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CHAPTER TWELVE EFFECTIVE MANAGEMENT OF HUMAN
RESOURCES
OVERVIEW OF CHAPTER
One of the most important resources in all organizations is its human resources – the people
involved in the production and distribution of goods and services. Human resources include
all members of an organization, ranging from top managers to entry-level employees. This
chapter examines how managers can tailor their human resources management system to their
organization’s strategy and structure. The major components of the human resources
management are discussed: recruitment and selection, training and development, performance
appraisal, pay and benefits, and labor relations. The central role that human resources
management plays in creating a high performing organization is emphasized.
LEARNING OBJECTIVES
1. Explain why strategic human resources management can help an organization gain a
competitive advantage.
2. Describe the steps managers take to recruit and select organizational members.
3. Discuss the training and development options that ensure that organizational members
can effectively perform their jobs.
4. Explain why performance appraisal and feedback is such a crucial activity.
5. Explain the issues managers face in determining levels of pay and benefits.
MANAGEMENT SNAPSHOT: ELECTRONIC RECRUITING AT MONSTER.COM AND
JOBLINE INTERNATIONAL
Monster.com is the leading online recruiting company with over 30 percent of the market. Jeff
Taylor founded it in 1994. As founder and CEO of a brick-and-mortar recruiting agency,
Taylor became aware of the difficult time his high-tech clients were having finding the right
people to fill their open positions through the traditional sources. He came up with a solution
to that problem – an online job board – and the rest is history.
On the Monster.com website, those seeking jobs in other countries can click on the Monster
global gateway which directs them to Jobline International, Europe’s largest electronic
recruiting site. Clearly, web-based recruiting companies such as Monster.com and Jobline
International have broadly expanded the external recruiting options for managers.
1. Why do managers engage in external recruiting with companies like Monster.com?
The advantages of external recruiting include having access to a potentially large
applicant pool, being able to attract people who have the skills and knowledge desired,
and being able to bring in newcomers who may have a fresh approach to problems.
Monster.com can quickly and easily provide a company with access to the resumes of
over 10 million job seekers.
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2. Before the recruiting process begins, in what ways must managers prepare for it?
Before actually recruiting employees, managers need to engage in human resources
planning. This includes making demand forecasts and supply forecasts, as well as job
analysis. Demand forecasts estimate the qualifications and numbers of employees an
organization will need, given its goals and strategies. Supply forecasts estimate the
availability and qualifications of current employees and the supply of qualified workers in
the external labor market. Job analysis entail developing job description and job
specification for each position within the company.
LECTURE OUTLINE
I.
STRATEGIC HUMAN RESOURCES MANAGEMENT
Human resources management (HRM) includes all of the activities managers engage in to
attract and retain employees and to ensure that those employees perform at a high level. An
organization’s human resources management system has five major components: recruitment
and selection, training and development, performance appraisal and feedback, pay and
benefits, and labor relations.

Strategic human resources management is the process by which managers design the
components of a HRM system to be consistent with each other, with other elements of the
organizational architecture, and with the organization’s strategies and goals.

As part of strategic human resources management, some managers have adopted “Six
Sigma” quality improvement plans. These plans ensure that its organization’s products
and services are as free of error or defects as possible through a variety of human
resources-related initiatives.
.
An Overview of the Components of HRM

Managers use recruitment and selection to attract and hire new employees who have the
abilities, skills, and experiences that will help an organization to achieve its goals. Careful
attention to the selection process can contribute to a company’s competitive advantage.

After recruiting and selecting employees, managers use training and development to
ensure that organizational members develop needed skills and abilities. Training and
development is an ongoing process because of changes in technology, the environment,
and organizational goals and strategies.
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
Performance appraisal and feedback serve two purposes in HRM. Performance appraisal
serves as a control system that can provide managers with the information they need to
make good human resources decisions. It also allows managers to regularly evaluate their
subordinates’ performance in order to provide them with valuable information about their
strengths and weaknesses.

On the basis of performance appraisals, managers distribute pay to employees. By
rewarding high-performing organizational members, managers increase the likelihood that
these human resources will continue their high level of performance.

Labor relations encompass the steps that managers may take to develop and maintain good
working relationships with the labor unions that may represent their employees’ interests.

Managers must ensure that all five of these components fit together and complement their
company’s structure and control systems. Each of the five components of HRM influences
the others.
The Legal Environment of HRM
Effectively managing human resources is a complex task for managers. The local, state, and
national laws and regulations that organizations must follow add to the complexity.

The U.S. government’s commitment to equal employment opportunity (EEO) has resulted
in a number of laws that managers must follow. The goal of EEO is to ensure that all
citizens have an equal opportunity to obtain employment regardless of their sex, age, race,
country of origin, religion, color, age, or disabilities.

Other laws, such as the Occupational Safety and Health Act of 1970, require managers to
ensure that employees’ health is protected from workplace hazards and safety standards
are met.
Ethics in Action: Don’t Make Promises You May Not be Able to Keep
During the late 1990’s, workers flocked to dot-coms with promises of getting rich quick,
working in a vibrant and stimulating environment, and being able to cash in on lucrative stock
options. By the first quarter of 2001, however, over 50,000 dot-com jobs were eliminated, the
majority of them in the San Francisco Bay area. Some laid-off employees think it was unfair
for dot-com owners and managers to make lofty promises that they were unable to keep and
are seeking legal redress. Some of these laid-off workers have brought their cases before the
U.S. Labor Department for investigation, while others are seeking redress through WARN, a
federal law stipulating that organizations with more than 100 employees are required to
provide 60 days notice when undertaking a large layoff.
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II.
RECRUITMENT AND SELECTION
Recruitment includes all the activities that managers engage in to develop a pool of qualified
candidates for open positions. Selection is the process by which managers determine the
relative qualifications of job applicants. Before actually recruiting and selecting employees,
managers need to engage in human resources planning and job analysis.
Human Resources Planning
Human resources planning includes all the activities managers engage in to forecast their
current and future needs for human resources.

Current human resources are the employees an organization needs today. Future human
resources are the employees the organization will need at some later date.

Managers must make both demand forecasts and supply forecasts. Demand forecasts
estimate the qualifications and numbers of employees an organization will need, given its
goals and strategies. Supply forecasts estimate the availability and qualifications of current
employees and the supply of qualified workers in the external labor market.

