Management

Fifteenth Edition, Global Edition

Chapter 7
Managing Human Resources

Copyright © 2021 Pearson Education Ltd.

Learning Objectives
12.1 Explain the importance of human resource management and
the human resource management process.
12.2 Describe the external influences that affect the human
resource management process.
12.3 Discuss the tasks associated with identifying and selecting
competent employees.
12.4 Explain how companies provide employees with skills and
knowledge.
12.5 Describe strategies for retaining competent, high-performing
employees.
12.6 Identify two important trends in organizational career
development.
12.7 Discuss contemporary issues in managing human
resources.

Copyright © 2021 Pearson Education Ltd.

Why Human Resource Management is Important

• Human resource management (HRM) can be a significant

source of competitive advantage
• HRM is an important part of organizational strategies
• The way organizations treat their people can significantly
impact performance

Copyright © 2021 Pearson Education Ltd.

The Human Resource Management Process
• To ensure an organization has qualified people to perform
all the work, specific HRM activities need to be done
• Exhibit 12.1 shows the eight activities in this process

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.1 HRM Process

Exhibit 12.1 shows the eight steps in the HRM process.

Copyright © 2021 Pearson Education Ltd.

External Factors that Affect the Human
Resource Management Process
• The economy: lasting impact of the Great Recession

Copyright © 2021 Pearson Education Ltd.

Labor Unions
• Labor union: an organization that represents workers and
seeks to protect their interests through collective
bargaining

Copyright © 2021 Pearson Education Ltd.

Laws and Rulings
• Affirmative action: Organizational programs that enhance
the status of members of protected groups

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.2 Major HRM Laws—Equal
Employment Opportunity and Discrimination
Law or Ruling Year Description
Equal Pay Act 1963 Prohibits pay differences for equal work
based on gender
Civil Rights Act, Title VII 1964 Prohibits discrimination based on race,
(amended 1972) color, religion, national origin, or gender
Age Discrimination in 1967 Prohibits discrimination against
Employment Act (amended 1978) employees 40 years and older
Vocational Rehabilitation 1973 Prohibits discrimination on the basis of
Act physical or mental disabilities
Americans with 1990 Prohibits discrimination against
Disabilities Act individuals who have disabilities or
chronic illnesses; also requires
reasonable accommodations for these
individuals

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.2 Major HRM Laws—
Compensation/Benefits
Law or Ruling
Worker Adjustment and
Retraining Notification Act
Family and Medical Leave
Act
Health Insurance Portability
and Accountability Act
Lilly Ledbetter Fair Pay Act
Patient Protection and
Affordable Care Act
Year Description
1990 Requires employers with more than 100
employees to provide 60 days’ notice before a
mass layoff or facility closing
1993 Gives employees in organizations with 50 or
more employees up to 12 weeks of unpaid leave
each year for family or medical reasons
1996 Permits portability of employees’ insurance from
one employer to another
2009 Changes the statute of limitations on pay
discrimination to 180 days from each paycheck
2010 Healthcare legislation that puts in place
comprehensive health insurance reforms
Copyright © 2021 Pearson Education Ltd.
Exhibit 12.2 Major HRM Laws—Health/Safety

Law or Ruling Year Description

Occupational Safety and 1970 Establishes mandatory safety and health
Health Act (OSHA) standards in organizations
Privacy Act 1974 Gives employees the legal right to examine
personnel files and letters of reference
Consolidated Omnibus 1985 Requires continued health coverage
Reconciliation Act following termination (paid by employee)
(COBRA)

Copyright © 2021 Pearson Education Ltd.

Global HR M
• Work councils: groups of nominated or elected
employees who must be consulted when management
makes decisions involving personnel
• Board representatives: employees who sit on a
company’s board of directors and represent the interests of
the firm’s employees

Copyright © 2021 Pearson Education Ltd.

