Module Title: HUMAN RESOURCE MANAGEMENT (ITM 322)

Course Title: HUMAN RESOURCE MANAGEMENT

Course Number: ITM 322
Course Description:
This course is tasked on the development of people which covers the manifestation and
development of managing personnel as well as managerial concept within the organization
which provokes the student to understand and to gain a manipulative skills in managing
personnel within the organization.

Total Learning Time: 54/hours/18 weeks

Pre-requisites (If there’s any): None
Overview:
This module will guide students to understand why it is important in any course to study
Human Resource Management. First, Human resources appreciate in the passage of time. It is
the most important resource from ages of kings and politicians have ruled, but only those have
succeeded are the persons, who have tactfully used their available human resources.
Appropriate human resources assure an organization that the right number and kind of people
are available at the right time and place so that organizational needs can be met. Therefore,
success of any organization depends on the management of human resources. In generic
terms, Human Resource means, “The total knowledge, skills, creative abilities, talents,
aptitudes, values, attitudes and approaches’, in some personnel. Generally, some resources are
developed, while some are obtained through heredity. When these resources are used in a way
such that maximum benefits can be taken out of it, then it is called “Human Resource
Management”.

Learning Outcomes:
 Describe the organizational human resource process
 Discuss the methods and process of performance appraisal and compensation
 Discuss the importance of training and development
 Describe the procedures involved in job design and evaluation

Indicative Content:
 Virtual Introduction and Orientation of the Course:
Vision, Mission, Goals and Objectives of the University,
Core Values and Outcome
Quality Policy
Course orientation: Grading system, Requirements,
Relevance of the course
CHAPTER 1
INTRODUCTION TO HUMAN RESOURCE MANAGEMENT
Human resource management is the organization function that deals with issues related
to people such as compensation, hiring, performance management, organization development,
safety, wellness benefits, employee motivation, communication, administration and training. The
purpose of human resource management in an organization is to achieve maximum individual
development, favourable working atmosphere and constructive relationship between employers
and employees; in other words effective utilization of Human Resources. Human resource
management is a strategic approach to the motivation and development of people, and to
gaining their commitment so that they can make their best contribution to organization success,
while also meeting their own needs and aspirations.

In short, HRM aims at achieving organizational goals meet the expectations of

employees; develop the knowledge, skills and abilities of employees, improve the quality of
working life and manage human resources in an ethical and socially responsible manner. The
effective use ofpeople is the critical factor in the successful accomplishment of corporate goals.
To this end HR managers have to understand the needs, aspirations of employees proactively,
face the challenges head on resolve issues amicably in the years ahead.

Human Resource Management involves management functions like planning, organizing,

directing and controlling
 It involves procurement, development, maintenance of human resource
 It helps to achieve individual, organizational and social objectives
 Human Resource Management is a multidisciplinary subject. It includes the study of
management, psychology, communication, economics and sociology.
 It involves team spirit and team work.
 It is a continuous process.

HR Management: HRM versus HRD (Development)

Both are very important concepts of management specifically related with human
resources of organization. Human resource management and human resource
development can be differentiated on the following grounds:
  Human resource management is mainly maintenance oriented (admin tasks, employee
files, payroll, etc.) whereas human resource development is learning oriented.
 Organization structure in the case of human resource management is independent,
whereas human resource development creates a structure that is inter-dependent and
inter-related.
 Human resource management aims to improve the efficiency of the employees, whereas
HRD aims at the development of the employees as well as organization as a whole.
 Responsibility of human resource development is given to the personnel/human resource
management department and specifically to personnel manager, whereas responsibility of
HRD is given to all managers at various levels of the organization.
 HRM motivates employees by giving them monetary incentives or rewards whereas
human resource development stresses on motivating people by satisfying higher-order
needs.

HR Management: HRM in Today’s Work Place

There are several factors in the changing function of HR in today's workforce, including
modernized duties at companies, the use of technology in human resources and the
responsibility of HR to help establish and maintain workplace culture.

According to Inc., human resources management is a formal system used within

organizations to manage employees. The primary role of HRM is to oversee critical areas
such as staffing and recruiting, defining employee roles and compensation and benefits. With
an HRM program in effect at your business, you can focus on increasing productivity and
ensuring your employees have everything they need to succeed in their roles.
Creating an Organizational Culture

One of the overarching ways HRM effects a business is by creating an organizational

culture. Establishing a vision and mission for the company, along with its core values, is
integral because it brings employees together to work toward a shared goal. Everything about
an organization stems from those three critical elements, from the way departments are
structured to the job descriptions of each role to the processes and procedures, according
to HR Zone. It's important to ensure all employees are aware of the business’ vision, mission
and core values. Including them in onboarding materials and discussing them at town hall
meetings can help make sure everyone is familiar with them.

Company leadership, including HRM employees, need to embody those elements and
model it for staff. For example, if the vision of the company is to create a greener future, then
the materials used to manufacture the products need to be sustainably sourced. Similarly, the
office kitchen should have recyclable materials instead of single-use plastics. If work-life
balance is one of the core values of the company, there should be a competitive vacation day
allotment for employees to use without judgment or push-back.

Training and Developing Employees

The impact of HRM on the efficacy of employees is apparent in their onboarding and
training. Regardless of how skilled or experienced an employee may be, they need to learn
the processes and procedures that are specific to the company. This is where HRM comes in.
Businesses need to develop detailed onboarding materials for each new employee that get
them accustomed to the expectations of the organization.

Job-specific training is often conducted by senior employees within the same

department, but is also overseen by human resources. It’s not only important to ensure new
employees have the training and education they need for their specific role, but assessment is
also key so the employees can apply their knowledge once they begin the job. According to
HR Zone, when employees get promotions and enter new roles, HR helps with continuous
education development and training.