Managers sometimes decide to outsource to fill some HR needs. Outsourcing is when
managers contract with people who are not members of their organization to provide
goods and services.

Managers sometimes outsource because it provides them with increased flexibility and
allows them to use human resources at a lower cost.

Outsourcing does have disadvantages. Managers may lose some control over the quality
of goods and services. Individuals may have less knowledge of organizational practices
and goals and less commitment to the organization. Also, unions resist outsourcing
because it has the potential to eliminate some members’ jobs.
Job Analysis
Job analysis is the process of identifying: 1) the tasks, duties, and responsibilities that make
up a job (the job description), and 2) the knowledge, skills, and abilities needed to perform the
job (the job specifications). A job analysis needs to be done for each job in the organization.
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External and Internal Recruitment
Recruitment is what managers do to develop a pool of qualified candidates for open positions.

When managers recruit externally, they look outside the organization for people who have
not worked for the organization previously. There are many different ways that managers
can recruit externally.

The advantages of external recruiting are having access to a potentially large applicant
pool, being able to attract people who have the skills and knowledge desired, and being
able to bring in newcomers who may have a fresh approach to problems.

Disadvantages include the high cost of external recruitment, the external recruit’s
lack of knowledge about the inner workings of the organization, and the uncertainty as to
whether they will actually be good performers.

When recruiting is internal, managers turn to existing employees to fill open positions.
Those internal employees are seeking either a lateral move, which is a job change that
entails no major changes in responsibility or authority levels, or a promotion.

Internal recruiting has several advantages. Internal applicants are already familiar with
the organization, managers already have information about candidates’ skills and actual
behavior, and it can help boost levels of employee motivation. For those who may not be
ready for a promotion, a lateral move can alleviate boredom. Also, internal recruiting is
normally less time-consuming and expensive.

Disadvantages of internal recruiting include a pool of candidates that may be limited, a
tendency among those candidates to be “set” in the organization’s ways, and a lack of
suitable internal candidates. Managers may rely on external recruiting to bring new ideas
and approaches into the organization.
The Selection Process
Managers need to find out whether each applicant is qualified for the position and whether he
or she is likely to be a good performer. If multiple candidates meet these two conditions,
managers must determine which are likely to be better performers than the others. They have
several selection tools to help them sort out the relative qualifications and appraise their
potential to be good performers.
Background Information
To aid in the selection process, managers obtain background information from resumes and
job applications. This information can be helpful both to screen out applicants who are
lacking key qualifications and to determine which qualified applicants are more promising
than others.
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Interviews
Almost all organizations use interviews during the selection process.

In a structured interview, managers ask each applicant the same standard questions.

Situational interview questions present interviewees with a scenario that they would likely
encounter on the job and ask them to indicate how they would handle it.

An unstructured interview proceeds more like an ordinary conversation. Instead of asking
fixed questions, the interviewer asks probing questions to determine what the candidate is
like.

Structured interviews are superior to unstructured interviews because they are more likely
to yield information that will help identify qualified candidates, and they are less
subjective.
Paper-and-Pencil Tests
Two kinds of paper-and-pencil tests are used for selection purposes.

Ability tests assess the extent to which applicants possess skills necessary for job
performance, such as verbal comprehension.

Personality tests measure personality traits and characteristics relevant to job
performance. Use of personality tests for hiring is controversial.

Before using any paper-and-pencil tests, managers should have sound evidence that the
tests are actually good predictors of performance.
Physical Abilities Tests
For jobs that require physical abilities, physical ability tests can measure strength and stamina.
Performance Tests
Performance tests measure job applicants’ performance on actual job tasks. Assessment
centers take performance tests a step further by having applicants participate in a variety of
activities over a few days. Throughout the process, current managers observe the candidates’
behavior and measure performance.
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References
Applicants may be required to provide references from former employers or other sources.
These individuals are asked to provide candid information about the applicant.

References are often used at the end of the selection process to confirm a decision to hire.

Several recent lawsuits filed by applicants have caused managers to be increasingly wary
of providing any kind of negative information in a reference, even if it is accurate.
Ethics in Action: Withholding Negative Information and the Importance of Background
Checks
Because some companies have been sued for giving negative references, employers are
worried about giving out negative information about former employees, even if it is true.
Withholding negative information haunts many managers, however, because lives may be at
stake. Examples include information about a pilot that had been found unfit to fly by his
previous employer and a truck driver who had been fired by his previous employer for
drinking on the job.
Realizing this dilemma, some legislators have taken steps to protect employers who give
accurate, negative information in references. This underscores how important it is for
managers to thoroughly check the background of all prospective employees. A number of
online sources for are now available to assist managers in this area.
The Importance of Reliability and Validity
Whatever the selection tools a manager uses, they need to be both reliable and valid.

Reliability is the degree to which a tool or test measures the same thing each time it is
administered. Scores on a selection test should be very similar if the same person is
assessed with the same test on two different days. The reliability of interviews can be
increased if two or more different interviewers interview the same candidate.

Validity is the degree to which a tool or test measures what it claims to measure.

Managers have an ethical and legal obligation to use reliable and valid selection tools.
However, reliability and validity are a matter of degree, rather than all-or-nothing
characteristics.
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III.
TRAINING AND DEVELOPMENT
Training and development helps to ensure that organizational members have the knowledge
and skills needed to perform jobs effectively, take on new responsibilities, and adapt to
changing conditions.

Training primarily focuses on teaching organizational members to perform their current
jobs and helping them acquire the knowledge and skills they need to be effective
performers.

Development focuses on building the knowledge and skills of organizational members so
that they will be prepared to take on new responsibilities.

Training tends to be used more often at lower levels in the organization. Development
tends to be used more frequently with professionals and managers.
Types of Training
There are two types of training: classroom instruction and on-the-job training.

Through classroom instruction, employees acquire knowledge and skills in a classroom
setting. This may take place within the organization or outside it.

Classroom instruction frequently includes use of videos and role-plays in addition to
written materials, lectures, and group discussions.

Using simulations, during which key aspects of the work situation and job tasks are
duplicated as closely as possible in an artificial setting, can be part of classroom
instruction.

