Lecture 3.

Human Resource Management

Chapter Outline
Importance
Process
Principles
Environmental factors affecting
HRM
Legal environment of HRM

HR planning & current inventory

Meeting Future Human Resource Needs
Employee Performance Management
Compensation and Benefits

Contemporary Issues
Managing downsizing

1.1. Introduction
The quality and effectiveness of the organization is determined by the quality
of the people that are employed. Success for most organizations depends on
finding the employees with the skills to successfully perform the tasks
required to attain the companys strategic goals. Management decisions and
processes for dealing with employees are critical to ensure that the
organization gets and keeps the right staff.
In order to get the most out of staff, human resource management integrates
all processes, programs, and systems in an organization designed to ensure
that employees are acquired and used in an effective way.
Synonyms such as personnel management are often used in a more
restricted sense to describe activities that are necessary in the recruiting of a
workforce, providing its members with payroll and benefits, and
administrating their work-life needs.
Importance:
Significant source of competitive advantage: Every organization wants to
attract, motivate, and retain the most qualified employees and match them
to jobs for which they are best suited. Human resources, training, and labor
relations managers and specialists provide this connection.
As an important strategic tool: Achieve competitive success through people
by treating employees as partners. In the past, these workers performed the
administrative function of an organization, such as handling employee
benefits questions or recruiting, interviewing, and hiring new staff in
accordance with policies established by top management. Today's human
resources workers manage these tasks, but, increasingly, they consult with
top executives regarding strategic planning. They have moved from behindthe-scenes staff work to leading the company in suggesting and changing
policies.
To improve organizational performance: High performance work practices
lead to both high individual and high organizational performance (value
addition).
Exhibit 11
Examples of High-Performance Work Practices
Self-managed teams
Decentralized decision making

Training programs to develop knowledge, skills, and abilities

Flexible job assignments
Open communication
Performance-based compensation
Staffing based on personjob and personorganization fit

1.2. The Human Resource Management Process

C Model

1.3. Principles of Human Resource Management: the10

1.4. A. Environmental Factors Affecting HRM

Employee Labor Unions

Organizations that represent workers and seek to protect their
interests through collective bargaining.
Collective bargaining agreement
A contractual agreement between a firm and a union
elected to represent a bargaining unit of employees

of the firm in bargaining for wage, hours, and

working conditions.
Governmental Laws and Regulations
Limit managerial discretion in hiring, promoting, and discharging
employees.
Affirmative Action: Organizational programs that enhance
the status of members of protected groups.

1.4. B. Legal Environment of HRM

Since the mid-1960s, federal and provincial legislation has greatly influenced
human resource management. As a result, employers must ensure that
managers and supervisors, as well as employees, understand the companys
and their obligations under the laws. For example, decisions as to who will
be hired must be done without regarding to race, gender, religion, etc. The
four primary areas of employment laws will be discussed in more detail.
1. The most significant impact on human resource management comes from
human rights legislation. This is the legislation that protects individuals
and groups from discrimination and harassment in many areas of
employment. Discrimination is prohibited on a number of groups (refer
following table) and requires that decisions are made impartially.
Harassment is also covered by human rights legislation.
Generally
speaking, harassment includes any and all forms of unwelcome
behavior. Most of the focus on the last several years has been on sexual
harassment--any unwanted activity of a sexual nature that affects an
individuals employment. Sexual harassment is a serious issue in both
public and private sector organizations and it is a global issue. Managers
must be vigilant to prevent this or else there are costly consequences to
the organization.
2. Employment standards--refers to the basic or minimum employment
conditions in any organization. Includes things such as minimum wage,
hours of work, what constitutes overtime pay, etc.
3. Health and safety--applies to all organizations and recent changes have
placed more responsibility on employees for the creation and
maintenance of a healthy and safe work environment. This legislation
also provides a monetary payment if a person is injured on the job.
4. Labor relations--governs the relationship between a trade union and an
employer.
As a result, not all organizations are covered by this
legislation--only those that have unionized employees.

Table: Laws & Regulations

Year
1963
1964
1967
1973
1974

1978
1986

1988

1990

U.S. Federal Law or

regulations
Equal Pay Act
Civil Rights Act, Title VII
(amended in 1972)
Age Discrimination in
Employment Act
Vocational Rehabilitation
Act
Privacy Act

Mandatory Retirement
Act
Immigration Reform and
Control Act
Worker Adjustment and
Retraining Notification
Act
Americans with
Disabilities Act

1991

Civil Rights Act of 1991

1993

Family and Medical Leave

Act of 1993

Description
Pay differences based on sex for equal
work
Prohibits discrimination based on race,
color, religion, natural origin, or sex
Prohibits age discrimination among
employees between 40 to 65
Prohibits discrimination on the basis of
physical & mental disabilities
Gives employees the legal right to
examine personnel files and letters of
reference concerning them
Prohibits forced retirement before 70
Prohibits unlawful employment of aliens
and unfair immigration-related
employment practices
(for employer having more than 100
employees) 60 days notice before a
facility closing or mass layoff
Prohibits discrimination against
physically/mentally disable or the
chronically ill
Permits individuals to sue for intentional
discrimination
Up to 12 weeks of unpaid leave each year
for family or medical reasons