Increasing Employee Retention and Satisfaction

The process of recruiting, hiring and on boarding an employee is not only time-consuming, it’s
expensive. That’s why HRM focuses on reducing turnover within an organization by ensuring
employees are engaged. This includes providing them with a competitive compensation and
benefits package, in addition to perks such as free lunches or paid social outings. HRM is also
needed to develop clear job descriptions so all employees understand exactly what they are
responsible for achieving, reducing confusion and disagreements.
Benefits of HRM practices for employees are that they have the opportunity to provide
feedback and see their suggestions acted upon. While measuring employee engagement and
satisfaction is difficult, trained HRM professionals devise various surveys and focus groups to
learn how employees feel about the company. They also conduct exit interviews with
employees who leave, according to Human Resources MBA. This way, they can learn what
went wrong and how they can improve it.
CHAPTER 2

HISTORY OF HUMAN RESOURCES

Human resource management has changed in name various times throughout history.
The name change was mainly due to the change in social and economic activities throughout
history.

Industrial Welfare
Industrial welfare was the first form of human resource management (HRM). In 1833 the
factories act stated that there should be male factory inspectors. In 1878 legislation was passed
to regulate the hours of work for children and women by having a 60 hour week. During this time
trade unions started to be formed. In 1868 the 1st trade union conference was held. This was
the start of collective bargaining. In 1913 the number of industrial welfare workers had grown so
a conference organized by Seebohm Rowntree was held. The welfare workers association was
formed later changed to Chartered Institute of Personnel and Development.

Recruitment and Selection

It all started when Mary Wood was asked to start engaging girls during the 1st world war.
In the 1st world war personnel development increased due to government initiatives to
encourage the best use of people. In 1916 it became compulsory to have a welfare worker in
explosive factories and was encouraged in munitions factories. A lot of work was done in this
field by the army forces. The armed forces focused on how to test abilities and IQ along with
other research in human factors at work. In 1921 the national institute of psychologists
established and published results of studies on selection tests, interviewing techniques and
training methods.

Acquisition of other Personnel Activities

During the 2nd world war the focus was on recruitment and selection and later on training;
improving morale and motivation; discipline; health and safety; joint consultation and wage
policies. This meant that a personnel department had to be established with trained staff.

Industrial Relations
Consultation between management and the workforce spread during the war. This
meant that personnel departments became responsible for its organization and administration.
Health and safety and the need for specialists became the focus. The need for specialists to
deal with industrial relations was recognized so that the personnel manager became as
spokesman for the organization when discussions where held with trade unions/shop stewards.
In the 1970's industrial relations was very important. The heated climate during this period
reinforced the importance of a specialist role in industrial relations negotiation. The personnel
manager had the authority to negotiate deals about pay and other collective issues.

Legislation
In the 1970's employment legislation increased and the personnel function took the role
of the specialist advisor ensuring that managers do not violate the law and that cases did not
end up in industrial tribunals.

Flexibility and Diversity

In the 1990's a major trend emerged where employers were seeking increasing flexible
arrangements in the hours worked by employees due to an increase in number of part-time and
temporary contracts and the invention of distance working. The workforce and patterns of work
are becoming diverse in which traditional recruitment practices are useless.In the year 2000,
growth in the use of internet meant a move to a 24/7 society. This created new jobs in e-
commerce while jobs were lost in traditional areas like shops. This meant an increased potential
for employees to work from home. Organizations need to think strategically about the issues
these developments raise. HRM manager’s role will change as changes occur.

Information Technology some systems where IT helps HRM are: Systems for e-
recruitment; On-line short-listing of applicants; developing training strategies on-line;
Psychometric training; Payroll systems; Employment data; Recruitment administration;
References; Pre-employment checks. IT helps HR managers offload routine tasks which will
give them more time in solving complex tasks. IT also ensures that a greater amount of
information is available to make decisions.

Exercises:

I. Identification. Human resource management has changed name in various times

throughout history due to the change in social and economic activities throughout history.
Identify the name of change of human resource management.
1. ________________________ was the first form of human resource management
(HRM).
2. ________________________ in this period, ensuring that managers do not violate the
law and that cases did not end up in industrial tribunals.
3. ________________________ In the 1st world war personnel development increased due
to government initiatives to encourage the best use of people.
4. ________________________ During the 2nd world war, a personnel department had to
be established with trained staff.
5. ________________________ It is the period where the personnel manager has the
authority to negotiate deals about pay and other collective issues.
6. _______________________ In the 1990’s, an increased potential for employees to work
from home.

II. Enumeration:
1. Give the Management Functions of Human Resource Management.
1. 3.
2. 4.
2. Human Resource Management (HRM) and Human Resource Development (HRD) can
be differentiated on the following grounds:
HRM HRD

1. 1.

2. 2.

3. 3.

4. 4.
5. 5.

3. Primary role of HRM

1. 4.
2. 5.
3.

Learning Outcomes:
 Define human resource management and explain how managers develop and
implement a human resource plan.
 Explain how companies train and develop employees, and discuss the importance of a
diverse workforce.
 Identify factors that make an organization a good place to work, including competitive
compensation and benefits packages.

CHAPTER 3

FINDING AND HIRING THE BEST “HUMAN” FOR THE JOB

RECRUITMENT
When HR planning indicates the need for additional labor, organizations have a number
of choices to make. This may be the first step in a full-scale recruitment and selection process,
but sometimes hiring additional employees is not the best method to obtain additional labor. It
may be appropriate for an organization to consider alternatives to recruiting, such as
outsourcing or contingent labor, instead of hiring regular employees. If this is a temporary
fluctuation in work volume, the simplest solution may be part-time labor or overtime by existing
employees. The costs of recruitment and selection can be staggering; hiring new employees
should occur only after careful consideration and only when the organization anticipates a long-
term need for additional labor. Estimates on the cost to replace supervisory, technical and
management employees run from 50 percent to several hundred percent of employee salaries.
Careful HR planning must consider the overall growth prospects of the organization and
accurate forecasting of future labor needs. Recruitment planning begins only when other
alternatives have been considered and eliminated.

RECRUITMENT: The process of attracting individuals on a timely basis, in sufficient numbers

and with appropriate qualifications, to apply for jobs with an organization.

INTERNAL ENVIRONMENT

Promotion from Within. Your organization’s promotion policy will have a significant effect on
the recruitment process. If the open position is above entry level, it may be appropriate to
promote someone already working for the organization. Many organizations use promotion from
within as a motivation tool and a reward for good work or longevity with the organization. When
employees see their co-workers being promoted, they become more aware of their own career
opportunities. Promotion may be especially important in a stagnant economy where people
have little chance of improving their lot by changing organizations. Their only opportunity for
career growth and increased income is to move up within their current organization. The
problem with promotion from within is that the promoted person leaves a staffing gap in his or
her former position, so there is still a position to be filled.