In on-the-job training, learning occurs in the work setting as employees perform their
jobs. Co-workers or supervisors can provide on-the-job training, or it can take place as
jobholders gain experience.
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Focus on Diversity: Action-Oriented Training Solves Business Problems and Fosters
Diversity
Siemens, the huge German conglomerate that competes with General Electric, uses actionoriented training. Employees are trained by working on real business problems or project
teams, which allows them to develop technical skills, teamwork skills, and extend their
communication networks. Team makeup is diverse at Siemens University, which is
responsible for training the company’s analysts and engineers. They are often composed of
members who may have worked in different divisions or different countries. In addition to HR
development and problem solving benefits, this training has financial benefits for Siemens.
The solutions that teams come up with as part of their training typically save the company
more than $10 million per year.
Types of Development
Although both classroom instruction and on-the-job training can be used for development
purposes as well as training, development often includes additional activities such as varied
work experiences and formal education.

Top managers need to understand and have expertise in different functions, products, and
markets. To develop managers who will have this expertise, employees with high
potential are given a varied job experiences. An overseas work assignment is often
included in this type of development.

Many large corporations reimburse employees for tuition expenses for taking college
courses because it is an effective way to develop employees for more challenging
positions.

Whenever training and development takes place off the job or in a classroom setting, it is
vital for managers to promote transfer of the knowledge and skills to the actual work
situation.
IV.
PERFORMANCE APPRAISAL AND FEEDBACK
Performance appraisal is the evaluation of employees’ job performance and contributions to
the organization. Performance feedback is the process through which managers share
performance appraisal information with their subordinates. Performance appraisal must first
take place first, in order for performance feedback to occur.
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Performance appraisal and feedback contribute to effective management in several ways.




It gives managers information on which to base human resources decisions.
It also can help managers determine which workers are candidates for training and
development.
It encourages high levels of employee motivation and performance.
It can provide both good and poor performers with insight into their strengths and
weaknesses.
Types of Performance Appraisal
Performance appraisal focuses on the evaluation of traits, behaviors, and results.

When trait appraisals are used, mangers assess subordinates on personal characteristics
that are relevant to job performance, such as skills, abilities, or personality.

The disadvantages of trait appraisals are: 1) possessing a certain trait does not ensure that
the characteristic will actually be used on the job and result in high performance, 2)
because traits do not show a direct association with performance, workers and courts may
view them as unfair, and they often do not enable managers to provide employees with
feedback they can use.

If how workers behave on the job is important, then behavior appraisals are especially
useful. Behavior appraisals have the advantage of providing employees with clear
information about what they are doing right and wrong and how they can improve their
performance.

With results appraisals, managers appraise performance in terms of results or the actual
outcomes of work behaviors.

The information upon which appraisals are based is either objective or subjective.
Objective appraisals are based on facts and are likely to be numerical. Subjective
appraisals are based on managers’ perceptions of traits, behaviors, or results.

Objective appraisals are often used when measuring results because results tend to be
easier to quantify than traits or behaviors. However, when how workers perform their jobs
is important, subjective behavior appraisals are more appropriate.
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Who Appraises Performance?
Supervisors are the most common appraisers of performance. Performance appraisal is an
important part of most managers’ job duties. However, appraisals by managers can be
augmented by appraisals from other sources.

Self-appraisals involve an employee assessing his or her own performance. The selfappraisal is a supplement to the manager’s appraisal.

Peer appraisals are provided by an employee’s co-workers and can be motivational to
employees who work in groups or teams. Many companies are now asking subordinates to
appraise their managers’ performance.

Sometimes customers provide assessments of employee performance in terms of
responsiveness to customers and quality of service.

Although appraisals from each of these sources can be useful, there are drawbacks.
360-Degree Performance Appraisals
In a 360-degree appraisal, a manager’s performance is appraised by a variety of people in a
position to evaluate the manager’s performance. The manager then receives feedback based
on evaluations from these sources.
For the following reasons, this kind of appraisal is not always clear-cut:

Subordinates may try to get back at their boss by giving he or she a negative appraisal.

Peers may be reluctant to provide an accurate appraisal of a coworker.

The evaluators must be knowledgeable about the performance dimensions being assessed.

For 360-degree appraisals to be effective, there has to be trust throughout the organization.
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Effective Performance Feedback
In order for the performance appraisal and feedback to encourage and motivate high
performance, managers must provide their subordinates with performance feedback.

Managers can use both formal and informal appraisals. Formal appraisals are conducted at
set times during the year and are based on performance dimensions and measures that
have been specified in advance.

An integral part of a formal appraisal is a meeting between the manager and the
subordinate in which the subordinate is given feedback on performance.

Because they realize the value of performance appraisals, large corporations have
committed substantial resources to updating their performance appraisal systems and
teaching employees how to correctly use them.

Because employees often want feedback on a more frequent basis, many companies
supplement formal performance appraisal with frequent informal appraisals, during which
managers and their subordinates meet informally to discuss ongoing progress.
Guidelines for effectively giving performance feedback include:
 Be specific and focus on behaviors or outcomes that are correctable and within a worker’s
ability to improve.
 Approach performance appraisal as an exercise in problem solving and solution finding,
not criticizing.
 Express confidence in a subordinate’s ability to improve.
 Provide performance feedback both formally and informally.
 Praise instances of high performance and areas of a job in which a worker excels.
 Avoid personal criticisms and treat subordinates with respect.
 Agree to a timetable for performance improvements.
PAY AND BENEFITS
Pay includes employees’ base salaries, pay raises, and bonuses. It is determined by a number
of factors, including characteristics of the organization and of the job and levels of
performance. Employee benefits are based on membership in an organization. They include
sick days, vacation days, medical and life insurance.
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Pay Level
Pay level is the relative position of an organization’s pay incentives in comparison with those
of other organizations in the same industry employing similar kinds or workers.

Managers must decide whether they want to offer relatively high, average, or low wages.
High wages help ensure that the organization will be able to recruit and retain high
performers, but high wages also raise costs.

In determining pay levels, managers should take into account their organization’s strategy.
Pay Structure
Managers have to establish a pay structure for the different jobs in the organization.
Pay structure clusters jobs into categories reflecting their relative importance to the
organization and its goals, levels of skill required, and other characteristics.

Pay ranges are established for each job category. An individual employees’ pay within job
categories is then determined by factors such as performance, seniority, and skill levels.

Large U.S. corporations tend to pay their top managers higher salaries than do European
or Japanese counterparts. There also is a much greater pay differential between employees
at the bottom and those high in the hierarchy in U.S. companies.