1996

Health Insurance
Allows portability of employees health
Portability and
insurance from one employer to another
Accountability Act of
1996
1.5. HR Planning
The process by which managers ensure that they have the right number and
kinds of people in the right places, and at the right times, who are capable of
effectively and efficiently performing their tasks. It helps to avoid sudden
talent shortages and surpluses.
Since it is important to have the right people in the right jobs at the right
time, human resource planning is the process to achieve that. What the
organization will do is make an assessment of the current capabilities of its
employees, determine what it will need in the future, and design a program
to meet those needs.
Depending on the organizations objectives and strategies, demand for
human resources is contingent upon demand for the organizations products
or services and on the levels of productivity. After estimating total revenue,
management can estimate the number and kinds of human resources
needed to obtain those revenues.
Steps in HR planning:
Assessing current human resources
Assessing future needs for human resources
After it has assessed current capabilities and future needs, management can
estimate future human resources shortages and over-staffing. Then, it can
develop a program to match these estimates with forecasts of future labor
supply.
Current assessment: Human Resource Inventory A review of the
current make-up of the organizations current resource status.
Job Analysis: An assessment that defines a job and the behaviors
necessary to perform the job.
Requires conducting interviews, engaging in direct observation, and
collecting the self-reports of employees and their managers.
Job Description: A written statement that describes a job.
Job Specification: A written statement of the minimum qualifications that
a person must possess to perform a given job successfully.
1.6. Meeting Future Human Resource Needs
Recruitment: The process of locating, identifying, and attracting capable
applicants to an organization
Decruitment: The process of reducing a surplus of employees in the
workforce of an organization
Exhibit 1-2 Major Sources of Potential Job Candidates

Exhibit 1-3 Decruitment Options

Selection: The process of screening job applicants to ensure that the most
appropriate candidates are hired.
Exhibit 1-3
Selection Tools
Application Forms
Written Tests
Performance Simulations Tests
Interviews
Background
Investigations
Physical
Examinations

1.7. Employee Needed Skills and Knowledge

Orientation: Education that introduces a new employee to his or her job and
the organization.
Work unit orientation
Organization orientation
Exhibit 1-4
Types of Training
Communication skills, computer systems application and
Genera programming, customer service, executive development,
l
management skills and development, personal growth, sales,
supervisory skills, and technological skills and knowledge

Specif
c

Basic life/work skills, creativity, customer education,

diversity/cultural awareness, remedial writing, managing change,
leadership, product knowledge, public speaking/presentation
skills, safety, ethics, sexual harassment, team building, wellness,
and others

Exhibit 1-4 Training

Methods
Traditional Training
Methods
On-the-job
Job rotation
Mentoring and coaching
Experiential exercises
Workbooks/manuals
Classroom lectures

Technology-Based Training
Methods
CD-ROM/DVD/videotapes/
audiotapes
Videoconferencing/
teleconferencing/
satellite TV
E-learning

1.8. Employee Performance Management

A process of establishing performance standards and appraising employee
performance.
Exhibit 1-5
Methods

Advantages and Disadvantages of Performance Appraisal

Method

Advantage

Disadvantage

Written essays

Simple to use

More a measure of evaluators

writing ability than of

employees actual
performance
Critical incidents

Rich examples; behaviorally

based

Time-consuming; lack
quantification

Graphic rating
scales

Provide quantitative data; less

time-consuming than others

Do not provide depth of job

behavior assessed

BARS

Focus on specific and

measurable job behaviors

Time-consuming; difficult to
develop

Multi-person
comparisons

Compares employees with one

another

Unwieldy with large number of

employees; legal concerns

MBO

Focuses on end goals; results

oriented

Time-consuming

360-degree
appraisals

Thorough

Time consuming

1.9. Compensation and Benefts

Benefits of a Fair, Effective, and Appropriate Compensation System
Helps attract and retain high-performance employees
Impacts the strategic performance of the firm
Types of Compensation
Base wage or salary
Wage and salary add-ons
Incentive payments
Skill-based pay
Variable pay
1.10. Managing Downsizing
The planned elimination of jobs in an organization
i) Provide open and honest communication.
ii) Provide assistance to employees being downsized.
iii) Reassure and counseling to surviving employees.
Exhibit 1-6 Tips for Managing Downsizing
Communicate openly and honestly:
Inform those being let go as soon as possible
Tell surviving employees the new goals and expectations
Explain impact of layoffs

Follow any laws regulating severance pay or benefts

Provide support/counseling for surviving employees
Reassign roles according to individuals talents and backgrounds
Focus on boosting morale:
Offer individualized reassurance
Continue to communicate, especially one-on-one
Remain involved and available