Engineering Management

ChE-410
Lecture-8
Hafiz Mudaser Ahmad
h.m.ahmad@uet.edu.pk
Department of Chemical Engineering
University of Engineering & Technology Lahore
01/12/2023 10:56:14 am 1
 Outline
MANAGING HUMAN RESOURCES IN ORGANIZATIONS
• The environmental context of HRM
• Attracting human resources
• Developing human resources
• Maintaining human resources
• Managing workforce diversity
• New challenges in the changing workplace
The Environmental Context of HRM
Human Resource Management (HRM)

• Human Resource Management (HRM) is the set of

organizational activities directed at attracting, developing,
and maintaining an effective workforce.
• Three particularly vital components of this context are
HRM’s strategic importance and the legal and social
environments of HRM.
The Strategic Importance of HRM

• Human resources have become important in companies

because of legal stuff, understanding how valuable people
are for making more stuff, and knowing that bad HR can
cost a lot. For example, Microsoft is getting rid of jobs in
some areas but hiring for important stuff to grow.
The Strategic Importance of HRM

• If a company doesn't do HRM right, it can waste money on

hiring and firing, have bad pay systems, and get into trouble
with discrimination.
• Big companies often put HR bosses under the main boss and
make plans to match HR with the company's big plans. Even
small companies have HR teams that work with managers to
hire and rate how employees are doing.
• The HR stuff "human capital" to show how much a company
invests in getting, keeping, and motivating good workers.
The Legal Environment of HRM

• A number of laws regulate various aspects of

employee–employer relations, especially in the areas
of equal employment opportunity, compensation and
benefits, labor relations, and occupational safety and
health.
Equal Employment Opportunity
• These laws, like Title VII of the Civil Rights Act of 1964, make it
illegal to discriminate in the workplace. They prevent unfair
treatment based on race, gender, age, or disability.
• Employers must be fair to all applicants and employees, and
some laws even encourage hiring underrepresented groups. For
instance, the Americans with Disabilities Act ensures fairness for
disabled individuals and requires accommodations.
• The laws protect against discrimination and support fairness and
equal opportunities at work.
Compensation and Benefits
• Laws regulate pay and benefits at work.
• The Fair Labor Standards Act sets minimum wages and overtime pay
rules.
• The Equal Pay Act ensures equal pay for the same job regardless of
gender.
• Some benefits, like worker's compensation, are mandatory.
• Laws for pension plans and the Family and Medical Leave Act provide
unpaid leave for emergencies.
Labor Relations and Rights

• Laws like the Wagner Act let employees vote for unions, making
management negotiate with them.

• The Taft-Hartley Act limits union power and gives more rights to
businesses during union activities.