Concerns have ranged over whether it is equitable or fair for CEOs of large companies in
the U.S. to make huge sums when their companies are restructuring or laying off a good
portion of their workforces.
Benefits
Organizations are legally required to provide mandated benefits to their employees, including
worker’s compensation, Social Security, and unemployment insurance.

Workers’ compensation provides employees with financial assistance if they are unable
to work because of a work-related injury or illness.

Social Security provides financial assistance to retirees and disabled former employees.

Unemployment insurance provides financial assistance to workers who lose their jobs
through no fault of their own.

Other benefits such as life insurance, pension plans, and flexible working hours are
provided at the option of employers.
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
VI.
In some organizations, top managers decide which benefits best suit the employees. Other
organizations offer cafeteria-style benefit plans that let employees themselves choose the
plan they want.
LABOR RELATIONS
Labor relations are the activities that managers engage in to ensure that they have effective
working relationships with labor unions that represent their employees’ interests.

Although the U.S. government has created and enforced laws regulating employment,
some workers believe that a union will help ensure that their interests are fairly
represented in the organization.

In 1938, the government passed the Fair Labor Standards Act, which prohibited child
labor and made provision for minimum wages, overtime pay, and maximum working
hours.

In 1963, the Equal Pay Act mandated that men and women performing equal work
receive equal pay.

In 1970, the Occupational Safety and Health Act mandated procedures for managers to
follow to ensure workplace safety.
Unions
Unions exist to represent workers’ interest in organizations.

The U.S. Congress passed the National Labor Relations Act of 1935 that made it legal
for workers to organize into unions to protect their rights and interests.

The Act also established the National Labor Relations Board to oversee union activity.
The NLRB conducts certification and decertification (voting to get rid of the union)
elections.

Employees might vote to have a union for a variety of reasons. They may feel that their
wages and working conditions need improvement or that managers are not treating them
with respect, or they may be dissatisfied with management and find it difficult to
communicate their concerns.

Some workers are reluctant to join unions for a variety of reasons. There is a perception
that union leaders are corrupt, while others feel that belonging to a union might not do
them much good.
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
Although unions can be a positive force in organizations, sometimes they can be a
negative force, impairing organizational effectiveness.

The percentage of U.S. workers represented by unions today is less than half of the
percentage in the 1950s. Although union influence in manufacturing and heavy industry
has been on the decline, they have recently made inroads in other segments of the
workforce.

Union membership and leadership is also becoming increasingly diverse.
Collective Bargaining
Collective bargaining is negotiation between labor unions and managers to resolve conflicts
and disputes about important issues such as working hours, wages, benefits, and job security.

Once an agreement that union members support has been reached, union leaders and
managers sign a contract spelling out its terms of that agreement. This contract is called a
collective bargaining agreement.

Sometimes this agreement is reached with the help of a neutral third party, called a
mediator.