Nepotism. Nepotism is the hiring of relatives. In the Philippines, it is one of the prohibitions on
the appointments in the Civil Service that Nepotism is the appointment of relative in the
national/local government, SUCs, GOCCs with original charter, any branch of the
government.Be sure you know your organization’s policy on nepotism before one of your staff
approaches you about hiring a member of his or her family. If you hire staff relatives (or if you
don’t), be careful of civil rights violations because in many states it is illegal to discriminate in
hiring based on a person’s marital status.

EXTERNAL ENVIRONMENT

Labor Market Conditions. The strength of the economy and labor market conditions will
significantly affect your organization’s ability to attract and retain top-level employees. When the
economy is strong, with little unemployment, your organization may have to compete with other
employers for a limited number of skilled employees. This may require increased compensation
or benefits incentives to attract quality applicants. The reverse may be true in a soft economy,
with high levels of unemployment. The problem then is not a shortage of qualified applicants;
instead, the problem is managing the huge number of applications that must be pared down to
find a few good hires. Local labor market conditions strongly affect non-managerial and
supervisory positions, and depending on your industry, global considerations may affect your
labor market for professional and technical applicants.

In Foreign Setting
Legal Issues. There are a number of laws that will affect your hiring process, particularly in the
area of discrimination.
The Civil Rights Act of l964 prohibits discrimination in employment practices when the
discrimination is based on a person’s race, color, sex, religion or national origin.
The Age Discrimination in Employment Act (ADEA) of 1967 extends discrimination
protection to persons aged 40 and older for organizations of 20 or more employees.
The Pregnancy Discrimination Act of 1978 is an amendment to Title VII of the Civil
Rights Act. The Act makes it unlawful to refuse employment to a woman based on pregnancy,
childbirth or any related medical condition.
The Americans with Disabilities Act (ADA) of 1990 prohibits discrimination against
qualified individuals with disabilities in organizations of 15 or more employees. The ADA also
requires that the employer offer reasonable accommodations to disabled individuals so they
have equal opportunity to apply for job openings and, if hired, to be successful in their job
functions.

INTERNAL RECRUITMENT

Job Posting. The most common method used to find qualified applicants from inside the
organization is job posting.

JOB POSTING: The procedure to inform employees that job openings exist.

The traditional method to announce a job opening was to post notice of the job on the
HR bulletin board; no doubt this is the origin of the term job posting. Today, many organizations
post jobs electronically through organization-wide intranets or send e-mails to all employees
about the job vacancy. Other employers publish employment newsletters or distribute job
announcement flyers. Whatever the method used, the job announcement should include
information about the position, the required qualifications and instructions on how to apply.
It is important that the job announcement is made available to all employees. Adequate
job posting can ensure that minority workers and other disadvantaged groups are aware of
opportunities within the organization. The downside to job positing is employee cynicism that
occurs when jobs are posted as open, but in reality, the organization has already selected a
strong internal candidate. Such practices create resentment and mistrust among employees
when they believe the job posting is just a formality with little real opportunity for advancement.

EXTERNAL RECRUITMENT

Applicant pools can be generated in a number of ways. Depending on your

organization’s policies and the size of your hiring budget, you may want to use an employment
agency. Private agencies and executive search firms are usually used for recruiting white-collar
employees, but they can be used for virtually any type of position. Using job criteria provided by
your organization, an agency will generate the applicant pool and do the preliminary interviews,
thereby screening out unqualified candidates and sending you only those who are actually
qualified. This can save a great deal of time; however, private agency fees can be costly
because they are often a percentage of the position’s annual salary. This can be a significant
expense, particularly when filling executive-level positions. Depending on the nature of the
position, you may also get some unsolicited walk-in applicants, but these still may not generate
a large enough applicant pool without further recruitment efforts.

You may choose to advertise the open position in local newspapers, trade journals, radio
and television. Advertising can range from a simple help wanted ad in the classifieds to an
extensive multimedia campaign. Help wanted ads often include a URL for online applications
well as more traditional methods for reply. Some organizations have eliminated traditional
methods altogether and accept only online applications.
Some positions lend themselves well to internships.An internship is an arrangement in
which a student is placed temporarily in a position with no obligation by either the student or the
organization to make the position permanent. The internship may be a summer or a part-time
job while the student is in school, enabling the student to learn the organization and try out the
job before settling into a career. It also enables the organization to try out a possible future
employee before making a job offer.

INTERNET RECRUITING

The most significant change in recruiting practices has been the rise in the use of online
recruiting. Many organizations post job openings on their web sites or on specialized sites like
Career Builder and Monster.com, and some accept only online applications, completely
eliminating the hard-copy application. There are advantages to online recruiting. First, it costs
less than traditional advertising. It’s easy and quick to post an ad; responses arrive faster and in
greater quantity; and a wider range of applicants can be generated. Online processes can also
screen applications and administer some selection tests, thereby significantly reducing the HR
time required to generate a pool of qualified candidates.
There are as many different methods of recruiting as there are organizations, and there
is no one best method for recruiting job applicants. Most organizations use a variety of methods,
depending on the nature of the job to be filled, the time needed to properly fill the position and
the size of their recruiting budget. Your organization may already have a valid track record for
recruiting that will determine what methods work best for your situation.
SELECTION

SELECTION: The process of choosing from a group of applicants the individual best suited for
a particular position and for the organization.

