PART 3

Organizing

CHAPTER 8

Managing Human
Resources in
Organizations

© 2019 Cengage. All rights reserved.

Learning Objectives (slide 1 of 2)
After studying this chapter you should be able to:
1. Describe the environmental context of human
resource management, including its strategic
importance and its relationship with legal and social
factors.
2. Discuss how organizations attract human resources,
including human resource planning, recruiting, and
selecting.
3. Describe how organizations develop human
resources, including training and development,
performance appraisal, and performance feedback.

© 2019 Cengage. All rights reserved.

Learning Objectives (slide 2 of 2)
4. Discuss how organizations maintain human resources,
including the determination of compensation and
benefits and career planning.
5. Discuss the nature of diversity, including its meaning,
associated trends, impact, and management.
6. Describe labor relations, including how employees
form unions and the mechanics of collective
bargaining.
7. Describe the issues associated with managing
knowledge and contingent and temporary workers.

© 2019 Cengage. All rights reserved.

Discussion Starter (1)
• Wegmans Food Markets Cheese department
manager Carol Kent will be happy to
recommend the best brand because her job
calls for knowing cheese as well as managing
some 20 subordinates. Kent is a knowledgeable
employee, and knowledgeable employees, says
Wegmans CEO Danny Wegman, are
“something our competitors don’t have and our
customers couldn’t get anywhere else.”
– If you were an HR executive at Wegmans, would you
focus more on internal recruiting or on external
recruiting?

© 2019 Cengage. All rights reserved.

8-1 The Environmental Context of
Human Resource Management
• Human resource management (HRM)
– The set of organizational activities directed at
attracting, developing, and maintaining an effective
workforce
– In this short video, LinkedIn Talent Solutions explains
how the role of HRM has evolved in the 21st Century:
YouTube (
https://www.youtube.com/watch?v=ukmC6F0JvQw).

© 2019 Cengage. All rights reserved.

8-1a The Strategic Importance of HRM

• Human capital
– Reflects the organization’s investment in attracting,
retaining, and motivating an effective workforce

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 8-1b The Legal Environment of HRM
(slide 1 of 2)
• Equal Employment Opportunity
– Title VII of the Civil Rights Act of 1964
• Forbids discrimination on the basis of sex, race, color,
religion, or national origin in all areas of the employment
relationship.
– Adverse impact
• When minority group members meet or pass a selection
standard at a rate less than 80 percent of majority group
members
– Equal Employment Opportunity Commission
• Charged with enforcing Title VII of the Civil Rights Act of 1964

© 2019 Cengage. All rights reserved.

 8-1b The Legal Environment of HRM
(slide 2 of 2)
• Equal Employment Opportunity
– Age Discrimination in Employment Act of 1967
• Outlaws discrimination against people older than
40 years; passed in 1967, amended in 1978 and 1986
– Pregnancy Discrimination Act
• Forbids discrimination against women who are pregnant

© 2019 Cengage. All rights reserved.

Discussion Starter (2)

• Affirmative action has become a controversial

issue in the United States. Some people believe
that affirmative action has outlived its usefulness
and should be eliminated, whereas others think
it is still necessary.
– What is your opinion on affirmative action?

© 2019 Cengage. All rights reserved.

 8-1b The Legal Environment of HRM
(slide 1 of 7)
• Equal Employment Opportunity
– Affirmative action
• Intentionally seeking and hiring qualified or qualifiable
employees from racial, sexual, and ethnic group that are
underrepresented in the organization
• Various executive orders, especially Executive Order 11246,
require federal contractors to develop affirmative action plans
and engage in affirmative action in hiring veterans and the
disabled.

© 2019 Cengage. All rights reserved.

 8-1b The Legal Environment of HRM
(slide 2 of 7)
• Equal Employment Opportunity
– Americans with Disabilities Act
• Forbids discrimination against people with disabilities
– Civil Rights Act of 1991
• Amends the original Civil Rights Act, making it easier to bring
discrimination lawsuits while also limiting punitive damages

© 2019 Cengage. All rights reserved.

