DECRUITMENT OPTIONS

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 SELECTION

▶ Selection
– Once you have a pool of candidates, the next step in the
HRM process is selection to determine who is best qualified
for the job. Managers need to “select” carefully since hiring
errors can have significant implications.
– screening job applicants to ensure that the most appropriate
candidates are hired.
• A valid selection device is characterized by a proven
relationship between the selection device and some
relevant criterion.
• A reliable selection device indicates that it measures the
same thing consistently.
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 EXHIBIT 12-6
SELECTION DECISION OUTCOMES

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 EXHIBIT 12-7
SELECTION TOOLS
The best-known selection tools include application forms,
written and performance-simulation tests, interviews,
background investigations, and in some cases, physical exams.
Exhibit 12-7 lists the strengths and weaknesses of each.

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 EXHIBIT 12-7
SELECTION TOOLS (CONT.)

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INC.
 EXHIBIT 12-7
SELECTION TOOLS (CONT.)

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 SELECTION (CONT.)

▶ Realistic Job Preview (RJP) – a preview of a

job that provides both positive and negative
information about the job and the company.
One thing managers need to carefully watch is
how they portray the organization and the work
an applicant will be doing. If they tell applicants
only the good aspects, they’re likely to have a
workforce that’s dissatisfied and prone to high
turnover.
To increase employee job satisfaction and reduce
turnover, managers should consider a RJP.
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 PROVIDING EMPLOYEES WITH NEEDED
SKILLS AND KNOWLEDGE
▶ Orientation – introducing a new employee to
his or her job and the organization.
• Employee Training is an important HRM
activity. As job demands change, employee
skills have to change.
• In 2011, U.S. business firms spent more than
$59 billion on formal employee training.
Managers, of course, are responsible for
deciding what type of training employees
need, when they need it, and what form that
training should take.
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 PROVIDING EMPLOYEES WITH NEEDED
SKILLS AND KNOWLEDGE
There are two types of orientation.
Work unit orientation familiarizes the employee with
the goals of the work unit, clarifies how his or her
job contributes to the unit’s goals, and includes an
introduction to his or her new coworkers.
Organization orientation informs the new employee
about the company’s goals, history, philosophy,
procedures, and rules. It should also include
relevant HR policies and maybe even a tour of the
facilities.
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 EXHIBIT 12-8
TYPES OF TRAINING

Exhibit 12-8 describes the major types of training that

organizations provide. Some of the most popular types include
profession/industry-specific training, management/supervisory
skills, mandatory/compliance information (such as sexual
harassment, safety, etc.), and customer service training.
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 EXHIBIT 12-9
TRADITIONAL TRAINING METHODS

Exhibit 12-9 provides a description of the various traditional

and technology-based training methods that managers might
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 EXHIBIT 12-9
TRADITIONAL TRAINING METHODS (CONT.)

Of all these training methods, experts believe that

organizations will increasingly rely on e-learning and mobile
applications to deliver important information and to develop
employees’ skills.
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 RETAINING COMPETENT,
HIGH PERFORMING EMPLOYEES
▶ Performance management system – establishes
performance standards used to evaluate employee
performance.
• Skill-based pay – a pay system that rewards
employees for the job skills and competencies they
can demonstrate. Under this type of pay system, an
employee’s job title doesn’t define his or her pay
category, skills do. Research shows these types of
pay systems tend to be more successful in
manufacturing organizations than in service
organizations and organizations pursuing technical
innovations.

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 RETAINING COMPETENT,
HIGH PERFORMING EMPLOYEES
▶ Performance management system –
• On the other hand, many organizations use
Variable pay – a pay system in which an
individual’s compensation is contingent on
performance.
• 90 percent of U.S. organizations use some
type of variable pay plans, and 81 percent of
Canadian and Taiwanese organizations do.

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 EXHIBIT 12-10
PERFORMANCE APPRAISAL METHODS

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 EXHIBIT 12-10:
PERFORMANCE APPRAISAL METHODS
(CONT.)

