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Part 4 Creating the Human Resource Advantage © 2015 McGraw-Hill Education. 10-2 CHAPTER 9 Motivating the Workforce CHAPTER 10 Managing Human Resources 10-3 Learning Objectives LO 10-1 Define human resources management and explain its significance. LO 10-2 Summarize the processes of recruiting and selecting human resources for a company. LO 10-3 Discuss how workers are trained and their performance appraised. LO 10-4 Identify the types of turnover companies may experience and explain why turnover is an important issue. LO 10-5 Specify the various ways a worker may be compensated. LO 10-6 Discuss some of the issues associated with unionized employees, including collective bargaining and dispute resolution. LO 10-7 Describe the importance of diversity in the workforce. 10-4 Nature of Human Resource Management Human Resource Management (HRM) • All activities involved in determining an organization’s human resources needs, as well as acquiring, training and compensating people to fill those needs Called personnel management in some companies Managers try maximizing employee satisfaction while motivating them to productively meet objectives 10-5 Planning for Human Resource Needs During a company’s planning period, the human resources department: Determines the current number of workers and how many plan to retire or leave during the planning period Forecasts how many qualified employees will need to be hired, or determines if layoffs are required Forecasts the availability of future qualified hires Develops a strategy which may include outsourcing, automation or temporary workers 10-6 Planning for Human Resources Needs Next, managers analyze the jobs in order to match people to available assignments Job Analysis • Determines, through observation and study, pertinent information about a job including specific tasks and necessary abilities, knowledge and skills 10-7 Planning for Human Resources Needs Using the job analysis, managers develop: Job Description Job Specification • A formal, written explanation of a specific job, usually including job title, tasks, relationship with other jobs, physical and mental skills required, duties, responsibilities and working conditions • A description of the qualifications necessary for a specific job, in terms of education, experience, and personal and physical characteristics 10-8 Recruiting and Selecting New Employees Job descriptions and job specifications are used to develop recruiting materials Recruiting • Forming a pool of qualified applicants from which management can select employees Internal sources include current employees External sources includes everything else Some companies use agencies or executive search firms, sometimes called headhunters 10-9 Recruiting and Selecting New Employees Selection • The process of collecting information about applicants and using that information to make hiring decisions o Includes the application, interviewing, testing and reference checking o The process can be lengthy and expensive but necessary in order to find applicants who can do the work and fit into the firm’s structure and culture o Careful hiring saves future hiring expenses 10-10 Recruiting and Selecting New Employees The next phase of the selection process is the interview Through interviews, management obtains detailed information about the applicant’s experience and skills and their reasons for changing jobs The interviewer can answer the applicant’s questions about the job, compensation, working conditions, policies, company culture and so on An interviewee’s questions may be as revealing as their answers 10-11 Recruiting and Selecting New Employees Personality tests such as MyersBrigg are used to assess an applicant’s potential for a certain kind of job For instance, extroversion and a love of people would be good qualities for a sales or retail job Interestingly, there does not seem to be any difference between introversion and extroversion in making a good manager 10-12 Recruiting and Selecting New Employees Before making a job offer, the company should check references; including verifying educational background and previous work experience An Internet search is often done to determine social media or other public activities Public companies are likely to do a more extensive background search Reference checking is important as applicant’s may misrepresent themselves on their applications and resumes 10-13 Recruiting and Selecting New Employees Managers must be aware of legal restraints and regulations in order to avoid legal problems Title VII of the Civil Rights Act Equal Employment Opportunity Commission (EEOC) • Prohibits discrimination in employment and created the Equal Employment Opportunity Commission • A federal agency dedicated to increasing job opportunities for women and minorities and eliminating job discrimination based on race, religion, color, sex, national origin or handicap 10-14 Recruiting and Selecting New Employees Other laws affecting HRM include: Americans with Disabilities Act (ADA) • Prevents discrimination against persons with disabilities Age Discrimination in Employment Act • Focuses on discrimination against those 40 years and older Equal Pay Act • Mandates that men and women who do equal work receive the same wage • Wage differences are acceptable if based on seniority, performance or qualifications 10-15 Video Interviews Interviewing for a job has traditionally required the interviewee to go to the physical location of the job applied for no matter how far the distance However since 2011, human resource managers have taken to video conferencing to conduct interviews over 49 percent of the time This has not only increased the diversity of people being interviewed as they are no longer restricted by travel, but it has decreased the amount of time used in the recruiting process as well as the costs of recruiting SOURCE: Andrea Huspeni. “Video Chat: It Ain’t Just for Long Distance Relationships Anymore (Infographic)”. www.youngentrepreneur.com. September 17, 2013. http://www.youngentrepreneur.com/startingup/start-ups/video-chat-it-aint-just-for-long-distance-relationships-anymoreinfographic/#%21. (accessed September 24, 2013); Elaine Pofeldt. “Ace Your Next Interview”. Money. September 2013. Page 31. 