Chapter 9
Attracting and
Retaining the Best
Employees
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LEARNING OBJECTIVES
9-1 Describe the major components of human resources management.
9-2 Identify the steps in human resources planning.
9-3 Describe cultural diversity and understand some of the challenges and
opportunities associated with it.
9-4 Explain the objectives and uses of job analysis.
9-5 Describe the processes of recruiting, employee selection and orientation.
9-6 Discuss the primary elements of employee compensation and benefits.
9-7 Explain the purposes and techniques of employee training and
development.
9-8 Discuss performance appraisal techniques and performance feedback.
9-9 Outline the major legislation affecting human resources management.
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Human Resources Management:
An Overview
Human resources, the people who work within
an organisation, are the most important and
valuable resource for a business.
Human resources management (HRM) – all
the activities involved in acquiring, maintaining
and developing an organisation’s human
resources
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HRM Activities (slide 1 of 3)
Acquisition includes planning and the various activities
that lead to hiring new personnel.
The planning phase of HRM includes five separate
activities:
1. Human resources planning – determining the business’s
future human resources needs
2. Job analysis – determining the exact nature of the positions
3. Recruiting – attracting people to apply for positions
4. Selection – choosing and hiring the most qualified applicants
5. Orientation – acquainting new employees with the business
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HRM Activities (slide 2 of 3)
Maintaining human resources consists primarily of
encouraging employees to remain with the business and
to work effectively by using a variety of HRM
programmes, including:
• Employee relations – increasing employee job
satisfaction through satisfaction surveys, employee
communication programmes, exit interviews and fair
treatment
• Compensation – rewarding employee effort through
monetary payments
• Benefits – providing rewards to ensure employee
well-being
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HRM Activities (slide 3 of 3)
The development phase of HRM is concerned
with improving employees’ skills and expanding
their capabilities.
The two important activities of this phase are:
1. Training and development – teaching employees
new skills and new jobs, and more effective ways of
performing their present jobs
2. Performance appraisal – assessing employees’
current and potential performance levels
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Responsibility for HRM
In general, HRM is a shared responsibility of line managers and staff HRM
specialists.
Specific HRM activities are assigned to those in the best position to perform
them.
• Human resources planning and job analysis are usually carried out by staff
specialists with input from line managers.
• Staff experts handle recruiting and selection, although line managers are
involved in hiring decisions.
• Staff specialists devise orientation programmes that are carried out by both
staff specialists and line managers.
• Compensation systems (including benefits) most often are developed and
administered by the HRM staff.
• Training and development activities are the joint responsibility of staff and
line managers.
• Performance appraisal is the job of the line manager, although HRM
personnel design the business’s appraisal system in many organisations.
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Human Resources Planning
Human resources planning – the development of
strategies to meet a business’s human resources needs
The organisation’s overall strategic plan is the starting
point of the process.
From this, human resource planners can forecast future
demand for human resources.
Next, the planners must determine whether the needed
human resources will be available.
Finally, they have to take steps to match supply with
demand.
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Forecasting
Human Resources Demand
Planners should base human resource demand forecasts on all
relevant information available.
• The business’s overall strategic plan will provide information about
future business ventures, new products and projected expansions or
contractions of specific product lines.
• Information on past staffing levels, evolving technologies, industry
staffing practices and projected economic trends also can be helpful.
Technological advances are creating new opportunities in
forecasting and planning for human resources demand.
• Insights gained from such technology can help managers develop more
cost-effective recruiting and selection strategies as well as recognise
threats and opportunities.
HRM managers use forecasting information to determine both the
number of employees required and their qualifications.
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Forecasting
Human Resources Supply
A forecast of human resources supply must take
into account both the present workforce and any
changes that may occur within it.
Two useful techniques for forecasting human
resources supply are the replacement chart and
the skills inventory.
• Replacement chart – a list of key personnel and their
possible replacements within a business
• Skills inventory – a searchable database containing
information about the skills and experience of all
present employees
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Matching Supply with Demand
When demand is predicted to be greater than supply, HR
planners must make plans to recruit new employees.
When the supply of employees is predicted to be greater
than the demand, the business must take steps to
reduce the size of its workforce through:
• Layoffs
• Attrition – the normal reduction in the workforce when
employees leave a business due to retirement or a new
job
• Early retirement
• Retrenchment – when employees are offered a
severance package to leave their job
• Firing
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Cultural Diversity in
Human Resources (slide 1 of 2)
Today’s workforce is highly diverse, with employees
bringing a wide variety of beliefs, expectations and
behavioural norms to the workplace.