 8-1b The Legal Environment of HRM
(slide 3 of 7)
• Compensation
– Fair Labor Standards Act of 1938 (FLSA)
• Sets a minimum wage and requires overtime pay for work in
excess of 40 hours per week; passed in 1938 and amended
frequently since then
• Salaried professional, executive, and administrative
employees are exempt from the Act’s minimum wage and
overtime provisions.
– Equal Pay Act of 1963
• Requires that men and women be paid the same amount for
doing the same job; exceptions are permitted for seniority and
performance pay.

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 8-1b The Legal Environment of HRM
(slide 4 of 7)
• Benefits
– Employee Retirement Income Security Act
of 1974 (ERISA)
• A law that sets standards for pension plan management and
provides federal insurance if pension plans go bankrupt
– Family and Medical Leave Act of 1993
(FMLA)
• Requires employers to provide up to 12 weeks of unpaid
leave for family and medical emergencies

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 8-1b The Legal Environment of HRM
(slide 5 of 7)
• Labor Relations
– National Labor Relations Act
• Passed in 1935 to set up procedures for employees to vote
on whether to have a union; also known as the Wagner Act
– National Labor Relations Board (NLRB)
• Established by the Wagner Act to enforce its provisions
– Labor Management Relations Act
• Passed in 1947 to limit union power; also known as the Taft-
Hartley Act

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 8-1b The Legal Environment of HRM
(slide 6 of 7)
• Health and Safety
– Occupational Safety and Health Act of 1970
(OSHA)
• Directly mandates the provision of save working conditions
• Requires that employers:
– Provide a place of employment that is free from hazards that
cause death or serious physical harm.
– Obey safety and health standards set by the Occupational Safety
and Health Administration (OSHA).

© 2019 Cengage. All rights reserved.

Legal Aspects of HRM in Vietnam

• 2012 Labor Law (Luật Lao động)

• 2013 Law on Employment (Luật Việc làm)
• 2014 Law on Social Insurance (Luật Bảo hiểm
xã hội)
• Decree (Nghị định), Circular (Thông tư)…

16
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 17
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 8-1b The Legal Environment of HRM
(slide 7 of 7)
• Emerging legal issues
– Sexual harassment
– Alcohol and drug dependencies
– AIDS in the workplace

© 2019 Cengage. All rights reserved.

8-2a Human Resource Planning

• Job analysis
– A systemized procedure for collecting and recording
information about jobs within an organization
• Job description
– A listing of the job’s duties; its working conditions; and
the tools, materials, and equipment used to perform
the job
• Job specification
– A listing of the knowledge, skills, abilities, and other
credentials the incumbent jobholder will need to do a
job

© 2019 Cengage. All rights reserved.

FIGURE 8.1 Human Resource Planning

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Forecasting the Supply of Labor

• Internal supply
– Anticipated personnel changes
– Replacement chart
• Lists each important managerial position in the organization,
who occupies it, how long he or she will probably remain in
the position, and who is or will be a qualified replacement
– Employee information system (skills inventory)
• Contains information on each employee’s education, skills
experience, and career aspirations; usually computerized
• External supply
– State employment commissions
– government reports
– College graduation records
© 2019 Cengage. All rights reserved.
8-2b Recruiting Human Resources (slide 1 of 2)

• Recruiting
– The process of attracting individuals to apply for
jobs that are open
• Internal recruiting (Promotion from Within)
– Considering current employees as applicants for
higher-level jobs in the organization
– Can help build morale and reduce turnover of high-
quality employees.
– Can create a “ripple effect”—the disadvantage of
having to successively fill vacated positions.

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8-2b Recruiting Human Resources (slide 2 of 2)
• External recruiting
– Getting people from outside the organization to apply for jobs

• Realistic job preview (RJP)

– Provides the applicant with a real picture of what it would be like
to perform the job that the organization is trying to fill
© 2019 Cengage. All rights reserved.
8-2c Selecting Human Resources (slide 1 of 3)
• Validation
– Determining the extent to which a selection device is
really predictive of future job performance
• Application Blanks
– Gather information about work history, educational
background, and other job-related demographic data
– Must not ask for information unrelated to the job
– Are used to decide if a candidate merits further
evaluation
– Provide interviewers with candidate information

© 2019 Cengage. All rights reserved.

8-2c Selecting Human Resources (slide 2 of 3)

• Tests
– Ability, skill, aptitude, or knowledge tests are usually
the best predictors of job success.
– Tests must be validated, administered, and scored
consistently.
– The testing process must be the same for all
candidates.