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 EXHIBIT 12-11
WHAT DETERMINES PAY AND BENEFITS

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 CONTEMPORARY ISSUES IN MANAGING
HUMAN RESOURCES
▶ Downsizing (or layoffs) – the planned elimination of jobs
in an organization. During the most current economic
recession, many well-known companies
downsized—including, among others, Boeing, Nokia,
Procter & Gamble, Hewlett-Packard, Volkswagen, Dell,
General Motors, Unisys, Siemens, Merck, Honeywell, and
eBay.
▶ Sexual harassment – any unwanted action or activity of a
sexual nature that explicitly or implicitly affects an
individual’s employment, performance, or work
environment. Sexual harassment is a serious issue in both
public and private sector organizations.

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 EXHIBIT 12-12
TIPS FOR MANAGING DOWNSIZING

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 CONTEMPORARY ISSUES IN MANAGING
HUMAN RESOURCES (CONT.)
▶ Family-friendly benefits – benefits that
accommodate employees’ needs for
work–life balance.
Smart managers recognize that employees don’t
leave their families and personal lives behind
when they come to work.
They’ve introduced programs such as on-site child
care, summer day camps, flextime, job sharing,
time off for school functions, telecommuting, and
part-time employment.
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 CONTEMPORARY ISSUES IN MANAGING
HUMAN RESOURCES (CONT.)
▶ Employee Health Care Costs – since 2002, health
care costs have risen an average of 15 percent a
year and are expected to double by the year 2016
from the $2.2 trillion spent in 2007.
▶ Employee Pension Plan Costs – pension
commitments have become such an enormous
burden that companies can no longer afford them.
In fact, the corporate pension system has been
described as “fundamentally broken.”

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 REVIEW LEARNING OBJECTIVE 12.1
• Explain the importance of the human resource
management process and the external
influences that might affect that process.
- HRM is important for three reasons:
1. It can be a significant source of competitive
advantage.
2. It’s an important part of organizational strategies.
3. The way organizations treat their people has been
found to significantly impact organizational
performance.

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 REVIEW LEARNING OBJECTIVE 12.2
• Discuss the tasks associated with
identifying and selecting competent
employees.
– A job analysis is an assessment that defines a
job and the behaviors necessary to perform it.
– A job description is a written statement
describing a job.
– A job specification specifies the minimum
qualifications a person must possess to
successfully perform a given job.

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 REVIEW LEARNING OBJECTIVE 12.2 (CONT.)

• Major sources of potential job candidates include:

– The Internet
– Employee referrals
– Company Web site
– College recruiting
– Professional recruiting organizations

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 REVIEW LEARNING OBJECTIVE 12.2 (CONT.)

• Different selection devices include: application

forms, written tests, work sampling, assessment
centers, background investigations, reference
checks, and physical exams.

• A realistic job preview gives an applicant more

realistic expectations about the job, and should
increase employee job satisfaction and reduce
turnover.

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 REVIEW LEARNING OBJECTIVE 12.3

• Explain the different types of orientation

and training.
– Orientation results in an outsider-insider
transition that makes the new employee feel
comfortable and fairly well-adjusted.
– The two types of training are general and
specific.

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 REVIEW LEARNING OBJECTIVE 12.4
• Describe strategies for retaining competent,
high-performing employees.
- Performance appraisal methods are written essays,
critical incidents, graphic rating scales, BARS,
multi-person comparisons, MBO, and 360-degree
appraisals.
- Skill-based pay systems reward employees for
demonstrated job skills and competencies.
- Variable pay system, an employee’s compensation
is contingent on performance.

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 REVIEW LEARNING OBJECTIVE 12.5
• Discuss contemporary issues in managing
human resources.
– Managers can manage downsizing by communicating
openly and honestly.
– Sexual harassment is any unwanted action or activity of a
sexual nature that explicitly or implicitly affects an
individual’s employment, performance, or work
environment.
– Organizations are dealing with work–family life balance
issues.
– Organizations are controlling HR costs by controlling
employee health care costs and pensions.

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