The Application. Asking the candidate to complete an application form is generally done early
in the selection process. Despite the widespread use of application forms for employee
selection, research demonstrates that illegal (or inappropriate) application items are still quite
common. Questionable items are those that request information on gender, race, national origin,
education dates and disabilities. The most commonly found inappropriate questions involve past
salary levels, age, driver’s license information, citizenship information and Social Security
numbers. Questions about past salary are considered inadvisable since they can perpetuate
lower salaries for women and minorities as compared with white males. If an employer bases a
starting salary on an applicant’s prior earnings, minorities and women will likely be offered less
pay. Although the majority of applications do not explicitly ask about age, many include inquires
about an applicant’s education dates (year of high school graduation), which can be used to
infer an applicant’s age.
The information requested on an application form may vary from organization to
organization and even by job type within an organization. Typically, though, the application form
should include sections for the applicant’s name, address, telephone number, education,
military background, work experience and reference information. There should be a place for
the applicant to sign and a preprinted statement that the applicant’s signature indicates his or
her attestation that everything on the form is true; if not, the candidate can be released. When it
is not prohibited by state law, many organizations include an employment-at-will statement
reminding employees that either the employer or the employee can terminate the employment
relationship at any time. And finally, the form should include a statement from the applicant
giving permission to have references checked. Many applicants include résumés along with
their applications, and HR can direct applicants to submit forms either online or in hard copy.
Regardless of the methods used, you may get hundreds of applications for only a few open
positions, particularly in a slow economy with high unemployment.

Screening Interview Before moving further into the selection process, many organizations
prefer to do a screening interview of those applicants that appear qualified based on information
submitted on their résumé and application. Screening interviews are usually conducted by
telephone. The interviewer asks a few straightforward questions to determine the candidate’s
job qualifications and appropriateness for the open position. If it is determined that the applicant
is not appropriate for the position, the interviewer may refer the candidate to another open
position within the organization if there is something available that matches the applicant’s skills.
If there is nothing else available and the candidate is obviously unqualified for the position, the
process ends there, saving both the candidate and the organization the time and expense of
going further into the selection process.

SELECTION TESTS

SELECTION TEST: Any instrument used to make a decision about a potential employee.

There are a number methods organizations use to determine if an applicant has the
potential to be successful on the job. Selection tests are used to identify applicant skills that
cannot be determined in an interview process. Using a variety of testing methods, applicants are
rated on aptitude, personality, abilities, honesty and motivation. Properly designed selection
tests are standardized, reliable and valid in predicting an applicant’s success on the job.
 Standardization: The uniformity of procedures and conditions related to administering
tests (R. Wayne Mondy).
To equitably compare the performance of several applicants, the processes used
for testing those applicants must be as identical as possible. The content of the test, the
instructions and the time allowed must be the same for all candidates. For example,
when giving a timed keyboarding test, it would be unfair for one applicant to be tested on
a manual typewriter while the other candidates were tested on contemporary computer
keyboards.
 Reliability: The extent to which a selection test provides consistent results (R. Wayne
Mondy).
A test’s reliability should be questioned if it does not generate consistent results
each time it is used. For example, if a person scores 125 on an intelligence test one
week and scores only 80 on the same test the following week, you should assume the
testing instrument is not reliable.
 Validity: The extent to which a test measures what it claims to measure (R. Wayne
Mondy).

Do higher test scores relate to higher success on the job?

The skills tested in a selection instrument should be the same skills used on the job.
Therefore, we can assume that higher test scores will correlate to higher success in job
performance. If a specific test cannot assess the ability to perform the job, it has no usefulness
in the selection process. For example, for an administrative assistant position that requires
skilled keyboarding for job success, a keyboarding test would be valid in the selection process.
We could assume that a higher score on the keyboarding test would indicate higher
performance on the job. Requiring the same job applicant to complete a lifting test would not be
valid for the position because the ability to lift specific weights is not a job requirement and
therefore a higher score on lifting would not be a valid predictor of job success.
Tests are generally administered and evaluated before interviewing candidates. Testing
helps trim the applicant field by further eliminating those with inadequate skill levels to be
successful in the job. Applicant testing has two major advantages: test results are objective and
free from personal bias and they are usually expressed numerically so they can be validated by
statistical analysis. Employers usually use tests to determine the applicant’s knowledge or
proficiency level in the required job skills. Some organizations also use aptitude tests as well as
personality, honesty and physical ability testing. If your organization does testing for substance
abuse, it must occur at the end of the selection process and be done in conjunction with a job
offer.

INTERVIEWING CANDIDATES

Selection testing will trim your recruitment pool, but you’ll likely need to narrow your list
of candidates even further to establish a reasonable number for interviewing. The nature of the
job and how much time you can afford to allot to the interview process will determine how many
applicants you choose to interview. Three or four may be plenty, but more may be important for
you to get a good feel for the candidates’ qualifications.
The interview is really a verbal test for the candidate. However, unlike a paper and pencil
test, there is no clear right or wrong answer in many cases. The results are subject to
interpretation by the interviewer and thus can have a huge potential for error, depending on the
questions asked, the answers given and the interviewer’s own personal bias. Think carefully
about the kind of information you want to get from the candidate during the interview. Don’t
waste time asking questions that give you the same information found on the application. Use
the interview to find out how the person will conduct him or herself on the job. Successful
interviewing results from a thorough understanding of the job requirements. Therefore, you must
have a complete and accurate job description that identifies the critical job competencies. These
competencies become the target list against which each candidate is measured, and they
provide the basis for developing your interview questions.
The most widely used interview techniques are the structured or patterned interview,
the nondirective interview and the situational/problem-solving interview. In a structured or
patterned interview, the interviewer follows a pre-set list of questions asked of all candidates.
This allows for consistency in the process, ensures that important questions are not left out and
helps guarantee that all candidates will be assessed by the same standards. Though
consistency is desirable, the interview should not be so rigid that interviewers are not allowed
follow-up questions based on the candidate’s answers; you don’t want to miss important
information that the candidate may provide from further questions.
Situational interviewing is characterized by questions like, “what would you do in this
situation,” allowing the candidate to speculate on how he or she would handle a particular job
problem. Behavioral interviewing asks the candidate to describe what he or she did in a
particular situation. It requires the candidate to give real examples of past actions and results,
and it is based on the theory that past behavior is a good predictor of future behavior. Generally,
behavioral questions are more likely to give real-world information that may be relevant in
making a good selection decision.
The nondirective interview takes the opposite approach from a structured interview. It is
conducted with a minimum of questions asked by the interviewer and questions are not always
planned in advance. This technique involves open-ended questions such as “tell me about the
work you do in your field,” allowing the candidate to express his or her thoughts and feelings
that might be relevant to the job and allowing the interviewer to follow the direction set by the
candidate. This technique can reveal information that may never arise in a structured interview,
but it can lead to problems if the candidate reveals inappropriate or potentially discriminatory
information. Sometimes interviews without structure can become nothing more than casual
conversations, with the interviewer focusing solely on getting to know the candidate. This may
be nice for social gatherings, but it has almost no predictive ability in the hiring process. You’ll
have a more successful new hire if you stay away from the “casual conversation” trap and
instead plan carefully for a structured interview that focuses on job-related information.

