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The Environmental Context of HRM

Human Resource Management (HRM)

The set of organizational activities directed at

attracting, developing, and maintaining an effective work force.

The Strategic Importance of HRM

HRM is increasingly important as firms realize the

value of their human capital in improving productivity.

HRM is critical to bottom-line performance of the firm. HR planning is now part of the strategic planning


Selecting Human Resources (contd)

Interviews can be poor predictors of job success due to

interviewer biases. Interview validity can be improved by training interviewers and using structured interviews.


Selecting Human Resources (contd)

Assessment Centers
Are a popular method for selecting that is particularly

good for selecting current managers for promotion. Provides content validation for major parts of the managerial job.

Other Techniques
Polygraphs have declined in popularity due to passage

of the Polygraph Protection Act. Employers now use physical exams, drug tests, and credit checks to screen prospective employees.


Developing Human Resources

Training and Development

Teaching operational or technical employees how to do the job for which they were hired. Teaching managers and professionals the skills need for both present and future jobs.



14.2 The Training Process

Assess training needs Who needs to be trained? What do they need to know? What do they already know? Set training objectives Specific Measurable

Plan training evaluation Did trainees like the training? Can they meet the training objectives? Do they perform better on the job?

Develop training program Content Location Methods Trainers Duration

Conduct training

Evaluate training

Modify training program based on evaluation


Developing Human Resources (contd)

Assessing Training Needs
Determining what needs exist is the first step in

developing a training plan.

Common Training Methods


Role play and case studies

On-the-job and vestibule training

Web-based and electronic training


Developing Human Resources

Evaluation of training
Training and development programs should always be

evaluated. Approaches include measuring relevant job performance criteria before (pretest) and after the training (post-test) to determine the effect of training.


Developing Human Resources (contd)

Performance Appraisal
A formal assessment of how well workers do their jobs.

Reasons for performance appraisal

Validates the selection process and the effects of

Aids in making pay raise, promotion, and training

Provides feedback to workers to improve their

performance and plan future careers.


Developing Human Resources (contd)

Objective Measures of Performance
Can be actual output (units produced), scrap rate,

dollar volume of sales, and claims processed.

Can become contaminated by outside factors resulting

in opportunity bias where some have a better chance to perform than others.
Special performance tests assess each employee

under standardized conditions.

Performance tests measure ability and not motivation.


Developing Human Resources (contd)

Judgmental Methods of Appraisal
Rankingcompares employees to each other.

Difficult to do with large numbers of employees. Difficult to make comparisons across work groups. Employees are ranked only on overall performance. Do not provide useful information for employee feedback.

Ratingcompares employee to a fixed standard.

Graphic rating scales Behaviorally-anchored rating scale (BARS)


14.3 Graphic Rating Scales for a Bank Teller


14.4 Behaviorally Anchored Rating Scale


Developing Human Resources (contd)

Rater Errors in Performance Appraisal

Recency error

Errors of leniency and strictness

Halo error


Developing Human Resources (contd)

Performance Feedback
Is best given in a private meeting between the

employee and immediate supervisor.

Discussion should focus on the facts:

The assessed level of performance How and why the assessment was made. How the employees performance can be improved.

Properly training managers can help them conduct

more effective feedback interviews.


Developing Human Resources (contd)

360 degree Feedback
Managers are evaluated by everyone around them:

Boss Subordinates Peers

Provides a richer array of performance

information on which to base an appraisal.


Maintaining Human Resources

Determining Compensation

The financial remuneration given by the organization to its employees in exchange for their work. Wages Salary Incentives Provide means to maintain a reasonable standard of living. Provide a tangible measure of the value of the individual to the organization.

Purposes of compensation


Compensation Decisions
Wage-level Decision
Is a management policy decision to pay above, at, or

below the going rate for labor in an industry or geographic area.

Factors affecting the wage-level decision:

The size and current success of the firm. The level of unemployment in the labor force.

Area wage surveys

Provide information about maximum, minimum, and

average wages for a particular job in a labor market.

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Compensation Decisions (contd)

Wage-structure decision
Job evaluations Wage surveys data and the wage structure

Individual wage decision

Factors such as seniority, initial qualifications,

individual merit, and labor market conditions influence wage decisions.


Maintaining Human Resources (contd)

Determining Benefits
Benefits (Indirect compensation)

Things of value other than compensation that an organization provides to its workers. The average company spends an amount equal to more than one-third of its cash payroll on employee benefits. A good benefit plan encourages employees to stay with the company and attracts new employees. Benefits do not necessarily stimulate high performance.


Maintaining Human Resources (contd)

Managing Benefits Effectively

Shop carefully for best-cost providers Avoid redundant coverage Provide only benefits that employees want


Maintaining Human Resources (contd)

Determining Benefits (contd)
Types of benefits

Pay for time not worked Insurance Employee service benefits Flexible plans that provide basic coverage and allow employees to choose the additional benefits they want up to the cost limit set by the organization. On-site childcare, mortgage assistance, and paid-leave programs.

Cafeteria benefit plans

Other benefits

Managing Labor Relations

Labor Relations
The process of dealing with employees when they

are represented by a union. Organizations prefer employees remain nonunion because unions limit managements freedom.

Why Unions Have Declined

Increased standards of living made union

membership less important. Unionized manufacturing industries have declined. Globalization of business has caused many unionized jobs to be lost overseas.

Managing Labor Relations (contd)

Avoiding Unionization

Provide fair treatment with clear standards

Provide a complaint and appeal system

Avoid favoritism


14.5 The Union-Organizing Process


Managing Labor Relations (contd)

Collective Bargaining
The process of agreeing on a satisfactory labor

contract between management and labor.

The contract contains agreements about wage, hours, and working conditions and how management will treat employees.

Grievance Procedure
The step-wise means by which a labor contract is


Grievances are filed on behalf of an employee by the union when it believes the employees have not been treated fairly under the contract.

Managing Knowledge Workers

Knowledge Workers
Contribute to an organization based on what they know

(e.g., computer scientists, engineers, and physical scientists).

Characteristics of Knowledge Workers

Tend to work in high-technology areas. Are abstract knowledge experts. Like to work independently and identify strongly with

their professions. Have skills that require continual updating and additional training.

Managing Knowledge Workers (contd)

Knowledge Worker Labor Markets
Current demand is strong for knowledge workers.

External labor market pressures Internal labor market pressures


Contingent and Temporary Workers

Trends in Contingent and Temporary Workers
Consistent increases in contingent workers10% of

the U.S. workforce is either contingent or temporary.

Challenges in Managing Contingent Workers

Integrating contingent workers into the organization in

a coordinated fashion.
Understanding their advantages and disadvantages. Calculating labor-cost savings of contingent workers. Deciding how similarly contingent employees will be

treated relative to permanent employees.