Chapter 13: Human Resource Management

Why HRM is important and the HRM process:

● HRM is important because:
○ It is a source of competitive advantage
○ It is part of the organization strategies: the human is the main
performance driver
○ It impacts organizational performance
● Work practices that lead to both high individual and high organizational
performance is called high-performance work practices
● Other HRM activities beside high-performance work practices:

External factors that affect the HRM process:

1. The Economy
● Economic recession leads to high unemployment rate, and to changes
in jobs (part-time vs. full time, etc.)
2. Employer labor unions
● When the workforce is unionized, organizations and managers face
more challenges
● A labor union: an organization that represents workers and seeks to
protect their interests through collective bargaining
● HRM decisions are dictated by collective bargaining agreements
3. Governmental laws and regulations: the most significant environmental
constraint
● Affirmative action: organizational programs that enhance the status of
members of protected groups
 ● Laws help to reduce discrimination but also reduce the managers
discretion over HRM decisions
● Managers of multinationals must understand different federal laws
applied on employees in every country where their firm operate
● (Australia) Some laws were made to increase productivity and reduce
union power (for example giving the employers the flexibility to
negotiate wages with employees)
● In most Western European countries, legislations require firms to
practice representative participation (2 forms):
○ Work councils: groups of nominated or elected employees who
must be consulted (informed) when management makes
decisions involving personnel → link employees with
management
○ Board representatives: employees who sit on a company’s
board of directors and represent the interests of the firm’s
employees
4. Demographic trends
● Retirement of older employees (baby boomers)
● One-child policy of China created a shortage of skilled workers
● Anti-discrimination policies create an increase female workers and
minority; racial and ethnic composition (diversify)
Identifying and Selecting competent employees:
● Human resource planning:
○ Definition: ensuring that they have the right number and kinds of
capable people in the right places and at the right time
○ Consist of 2 steps:
■ Assessing current human resources:
● Manage information through databases, help managers
to identify the people they need
● Job analysis: assessment that defines a job and the
behaviors necessary to perform it
● Job description/Position description: a written statement
describing the job (content, environment, conditions)
● Job specification: state the minimum qualifications that a
person must possess (knowledge, skills, attitudes)
■ Meeting future HR needs (these needs are determined by the
company’s missions, goals, and strategies) → estimate what
areas in the organization is understaffed or overstaffed
 ○ Companies must scrutinize (examine carefully) the qualifications and
backgrounds of employees → they should develop reliable and valid
selection procedures
● Recruitment and Decruitment:
○ Recruitment: Locating, identifying, and attracting capable applicants
○ Decruitment: Reducing an organization’s workforce
● Selection:
○ Definition: Screening job applicants to ensure that the most
appropriate candidates are hired
○ To increase employee job satisfaction and reduce turnover → realistic
job preview (RJP): A preview of a job that provides both positive and
negative information about the job and the company
Providing employees with needed skills and knowledge:
● Orientation: Introducing a new employee to his or her job and the
organization. Involves: work unit orientation & business orientation
● Employee training:
○ Types of training: profession/industryspecific training,
management/supervisory skills, mandatory/compliance information
(such as sexual harassment, safety,...), and customer service training
○ Training method: organizations are relying more on technology-based
training
Retaining competent, high-performing employees:
● Performance management system: Establishes performance standards used to
evaluate employee performance
● Compensation and benefits:
○ Skill-based pay: A pay system that rewards employees for the job skills
they can demonstrate
○ Variable pay: A pay system in which an individual’s compensation is
contingent on performance
Contemporary issues in managing human resources:
● Managing downsizing:
○ Downsizing: The planned elimination of jobs in an organization
● Managing sexual harassment (any unwanted action or activity of a sexual
nature that explicitly or implicitly affects an individual’s employment,
performance, or work environment)
● Controlling HR Costs (employee healthcare costs, pension plan costs,