Team or Individual Interview. In the past, the supervisor may have been the only person
interviewing the candidate, but the trend now is to use an interview team consisting of
representatives from the various areas of the organization that will interact with the new person.
The advantage of this approach is that multiple interviewers represent broader areas of interest,
and when interviewing is completed, there is more than one person to make the selection
decision. This may also help the new hire to be more quickly accepted by the team, since those
who participated in choosing the new team member are generally supportive of that choice. The
downside to team interviews is simply logistics. The larger the team, the more difficult it is to find
a time and a place in everyone’s busy schedules to make the interview happen. In addition,
candidates are likely to find a panel interview more stressful than an interview by a single
person.

BACKGROUND VERIFICATION AND REFERENCE CHECK

Once you have made your selection decision, you must verify the information provided
by the candidate and check the candidate’s references. Millions of background and reference
checks are done on applicants annually, and unfortunately, much of the information on
application forms and résumés is inaccurate. According to ADP Screening and Selection
Services, 40 percent of applicants lie about their work histories and educational backgrounds
and about 20 percent present false credentials and licenses. Nationwide, an estimated 30
percent of job applicants make material misrepresentations on their résumés. Another survey
found that 95 percent of college students said they would lie to get a job and 41 percent said
that they had already done so. One survey of top executives found that 15 percent admitted
falsifying résumé information.
Difficult as it may be to check references, you must get accurate information on your
prospective new hire. Unfortunately, past employers are increasingly reluctant to give
references mostly because they fear defamation lawsuits from disgruntled former employees.
Consequently, many employers strictly limit the information they provide about former
employees. It’s a no-win situation for employers, though, because they can be sued either way.
Withholding negative information about former employees may offer protection for the employer
from a defamation lawsuit, but it increases its exposure to a lawsuit based on negligence if the
employer withholds information regarding the volatility of a former employee.

DEFAMATION: The act of harming the reputation of another by making a false statement to a
third person.

NEGLIGENCE: The failure to exercise the standard of care that a reasonably prudent person
would have exercised in the same situation.

A past employer that fails to warn about an employee’s known propensity to violence
may be guilty of negligent referral, and a potential employer that fails to do proper reference
checks that may have uncovered the potential risk of a new employee may be guilty of
negligent hiring, if the new employee causes injury to another in the workplace. It is a reminder
to HR that we must diligently ferret out information on new hires and, at the same time, keep
accurate employment records on current employees so that when asked, we can provide
verifiable and reliable reference information. Because of the difficulty of obtaining information
from past employers, many organizations conduct criminal background checks, credit checks
and Internet searches to find information on job candidates. Before conducting any background
check on a potential employee, be sure your candidate signs the proper release forms.

Making The Job Offer. A job offer may be extended by phone, letter or in person—whatever is
customary in your organization. Most commonly, the job offer is handled by the HR department.
At this time, salary and benefits are discussed and the prospective employee is told of any
further conditions that must be met. If your organization requires a physical examination or a
drug screen, arrangements should be made to complete the process. If the candidate needs
time to think over the job offer, a time should be established for notification.
At this point, you must ensure that your potential new hires receive a realistic job
preview. Tell them everything they need to know about the job, the bad as well as the good. If
this job requires travel, tell them. If this job is high stress with little advancement opportunity, tell
them. Employers that treat the recruiting and hiring of employees as if the applicants must be
sold on the job and exposed to only the organization’s positive characteristics set themselves up
to have a workforce that is dissatisfied and prone to high turnover. Remember, you are hiring for
long term; the job must be a good fit for both the new employee and the organization. People
are most at risk of quitting within the first few months of hire, usually because the job turned out
to be something they did not expect. This is expensive for your organization and stressful for HR
if you are continually repeating the hiring process for the same positions; and, of course, it is
also stressful for the new hire.
Evaluating The Recruitment and Selection Process. Most organizations keep at least
minimum statistical information on their recruitment and hiring processes. You will want to
evaluate the processes to ensure that it is cost-effective, timely and, most importantly, that you
hired the right person! Information gathered may be invaluable for further recruiting as your
organization grows. Some things to think about:
- Were your methods cost-effective?
- Did you stay within budget?
- Did your recruitment generate a large enough applicant pool to make a good
selection decision?
- Were your applicants qualified for the job?
- How many applicants must you generate to get a good hire?
- How long did it take to fill the position?
- How long does it take for a new employee to “get up to speed?”
- What about turnover? Do your new employees stay with the organization?
- Answers to these questions can provide valuable information for the next time you
recruit and hire a new employee.
CONGRATULATIONS – You have a new employee!

CHAPTER 4

COMPENSATION AND BENEFITS

Employee benefits and services (Philippines)

COMPENSATION “The purpose of the compensation is to attract, motivate and to maintain

employees”
Direct compensation - e.g. Incentives & Profit Sharing (Pay for Performance) Compensation
Management (Wages and Salaries).
Indirect compensation - Security, Safety and health (Legally mandated benefits) Benefits and
Services (“Fringe” benefits)

BENEFITS AND SERVICES are called indirect compensation and are also known as “fringe
benefits” and “Perks”.
Perks (services) are something in addition to the payment like car fuel and free parking,
clothing, and educational supports. Whereas fringe benefit means something extra (such as
vacation time) that is given by an employer to workers in addition to their regular pay. Such
benefits and services are used to persuade, to motivate, and/or to retain employees and are not
linked with the employees’ performance (e.g. stimulating them to greater effort and higher
performance).

Definition of Benefits and Services.

