• The process of planning, organizing, directing

(motivating), and controlling the procurement,

development, compensation, integration, maintenance,
and separation of organizational human resources to the
end that organizational, individual, and societal needs are
satisfied.

Human Resource
Management
 Human Resource Management

Human Resource Management includes all activities used to

attract & retain employees and to ensure they perform at a high
level in meeting organizational goals.
These activities are made up of
1. Recruitment & selection.
2. Training and development.
3. Performance appraisal and feedback.
4. Pay and benefits.
5. Labor relations.
• HR Planning includes all activities managers do to forecast
current and future HR needs.
• Must be done prior to recruitment and selection
• Demand forecasts made by managers estimate the number &
qualifications the firm will need.
• Supply forecasts estimate the availability and qualifications of
current workers and those in the labor market.
Human Resource
Planning
• Component should be consistent with the others, organization
structure, and strategy.
• Recruitment: develop a pool of qualified applicants.
• Selection: determine relative qualifications & potential for a job.
• Training & Development: ongoing process to develop worker’s
abilities and skills.
• Performance appraisal & feedback: provides information about
how to train, motivate, and reward workers.

HRM Components
• Managers can evaluate and then give feedback to enhance worker
performance.
  Pay and Benefits: high performing employees should be rewarded with
raises, bonuses.
• Increased pay provides additional incentive.
• Benefits, such as health insurance, reward membership in firm.
 Labor relations: managers need an effective relationship with labor
unions that represent workers.
• Unions help establish pay, and working conditions.
If management moves to a decentralized structure, HRM should
HRM Components
be adjusted as well.
• External recruiting: managers look outside the firm for people who
have not worked at the firm before.
• Managers advertise in newspapers, hold open houses, recruit at
universities, and on the Internet.
• External recruitment is difficult since many new jobs have specific skill
needs.
• A multi-prong approach to external recruiting works best.
• Internal Recruiting: positions filled within the firm.
• Internal recruiting has several benefits:
• Workers know the firm’s culture, may not have new ideas.

Recruitment
• Managers likely already know the candidates.
• Internal advancement can motivate employees.
• Outsourcing: managers can decide to contract with outside workers
rather than hiring them.
• Outsourcing is more flexible for the firm.
• Outsourcing often provides human capital at a lower cost.
• Outsource problems: managers lose control over output.
• Outsource contractors are not committed to the firm.

HRM Planning:
• Unions typically are against outsourcing that has potential to eliminate
member’s jobs.

Outsourcing
Figure 10.3

Background
Background
Information
Information
Interviews
Interviews References
References

Selection
Selection

Performance
Performancetests
tests Paper
Papertests
tests

Selection Tools
Physical
Physical
Ability
Abilitytests
tests
After a pool of applicants are identified, qualifications related to the
job requirements are determined:
• Background Information: includes education, prior employment,
college major, etc.
• Interview: almost all firms use one of two types:
• Structured interview: managers ask each person the same job-related
questions.
• Unstructured interview: held like a normal conversation.
• Usually structured interviews preferred; bias is possible.

Selection Process
• Physical Ability Test: measure strength & endurance.
• Good for physically demanding jobs.
 Paper & Pencil Tests: Either an ability and personality test.
• Ability test: assess if applicant has right skills for the job.
• Personality test: seek traits relevant to job performance.
• Be sure test is a good predictor of job performance.
 Performance Tests: measure job performance.
• Typing speed test is one example.
• Assessment Center: candidates assessed on job-related activities over a
period of a few days.
 References: outside people provide candid information about

Selection Process
candidate.
• Can be hard to get accurate information.
• 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

Reliability & Validity

tools.
• Labor Union-an organization with legal authority to
negotiate with the employer on behalf of employees
• Bonafide Occupational Qualification (BOQ)-individual
characteristics necessary for performance of job
requirements
• Employees Vs Independent Contractors
• Union Shop - must be in the union

Terms
 • 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.