• Managers must be aware of these differences.
o Examples: European businesspeople may offer a kiss on the
cheek as a greeting; Latin Americans tend to stand closer to
people with whom they are talking than North Americans prefer.
Cultural (or workplace) diversity – differences among
people in a workforce owing to race, ethnicity and
gender
Although cultural diversity presents a challenge,
managers should view it as an opportunity rather than a
limitation.
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TABLE 9-1 Advantages of Cultural Diversity
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Cultural Diversity in
Human Resources (slide 2 of 2)
Numerous businesses have trained their
managers to respect and manage diversity.
• Diversity training programmes may include:
o Recruiting people from previously excluded groups
o Training them to be managers
o Training managers to view diversity positively
o Teaching English as a second language
o Facilitating support groups for immigrants
• A diversity programme will be successful only if it:
o Is systematic
o Is ongoing
o Has a strong, sustained commitment from top leadership
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Job Analysis
Job analysis – a systematic procedure for
studying jobs to determine their various
elements and requirements
The job analysis for a particular position consists
of two parts.
1. Job description – a list of the elements that make
up a particular job
2. Job specification – a list of the qualifications
required to perform a particular job
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FIGURE 9-1 Job Description and Job Specification
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Recruiting (slide 1 of 3)
Recruiting – the process of attracting qualified
job applicants
Recruiters may seek applicants outside the
business, within the business, or both.
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Recruiting (slide 2 of 3)
External recruiting – attracting job applicants from
outside an organisation
• External recruiting may include:
o Activities on university campuses and open houses
o Soliciting recommendations from current employees
o Posting in newspapers
o Employment agencies
o Online
• Advantage:
o Brings people into a business who have new perspectives and
varied business backgrounds
• Disadvantages:
o Is often expensive
o May provoke resentment among present employees
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Recruiting (slide 3 of 3)
Internal recruiting – considering present
employees as applicants for available positions
• Advantages:
o Provides strong motivation for current employees
o Helps the business to retain quality personnel
• Disadvantages:
o Leaves another position open
- Thus, the business not only incurs recruiting and selection
costs, but it also must train two employees instead of one.
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Selection
Selection – the process of gathering information
about applicants for a position and then using
that information to choose the most appropriate
applicant
• Common means of obtaining information about
applicants’ qualifications are:
o Employment applications
o Employment tests
o Interviews
o References
o Assessment centres
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FIGURE 9-2 Typical Employment Application
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Orientation
Soon after a candidate joins a business, he or
she goes through the business’s orientation
programme.
• Orientation – the process of acquainting new
employees with an organisation
Orientation topics range from the location of the
company cafeteria to career paths within the
business.
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Compensation Decisions (slide 1 of 3)
Compensation – the payment employees
receive in return for their labour
Compensation system – the policies and
strategies that determine employee
compensation
• For most businesses, designing an effective
compensation system requires two separate
management decisions:
1. Wage level
2. Individual wages
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Compensation Decisions (slide 2 of 3)
Wage Level
Management first must position the business’s general pay level
relative to pay levels of comparable businesses.
• To determine the average pay for a job, the business may use
wage surveys.
o Wage survey – a collection of data on prevailing wage
rates within an industry or a geographic area
Next, management must determine the wage structure by
deciding on relative pay levels for all the positions within the
business.
• The wage structure is developed on the basis of a job
evaluation.
o Job evaluation – the process of determining the relative worth of
the various jobs within a business
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Compensation Decisions (slide 3 of 3)
Individual Wages
Finally, the company must determine the specific
payments that individual employees will receive.
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Comparable Worth
Comparable worth – a concept that seeks
equal compensation for jobs requiring about the
same level of education, training and skills
• In recent decades, many countries have taken steps
to ensure that all workers have equal pay for
comparable worth.
• A few companies have taken steps to address the
situation by publicising the results of their
investigations into their own pay gaps.
o Examples: Investec and Anglo American’s South African
operations are compelled by UK law to include reporting
about gender pay gaps.