Employee Benefits. In general, indirect and non-cash (or sometimes in cash) compensation
paid by an employer to employees in addition to their regular pay. Benefits tends to be
necessities for many people. Some benefits are mandated by law (such as GSIS/SSS, Pag-
IBIG, and PhilHealth), others vary from firm to firm or industry to industry.
Employee Services. According to the Employee Services Management Association, employee
services encompasses "recreation programs, community services, recognition programs, event
planning, childcare/eldercare services, convenience services, and travel offerings.” Employee
services can include anything an employer deems necessary to provide as a perk for
employees. No real limit exists as to what can be included as an employee service. Employee
services are more of a convenience than a true benefit.
Although employee services might be considered a benefit, they are usually optional and not
necessarily what job seekers first look for when conducting a job hunt.

Objectives of Benefit Programs. The main objective is to attract (recruit) and to retain
employees.
• To Improve Morale
• To Meet Health and Safety Needs
• To Attract Good Employees
• To Reduce Turnover
• To Maintain a Competitive Position
• To Enhance the Organization's Image
Types of Benefits
• Insurance benefits
• Health benefits (and services)
• Security benefits
• Time-off benefits
• Work scheduling benefits
• Retirement benefits
• Disability benefits

MANDATORY GOVERNMENT BENEFITS AND CONTRIBUTIONS

Covered by the Philippine Labor Code
1. Social Security System (SSS) ContributionsRepublic Act No. 8282 or otherwise
known as the Social Security Act of 1997 The social security system is aimed at
providing protection for the SSS member against socially recognized hazard conditions
such as sickness, disability, maternity, old age and death, or other such contingencies
not stated but resulted in loss of income or results to financial burden. The employee
and his/her employer(s) are to contribute for the social security benefits of the said
employee in accordance to a given schedule by the Philippine Social Security System.
2. Contribution to National Health Insurance Program (NHIP) The employee and
his/her employer(s) are to contribute to the medical insurance of the said employee in
accordance to the Republic Act 7835 on Medicare Program which is administered by the
Philippine Health Corporation (PhilHealth).
3. Contribution to Home Development and Mutual Fund (HDMF/Pag-IBIG) Home
Development Fund Law of 2009, employer(s) is required to contribute per month not less
than 100.00₱ to the employees Home Development and Mutual Fund. In accordance to
the periodic remittance schedule provided by HDMF, employers will remit this
contribution, in addition to that of the employees, which is to be deducted from his/her
payroll.
4. The 13th Month Pay.As mandated by the Presidential Decree No. 851, the employee
shall receive a bonus salary equivalent to one (1) month, regardless the nature of his/her
employment, not later December 24 of every year.
5. Service Incentive Leave Book III, Chapter III of the Labor Code of the Philippines
covers the employee benefits for Incentive Leaves. According to Article 95, an employee
who has rendered atleast one year of service is entitled to a yearly five days’ service
incentive leave with pay.
6. Meal and Rest Periods Under Article 83, the employee is provided one-hour employee
benefit for regular meals, when working on an eight-hour (8-hours) stretch. Employees
 are also provided adequate rest periods in the morning and afternoon which shall be
counted as hours worked.

Compensability of Illness or Injury

Under Employee’s Compensation Program (ECP)

Employee’s Compensation Program (ECP) - is a government program designed to provide a

compensation package to public and private employees or their dependents in the event of
work-related sickness, injury, or death.
1. Occupational Diseases - For an occupational disease and the resulting disability or death to
be compensable, all of the following conditions must be satisfied:
- the employee’s work and/or the working conditions must involve risk/s that caused
the development of the illness;
- the disease was contracted as a result of the employee’s exposure to described
risks;
- the disease was contracted within a period of exposure and under such factors
necessary to contract it; and
- there was no deliberate act on the part of the employee to disregard the safety
measures or ignore established warning or precaution.
The Increased Risk Theory. There is an increased risk if the illness is caused or precipitated
by factors inherent in the employees’ nature of work and working conditions. It does not include
aggravation of a pre-existing illness.
To establish compensability of the claim under the Increased Risk Theory, the claimant
must show proof of work-connection. The degree of proof required varies on a case to case
basis.
2. Work-related Injuries. For the injury and the resulting disability or death to be compensable,
the injury must be the result of an accident arising out of and in the course of employment.
 Injuries resulting from an accident which happened at the workplace.
 Injuries resulting from an accident which happened while the employee is performing his
official function.
 Injuries resulting from an accident which happened while going to or coming from the
place of work.
 Injuries resulting from an accident which happened while ministering to personal
comfort.
 Injuries resulting from an accident while the employee is inside the company shuttle bus.
 Injuries resulting from an accident which occurred during a company-sponsored activity.
 Death of an Employee Due to Assault
Excepting Circumstances.No compensation shall be allowed to the employee or his/her
dependents in cases when the sickness, injury, disability, or death was occasioned by any of
the following:
1. Intoxication - Intoxication refers to a person’s condition in being under the influence of liquor
or prohibited drugs to the extent that his acts, words, or conduct is impaired visibly, as to
prevent him from physically and mentally engaging in the duties of his employment.
2. Notorious Negligence - Notorious negligence is something more than mere or simple
negligence. It signifies a deliberate act of the employee to disregard his own safety or ignore
established warning or precaution.
3. Willful Intent to Injure Oneself or Another - This contemplates a deliberate intent on the part of
the employee to inflict injuries on himself or another.