Training & 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

Types of Development
transferred to the workplace.
• Right-to-work laws - can’t force membership
• Contrast Error-interviewer bases judgement of a
candidate upon a comparison with preceding interviewee
• Similarity Error-bias toward a candidate that is similar to
the interviewee
• Situational Interviews-give scenarios to candidates and
judge their responses

Terms (cont)
• Job Analysis-the act of examining positions within an
organization
• Job Description-narrative explaining the scope of a
position
• Job Characteristics-tasks involved in a position
• Job Requirements-personal characteristics necessary to
fill a position

Job Analysis
• Process of evaluating employee performance
• job related strengths
• development needs
• progress toward goals
• determine ways to improve performance
• Pay an promotion decisions
• More systematic is better, for the most part

Performance Appraisal
• Self Appraisal
• Peer Appraisal
• 360 Degree appraisal
• Central Tendency Error-everyone ranked as average
• Leniency-individuals are ranked higher than they deserve

Performance Appraisal
(cont)
Figure 10.6

Supervisors
Supervisors

Peers
Peers Customers
Customers& &
Clients
Clients
Sources
Sourcesof
of
performance
performance
appraisals
appraisals
Who Appraises
Performance?
Self
Self Subordinates
Subordinates
• 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

Pay and Benefits

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

Pay
• Piece-Rate - Pay for each unit of output
• Commissions - Pay from percentage of sales or profits
• Bonuses - Lump sum payments
• Merit Pay - Permanent increases in base pay linked to
individual’s previous performance
• Seniority - Increases over time

Individual Incentives
• 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

Team or Organizational
Incentive
• Pro-Union Legislation (1920’s and 1930’s)

• Union Restriction Legislation (1940’s and 1950’s)

• Equal Employment Legislation (1960’s to present)

Labor Legislation
Timeline
• Railway Labor Act 1926
• The fundamental right of workers to engage in labor
organizing activity without fear of employer retaliation and
discrimination
• Avoid service interruptions
• Eliminate Restrictions on joining unions
• Prompt settlement of disputes
• Federal Insurance Contribution Act 1935
• social security contribution by employers

Pro-Union/Labor
Legislation
• Restore the equality of bargaining power arising out of
employer’s general denial of labor of the right to bargain
collectively with them---Granted right to Strike
• Five Unfair Practices Outlawed
• Interference with organizing
• Domination
• Discrimination in hiring
• Discrimination against those filing charges
• Refusal to bargain collectively

Wagner & National Labor

Relations Act 1935
• Minimum Wage
• Pay for overtime
• Does not cover commission, salary, or tips

Fair Labor Standards Act

1938
• Taft-Hartley Act Labor Management Relations Act 1947
• Criticized the Wagner Act for its bias towards unions,
limited the constitutional right of free speech by employers,
did not consider unfair labor practices on the part of unions
• Employees Allowed to refrain from unions
• Closed shop was outlawed and a written agreement was
required for withdrawal of union dues from paychecks

Union Restriction
• Recognition of supervisor unions not required
• One certification election per year
• Allowed employee initiated decertification elections

Taft-Hartley (cont)
• Detailed regulation of internal union activity
• Control of due increases
• Right to nominate and vote
• Filing of reports with the Secretary of Labor

Landrum-Griffin Act 1959

• Equal Pay Act 1963
• Men and women must be paid equally when doing equal
work
• requiring similar skill, effort, responsibility, and conditions
• Equal Pay Vs Comparable Worth

Pro-Individual
• Prohibits discrimination in all phases of employment
based on race, color, religion, sex, or national origin.
• Such information can’t be considered in hiring, firing,
promotions, training, or granting raises
• religious discrimination
• EEOC monitors, justice department enforces

Title VII of the Civil Rights

Act of 1964
• Age Discrimination Act of 1967
• Protects those over 40
• Occupational and Safety Health Act 1970
• Requires employers to provide a safe and healthful
workplace with adequate protection against hazards
• Dangerous Equipment
• Chemicals
• Established OSHA

Individual Rights (cont)

• Equal Employment Opportunity Act 1972
• EEOC can sue employers in federal court on behalf of
aggrieved individual or class of people
• Americans with Disabilities Act 1990
• Employers with more than 15 employees can not
discriminate against disabled employees
• Civil Rights Act 1991
• Awards aggrieved employees punitive damages

Individual Rights (cont)