HRM Issues

Chapter 10
 Legal Issues
• Difficult area to legislate clearly
• Political battle ground
• More attention paid to the rights of individual
employee – HRM need to comply with anti
discrimination legislation
 HRM At work
• ensuring that recruitment, selection and promotion procedures
comply with anti-discrimination legislation;
• staff training and development;
• setting up and monitoring remuneration policy;
• setting up and monitoring appraisal procedures;
• administering dismissal and redundancy procedures;
• dealing with contracts of employment;
• workforce planning;
• administering grievance procedures;
• being aware of new legislation affecting employment rights and
advising management of what the organization must do to comply
with it;
• dealing with health and safety;
• administering consultative committees.
 HR Process

Acquisition

Fairness Training

Health and
Appraisal
Safety

Labor
Compensation
Relations
 Recruiter

Labor
relations EEO
specialist Human coordinator
Resource
Specialties
Training Job
specialist analyst

Compensation
manager
 Recruitment and Selection
• Recruitment – selection
• Outsourced to agencies
• Selection in the hand of employer
 Recruitment and Selection
Selection Techniques
• One to one interviews
– Reliable
– Not easy to demonstrate the compliance of equal
rights legislation
• Interview with panel
– Public sector
– Favor candidates who are smooth talkers
– Prevents nepotism and corruption – but bad
appointments
 Recruitment and Selection
Selection Techniques
• Assessment of references
– Legislation to provide reference
– Legal dangers – used less
• Psychometric tests
– Ability tests – verbal or numerical skills
– Aptitude test – potential to learn skills
– Personality tests – value of this not clear
 Recruitment and Selection
Selection Techniques
• Situational assessment
– Military officers and multinational companies to
recruit new graduates
– Situational questions in interviews are more
valuable
• Task assessment
– Not all the skills can be tested in one or more
tasks
• Nepotism – Cronyism – low risk from both ?
◦ Selection tools must be reliable and valid.
Reliability: the degree to which the tool measures the same thing
each time it is used.
Scores should be close for the same person taking the same
test over time.
Validity: Does the test measure what it is supposed to measure?
Example: does a physical ability test really predict the job
performance of a firefighter?
Managers have an ethical and legal duty to develop good selection
tools.
 Staff Training And Development
• UK criticized for lack of interest in staff training
• In USA – professionals paid to get part time
degree – promotions on further qualification
• Up to individuals and managers
– BCS supports CPD
– Managers to take responsibility of CPD
• Staff training and development is more important
in high tech companies – but also, first thing to be
cut with budget is short
 Training: teach organizational members how to
perform current jobs.
Help worker’s acquire skills to perform effectively.

Development: build worker’s skills to enable

them to take on new duties.

