Download Chapter 10 Attracting and Retaining the Best Employees

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Chapter 9 Attracting and Retaining the Best Employees
1. Describe the major components of human resources management
Although some jobs can be automated, many cannot. In fact, the unique and
valuable contributions that people make to an organization also make them a firm’s most
important asset. It is the responsibility of human resources management, or HRM, to
perform all the activities involved in acquiring, maintaining, and developing an
organization’s human resources. Each of these three functions—acquiring, maintaining,
and developing—comprise several activities. Within the acquiring function, the five
HRM activities include (1) human resources planning, to determine the firm’s future
needs; (2) job analysis, to determine the nature of the jobs to be filled; (3) recruiting, to
attract people to apply for positions; (4) selection, to choose and hire the best applicants,
and (5) orientation, to acquaint new employees with the firm. The second function,
maintaining, involves three activities: (1) employee relations, to increase job satisfaction;
(2) compensation, to reward effort through monetary payment, and (3) benefits, to
provide rewards to ensure well-being. The third function, developing, is concerned with
training and development and performance appraisals. In general, HRM responsibilities
and activities are shared among line managers and HRM specialists. (LO 1 ends)
2. Identify the steps in human resources planning
In order to perform all these activities, an organization has to have a plan. Human
resources planning is the development of strategies to meet a firm’s future human
resources needs. This starts with the organization’s overall strategic plan. From this plan,
human resources planners can forecast a firm’s future demand. For example, the strategic
plan indicates when and where new products or new ventures are expected.
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The next step is to determine whether the needed human resources will be
available. These human resources may be current employees or people that will have to
be found outside the organization. Two useful techniques for forecasting human
resources needs are the replacement chart and the skills inventory. A replacement chart is
a list of key personnel and their possible replacements within the firm. The skills
inventory is a computerized data bank containing information on the skills and
experience of all present employees.
Finally, planners have to take steps to match supply with demand. If demand is
expected to exceed supply, HRM planners will have to engage in recruitment efforts. If
supply is expected to exceed demand, however, some employees may be laid off or fired,
neither of which is pleasant or desirable. Attrition, the normal reduction in the work force
when employees leave a firm, may help reduce supply, as may early retirement options.
(LO 2 ends)
3. Describe cultural diversity and understand some of the challenges and
opportunities associated with it
Organizations today are realizing that having a diverse work force can be a
competitive advantage. It also forces managers to learn to supervise and motivate people
with a broader range of values. Cultural or workplace diversity refers to the differences
among people in a work force due to race, ethnicity, and gender. Diversity training can
help managers and employees deal with both the challenges as well as the advantages of
a varied work force. People from different backgrounds can bring a wide range of
strengths to a firm. (LO 3 ends)
4. Explain the objectives and uses of job analysis
In order to find the best person to do a particular job, we need to know the exact
nature of that job. Job analysis is a systematic procedure for studying jobs to determine
their various elements and requirements. A job analysis for a particular position generally
consists of two parts. The first is a job description, which is a list of the elements that
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make up a particular job. A job description includes the duties that must be performed,
the working conditions, the responsibilities, and the tools and equipment that must be
used. The second part of job analysis is a job specification, which is a list of the
qualifications required to perform a particular job. This includes the skills, abilities,
education, and experience that are expected. The job analysis is thus used not only to
recruit and select new employees, but also to evaluate and compensate them. (LO 4 ends)
5. Describe the process of recruiting, employee selection, and orientation
When an organization needs to fill certain positions, human resources needs to
find suitable candidates and match those candidates to the job. These activities are
commonly called recruiting, selection, and, once the right person has been found and
matched, orientation. Let’s start by discussing recruiting. Recruiting is the process of
attracting qualified job applicants. Recruiters may look outside the firm, inside the firm,
or both. The attempt to attract job applicants from outside the organization is called
external recruiting. A firm may use newspaper or Internet advertising, job fairs in union
halls or on college campuses, or employment agencies. Different types of jobs may
require different media to be most successful. External recruiting enables a firm to bring
in people with new perspectives and varied business backgrounds, but it is often
expensive and can provoke resentment among current staff. In contrast, internal
recruiting is used to consider present employees as applicants for available positions.
Internal candidates may be promoted to new positions or transferred to equivalent
positions. Promoting from within can be very motivating for employees, and many firms
use a job posting system to alert current employees to new openings within the
organization.
After going through the recruiting process, human resources personnel move on to
the selection phase, which is the process of gathering information about applicants for a
position and then using that information to choose the most appropriate applicant.
Matching the qualifications of the applicants to the requirements of the job is critical. So
how do HRM personnel find this information? There are several sources, including (1)
employment applications, which include factual information about an applicant’s
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education and personal history; (2) employment tests, which focus on aptitudes, skills,
and knowledge basic to the job; (3) interviews, which provide additional information by
allowing the interviewer to probe more deeply into areas of importance; (4) references,
which provide names of people who would speak in favor of a candidate; and (5)
assessment centers, which are generally used to select current employees for promotion
to higher-level management positions.