• These laws ensure a balance between unions and management, allowing

unions to represent employees while businesses make their own
decisions.
Health and Safety
• OSHA makes sure workplaces are safe and free from dangers that can
cause harm. Employers must follow safety rules to prevent accidents
and protect from diseases.
• There have been investigations into cases of severe injuries caused by
repetitive stress in a manufacturing plant where employees handle
heavy machinery for extended hours. Several workers reported chronic
back problems and musculoskeletal issues due to the nature of their
tasks. While safety protocols exist, concerns arose about the ergonomic
design of workstations and the impact on worker health. Authorities are
looking into improving workplace ergonomics to prevent such injuries.
Attracting Human Resources
Human Resource Planning
• The starting point in attracting qualified human resources is
planning. HR planning involves job analysis and forecasting
the demand and supply of labor.
• Job Analysis is a systematic analysis of jobs within an
organization.
• A job analysis is made up of two parts. The job description
lists the duties of a job, the job’s working conditions, and the
tools, materials, and equipment used to perform it. The job
specification lists the skills, abilities, and other credentials
needed to do the job.
Forecasting Human Resource Demand and Supply
• Managers plan for how many people they'll need in the future by
looking at past trends, company plans, and economic changes. They use
sales forecasts and historical data to estimate how many new
employees they'll need. Big companies might use complex methods.
• For example, Walmart once planned to hire a million people, mostly for
growth and to replace leaving workers. They adjusted the plan over time
but ended up hiring close to what they initially projected.
Matching Human Resource Supply and Demand
• Managers balance employee numbers by hiring, retraining, or
transferring staff based on future demand predictions. If there's
a shortage, they might persuade retirees to stay, install better
systems, or recruit externally.
• Temporary workers and flexible staffing help manage
fluctuations. For overstaffing, they might transfer employees, not
replace those leaving, encourage early retirement, or consider
layoffs.
Recruiting Human Resources
• Recruiting is the process of attracting qualified persons to apply for jobs that are open. Where do
recruits come from? Some recruits are found internally; others come from outside the
organization.
• Internal recruiting means considering present employees as candidates for openings. Promotion
from within can help build morale and keep high-quality employees from leaving the firm.
In unionized companies, rules for informing employees about job openings are in the union
contract. For higher positions, they might use a skills database or manager recommendations. Job
postings are common within a company's communication network. Internal recruiting can create
a domino effect, requiring multiple replacements when someone switches roles. For instance,
filling 195 jobs caused 454 other job movements in one organization.
• External recruiting involves attracting persons outside the organization to apply for jobs.
External recruiting methods include advertising, campus interviews, employment agencies or
executive search firms, union hiring halls, referrals by present employees, and hiring “walk-ins” or
“gate hires”.
Selecting Human Resources
• Hiring involves picking the best candidates from the
applicant pool.
• The selection process aims to gather info that predicts how
well someone will do in the job.
• This info needs to be genuinely useful in guessing future job
performance.
• Validation is the process of checking if the collected info
actually helps predict future success in the job.
Application Blanks
Application blanks gather job-related info from candidates but should
avoid unrelated details. Despite their use for initial evaluation and
interviewer preparation, a rising trend shows applicants falsifying
information, with 44% of surveyed applications containing false details.
Tests
Job-relevant tests are top predictors of job success, but consistent
administration and scoring, equal conditions for all candidates, and
validation are crucial for fair assessment.
Interviews
Interviews might not always predict job success due to biases. Training
interviewers, structuring questions uniformly, and validating content
aim to improve interview validity by reducing biases and ensuring
consistency.
Assessment Centers
Assessment centers, simulating managerial tasks, last a few
days and involve exercises and observations by higher-level
managers. Properly designed, they're highly valid for selecting
managers, and ensuring fairness in management selection.
Other Techniques
Organizations vary selection methods; polygraph tests decline
while physical exams and drug testing grow, especially for
safety-sensitive roles like nuclear power. Credit checks are also
becoming common in hiring processes for some organizations.
Developing Human Resources
Developing Human Resources

• Regardless of how effective a selection system is; however,

most employees need additional training if they are to

grow and develop in their jobs. Evaluating their

performance and providing feedback is also necessary

Training and Development
• In HRM, training usually refers to teaching operational or technical
employees how to do the job for which they were hired.
• Development refers to teaching managers and professionals the skills
needed for both present and future jobs.
• Most organizations provide regular training and development
programs for managers and employees. For example, IBM spends
more than $700 million annually on programs and has a vice
president in charge of employee education. U.S. businesses spend
more than $125 billion annually on training and development
programs away from the workplace.
Assessing Training Needs
• Start training plans by identifying existing needs.
• Machinery operation gaps call for specific training, but poor
office performance might have various causes: motivation,
equipment, supervision, work design, or skill/knowledge
deficiencies.
• Training resolves skill/knowledge gaps; set clear, measurable
learning goals and plan post-training evaluations for effective
programs.
Common Training Methods
• Various training methods suit different content: factual material benefits
from reading, programmed learning, and lectures; interpersonal skills
need methods like role-playing; physical skills require practice-based
approaches like on-the-job training.
• Web-based training gains popularity for its flexibility, allowing mixed
content, easy updates, and reduced travel costs, but lacks in simulating real
activities and face-to-face interaction. Many successful companies,
including Xerox, Ford, and Boeing, rely on a blend of methods involving
tests, simulations, and role-playing.
• Moreover, some corporations establish their own training facilities, like
universities. McDonald’s initiated this trend with "Hamburger University,"
providing management trainees hands-on knowledge in customer service
and burger grilling.
Evaluation of Training
• Evaluation of training programs is crucial for effectiveness.
• Common evaluation involves pre- and post-training
measures of criteria like attitudes or performance.
• While end-of-training assessments are accessible, on-the-job
performance measures hold greater significance.
• True assessment lies in observable job performance
improvement rather than trainee feedback alone.
Maintaining Human Resources
Maintaining Human Resources