10-16 Developing the Workforce Orientation • Familiarizing newly hired employees with fellow workers, company procedures and the physical properties of the company Usually includes A tour of the building Introductions to co-workers and supervisors Distribution of manuals and policies Socializing the new employee into the ethics and culture of the company 10-17 Developing the Workforce Training • Teaching employees to do specific job tasks through either classroom development or on-the-job experience • On-the-job training – workers learn by actually performing the tasks of the job • Classroom training – teaches employees with lectures, conferences, video and Web-based instruction Development • Training that augments the skills and knowledge of managers and professionals 10-18 Developing the Workforce Assessing an employee’s strengths and weaknesses on the job is one of the most difficult tasks for managers Performance appraisal is crucial as it Gives employees feedback on how they are doing and how to improve Provides a basis for determining compensation Generates information about the quality of the firm’s selection, training and development activities 10-19 Developing the Workforce Performance appraisals may be objective or subjective Objective appraisal is quantifiable; such as how many of something was produced or the score on a test One popular subjective appraisal method is ranking employees against each other Another method is the 360-degree feedback system, providing feedback from a panel of superiors, peers and subordinates 10-20 Developing the Workforce Turnover Promotion Transfer • Occurs when employees quit or are fired and must be replaced by new employees • Can also take the happy form of a promotion or transfer • An advancement to a higher-level job with increased authority, responsibility and pay • Managers prefer to promote based on merit but some companies and labor unions require it be based on seniority • A move to another job within the company at essentially the same level and wage 10-21 Developing the Workforce ► Many companies in recent years are choosing to downsize by eliminating jobs ► Reasons might be due to financial constraints or the need to become more productive and competitive 10-22 Developing the Workforce Separations • Employment changes involving resignation, retirement, termination or layoff Traditionally, companies could fire workers at will, that is, for any reason other than race, religion, sex or age Recent legislation requires companies fire employees fairly, for just cause only The HR department strives to minimize employee losses as recruiting and training is expensive 10-23 Compensating the Workforce People don’t work for free and their pay and benefits are a substantial portion of an organization’s expenses Compensation for a specific job is typically determined through a • A study that tells a company how Wage/Salary much compensation comparable firms are paying for specific jobs Survey the firms have in common 10-24 Financial Compensation Wages - financial rewards based on the number of hours the employee works or the level of output achieved Time wages – based on hours worked Minimum wage – federally mandated Tip wages $2.13 plus tips, must equal minimum wage 10-25 Compensating the Workforce Many companies pay on an incentive system, such as: Piece Wages Commission • Pay based on the level of output achieved • Major advantage is this system motivates employees • An incentive system that pays a fixed amount or a percentage of the employee’s sales • Motivates employees to sell as much as they can • Some companies combine commission with time wages or salaries 10-26 Compensating the Workforce Salary • A financial reward calculated on a weekly, monthly or annual basis Bonuses • Monetary rewards offered by companies for exceptional performance as incentives to further increase productivity Profit Sharing • A form of compensation whereby a percentage of company profits is distributed to the employees whose work helped to generate them ESOPs • Employee stock ownership plans distribute company stock to employees as a form of profit sharing 10-27 Compensating the Workforce Benefits • Nonfinancial forms of compensation provided to employees, such as pension plans, health insurance, paid vacations and holidays, and the like According the Bureau of Labor Statistics, employer costs for compensation in the U.S. average $27.42 per hour worked Wages and salaries account for 70.8% while benefits account for 29.2% Benefits increase employee security, morale and motivation 10-28 Compensating the Workforce The employee assistance program (EAP) offers employees’ personal assistance with problems that may