Benefits under ECP

Under Employee’s Compensation Program (ECP)
1. Loss of Income Benefit Under the ECP, it is the disability, or the incapacity to work, which is
being compensated and not the illness or the injury.
3 Types: 1.Temporary Total Disability (TTD). For a disability that prevents an employee from
performing his work for a continuous period not exceeding 120 days. The amount of daily
income benefit shall be ninety percent (90%) of the employee’s average daily salary credit as
determined by the Systems. 2. Permanent Total Disability (PTD). A monthly income benefit
granted for disabilities, such as, but not limited to, complete loss of sight of both eyes, loss and
function loss of both limbs, and brain injury resulting to imbecility or insanity. The amount of
monthly income benefit for PTD shall be determined by the Systems based on the average
monthly salary credit or average monthly compensation (AMSC/AMC).3. Permanent Partial
Disability (PPD). A monthly income benefit is granted for disabilities that result in physical loss
(amputation) or functional loss of a body part. The number of monthly pensions is based on the
corresponding body part loss or functional loss, as provided under Article 193 of PD No. 626, as
amended, and EC schedule of Compensation.
2. Medical Services. It includes reimbursement of the cost of medicines for the illness or injury,
payment to providers of medical care, hospital care, surgical expenses, and the costs of
rehabilitation appliances and supplies. The medical services are limited to ward services of
hospitals duly accredited by the Department of Health (DOH). A.Hospital Confinement The
benefit in case of
sickness and injury shall not exceed the actual cost of ward services in accredited hospital
equipped with facilities necessary for the treatment of the disease and injury. B.
Thesubsequent attendance by an accredited physician.C. Medicines Medicine
reimbursements shall be in accordance with the amount prescribed under Republic Act No.
9502, otherwise known as “Universally Accessible Cheaper Quality Medicine Act No. 2008”.
3. Career’s Allowance. A supplemental pension of P575/month is provided to pensioners
under the ECP who suffer from work-connected PPD and PTD.
4. Rehabilitation Services/KaGabay Program. (Katulong at Gabay sa Manggagawang May
Kapansanan) Persons with work-related disabilities (PWRD) with an approved EC TTD, PPD or
PTD are qualified to avail of the benefits and services under the Katulong at Gabay sa
Manggagawang May Kapansanan, or KaGabay Program.
KaGabayProgramKaGabayProgram Under this program, qualified beneficiaries are entitled
to:A.Physical Restoration Provision of physical or occupational therapy services to PWRDs
including assistive devices, subject to funding limitations. B.Skills Training for Re-
employment PWRDs can acquire new competencies, subject to his/her potential and residual
functional capacity. C.Entrepreneurship Training PWRDs who want to set up their own
livelihood undertaking are given the chance to take part in entrepreneurship training.
All these benefits and services are provided to qualified PWRDs for free.
Incentives for Employers Hiring Persons with Disabilities (PWD) Section 8 of Republic Act No.
7277, otherwise known as the Magna Carta for Disabled Persons
 Private entities are entitled to an additional deduction, from their gross income,
equivalent to twenty-five (25%) of the total amount paid as salaries and wages to
disabled persons who meet the required skills or qualifications, either as regular
employee, apprentice, or learner.
5. Death Benefits The beneficiaries of the deceased employee are entitled to an income benefit
if the employee died as a result of a work-related injury or sickness. The surviving legitimate
spouse is entitled to receive income benefit until he or she remarries. Each dependent child, not
exceeding five, counted from the youngest and without substitution, shall receive ten percent
(10%) more as dependent’s pension.
6. Funeral Benefits
  An amount of P20,000 may be granted for the Private Sector upon the death of an
employee who died as a result of a work-related accident or disease.
 Simultaneous Granting of EC Disability Benefits and Sick Leave Benefits for Private
Sector.
 Simultaneous Granting of EC Disability Benefits and Special Leave Benefits for Women
in the Private and Public Sector.
 In the event that an employee’s gynecological disorders were found to be work-
connected, all qualified women employees in the private and in the public sector can still
avail of EC disability benefits in addition to Special Leave Benefits under Republic Act
No. 9710, otherwise known as “Magna Carta for Women”.

Philippines Benefits Summary

Under the Philippine Labor Code (Presidential Decree No. 442)
1. Minimum Wage
- The Wage Rationalization Act, Republic Act No. 6727, sets the minimum wage rates
applicable per region, province and industry sector.
- Workers that render services for a total of 40 hours per week (8 hours per day, 5 days
per week) are entitled to receive at least the daily minimum wage.
- National Capital Region - the minimum gross basic wage is ₱512.00 per day (as of
October 2017).
2. Night Shift Differential This refers to additional compensation of at least 10 percent of an
employee’s applicable wage rate, payable to employees (except exempt employees) who
perform work between 10 p.m. to 6 a.m. of the following day.
“Exempt Employees”
 government employees;
 managerial employees and officers or members of the managerial staff;
 field personnel;
 members of the family of the employer who are dependent on him for support;
 domestic helpers and persons in the personal service of another;
 employees who are paid by results, as determined by the Secretary of the Philippine
Department of Labor and Employment (DOLE) in appropriate regulations; and
 Househelpers and persons in the personal service of another.
3. Overtime pay The normal working hours is 8 hours per day. An employee who renders
work in excess of eight hours a day is entitled to overtime pay equivalent to the applicable
wage rate plus at least 25 percent thereof. The overtime rate will vary if the overtime work is
rendered on a rest day, regular holiday or special day. Under Rest day: regular/special
holiday – plus 30% of the regular daily salary.
“exempt employees” are not entitled to such overtime pay.
4. Rest Days Employees, except exempt employees, are entitled to a rest period without pay
of not less than 24 consecutive hours for every six consecutive normal working days (i.e.
Sunday). Work done on rest days = plus 30% of the regular daily compensation.
5. Holidays Unworked regular holiday (except exempt employees) = regular daily wage Work
on regular holiday = 200% or Double pay Work on Special Holiday = regular daily pay +
30% Rest day + Work on Special holiday = regular daily pay + 50%
Special Holidays:Benigno S. Aquino Jr. Day (Monday nearest 21 August),All Saints Day (1
November), Last day of the year (31 December) Regular Holidays:New Year’s Day (1
January), Maundy Thursday (movable date), Good Friday (movable date), EidulFitr
(movable date), EidulAdha (movable date), Araw ng Kagitingan (Monday nearest 9 April),
Labor Day (Monday nearest 1 May), Independence Day (Monday nearest 12 June), National
 Heroes Day (Last Monday of August),Bonifacio Day (Monday nearest 30 November),
Christmas Day (25 December), Rizal Day (Monday nearest 30 December).
6. Leaves.Maternity Leave 60 days leave in case of normal delivery, abortion or miscarriage
78 days for caesarean delivery maternity benefit = 100% of her average salary credit
Paternity Leave Paternity leave benefit is granted to all married male employees first 4
deliveries of lawful wife 7 days leave = full pay (consisting of his basic salary). Solo-parent
Leave Solo Parents Welfare, Republic Act No. 8972 Employee must have been working for
atleast 1 year 7 working days of leave in a year (with pay). Leave due to Domestic
Violence Leave for women and their children who are victims of violence paid leave for up
to 10 days (extendible when the necessity arises as specified in the protection order). Leave
due to Gynecological Disorders Women employees who have rendered continuous
aggregate employment service of at least six months for the last 12 months are entitled to
the special leave benefit of up to two months with full pay following surgery caused by
gynecological disorders.
7. 13th Month pay (Presidential Decree No. 851) all “rank and file” employees 13th month
pay = 1/12 (or 1 month) of the total basic salary Regardless the nature of his/her
employment, he/she will be paid not later December 24 of every year.
8. Retirement Benefits Section 1. Article 287 of Presidential Decree No. 442 60 years of
age (but not beyond 65) and served for at least 5 years Benefits = 15 days’ salary +
service incentive leave (cash equivalent) + 13th month pay
9. Separation Pay Basis of separation pay: 1. Introduction of labor-saving devices 2.
Redundancy 3. Retrenchment 4. Closure or Cessation of business 5. Disease the
employee found to be suffering and whose continued employment is prohibited by law or
is prejudicial to his health as well as the health of his co- employees.
10. Service Charges All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered
employees and fifteen percent (15%) for management. The share of the employees shall
be equally distributed among them. In case the service charge is abolished, the share of
the covered employees shall be considered integrated in their wages.
11. Disability benefitsTemporary Total Disability (TTD) income benefit = 90% of his average
daily salary coverage = continuous benefit pay must not exceed 129 working days.
Permanent Total Disability (PTD) income benefit = equivalent to his monthly income
benefit + 10% for each dependent child (not exceeding 5 dependents). guaranteed
monthly benefit = five years.
Permanent Total Disability (PTD) The following disabilities shall be deemed total and
permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided for in the Rules;
(2) Complete loss of sight of both eyes;
(3) Loss of two limbs at or above the ankle or wrist;
(4) Permanent complete paralysis of two limbs;
(5) Brain injury resulting in incurable imbecility or insanity; and
(6) Such cases as determined by the Medical Director of the System and approved by the
Commission