After the recruiting and selection processes are completed and the applicant
accepts the job offer, the new worker goes through an orientation program. Orientation is
the process of acquainting new employees with an organization. Orientation topics may
include career paths within the firm as well as the location of the company cafeteria. The
process may take as little as a half hour or it may last several days. (LO 5 ends)
6. Discuss the primary elements of employee compensation and benefits
Another major role that human resources personnel play is in the area of
compensation and benefits. Compensation is the payment employees receive in return for
their labor. Compensation is just one part of a larger area called the compensation system,
which includes the policies and strategies that determine employee compensation. The
compensation system addresses such issues as ways to keep labor costs low while still
providing for employee needs. It includes areas such as wage level, wage structure, and
individual wages. Wage levels mean comparing the wages in similar companies to
determine the average. By conducting a wage survey, a firm collects data on the
prevailing wage rates within an industry or a geographic area. The next step is to
determine the wage structure, or the relative levels of pay throughout the organization. In
other words, should a manager be paid more than a secretary? Less than an accountant?
The same as an engineer? To answer these questions, a job evaluation is often used. A job
evaluation is the process of determining the relative worth of the various jobs within a
firm. This may be accomplished by a simple ranking, or more commonly by assigning
point values to various responsibilities and requirements. Finally, individual wages are
the specific payments made to each employee. These payments are typically based on
experience and qualifications.
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The issue of comparable worth is another aspect that HRM must consider.
Comparable worth is a concept that seeks equal compensation for jobs requiring about
the same level of education, training, and skills.
A final decision on compensation revolves around the form in which it is paid.
These forms include an hourly wage, which is a specific amount of money paid for each
hour of work; a salary, a specific amount of money paid for an employee’s work during a
set calendar period, regardless of the actual number of hours worked; a commission, a
payment that is a percentage of revenue; or an incentive payment, which is a payment in
addition to wages, salary, or commissions. Incentive payments may be paid to all
employees, if the firm has an excellent year, or just to those employees who exceed
specific goals. This is sometimes called gain sharing. Finally, some organizations may
reward outstanding workers individually through a pay-for-performance approach called
merit pay.
Compensation levels are generally reviewed annually. Some firms provide a
certain percentage increase that is added on to an employee’s base pay for each pay
period for the next year. Other firms offer a lump-sump salary increase, where employees
receive an entire pay raise in one lump sum, while their regular pay stays the same as the
previous year. A final compensation issue is profit sharing, the distribution of a
percentage of the firm’s profit among its employees. The goal is to motivate employees
to work effectively by giving them a stake in the company’s financial success.
The other part of compensation is called employee benefits. An employee benefit
is a reward in addition to regular compensation that is provided indirectly to employees.
Typical employee benefits include pay for time not worked, insurance packages, pension
and retirement programs, workers’ compensation insurance, unemployment insurance,
and Social Security. Some organizations may also offer tuition reimbursement, childcare,
subsidized meals, and recreational facilities. Employee benefits are about 28% of an
employee’s total compensation package. In an effort to accommodate employees, many
firms offer flexible benefit plans, whereby an employee receives a predetermined amount
of benefit dollars to spend on a package of benefits he or she has selected to meet
personal needs. (LO 6 ends)
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7. Explain the purpose and techniques of employee training, development, and
performance appraisal
After acquiring and maintaining employees, it is the function of HRM to deal with
training and development as well. Both are aimed at improving employees’ skills and
abilities, but employee training is the process of teaching operations and technical
employees how to do their present jobs more effectively and efficiently. Management
development, on the other hand, is the process of preparing managers and other
professionals to assume increased responsibility in both present and future positions.
Thus, the difference is who is being taught and the purpose of the teaching. Companies
that want to stay competitive make a huge commitment to training and development.
Training programs generally have three parts: analysis of needs, determination of training
and development methods, and creation of a system to evaluate the program’s
effectiveness. Training and development are expensive, and some firms use online
training as well as more traditional face-to-face training strategies to stretch their training
dollars.
The final component of the HRM function is performance appraisal, or the
evaluation of employees’ current and potential levels of performance to allow managers
to make objective human resources decisions. In order to best evaluate, firms may use
objective methods, such as units of output, sales volume, or some other measurable
factor; or judgmental methods, such as employee ranking or rating scales. Judgmental
methods are used much more often. It is important that managers not overemphasize or
underemphasize certain parts of the overall evaluation instrument. Results of the
evaluation should be discussed with the employee during a performance feedback
interview. These interviews may take a tell-and-sell approach, a tell-and-listen approach,
or a problem-solving approach. Another popular appraisal approach is the 360-degree
evaluation. (LO 7 ends)
8. Outline the major legislation affecting human resources management
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Because the very nature of human resources deals with people, many laws have
been passed, mainly to protect the rights of employees, to promote job safety, and to
eliminate discrimination. A sampling of these laws is as follows. The National Labor
Relations Act and the Labor-Management Relations Act deal with labor unions. The Fair
Labor Standards Act established minimum wages and overtime pay rate. The Equal Pay
Act focuses on equal pay for men and women for equal jobs; and the Civil Rights Act
prohibits discrimination on the basis or sex, race, color, religion, or national origin. The
Age Discrimination in Employment Act prohibits discrimination on the basis of age. The
Occupational Safety and Health Act is concerned with unsafe working conditions. The
Employee Retirement Income Security Act protects the retirement rights of employees.
Affirmative Action is a series of executive orders that encourage the hiring of minorities.
Finally, the Americans with Disabilities Act prohibits discrimination against qualified
individuals with disabilities. (LO 8 ends)
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