© 2019 Cengage. All rights reserved.

8-2c Selecting Human Resources (slide 3 of 3)

• Interviews
– Interviewer biases can be overcome and interview
consistency and validity can be improved by training
interviewers and using structured interviews.
• Assessment Centers
– Used to select managers from current employees for
promotion.
• Other Techniques
– Polygraph testing, physical exams, drug tests, and
credit checks are used to screen prospective
employees.

© 2019 Cengage. All rights reserved.

8-3 Developing Human Resources (slide 1 of 2)
• Training
– Teaching operational or technical employees how to
do the job for which they were hired
• Development
– Teaching managers and professionals the skills
needed for both present and future jobs
• Assessing Training Needs
– Determining training needs is the first step in
developing a training plan.

© 2019 Cengage. All rights reserved.

8-3 Developing Human Resources (slide 2 of 2)

• Common Training Methods

– Lectures
– Role play and case studies
– On-the-job and vestibule training
– Web-based and electronic training
– Self-contained training facility (corporate university)

© 2019 Cengage. All rights reserved.

Discussion Starter (3)

• Think about a job you have had or with which

you are familiar. What do you think would be the
best training method? Why?

© 2019 Cengage. All rights reserved.

8-3a Training and Development Evaluation

• Training and development programs should

always be evaluated.
– Approaches include measuring relevant job
performance criteria before and after the training to
determine the effect of training.
• American Airlines employs a very realistic
training program. Catch a glimpse of the training
and the results at YouTube (
https://www.youtube.com/watch?v=1A8m9-KDhl
o
).

© 2019 Cengage. All rights reserved.

8-3b Performance Appraisal (slide 1 of 7)

• Performance appraisal
– A formal assessment of how well an employee is
doing his or her job
• Reasons for performance appraisal
– Validates the selection process and
the effects of training
– Aids in making decisions about pay raises,
promotions, and training
– Provides feedback to employees to improve their
performance and plan future careers

© 2019 Cengage. All rights reserved.

8-3b Performance Appraisal (slide 2 of 7)

• Objective Measures of Performance

– Measure actual output (that is, number of units
produced), scrap rate, dollar volume of sales, and
number of claims processed
– Opportunity Bias
• A measure of performance is “contaminated” (i.e., incorrectly
assesses performance) if it is influenced by an external
variable that causes some persons have a better chance to
perform than others.
• Rainfall increases lawnmower sales but reduces lawn
sprinkler sales.

© 2019 Cengage. All rights reserved.

8-3b Performance Appraisal (slide 3 of 7)

• Judgmental Appraisal Methods

– Compares employees directly with each other
– Difficult to do with large numbers of employees
– Difficult to make comparisons across work groups
– Employees are ranked only on overall performance
– Does not provide useful information for employee
feedback

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8-3b Performance Appraisal (slide 4 of 7)

• Judgmental Appraisal Methods

– Rating Method
• Compares each employee with a fixed standard
• Uses graphic rating scales of job performance dimensions to
be rated on a standard scale
– Behaviorally-Anchored Rating Scale (BARS)
• A sophisticated rating method in which supervisors construct
a rating scale associated with behavioral anchors

© 2019 Cengage. All rights reserved.

FIGURE 8.2 Graphic Rating Scales for a Bank Teller

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FIGURE 8.3 Behaviorally Anchored Rating Scale

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8-3b Performance Appraisal (slide 5 of 7)

• Divide into groups of two or three. Develop

sample graphic rating scales that your instructor
could use to assess your performance.

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8-3b Performance Appraisal (slide 6 of 7)

• Bias Errors
– Recency Error
• Basing judgments on the subordinate’s most recent
performance because it is the most easily recalled
– Errors of Leniency and Strictness
• Being too lenient, too strict, or tending to rate all employees
as “average”
– Halo Error
• Allowing the assessment of the employee on one dimension
to spread to that employee’s ratings on other dimensions

© 2019 Cengage. All rights reserved.