Demography
• Workers age 55 and older make up 16.3% of the workforce
• Hispanics make up 13% of the workforce
• Women make up almost 47% of the workforce
• Gen Yers make up almost 24% of the workforce
• Blacks make up about 13% of the workforce

Copyright © 2021 Pearson Education Ltd.

Human Resource Planning
• Human resource planning: ensuring that the organization
has the right number and kinds of capable people in the
right places and at the right times
• Two steps:
– Assessing current human resources
– Meeting future HR needs

Copyright © 2021 Pearson Education Ltd.

Current Assessment
• Job analysis: an assessment that defines jobs and the
behaviors necessary to perform them
• Job description (position description): a written
statement that describes a job
• Job specifications: a written statement of the minimum
qualifications a person must possess to perform a given
job successfully

Copyright © 2021 Pearson Education Ltd.

Meeting Future H R Needs/Increased
Scrutiny in Selection Process
• Future H R needs are determined by the organization’s
mission, goals, and strategies.
• Companies that do not carefully scrutinize the
qualifications or backgrounds of employees surely pose
risks of increased liability, poor reputation, and lower
performance.

Copyright © 2021 Pearson Education Ltd.

Recruitment and Decruitment
• Recruitment: locating, identifying, and attracting capable
applicants
• Decruitment: reducing an organization’s workforce

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.3 Recruiting Sources
Source Advantages Disadvantages
Internet Reaches large numbers of people; can Generates many unqualified
get immediate feedback candidates
Employee Knowledge about the organization May not increase the diversity
referrals provided by current employee; can and mix of employees
generate strong candidates because a
good referral reflects on the
recommender
Company Wide distribution; can be targeted to Generates many unqualified
website specific groups candidates
College Large centralized body of candidates Limited to entry-level positions
recruiting
Professional Good knowledge of industry Little commitment to specific
recruiting challenges and requirements organization
organizations
Social media Takes advantage of current Not nearly as effective in
employees’ connections; particularly reaching older or senior
effective at recruiting younger candidates
candidates

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.4 Decruitment Options
Option Description
Firing Permanent involuntary termination

Layoffs Temporary involuntary termination; may last only a few days or

extend to years
Attrition Not filling openings created by voluntary resignations or normal
retirements
Transfers Moving employees either laterally or downward; usually does not
reduce costs but can reduce intraorganizational supply–demand
imbalances
Reduced Having employees work fewer hours per week, share jobs, or
workweeks perform their jobs on a part-time basis

Early retirements Providing incentives to older and more senior employees for
retiring before their normal retirement date
Job sharing Having employees share one full-time position

Copyright © 2021 Pearson Education Ltd.

Selection
• Selection: screening job applicants to ensure that the
most appropriate candidates are hired

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.5 Selection Decision Outcomes

As shown in Exhibit 12.5, any selection decision can result in four possible outcomes—two
correct and two errors.

Copyright © 2021 Pearson Education Ltd.

Validity and Reliability
• A valid selection device is characterized by a proven
relationship between the selection device and some
relevant criterion.
• A reliable selection device indicates that it measures the
same thing consistently.

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.6 Selection Tools
Tool Characteristics
Application Almost universally used
forms Most useful for gathering information
Can predict job performance but not easy to create one that does
Written tests Must be job-related Include intelligence, aptitude, ability, personality, and
interest tests Are popular (e.g., personality tests; aptitude tests)
Relatively good predictor for supervisory positions
Performance Use actual job behaviors Work sampling—test applicants on tasks
simulation associated with that job; appropriate for routine or standardized work
tests Assessment center—simulate jobs; appropriate for evaluating managerial
potential
Interviews Almost universally used Must know what can and cannot be asked
Can be useful for managerial positions
Background Used for verifying application data—valuable source of information
investigations Used for verifying reference checks—not a valuable source of
information
Physical Are for jobs that have certain physical requirements Mostly used for
examinations insurance purposes

Copyright © 2021 Pearson Education Ltd.