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Types of Compensation
Most forms of compensation fall into the following categories:
• Hourly wage – a specific amount of money paid for each hour of
work
• Salary – a specific amount of money paid for an employee’s
work during a set calendar period, regardless of the actual
number of hours worked
• Commission – a payment that is a percentage of sales revenue
• Incentive payment – a payment in addition to wages, salary, or
commissions
• Lump-sum salary increase – an entire pay raise taken in one
lump sum
• Profit-sharing – the distribution of a percentage of a business’s
profit among its employees
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Employee Benefits (slide 1 of 2)
Employee benefit – a reward in addition to regular
compensation that is provided indirectly to employees
Types of Benefits
Employee benefits take a variety of forms.
• Leave benefits
o Covers such absences as holidays and sick leave
• Insurance packages
o Include medical aid and life cover
• Pension and retirement programmes
o May be borne entirely by the business or shared with the
employee
• Unemployment insurance
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Employee Benefits (slide 2 of 2)
Types of Benefits (continued)
• Workers’ compensation insurance
o Pays medical bills for injuries that occur on the job and provides
income for employees who are disabled by job-related injuries
• Other benefits
o Include tuition-reimbursement plans, credit unions, child-care
services, company cafeterias and exercise rooms
Flexible Benefit Plans
o Flexible benefit plan – compensation plan in which an employee
receives a predetermined amount of benefit rands to spend on a
package of benefit he or she has selected to meet individual needs
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Training and Development
Training and development are usually
differentiated as employee training or
management development.
• Employee training – the process of teaching
operations and technical employees how to do their
present jobs more effectively and efficiently
• Management development – the process of
preparing managers and other professionals to
assume increased responsibility in both present and
future positions
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Analysis of Training Needs
When thinking about developing a training
programme, managers first must determine
whether training is actually needed and, if so,
what types of training needs exist.
• Employers may find that sometimes employees need
motivation more than they need training.
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Training and Development Methods
On-the-job methods
Simulations
Classroom teaching and lectures
Conferences and seminars
Role-playing
e-Learning
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Evaluation of
Training and Development
To ensure that training and development are as
cost-effective as possible, the managers
responsible should evaluate the company’s
efforts periodically.
The results of training evaluations should be
made known to all those involved in the
programme – including trainees and upper
management.
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Performance Appraisal
Performance appraisal – the evaluation of employees’
current and potential levels of performance to allow
managers to make objective human resources decisions
The process has three main objectives:
1. Managers use performance appraisals to let workers know how
well they are doing and how they can improve in the future.
2. A performance appraisal provides an effective basis for
distributing rewards, such as pay raises and promotions.
3. Performance appraisal helps the organisation monitor its
employee selection, training and development activities.
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FIGURE 9-3 Performance Appraisal
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Common Evaluation Techniques (slide
1 of 2)
Objective Methods
Objective appraisal methods use some measurable quantity as the
basis for assessing performance.
• Examples: units of output, rand volume of sales, and number of
defective products
Judgemental Methods
Judgemental appraisal methods require that the manager judge or
estimate the employee’s performance level.
These methods are based on employee ranking or rating scales.
• When ranking is used, the manager ranks subordinates from best to
worst.
• A rating scale consists of a number of statements, on which each
employee is rated based on the degree to which the statement applies.
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Common Evaluation Techniques (slide
2 of 2)
Avoiding Appraisal Errors
Managers must be cautious and avoid making mistakes when
appraising employees.
It is common to overuse one portion of an evaluation instrument,
thus risking overemphasising or underemphasising issues.
A manager must guard against allowing an employee’s poor
performance on one activity to influence his or her judgement of that
subordinate’s work on other activities.
A manager must also guard against discrimination on the basis of
race, age, gender, religion, national origin, or sexual orientation.
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Performance Feedback (slide 1 of 2)
There are three major approaches to performance
feedback interviews:
1. Tell-and-sell
o The superior tells the employee how good or bad the employee’s
performance has been and attempts to persuade the employee to
accept the evaluation.
2. Tell-and-listen
o The supervisor tells the employee what the employee has done
right and wrong and then gives him or her a chance to respond.
3. Problem-solving
o Employees evaluate their own performance and set their own
goals for future performance.
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Performance Feedback (slide 2 of 2)
o Another approach that has become popular is
called a 360-degree evaluation.
• A 360-degree evaluation collects anonymous reviews
about an employee from his or her peers,
subordinates, and supervisors and compiles them into
a feedback report for the employee.
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TABLE 9-2 Legislation Affecting Human Resources Management
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