Permanent Partial Disability (PPD) The benefit shall be paid for not more than the period
designated in the following schedules:
12. Mid-year Bonus (14th month pay)Shall apply to all personnel occupying regular, or
contractual positions, rendering full- time basis, covered by the Compensation and
Position Classification System (CPCS) under RA No. 6758, as amended by Congress
Joint Resolution No.1, Series of 1994, and No.4, Series of 2009. Equivalent to 1-month
basic pay = given not earlier than May 15 (of current year).

The following are excluded from the MC:

o Government personnel that are exempted from RA No. 6758, as amended;
o Those hired without employee-employer relationships and funded from non-
Personal Services appropriations/budgets, as follows:
1. Consultants and experts hired for a limited period to perform specific services
or activities with expected outputs;
2. Laborers hired through job contracts and those paid on piecework basis;
3. Students workers and apprentices; and
4. Individuals and groups of people whose services are engaged through job orders,
contracts or service, or others similarly situated.

“De Minimis Benefits”

Compensation of small value, or “De Minimis benefits”, are excluded from the computation
of the gross income. De Minimis Benefits have the purpose to promote the well-being and
efficiency of employees and are limited to facilities or privileges of relatively small size.
De Minimis Benefits include:
 Monetized unused vacation leave credits for private employees not exceeding 10 days
 Monetized unused vacation and sick leave credits for government officials and
employees;
 Medical allowance for dependents of P750 per semester or P125 per month;
 Rice subsidy of P1,500 or one sack of rice monthly;
 Uniform allowance of P5,000;
 Medical assistance not exceeding P10,000 annually;
 Laundry allowance not exceeding P300 per month or P3,600 per year;
 Employees achievement awards not exceeding P10,000;
 Gifts given during Christmas and major anniversary celebrations not exceeding
PhP5,000 per employee per annum;
 Daily meal allowance for overtime work and night shift not exceeding 25%of basic
minimum wage; and
 Collective bargaining agreements (CBA) and productivity incentives not exceeding
PhP10,000.

Employee Services Employee services can include anything an employer deems necessary to
provide as a perk for employees. No real limit exists as to what can be included as an employee
service.
Common Types of Employee Services
 1. Flexible Work Schedules These programs are arranged to meet an organization's goals
while assisting employees with their personal lives. Example: Because of technological
advances, some employers allow employees to work from home one or several days per
week. This gives employees some flexibility to maintain a balanced personal life and
continue to successfully complete their work responsibilities.
2. Wellness Program. In 2008, the Harvard School of Public Health noted a national study
by Harris Interactive showing that 91% of employers "believed they could reduce their
health care costs by influencing employees to adopt healthier lifestyles. “Many
employers offer wellness programs to improve employees' health. These programs can
be applied in a variety of ways, including reimbursable gym membership costs, on-site
fitness facilities, and events to promote healthy living and eating.
3. Child Care Services Working parents having access to a work-site child care center
positively affects their ability to successfully concentrate on the job and be productive.
4. Product/Service Discounts Most individuals clip coupons and shop for sales to save
money. Some employers work with local and national retail product and service
providers to offer employees discounts for their personal needs. These types of
programs can include everything from discounts on groceries to purchasing a vehicle at
a lower cost. Free or discounted on-site food and drink services such as lunch, snacks
and coffee can also assist employees by saving them time and money. These types of
services are often appreciated by employees and can be implemented at little or no cost.

Activity: ITM 322 – Human Resource Management

Name: ______________________________ Course & Section: __________

A. Recruitment and Selection.

1. What is the different between recruitment and selection process?

2. Why is there a need for background verification and reference check?

3. Compensation and Benefits

I. What are the mandatory government benefits and contributions covered by the
Philippine Labor Code?
1. 4.
2. 5.
3. 6.
II. Enumerate the 12Philippines Benefits Summary Under the Philippine Labor Code
(Presidential Decree No. 442).
1. 7.
2. 8.
3. 9.
4. 10.
5. 11.
6. 12.

Prepared by:
ISABEL E. CABUGAO, LPT, MAIED-HE
Course Facilitators
ITM 322 – Human Resource Management