hurt their job performance Flexible benefit programs allow employees to choose the benefits they want, up to a certain amount Fringe benefits include sick leave, vacation pay, pension plans and other extra compensation Soft benefits include perks that help balance life and work, such as spas, food service and child care 10-29 Compensating the Workforce o An on-site fitness center is one of the benefits large companies have begun to offer employees o Such benefits are particularly important for employees who work long hours or who struggle to maintain a healthy worklife balance 10-30 Managing Unionized Employees Labor Unions • Employee organizations formed to deal with employers for achieving better pay, hours and working conditions On average, union workers make about $200 more per week than non-union workers Union growth has slowed and prospects for growth do not look good Significant aspects of HRM, particularly compensation, are dictated by union contracts at many companies 10-31 Managing Unionized Employees Collective Bargaining • The negotiation process through which management and unions reach an agreement about compensation, working hours and working conditions for the bargaining unit Labor Contract • The formal, written document that spells out the relationship between the union and management for a specified period of time – usually two or three years COLA or cost-of-living adjustment is automatic wage increases during periods of inflation Givebacks are wage and benefit concessions 10-32 Managing Unionized Employees Sometimes, management and labor simply cannot agree Labor tactics Picketing • A public protest against management practices that involves union members marching and carrying antimanagement signs at the employer’s plant or work site Strikes • Employee walkouts; one of the most effective weapons of labor unions Boycott • An attempt to keep people from purchasing the products of a company 10-33 Management Tactics Lockout Strikebreakers • Management’s version of a strike, wherein a work site is closed so that employees cannot go to work • People hired by management to replace striking employees; called “scabs” by striking union members 10-34 Managing Unionized Employees If labor and management still fail to reach an agreement, they have three forms of outside resolution: Conciliation • Happens when a third party is brought in to keep the two sides talking Mediation • The third party’s role is to suggest or propose a solution to the problem Arbitration • The settlement of a dispute by a third party whose solution is legally binding and enforceable • Compulsory arbitration is when the government requests arbitration to end a strike 10-35 Goodbye Human Resources? Some companies are reinventing their Human Resources department by getting rid of it, or at least, delegating many HR duties to frontline or department managers The hiring and recruiting process that traditionally occurs in the Human Resources department can sometimes misalign with the needs of the department where the new hire will work Delegating these processes to the manager of the department leads to better placement of employees that are aligned with the needs and environment of the department It also gives the management more of an active role in the leadership of his department, as he is responsible for the new and existing employees SOURCE: Todd Henneman. “Is HR At Its Breaking Point?”. www.workforce.com. March 22, 2013. http://www.workforce.com/articles/is-hr-at-itsbreaking-point. (accessed October 1, 2013) 10-36 Importance of Workforce Diversity Diversity • The participation of different ages, genders, races, ethnicities, nationalities and abilities in the workplace Understanding diversity means recognizing and accepting differences and valuing unique perspectives Primary characteristics are inborn and unchangeable Secondary characteristics can be changed Managers must remember that each person is defined by the interrelationships of all characteristics and they must consider the complete person 10-37 Importance of Workforce Diversity The U.S. workforce is becoming increasingly diverse Companies are improving their HRM programs to recruit, develop and retain more diverse employees to better serve their diverse customers The Census Bureau predicted that by 2042, minorities will make up more than 50% of the U.S. population Effectively managing diversity in the workforce involves cultivating and valuing its benefits and minimizing its problems 10-38 Importance of Workforce Diversity Some of the benefits to workforce diversity: More productive use of a company’s human resources Reduced conflict among employees as they learn to respect each other’s differences More productive working relationships Increased commitment to organizational goals Increased innovation and creativity Increased ability to serve the needs of diverse customers 10-39 Importance of Workforce Diversity Many companies strive to improve their working environment through • Legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, Affirmative identifying areas where women and Action minorities are underrepresented, and Programs establishing specific hiring and promotion goals, with target dates, for addressing the discrepancy 10-40 Discussion ? ? What activities are involved in acquiring and maintaining the appropriate level of qualified human resources? Name the stages of the selection process. What is the significance of a performance appraisal? How do managers appraise employees?