Before sitting down with management to negotiate, union members sometimes go on
strike to drive home their concerns to management.
VII.
SUMMARY AND REVIEW
LECTURE ENHANCERS
Lecture Enhancer 12.1
THE CLERICAL EVOLUTION
We think of the clerical field as being dominated by women, but in its early years the reverse
was true. A century ago, offices were off-limits to women. Stenographers and secretaries
were always men. Some famous former secretaries include Mark Twain, Lyndon Johnson,
and Carl Sandburg.
Changes began around 1870 when there were more office jobs than men to fill them. By
1900, a quarter of all clerical workers in the United States were women. During the World
War I, the percentage rose as thousands of male office workers left to fight the war and
women took over their jobs.
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Women encountered strong opposition from their male co-workers, who felt that they were
losing their jobs to women who would accept much lower salaries and worse working
conditions. One 1909 survey found that only about half of the offices surveyed had separate
restrooms for men and women.
Men's working conditions weren't much better. As secretary to the novelist Sinclair Lewis,
writer John Hersey took dictation, chauffeured his boss around, and bought him chocolates.
Novelist John O'Hara worked as a secretary for columnist Heywood Broun in 1930 for $35 a
week. He did, however, receive free lunch at Broun's penthouse apartment.
Lecture Enhancer 12.2
MEMORABLE JOB INTERVIEWS
The world's largest temporary personnel service for accounting, bookkeeping and information
systems, Accountemps, recently conducted a nationwide survey of executives about the most
unusual job interview they ever conducted. Some of the results:
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“The applicant apologized for being late, said he accidentally locked his clothes in his
closet.”
“The applicant walked in and inquired why he was here.”
“Shortly after sitting down, she brought out a line of cosmetics and started a strong sales
pitch.”
“The applicant brought in his five children and cat.”
“The applicant said if I hired him, I'd soon learn to regret it.”
“The applicant arrived with a snake around her neck and said she took her pet
everywhere.”
“When asked about loyalty, the applicant showed a tattoo of his girlfriend's name.”
Lecture Enhancer 12.3
THE COMPLICATED LEGACY OF HENRY FORD
Henry Ford founded the Ford Motor Company in 1903, producing an inexpensive, all-purpose
car, the Model T. His company grew rapidly after the Model T became an instant success. The
close relationship he enjoyed with his skilled workers deteriorated as he installed the
assembly line and hired unskilled workers. In 1913, dissatisfaction among workers resulted in
worker turnover of over 380 percent in one year alone. A small number of workers joined the
International Workers of the World, which served as an outlet for the workers' hostility.
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On January 14, 1914, Henry Ford shocked the industry by raising the average wage for his
workers from $2.34 to $5.00 per day. Although this, overnight, made Ford known as the
defender of the worker, Ford's motives were more complex. He believed that the more money
he paid to workers, the more of his cars would be purchased. Although he paid his workers
attractive salaries when they worked, he felt little responsibility for their continued
employment and laid them off when necessary.
During this early period, Ford instituted other worker benefits that were revolutionary. He
created a Safety and Health Department in 1914 and opened the Henry Ford Trade School in
1916, so that boys could learn a trade while attending school. Another farsighted policy was
the hiring of partially handicapped workers, ex-criminals, epileptics, and former mental
patients. In 1934, approximately 34 percent of Ford workers were physically handicapped.
Also instituted was the Ford Sociology Department, which counseled workers and
management alike. It gave workers advice on how to budget money and served as a protection
for them when unscrupulous salesmen descended on them after they had received their
paychecks. The Sociology Department also conducted a Language School to teach foreignborn workers the English language. Labor appreciated his reforms, and supported Ford in his
unsuccessful campaign for the U.S. Senate in 1918. Many experts feel that Ford's reforms
were the only labor reforms in the early part of the century.
But Ford was inconsistent in his dealings with his workers. During the 1920s, Ford instituted
a cost-saving campaign. The assembly line was increased in speed so that workers performed
their jobs in less time. Discipline was strict and workers were driven to work as hard as
possible. Even the Sociology Department was disbanded. The Ford Service Police, a 3,000person group, was created to enforce the speed-up of work and other discipline measures.
Workers who were involved in union activities were often physically assaulted.
Ford, who was once hailed as the workers' hero, was now viewed as a reactionary. During the
Great Depression, layoffs in all industries resulted in massive unemployment. In March 1932,
the Ford Hunger March took place. Several hundred workers marched on Ford, demanding a
six-hour work day, two daily rest periods, and an unemployment bonus of $50 per man. The
marchers were greeted by gunfire that resulted in four deaths. Henry Ford steadfastly
maintained a hostile attitude toward any union activities.
The Wagner Act was passed in 1935, establishing a national policy of protecting the rights of
workers to organize and collectively bargain. Under the protection of the Wagner Act, the
United Automobile Workers began a systematic campaign to organize the automobile
industry and bb 1937 they had succeeded.
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In May 1937, the UAW began its campaign to unionize Ford. Walter Reuther headed the
campaign and planned to distribute circulars to Ford workers on their way home. The union
members stationed themselves on a bridge over a road leading to the Ford Rouge River plant.
Ford Service Police ordered them to leave, and when the union supporters started to comply,
the police attacked them. The Battle of the Bridge ended with Reuther and several others,
including women, requiring hospitalization.
Even though Ford prevented unionization one more time, time was running out. When the
UAW began another organizing effort in 1941, they succeeded. After the head of the Ford
Service Police fired eight Rouge River workers for union activities, the workers
spontaneously walked off their jobs. They surrounded the plant and refused to let food and
water be sent in to the Ford Service Police in the plant. On April 11, 1941 Henry Ford agreed
to recognize the union.
MANAGEMENT IN ACTION
Notes for Topics for Discussion and Action
1. Discuss why it is important for human resources management systems to be in sync with
an organization's strategy and goals and with each other.
Human resources management systems include recruitment and selection, training and
development, performance appraisal and feedback, pay and benefits, and labor relations.
These systems need to be consistent with an organization's strategy and goals so that the
organization can increase efficiency and effectiveness, quality, innovation, and
responsiveness to customers. These objectives are the building blocks of competitive
advantage, and therefore directly contribute to an organization's success and survival. If an
organization chooses to pursue a low-cost strategy, the human resources systems need to
be responsive to this strategy, and need to contain costs and find ways to do more with
less. If an organization, instead, pursues a differentiation strategy and wishes to
distinguish itself from the competition, human resources must attract, select, and retain the
employees that will enable the organization to achieve its goal. Employees in every
organization must be trained with the skills and abilities they need, and must be rewarded
and motivated to ensure high performance at all levels.
2. Interview a manager in a local organization to determine how that organization recruits
and selects employees.
Joan Scott is a manager of a local branch of a large bank. She is responsible for recruiting
and selecting the tellers that will be employed at the bank. Recruitment involves
development of a pool of qualified candidates for open positions. Selection is the process
by which Jill determines the relative qualifications of the job applicants and their potential
for being good performers in the teller position.
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Joan first performs a job analysis, in which she determines the tasks, duties, and
responsibilities that make up the job of a teller, and the knowledge, skills, and abilities
needed to perform the job. Joan receives job descriptions from managers at higher levels
in the organization that help guide her in her recruitment and selection processes. Joan is
also a former teller herself, and she is familiar with the tasks and responsibilities required
by the position.
Joan recruits at local community colleges and training institutes through their career
planning services. She also places advertisements in the local newspaper classified
sections. Both of these activities are external recruiting, which involves looking outside
the organization to fill open positions. Joan also looks within the organization at existing
employees, known as internal recruiting, to fill open positions. Joan strives to present an
honest assessment of both advantages and disadvantages of a job within the bank, also
called a realistic job preview.
In order to select from her pool of qualified applicants, Joan uses many techniques. She
checks background information given on applications, conducts personal interviews with
each applicant that meets the minimum requirements, and also gives performance tests to
those who pass the initial screening process. Applicants are tested on their ability to do
simple calculations and their comprehension of certain financial terms. Finally, Joan
always checks references with former employers or professors of the applicants in order to
obtain more information about the applicant and their work habits.
3. Discuss why training and development is an ongoing activity for all organizations.
Training focuses primarily on teaching organizational members how to perform their
