Pride/Hughes/Kapoor Business, 109th Edition

Audio Review Transcript

Chapter 910 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.

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 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 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.

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)

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

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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