Notes on Human Resources Management

Notes on Human Resources Management

• Human Resource Management (HRM)

– The set of organizational activities directed at attracting, developing, and maintaining an effective work force.

• The Strategic Importance of HRM

– Firms have come to realize the value of their human resources in improving productivity.
– HRM is critical to bottom-line performance of the firm.
– HR planning is part of the strategic planning process.


• Job Analysis

– A systematic analysis of 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 skills, abilities, and other credentials the incumbent jobholder will need to do a job.


• Forecasting HR Demand and Supply

– Replacement chart

• A list of managerial positions in the organization, the occupants, how long they will stay in the position, and who will replace them.
– Employee information system (skills inventory)

• A database of employees’ education, skills, work experience, and career expectations, usually computerized.
Recruiting Human Resources

• Recruiting

– The process of attracting qualified persons to apply for jobs that are open.
• Internal Recruiting
– Considering present employees as candidates for openings.

• Promotion from within can help build morale and reduce turnover of high-quality employees.
• Disadvantage of internal recruiting is its “ripple effect” of having to successively fill vacated positions.
Recruiting Human Resources (cont’d)

• External Recruiting

– Attracting persons from outside the organization.
• Advertising in newspapers
• Interviews
• Employment agencies and search firms
• Hiring “walk-ins” and “gate hires”
– Realistic Job Preview (RJP)

• Considered a successful method to ensure person-job fit by providing a real picture of the job to the applicant.
A Sample Human Resource Selection Process



• Validation

– The process of determining the predictive value of information.

• Application Blanks

– Used to gather information about work history, educational background, and other job-related demographic data.
– Must not ask for information unrelated to the job.
– Used to decide if a candidate merits further evaluation.
– Provides interviewers with information about a candidate.

• Tests

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

• Interviews

– 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 (cont’d)

• Assessment Centers

– A method for selecting managers; particularly good for selecting current employees for promotion and content validation of major parts of the managerial job.
• Other Techniques
– Use of Polygraph testing has
– declined due to passage of the
– Polygraph Protection Act.
– Employers use physical exams,
– drug tests, and credit checks
– to screen prospective
– employees.

Developing Human Resources

• Training and Development
– 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.
• Training and Development
– Assessing Training Needs
• Determining training needs is
• the first step in developing a
• training plan.
– Common Training Methods
• Lectures—work well for factual material.

• Role play and case studies—good for improving interpersonal relations skills or group decision-making.
• On-the-job and vestibule training—facilitates learning physical skills through practice and actual use of tools.
Developing Human Resources (cont’d)

– Evaluation of Training

• 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.


• Performance Appraisal

– A formal assessment of how well employees do their jobs.
– Reasons for performance appraisal

• Appraisal validates the selection process and the effects of training.
• Appraisal aids in making
• decisions about pay raises,
• promotions, and training.
• Provides feedback to
• employees to improve their
• performance and plan future careers.

– Objective measures of performance

• Actual output (units produced), scrap rate, dollar volume of sales, and number of 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.

– Judgmental Methods
• Ranking—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.
– Do not provide useful information for employee feedback.
• Rating—compares each employee with a fixed standard.

– Graphic rating scales consist of job performance dimensions to be rated on a standard scale.
– Behaviorally-anchored rating scale (BARS) is a sophisticated method in which supervisors construct a rating scale where each point on the scale is associated with behavioral anchors.
Graphic Rating Scales for a Bank Teller


– Performance Appraisal Errors

• Recency error—the tendency of the evaluator to base 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.

• Performance Feedback
– Is best given in a private meeting between the employee and immediate supervisor.
– Discussion should focus on the facts:

• assessed level of performance, how and why the assessment was made, and how the employee’s performance can be improved
• in the future.

– Properly training managers can help them conduct more effective feedback interviews.
– “360 degree” feedback, in which managers are evaluated by everyone around them, provides a richer array of performance information on which to base an appraisal.Maintaining Human Resources

• Determining Compensation

– Compensation

• The financial remuneration given by the organization to its employees in exchange for their work.
– Wages are hourly compensation paid to operating employees.

– Salary refers to compensation paid for the total contribution of an employee and is not based on total hours worked.
– Incentives represent special compensation opportunities (e.g., sales commissions) that are usually tied to performance.
• Purposes of Compensation
– Provide the means to maintain a reasonable standard of living.

– Provide a tangible measure of the value of the individual to the organization.


– Wage-Level Decision

• 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
• in a labor market.

– Wage-Structure

• Job evaluations attempt to assess the worth of each job relative to other jobs in the organization.
• Wage surveys data and the wage
• structure are combined to set the
• actual wages for a job.
– Individual Wage Decisions
• Seniority, initial qualifications,
• individual merit, and labor
• market conditions influence
• wage decisions.
• Determining Benefits

– Benefits

• Things of value other than compensation that an organization provides to its workers.
• The average company spends more than one-third of its cash payroll on employee benefits.

– Types of Benefits
• Pay for time not worked—Sick leave,
• vacation, holidays, and unemployment.
• Insurance—Life and health insurance,
• workers’ compensation, social security,
• and private pension plans.

•  Employee service benefits—
•   Tuition reimbursement and
•    recreational opportunities.

– Cafeteria Benefit Plans

• Provide basic coverage and allow employees to choose the additional benefits they want up to the cost limit set by the organization.
• Flexible systems encourage people
• to stay in the organization and
• help the company attract
• new employees.

Managing Workforce Diversity

• Diversity

– When members of a group differ from one another along dimensions such as age, gender, or ethnicity.
• Diversity promotes competitive advantage by:
– increasing organizational systems’ flexibility.
– bringing added creativity.
– increasing the market scope of products.
– broadening the resources acquisition basis.
– adding a diversity of viewpoints to problem-solving, decision-making processes.
– decreasing the cost of doing business.

• Diversity as a Source of Conflict
– Personnel actions (e.g., hiring, firing, and promotion) being attributed to an individual’s diversity status.
– Misunderstood, misinterpreted, or inappropriate actions between people or groups.
– Cultural differences in work hours, personal styles, interpersonal relations, and conflict management.
– Fear, distrust, or individual prejudices.

• 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.

• Organizational Approaches

– Organizational Policies
• Actively seek a diverse and varied workforce.
• Positive responses to diversity problems.
• Mission statement of commitment to diversity.
– Organizational Practices
• Support networks, structured benefits
• packages, flexible working hours,
• and diversity in work groups
• and teams.

– Diversity Training

• Training that enables organization members to function in a diverse workplace.
– Organizational Culture
• Incorporating into a culture
• the valuation of diversity.

• Labor Relations

– The process of dealing with employees when they are represented by a union.
– Organizations prefer 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.

• 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 means by which a labor contract is enforced.
– Grievances are filed on behalf of an employee by the union when it believes employees have not been treated fairly under the contract.

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