current jobs and helping them acquire the knowledge and skills they need to be effective
performers. Development focuses on building organizational members' knowledge and
skills so that they will be prepared to take on new responsibilities and challenges.
Organizations need to continuously train and develop their human resources, especially in
today's global environment. Training is more frequently used in lower levels of an
organization, for example, with new hires and entry-level positions. In today's economy,
these positions experience high turnover, and employees tend to move quickly between
jobs and organizations, requiring new skills and knowledge in different industries and
settings.
Development tends to be utilized at higher levels in organizations. People who know their
jobs find they need new skills when they are given more responsibility, as is the case
when jobs are enriched and organizations become decentralized. The speed of business is
increasing every day, and new technology and competition make training and
development necessary ongoing activities in organizations that want to survive and
succeed.
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4. Describe the type of development activities that you think managers are most in need of.
Managers need development activities to help them adjust to new responsibilities and
challenges in today's organizations. Many organizations have downsized, and managers
need to be able to perform many duties and functions within an organization. For this
reason, managers need to be exposed to a variety of work experiences. Top managers need
to develop understanding of and expertise in a variety of functions, products and services,
and markets. A manager cannot narrow his or her focus to only their product line or region
of the country. An opportunity to experience different roles in an organization can help a
manager to understand how each function fits into the organization as a whole.
Managers can also benefit from formal education, such as executive MBA programs,
where they can learn the latest in business and management techniques and practices.
Whether managers receive development on-the-job or in a classroom, transfer of
knowledge and skills to the workplace is crucial. A manager must be able to successfully
apply what he or she has learned and use the development experience in ways that benefit
the organization and allow it to reach its goals.
5. Evaluate the pros and cons of 360-degree performance appraisals and feedback. Would
you like your performance to be appraised in this manner? Why or why not?
Performance appraisal and feedback are vital components of human resources
management systems. Through appraisal and feedback, performance is evaluated and
information is provided to employees that enables them to reflect on their performance
and develop plans for the future. The 360-degree approach allows a wider range of people
to evaluate and give feedback on an employee’s performance. A manager might conduct a
self-appraisal, as well as receive feedback from peers, subordinates, superiors, and even
customers and clients.
Some advantages of 360-degree appraisal are that employees are able to get more than one
perspective, and that people who work closely with the employee on a day-to-day basis
can give feedback on overall performance, not just once a month or once a year. It is also
a useful technique for meeting customer needs. It is sometimes easy for members within
an organization to lose sight of the customers' perspectives, and 360-degree appraisal
brings the customers' viewpoints into the larger picture.
Some disadvantages include the possibility of spiteful evaluations from disgruntled
subordinates, especially if evaluations are anonymous, coerced positive evaluations from
intimidated employees, or misguided evaluations from employees who are not
knowledgeable enough about the job they are evaluating.
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6. Discuss why two restaurants in the same community might have different pay levels.
A pay level is a broad term that refers to how an organization's pay incentives compare, in
general, to those of other organizations in the same industry, employing similar kinds of
workers.
Two restaurants in the same community might have different pay levels if they are
pursuing different organizational strategies. An expensive French restaurant may value the
competitive advantage that is gained through superior, quality food and excellent service.
This restaurant would likely adopt a high pay level, paying its chefs, servers, and staff
comparatively more than other restaurants. Though high pay levels raise costs, they also
help ensure that the restaurant managers will be able to recruit, select, and retain high
performers. A neighborhood diner, on the other hand, may adopt a low-cost strategy, and
pay its cooks, wait staff, and managers relatively low wages in order to keep costs down.
The diner may gain a cost advantage, but the disadvantages may include the inability to
select and recruit high performers, or motivate current employees to perform at a high
level.
7. Explain why union membership is becoming more diverse.
Labor relations includes all activities managers engage in to ensure that they have
effective working relationships with the labor unions that may represent their employees'
interests. Union membership is becoming more diverse, with even more workers finding
that unions help to ensure that their interests are fairly represented in their organizations.
Though union membership in industries such as manufacturing is declining, it is rising in
low-wage industries like garbage collecting, poultry processing, and janitorial work.
Unions are becoming more attractive to minorities, women, and workers at the bottom of
the pay scale. Workers who fall into these categories may be dissatisfied with their current
work arrangements and may believe that belonging to a union will help improve their
working conditions, pay, benefits, or job security. Since the white men that unions
traditionally targeted are moving away from union membership, unions are trying to retain
their membership and power by targeting women, African Americans, Hispanics and other
minority groups. Consequently, unions are becoming more diverse in their membership,
as well as their leadership, as evidenced by the appointment of a Mexican-American
woman as an executive vice president of the AFL-CIO in 1995.
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Notes for Building Management Skills
Analyzing Human Resources Systems
Think about your current job or a job that you had in the past. If you have never had a job,
then interview a friend or family member who is currently working. Answer the following
questions about the job you have chosen.
1. How are people recruited and selected for this job? Are the recruitment and selection
procedures that the organization uses effective or ineffective? Why?
Leslie Miller is a lifeguard at a local YMCA pool. She has worked at the pool for five
years, and has experienced firsthand many of the organization's human resources
management activities. Recruitment is the process of developing a pool of qualified
applicants, and selection involves choosing among them and determining their potential
for being good performers. Lifeguards are recruited through lifeguard training course
classes. Notices are posted in the classrooms, and representatives from the YMCA visit
classes to inform the trainees of opportunities for employment. In order to receive a job,
applicants must provide proof of certification in various courses, such as lifeguard
training, First Aid, and CPR. Applicants also take written and physical tests to determine
their knowledge and skill levels. Those who score the highest on the performance tests are
invited to complete applications listing previous job experience, school information, and
references. After a background check, reference check, and a group interview, the most
suitable candidates are offered positions.
2. What training and development do people who hold this job receive? Is it appropriate?
Why or why not?
Lifeguards must come to the job with certain training, but development and practice of
skills are very important to the maintenance of a safe facility. Lifeguards are required to
attend at least two training sessions a month, where skills are reviewed and practiced, and
techniques are refreshed. These sessions are conducted both in a classroom setting and in
the pool. Classroom instruction includes videos of rescue procedures and paper-and-pencil
tests of knowledge of first aid procedures and techniques. Periodic on-the-job training
includes rescue drills, where lifeguards simulate an emergency situation and review all
procedures and skills as if it were an actual emergency. Lifeguards also receive training in
swimming instruction. Many lifeguards teach swimming lessons as part of their job
requirement, and this training helps them to develop the techniques needed to teach a
variety of skills to a variety of age groups and ability levels.
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This classroom and drill exercise training is appropriate because pool lifeguards do not
constantly utilize skills such as CPR and rescue techniques. Although accidents do not
occur very frequently, it is a matter of life and death when they do, and patrons and
management need to be sure that the staff will be able to carry out their duties when it is
necessary. Also, swimming instruction is a job that requires patience and understanding,
and the instructors need to be trained to teach effectively.
3. How is performance of this job appraised? Does performance feedback contribute to
motivation and high performance on this job?
Performance appraisal is the accurate evaluation of employees' job performance and
contributions to their organization. Performance feedback is the process through which
managers share performance appraisal information with their subordinates, give
subordinates an opportunity to reflect on their own performance, and develop, with
subordinates, plans for the future.
Their supervisors appraise the lifeguards’ performance once a month. Supervisors rate
each lifeguard on teaching skills, customer service and attitude, timeliness, and neatness
and appropriateness of appearance. These are subjective appraisals that are based on the
supervisors' perceptions of traits, behaviors, and results.
Supervisors also monitor the number of training sessions that lifeguards attend, and the
physical conditioning that each lifeguard completes during the month. This is a more