Assessing an Applicant’s Future Job Performance

• Work sample tests: Hands-on simulations of part or all of

the work that workers in a job routinely must perform.
– One of the most reliable and valid tools for predicting
future performance
– More elaborate simulations can be designed and
administered through an assessment center to
determine managerial potential

Copyright © 2021 Pearson Education Ltd.

Realistic Job Preview
• Realistic job preview (RJ P): a preview of a job that
provides both positive and negative information about the
job and the company

Copyright © 2021 Pearson Education Ltd.

Orientation
• Orientation: introducing a new employee to his or her job
and the organization
• Work unit orientation: familiarizes employees with the
goal of the work unit and their specific job
• Organization orientation: informs employees about the
company’s goals, history, philosophy, procedures and rules

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.7 Entry Socialization Options (1 of 2)
Formal vs. Informal The more a new employee is segregated from the ongoing
Entry Socialization Options work setting and differentiated in some way to make
explicit his or her newcomer’s role, the more socialization is formal. Specific
orientation and training programs are examples. Informal socialization puts new
employees directly into the job, with little or no special attention.
Individual vs. Collective New members can be socialized individually. This
describes how it’s done in many professional offices. Or they can be grouped
together and processed through an identical set of experiences, as in military
boot camp.
Fixed vs. Variable This refers to the time schedule in which newcomers make
the transition from outsider to insider. A fixed schedule establishes standardized
stages of transition. This characterizes rotational training programs where new
hires might spend three months in each of half-dozen departments before final
assignment. Variable schedules give no advance notice of their transition
timetable. This describes the typical promotion system where one isn’t advanced
to the next stage until one is “ready.”

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.7 Entry Socialization Options (2 of 2)
Serial vs. Random Serial socialization is characterized by the use of role models
who train and encourage the newcomer. Apprenticeship and mentoring programs
are examples. In random socialization, role models are deliberately withheld.
New employees are left on their own to figure things out.
Investiture vs. Divestiture Investiture socialization assumes that the
newcomer’s qualities and qualifications are the necessary ingredients for
success, so these qualities and qualifications are confirmed and supported.
Divestiture socialization tries to strip away certain characteristics of the recruit.
Fraternity and sorority “pledges” go through divestiture rituals to shape them into
the proper role.

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.8 Types of Training

Exhibit 12.8 describes the major types of training that organizations provide.

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.9 Traditional Training Methods

Method Characteristics
On-the-job Employees learn how to do tasks simply by performing them,
usually after an initial introduction to the task.
Job rotation Employees work at different jobs in a particular area, getting
exposure to a variety of tasks.
Mentoring Employees work with an experienced worker who provides
and information, support, and encouragement; also called
coaching apprenticeships in certain industries.
Experiential Employees participate in role-playing, simulations, or other
exercises face-to-face types of training.
Workbooks/ Employees refer to training workbooks and manuals for
manuals information.
Classroom Employees attend lectures designed to convey specific
lectures information.

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.9 Technology-Based Training Methods
Method Characteristics
C D-R O M/D V D/ Employees listen to or watch selected media
videotapes/audiotapes/ that convey information or demonstrate certain
podcasts techniques.
Videoconferencing/ Employees listen to or participate as information
teleconferencing/satellite TV is conveyed or techniques demonstrated.
E-learning Internet-based learning where employees
participate in multimedia simulations or other
interactive modules.
Mobile learning Learning delivered via mobile devices.

Virtual reality Using VR headsets and customized software,

employees learn through simulated practices

Copyright © 2021 Pearson Education Ltd.