• After organizations have attracted and developed an

effective workforce, they must also make every effort to
maintain that workforce. To do so requires effective
Compensation and Benefits as well as career planning.
“Leading the Way” describes how a firm uses compensation
to maintain a strong workforce.
Determining Compensation
• Compensation is the payment given by the organization to its employees in exchange for
their work.
• There are three basic forms of compensation.
• Wages are the hourly compensation paid to operating employees. The minimum hourly
wage paid in the United States today is $ 7.25 (some states have higher minimums).
• Salary refers to compensation paid for total contributions, as opposed to pay based on
hours worked. For example, managers earn an annual salary, usually paid monthly. They
receive a salary regardless of the number of hours they work. Some firms have started
paying all their employees a salary instead of hourly wages. For example, all employees
at Chaparral Steel earn a salary, starting at $30,000 a year for entry-level operating
employees.
• Incentives represent special compensation opportunities that are usually tied to
performance. Sales commissions and bonuses are among the most common incentives.
• Compensation is crucial for the organization-employee
relationship, offering not just a means for a standard of
living but also reflecting an individual's value.
• Insufficient pay may prompt employees to leave while
feeling undervalued can lead to poor performance and
reduced commitment.
• A well-designed compensation system is essential for the
organization's best interests.
• A well-designed compensation system aids in attracting talent,
retaining employees, and driving high performance within
reasonable cost parameters.

• Decisions on wage levels, structures, and individual

determinations are crucial.