◦ Training used more often at lower levels of

firm, development is common with managers.
◦ A Needs Assessment should be taken first
to determine who needs which program
and what topics should be stressed.
 Types of development
◦ Varied Work Experiences: Top managers
must build expertise in many areas.
Workers identified as possible top managers
given many different tasks.
◦ Formal Education: tuition reimbursement is
common for managers taking classes for MBA
or similar.
Long-distance learning can also be used to reduce
travel.
Whatever training and development
efforts used, results must be
transferred to the workplace.
 REMUNERATION POLICIES AND JOB
EVALUATION
• Scales – increments
• Hard to cop with market situation
– Government hires IT professionals
– A lot of difference in salaries
• In professional environment
– Salaries varies within guidelines
– High increase in salaries after threat to leave job?
• Job evaluation
– Comparing relative worth of jobs – jobs to grades
 REMUNERATION POLICIES AND JOB
EVALUATION
• Job evaluation
– Anti discrimination legislation – equal pay for
work of equal value
– Job evaluation comes in to play in case of mergers
– acquisitions
– New rapidly growing companies – clarity and
consistency while flexibility
 REMUNERATION POLICIES AND JOB
EVALUATION
• Job evaluation schemes – analytical and
non-analytical
– Non-analytical – comparing whole jobs without
considering individual skills and elements
• Job classification – in public sectors, grades are decided
– description of characteristics of jobs decided later
– Analytical – assesses each job on basis of different
skills and elements
◦ Pay level: how the firm’s pay incentives
compare to other firms in the industry.
Managers can decide to offer low or high
relative wages.
Pay Structure: clusters jobs into categories
based on importance, skills, and other issues.
◦ Benefits: Some are required (social security,
workers comp).
Others (health insurance, day care, and others)
are provided at the employers option.
Cafeteria-style plan: employee can choose the
best mix of benefits for them. Can be hard to
manage.
Base Wage
◦ Job Based Pay-paid for the job that is done
◦ Competency Based Pay-pay is linked to job-relevant skills,
knowledge, and experience
Incentive Pay-linked to job performance
◦ can increase motivation
◦ links employees to firm performance
◦ works well when employees trust firm
Piece-Rate - Pay for each unit of output
Commissions - Pay from percentage of sales or
profits
Bonuses - Lump sum payments
• Gain Sharing - teams of employees share in
gains from improvements in productivity or
cost saving measures
• Profit Sharing -A percentage of profits earned
by a department or company
Stock Ownership
◦ Options
◦ Employee Stock Ownership Plans
 APPRAISAL SCHEMES
• Management by Objectives
– Set of objectives to achieve in six months
– Objectives to be precise, verifiable and quantifiable
– Managers and staff aware of organization’s objective
• MBO Weaknesses
– Not all objectives easily precisely specified and
quantifiable
– MBO tend to emphasize on short term objectives
instead of long term
 APPRAISAL SCHEMES
• Modern management towards general
principles of MBO instead of setting rigid
formal objectives
• Empowerment; setting at all levels as what is
expected from them, leaving on them how
they achieve it
Process of evaluating employee performance
◦ job related strengths
◦ development needs
◦ progress toward goals
◦ determine ways to improve performance
◦ Pay and promotion decisions
More systematic is better, for the most part
 Self Appraisal
Peer Appraisal
360 Degree appraisal
Central Tendency Error-everyone ranked as
average
Leniency-individuals are ranked higher than they
deserve
 Supervisors

Peers Customers &

Clients

Sources of
performance
appraisals

Self Subordinates
 Redundancy, dismissal and grievance
procedure
• Fair dismissal:
– Lack of capability to do the job
– Misconduct
– It is illegal for the employer to employ the
employee – employee’s work permit expired
– Redundancy
– “Other reasons” – but many are “unfair” e.g. on
grounds of discrimination, because the employee
is taking legal action to enforce their rights at
work, ….
 Redundancy and dismissal
• Dismissal Process:
– Written statement of why dismissal is being
considered
– Arrange a meeting where both sides can state their
case
– Following the meeting the employee is informed of
the decision.
– Right of appeal to more senior manager
• Other issues: constructive dismissal, takeovers
and outsourcing
 Redundancy
• Redundancy
– Employer no longer requires people to do a particular
category of job (or fewer people)
– Employees entitled to compensation (subject to a
legal minimum)
– Often employer seeks to reduce the number of
employees in a particular category
• Traditionally selection was last-in, first-out (is this
reasonable?)
• Often voluntary redundancy is offered (do you see any
issues with this?)
 UK Statutory Redundancy Pay
3. Redundancy pay
You’ll normally be entitled to statutory redundancy
pay if you’re an employee and you’ve been working
for your current employer for 2 years or more.

You’ll get:
• half a week’s pay for each full year you were
under 22
• one week’s pay for each full year you were 22 or
older, but under 41
• one and half week’s pay for each full year you
were 41 or older
• Length of service is capped at 20 years.
 Contracts of Employment
• In most modern economies employees are
required to have contracts (whether or not
they are written)
• Employees should understand their conditions
of employment.
• HR staff oversee the signing and record
keeping around contracts.
 Human Resource Planning
• HR departments often get involved in
resource planning:
– Characterizing the skills of the current workforce
– Characterizing the current workload and how
effectively the workforce meets that workload
– Forecasting likely increases in workload and the
pattern of workload
– Forecasting staff losses and gains
– Predicting the effects of takeovers etc on HR.