Evaluating Employee Performance
• Performance Evaluation: the practice of providing job
feedback to an employee that may be used to improve
performance and for compensation and promotion
decisions

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.10 Performance Appraisal
Methods (1 of 2)
Method Description
Written Essay Evaluator writes a description of
employee’s strengths and
weaknesses, past performance, and
potential; provides suggestions for
improvement.
Critical Evaluator focuses on critical
Incident behaviors that separate effective
and ineffective performance.
Graphic Popular method that lists a set of
Rating Scale performance factors and an
incremental scale; evaluator goes
down the list and rates employee on
each factor.
Advantages/Disadvantages
+ Simple to use
− May be better measure of
evaluator’s writing ability than of
employee’s actual performance
+ Rich examples, behaviorally
based
− Time-consuming, lacks
quantification
+ Provides quantitative data; not
time-consuming
− Doesn’t provide in-depth
information on job behavior
Copyright © 2021 Pearson Education Ltd.
Exhibit 12.10 Performance Appraisal
Methods (2 of 2)
Method Description Advantages/Disadvantages
BARS Popular approach that combines + Focuses on specific and
(Behaviorally elements from critical incident measurable job behaviors
Anchored and graphic rating scale; − Time-consuming; difficult to
Rating Scale) evaluator uses a rating scale, but develop
items are examples of actual job
behaviors.
Multiperson Employees are rated in + Compares employees with one
Comparison comparison to others in work another
group. − Difficult with large number of
employees; legal concerns
MBO Employees are evaluated on how + Focuses on goals; results oriented
well they accomplish specific − Time-consuming
goals.
360-Degree Utilizes feedback from + Thorough
Appraisal supervisors, employees, and − Time-consuming
coworkers.

Copyright © 2021 Pearson Education Ltd.

Electronic Performance Monitoring
• Electronic performance monitoring: the use of
electronic instruments to collect, store, analyze, and report
individual or group performance.

Copyright © 2021 Pearson Education Ltd.

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

Copyright © 2021 Pearson Education Ltd.

Exhibit 12.11 What Determines Pay and Benefits

Exhibit 12.11 summarizes the factors that influence the compensation and benefit packages
that different employees receive.

Copyright © 2021 Pearson Education Ltd.

Other Pay Factors
• Bonuses vs. Annual Pay Raises
• Pay Secrecy vs. Transparency
• Benefit Options

Copyright © 2021 Pearson Education Ltd.

Two Trends Shaping Career Development
• Lifelong learning: many organizations now support
employee lifelong learning through tuition reimbursement
and leadership programs
• Internships: internships are becoming more popular as
organizations realize this is a way to evaluate a potential
employee without a commitment to a full-time job

Copyright © 2021 Pearson Education Ltd.

Sexual Harassment
• Sexual harassment: any unwanted action or activity of a
sexual nature that explicitly or implicitly affects an
individual’s employment, performance, or work
environment

Copyright © 2021 Pearson Education Ltd.

Bullying in the Workplace
• Workplace bullying: occurs when an individual
experiences a number of negative behaviors repeatedly
over a period of time that results in physical or mental
harm

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.1
• Explain the importance of human resource
management and the human resource management
process.
1. Competitive advantage
2. Organizational strategies
3. Impact of employee treatment on organizational
performance

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.2
• Describe the external influences that affect the human
resource management process.
– Economy
– Labor unions
– Legal environment
– Demographic trends

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.3
• Discuss the tasks associated with identifying and
selecting competent employees.
– Planning:
 Job analysis
 Job description
 Job specification
– Recruitment/decruitment
– Selection
– Realistic job preview

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.4
• Explain how companies provide employees with skills
and knowledge.
– Orientation
– Training:
 Profession/industry-specific training
 Management/supervisory skills
 Mandatory/compliance information
 Customer service training
– Traditional training versus technology-based methods

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.5
• Describe strategies for retaining competent, high-
performing employees.
– Performance management system
– Performance appraisal methods
– Factors influencing compensation and benefits
– Skill-based pay systems versus variable pay system

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.6
• Identify two important trends in organizational career
development.
1. Organizations are now actively supporting lifelong
learning
2. Internships have expanded as a way to evaluate
potential employees without making a commitment to
full-time employment

Copyright © 2021 Pearson Education Ltd.

Review Learning Objective 12.7
• Discuss contemporary issues in managing human
resources.
– Downsizing
– Sexual harassment
– Controlling HR costs

Copyright © 2021 Pearson Education Ltd.