objective appraisal because it is based on number of sessions attended, and not on
perceptions of supervisors.
Lifeguards are also observed during swimming instruction by both supervisors and parents
of the students in the lessons. Evaluations are given at the end of each course, which
includes feedback from both supervisors and parents. These behavior appraisals do not
rely on self-reports, rather, they let supervisors assess how the staff performs their jobs—
the actual actions and behaviors that are exhibited on the job. This is a more
comprehensive appraisal because it involves customers as well as superiors.
This feedback is helpful for the lifeguards because they can develop the skills that
supervisors have targeted for improvement, as well as set goals for performance
improvement. The feedback is helpful for supervisors because they can assess the training
needs of their staff and plan on-the-job and classroom instruction around these needs.
Ultimately, the patrons of the facility benefit from a well-trained and motivated staff.
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4. What levels of pay and benefits are provided for this job? Are these levels of pay and
benefits appropriate? Why or why not?
Lifeguards receive hourly pay, with additional pay given to those lifeguards who teach
swimming lessons or coach youth swim leagues. Lifeguards are given raises at the end of
each season if they receive exceptional ratings on their performance appraisal evaluations.
Pay level is comparable to pay for lifeguards at other indoor facilities, though lower than
that of beachfront lifeguards. Lifeguards do not receive benefits, such as health insurance,
social security, or unemployment insurance. Most lifeguards work seasonally, and have
other jobs or attend school in addition to their lifeguard positions.
This level of pay is appropriate because lifeguards who work at indoor facilities typically
do not have as much responsibility as beachfront lifeguards. Also, lifeguards do not
perform administrative duties, which would necessitate a higher pay range. Finally, since
most lifeguards are part-time or seasonal employees, they do not need benefits that would
be more important to someone who is completely dependent on the job for their entire
income.
Notes for Small Group Breakout Exercise
Building a Human Resources Management System
1. Describe the steps you will take to recruit and select (a) the engineers, (b) the
clerical/secretarial workers, and (c) the MBAs.
The engineers will be externally recruited through advertisements in trade magazines and
newspapers, open houses for students at colleges that have engineering departments, and
career fairs in large cities and communities. Postings will also appear on the consulting
firm's website, which will contain information about the company's mission and goals.
External recruiting will also take place through informal networks and employment
agencies.
The clerical/secretarial workers will be recruited externally through advertisements in
newspapers and postings in training institutes and community colleges. Also, informal
networks will be utilized.
The MBA's will be recruited through campus interviews at business schools and postings
on the website and other job posting websites. Many companies are utilizing distance
learning, and some MBA students may not be available on campuses. An informal
network will also be used, by spreading the word in existing organizations that
employment opportunities exist at the new consulting company.
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Selection will consist of interviews for engineers and MBA's. In an interview, applicants
will be required to give a resume and previous experience information. Structured
interviews will be held on the campuses, and more informal interviews may be held at
later dates for candidates that seem promising. All three partners will interview
Engineering and MBA candidates in order to control for biases and idiosyncrasies. An
interview setting will allow the partners to determine skills in communication, as well as
technical expertise.
Selection for secretarial/clerical workers will be less rigorous. These applicants will
complete applications describing their training, skills, knowledge, and previous
experience. They will need to provide references and will also be given performance tests
that measure typing ability and skills in using computer software packages.
2. Describe the training and development that the engineers, the clerical/secretarial
workers, and the MBAs will receive.
Training focuses on teaching employees how to perform their jobs and helping them
acquire the knowledge and skills they need to be effective performers. Development
focuses on building employees' knowledge and skills. Although the engineers and MBAs
will enter their jobs with extensive training and knowledge, they may require some
development to familiarize them with the business of consulting and what it requires. This
is especially true if these employees come directly from schools and do not have much
“real-world experience.” This development may be formal education, as in classroom
instruction, or it may include some business courses for those who have not had any
experience with business as of yet. On-the-job training will likely occur as employees
become more experienced and comfortable in their positions. Varied work experiences
would also be helpful, enabling employees to have a wide variety of different job
experiences
Secretarial/clerical workers will also enter the job with various skills and knowledge,
though they may require more training than the engineers or MBAs. This training may
include seminars on software packages used in the office setting, and classroom
instruction on appropriate and inappropriate job behaviors. Simulations can also be used.
In a simulation, key aspects of the work situation and job tasks are duplicated as closely as
possible in an artificial setting. This could be done to show employees how to effectively
deal with clients, both in the office and on the telephone. On-the-job training will also
occur for these employees as they learn by doing the work.
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3. Describe how you will appraise the performance of each group of employees and how you
will provide feedback.
Engineers will have their performance appraised through both objective (based on facts)
and subjective (based on perceptions) assessment. Behavior appraisals will be used to
assess how the engineers perform their jobs—how they handle themselves in meetings,
how courteous they are to clients, and the quality of their reports and recommendations.
Results appraisals will include assessment of which recommendations they make and how
many new clients they bring into the organization. These appraisals do not focus on
behavior, but results.
MBAs will have their performance appraised in a similar manner, both objectively and
subjectively. Behavior appraisals will include how they keep the records, the accuracy of
the financial transactions, and adherence to legal specifications in business dealings.
Results appraisals will include how many clients they bring to the organization, the profit
that is realized by the organization, and the adherence to the budget specified.
Secretarial and clerical workers will be appraised through behavior and results appraisals
as well. They will be given feedback on the quality and accuracy of their work, and their
telephone and interpersonal skills.
All employees will receive feedback in both formal and informal appraisals. Formal
appraisals will be given at set times during the year using performance dimensions and
measures that have been specified in advance. Informal appraisals will be more frequent
and will involve less structured feedback and discussion of areas for improvement.
Feedback will be specific and will focus on behaviors or outcomes that are correctable and
within an employee's ability to improve upon. Employees will be given feedback in a
manner that is not critical, but has as its goals problem-solving and solution-finding. The
partners will try to praise high performance while improving deficit areas. Finally, all
employees will be treated with respect in all aspects of performance appraisal and
feedback.
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4. Describe the pay level and pay structure of your consulting firm.
Pay level refers to how the firm's pay incentives will compare, in general, to those of other
organizations in the same industry, employing similar kinds of workers. It is important to
start with a competitive salary range for engineers and MBAs in order to recruit and retain
high performers that will help to establish the firm. Since the firm is just starting out, the
partners may decide that pay incentives should start at a moderate level, until the firm is
secure and profitable. Employees may be recruited and enticed with future gain sharing
and chances to buy into the business after a set period of time. Secretarial and clerical
workers are more easily recruited, therefore, their pay should be comparable to that of
clerical workers at other firms, but it may not be as important to offer higher, more
competitive wages to these employees. Once the firm is on solid financial ground, it will
be able to afford raises for employees.
Pay structure refers to the way that jobs are clustered into categories according to their
relative importance to the organization and its goals, levels of skills required, and other
characteristics. The partners will receive the highest pay because they have risked their
capital in starting the firm. Also, they will likely do the majority of the work in the
beginning months and years of the firm's establishment. MBAs will receive the next
highest pay level, due to the extensive knowledge and skill that they bring to the
organization. Engineers will receive the next level of pay, just below that of MBAs, since
engineers are also highly skilled professionals. Secretarial and clerical workers will
receive the lowest level of pay in the organization. They are more easily trained, and the
availability of workers is greater for these positions than for those of the engineers and
MBAs.
Notes for You’re the Management Consultant
Apparently, Michaels tried to do developed his system in a vacuum. He needs to solicit input
from the other managers regarding the behaviors to be rated by the 20-item scale. Now that he
has some feedback, he might want to do the following:

Send an e-mail to all employees and managers in the organization apologizing for any
confusion and ill will that might have been created by his actions. He can explain that he
was only trying to improve the system for everyone, but apparently he had not
communicated that very well.

Next, he could ask the managers how to improve the 20-item scale. He does not need to
back down from using the 360-degree or the new performance system. However, he needs
to educate the managers about how it could work better using their own ideas, asking for
their input now and in the future and training them in how to use the instruments fairly.
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
Having gathered the information, he can now revise the form’s instructions, make
appropriate changes, and send out a prototype of the new forms for comments by all
managers.

Once changes are incorporated he should conduct training sessions on using the new
forms. Training sessions should include the guidelines for giving effective performance
feedback.
MANAGING ETHICALLY
1. Either individually or in a group, think about the ethical implications of managers
becoming friendly with subordinates.
The concerns mentioned in connection with this question raise the same issues highlighted
by the Justice Model of ethical decision making in Chapter 3. Can a manager ensure that
he or she will fairly distribute outcomes or rewards among all employees, if more friendly
with some than others? Managers must not give people they like larger raises than they
give to people they do not like or bend the rules to help their favorites.
2. Do you think that managers should feel free to socialize and become good friends with
their subordinates outside of the workplace, if they desire? Why or why not?
Some managers may feel that they are capable of forming close social relationships with
subordinates without allowing such friendships to impact their fairness or objectivity
toward all. However, psychologists tell us otherwise. Cognitive biases often operate at a
subconscious level, causing otherwise capable managers to sometimes make very bad
decisions. Also, as a leader setting an example for subordinates, managers should avoid
creating any situation that may give the appearance of unfairness or impropriety.
CASE FOR DISCSUSSION
Case Synopsis: MANAGING HUMAN RESOURCES AT TRILOGY SOFTWARE
Successfully integrating a high percentage of new hires into an organization on an annual
basis is a challenge in any industry. Trilogy Software, headquartered in Austin, Texas, excels
at recruiting, training, and integrating new employees into its growing company. The
company spends a great deal of money on HR and has created its own university boot camp
that all new employees attend for their first three months. This training program, called
Trilogy University, further develops the functional skills of new employees and also
indoctrinates them into Trilogy’s culture. The University is action based and the new recruits
work on actual Trilogy projects. The culture at Trilogy stresses humility, creativity,
teamwork, and change.
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Questions:
1. What are the distinguishing features of Trilogy’s approach to recruitment and selection?
Trilogy realizes that they must hire and retain the best and brightest to maintain their
competitive advantage. Therefore, they recruit highly trained persons from the nation’s
top universities. A substantial amount of organizational resources are devoted to the
recruiting and selection process.
2. How are new recruits trained at Trilogy?
The company created Trilogy University, a three month boot camp that trains new hires
and indoctrinates them into Trilogy culture. Training is classroom based and allows
employee to work on real projects. Along with functional skills, employees are also taught
soft skills such as learning to work in teams, communication skills, and risk taking.
3. Why is training so important for the success of Trilogy?
Training is a priority at Trilogy because the industry in which they compete is technology
intensive and rapidly changing. Trilogy is committed to molding each of its employees
into a ‘star’. Also, the opportunity to work with highly trained, creative co-workers is a
means of motivating and retaining top talent.
4. Are human resources more important in knowledge-based companies like Trilogy than in
manufacturing or service companies? Why or why not?
Human resources is an important function in all organizations. However, knowledge
workers do present special challenge. Because the demand for knowledge workers has
been growing at a rapid rate, organizations that need them must continually increase their
pay levels in order to retain them. Also, these employees require extensive and highly
specialized training, and therefore an organization must be willing to make the human
capital investments necessary to prevent skills of these workers from becoming obsolete.
The failure to update such skills could not only result in the loss of competitive advantage
but may also increase the likelihood that that the knowledge worker will go to another
firm that is more committed to training and development.
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BUSINESS WEEK CASES IN THE NEWS
Case Synopsis: How to Enable the Disabled
While the economic expansion of the 1990s boosted jobs and incomes for most Americans, it
seems to have bypassed the 10% of the working population that is disabled. Some say that the
Americans with Disabilities Act backfired because the costs associated with hiring disabled
workers dissuaded employers from hiring them. Others, however, argue that those who have
successfully integrated into the workforce no longer describe themselves as disabled in
government surveys. Everyone agrees that more has to be done to bring the disabled into the
world of work. Thus, hopes are now focused on the new “Ticket to Work” federal law, which
pays private agencies to train and place the disabled in continuing employment.
Questions:
1. Why might the disabled have difficulty obtaining jobs for which they are qualified and in
earning appropriate levels of income, given their education and skills?
Unfortunately, many myths still surround the issue of hiring the disabled, causing some
companies to remain fearful of fully complying with the ADA. Such companies are often
concerned about additional costs, loss of productivity, and what other people will think,
while remaining unaware of the benefits of hiring people with disabilities. Benefits
include their high loyalty, which reduces turnover costs and has a positive impact on
everyone's morale. Workers with disabilities are not more expensive to employ than other
employees, although many assume the opposite to be true, according to specialists in this
field.
2. How can managers take steps to ensure that the ADA has positive rather than negative
effects on the fate of the disabled?
To break down barriers, the corporate community must bring about social and attitudinal
accommodations that go beyond compliance to the law. Such attitudinal accommodations
rest on very deliberate corporate efforts to change the perceptions and behavior of
everyone in the workplace. Managers must be trained to appreciate an employee's
abilities rather than dwelling on a disability.
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