• During the recession, some companies refined their systems,

using targeted salary reductions like Hewlett-Packard's CEO
taking a 20% cut and tiered reductions for others.
Wage-Level Decision
• Deciding wage levels involves a policy choice: pay above, at, or below
the industry average.
• Firms typically aim for the average, while some, like IBM and Google,
pay more to attract top talent, whereas McDonald's and Walmart
often pay close to minimum wage.
• Unemployment rates also impact wages: abundant labor lowers pay,
while scarce labor increases it.
• Managers rely on wage surveys to determine actual rates, often
conducted by firms, HR associations, or industry groups to collect job-
specific wage data in the market.
Wage Structure Decision
• Wage structures are established through job evaluation, assessing a job's
value compared to others.
• Ben & Jerry's once had a policy limiting the highest-paid employee to seven
times the lowest.
• Small firms rank jobs simply, while larger ones use more complex methods.
Actual wage rates combine survey data with the job evaluation's wage
structure, often grouping similar-value jobs into wage grades for easier
management.
Individual Wage Decisions
• Deciding on employee pay involves choosing a range of rates for a job
rather than a single fixed rate. For example, the pay range for an
individual job might be $10.00 to $14.40 per hour, with different
employees earning different rates within the range.
• A system is then needed for setting individual rates. This may be
done on the basis of seniority (enter the job at $10 00, for example,
and increase 50 cents per hour every six months on the job), initial
qualifications (inexperienced people start at $10 00; more
experienced people start at a higher rate), or merit (raises above the
entering rate are given for good performance). Combinations of these
bases may also be used.
Determining Benefits
• Benefits are things of value other than compensation that
the organization provides to its workers. (Benefits are
sometimes called indirect compensation.)
• The average company spends an amount equal to more than
one-third of its cash payroll on employee benefits. Thus, an
average employee who is paid, say, $30,000 per year
averages a bit over $10,000 more per year in benefits.
• Benefits come in several forms. Pay for time not worked
includes sick leave, vacation, holidays, and unemployment
compensation.
• Insurance benefits often include life and health insurance for
employees and their dependents.
• Workers’ compensation is a legally required insurance benefit that
provides medical care and disability income for employees injured on
the job.
• Social Security is a government pension plan to which both
employers and employees contribute.
• Many employers also provide a private pension plan to which they
and their employees contribute.
• Some organizations have instituted cafeteria benefit plans,
whereby basic coverage is provided for all employees, but
employees are then allowed to choose which additional
benefits they want (up to a cost limit based on salary).
• An employee with five children might choose enhanced
medical and dental coverage for dependents, a single
employee might prefer more vacation time, and an older
employee might elect increased pension benefits.
Managing Workforce Diversity
The Meaning of Diversity
• Diversity exists in a community of people when its members differ
from one another along one or more important dimensions. In the
business world, the term diversity is generally used to refer to
demographic differences among people—differences in gender, age,
ethnicity, and so forth.
• For instance, the average age of the U.S. workforce is gradually
increasing, and so is the number of women in the labor force.
The Impact of Diversity
There is no question that organizations are becoming ever more diverse. But
how does this affect organizations? Diversity provides both opportunities
and challenges for organizations.
Diversity as a Competitive Advantage
Diverse organizations gain competitive edges, showing higher productivity,
lower turnover, and better market understanding. Effective diversity
management attracts talent and fuels innovation, benefiting both workplace
culture and market success.
Diversity as a Source of Conflict
Diversity in organizations can spark conflicts when hires, promotions, or
firings are perceived based on diversity. Misunderstanding, fear, and
personal biases among different groups also contribute to conflict in diverse
settings.
 Managing Diversity in Organizations
Individual Strategies
Managing diversity involves individual actions like understanding differences,
empathizing, tolerating diverse behaviors, and effective communication.
Failing to acknowledge and communicate about differences can lead to
misunderstandings and larger conflicts within the workplace.
Organizational Approaches
Organizational policies and responses to differences are crucial in managing
diversity, reflecting its importance. Practices like Avon's networks and
flexible procedures aid in diversity management, promoting adaptability
over rigidity. Diversity training and language programs, such as Motorola's
English training and Pace Foods' Spanish translations, are effective tools for
fostering a diverse and inclusive workplace.
New Challenges in the Changing Workplace
New Challenges in the Changing Workplace

• Human resource managers face several ongoing challenges

in their efforts to keep their organizations staffed with
effective workforces. To complicate matters, new challenges
arise as the economic and social environments of business
change.
Managing Knowledge Workers

• Employees traditionally add value to organizations because

of what they did or because of their experience.

• In the “information age,” however, many employees add

value because of what they know.
The Nature of Knowledge Work
Knowledge workers, like computer scientists and engineers, are crucial
for a company's success. They prefer independence, identify more with
their profession than their employer, and need continuous specialized
training. Companies must invest in their skills even after hiring to stay
competitive and retain these valuable employees.
Knowledge of Worker Management and Labor Markets
Demand for knowledge workers remains high despite economic slumps,
leading firms to constantly adjust salaries to retain them. Companies
face challenges as internal pay growth lags the external market,
prompting extreme measures like high starting salaries and bonuses.
Retaining specialists becomes difficult even with generous incentives, as
they often move to competitors offering lucrative sign-on bonuses.
Contingent and Temporary Workers

• A final contemporary HR issue of note involves the use of

contingent or temporary workers. Indeed, recent years have
seen an explosion in the use of such workers by
organizations. The FBI, for example, routinely employs a
cadre of retired agents in various temporary jobs.
Trends in Contingent and Temporary Employment
More workers are now in non-permanent roles called contingent
work, like contractors or temporary staff, not hired full-time. This
includes part-time workers or those hired through agencies, with
Citigroup using part-time sales agents for client outreach. Around 1
in 50 employed Americans held such positions in 2011.
Managing Contingent and Temporary Workers
HR managers need to plan and integrate temporary workers
effectively, understanding their limitations and advantages. They
should assess the real cost of employing them versus permanent
staff, considering productivity differences. Managers must decide
how to treat temporary workers, like inclusion in events or benefits,
consistently.
Thanks