8-3b Performance Appraisal (slide 7 of 7)

• 360-degree feedback
– A performance appraisal system in which managers
are evaluated by everyone around them–their boss,
their peers, and their subordinates
– Provides a richer array of performance information
on which to base an appraisal

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8-3c Performance Feedback

• Performance Feedback
– Best given in a private meeting between the employee
and immediate supervisor
– More effective if managers are properly trained to
conduct feedback interviews
• Focus of Appraisal Discussion
– Assessed level of performance
– How and why the assessment was made
– How the employee’s performance can be improved in
the future

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8-4a Determining Compensation (slide 1 of 2)

• Compensation
– The financial remuneration given by the organization
to its employees in exchange for their work

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8-4a Determining Compensation (slide 2 of 2)

• Forms of compensation
– Wages are hourly compensation paid to operating
employees.
– Salary is paid for the total contribution of an employee
and is not based on total hours worked.
– Incentives are special compensation opportunities that
are usually tied to performance.
• Purposes of compensation
– Provide a reasonable standard of living
– Provide a tangible measure of an individual’s value to
the organization

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Steps in Determining Compensation

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 8-4b Determining Benefits

• Benefits
– Things of value other than compensation that an
organization provides its workers
• Types of employee benefits
– Pay for time not worked
– Life, health, and other insurance
– Service benefits
– Cafeteria benefit plans

© 2019 Cengage. All rights reserved.

8-5 Managing Workforce Diversity (slide 1 of 2)

• Diversity
– A characteristic of a group or organization whose
members differ from one another along one or more
important dimensions, such as age, gender, or
ethnicity
• Diversity as a Competitive Advantage
– Higher productivity; lower turnover and absenteeism
– Increased reputation as “good place to work”
– Better understanding of different market segments
– Increased creativity and innovation

© 2019 Cengage. All rights reserved.

8-5 Managing Workforce Diversity (slide 2 of 2)

• Diversity as a Source of Conflict

– Personnel actions (e.g., hiring, promotion, and firing)
being attributed to an individual’s diversity status
– Misunderstood, misinterpreted, or inappropriate
actions among people of different groups
– Fear, distrust, or individual prejudices

© 2019 Cengage. All rights reserved.

 8-5b Managing Diversity in Organizations
(slide 1 of 2)
• Individual Strategies
– Understanding the nature and meaning of diversity
and multiculturalism
– Developing empathy in understanding the perspective
of others
– Developing tolerance of fundamental cultural
differences
– Having a willingness to communicate and discuss
diversity and multiculturalism issues

© 2019 Cengage. All rights reserved.

 8-5b Managing Diversity in Organizations
(slide 2 of 2)

• Managing diversity in organizations

– Organizational policies
– Organizational practices
– Diversity and multicultural training
• Training that is specifically designed to better enable
members of an organization to function in a diverse and
multicultural workforce
– Organizational culture

© 2019 Cengage. All rights reserved.

8-6 Managing Labor Relations (slide 1 of 2)

• Labor Relations
– The process of dealing with employees who are
represented by a union.
– Organizations prefer that employees remain nonunion
because unions limit management’s freedom.
– The best way to avoid unionization is to practice good
employee relations by:
• Providing fair treatment with clear standards in pay,
promotions, layoffs, and discipline.
• Providing a complaint and appeal system and
avoiding favoritism.

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FIGURE 8.4 The Union-Organizing Process

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8-6 Managing Labor Relations (slide 2 of 2)

• Collective bargaining
– The process of agreeing on a satisfactory labor
contract between management and a union
• Grievance procedure
– The means by which a labor contract is enforced

© 2019 Cengage. All rights reserved.

 Discussion Starter (4)

• How would managing nonunionized workers

differ from managing workers who elected to be
in a union? Which would be easier? Why?

© 2019 Cengage. All rights reserved.

8-7b Contingent and Contemporary Workers

• Contingent and Temporary Workers

– Are not permanent or full-time employees
• Independent contractors, on-call workers, temporary, contract
and leased employees, and part-time workers.
• 1 in every 50 employed Americans held a temporary or
contingent position in 2011.
• Managing Contingent and Temporary Workers
– The strategic need to maintain flexibility in staffing
levels and to control labor costs requires:
• Careful advance HR planning.
• Understanding how to effectively utilize contingent workers.
• Assessing the real cost of using contingent workers.

© 2019 Cengage. All rights reserved.