CyberSummary

INTRODUCTION

Managing the quantity (through hiring and firing) and quality (through training, compensating, and so on) of employees is an important business function.

THE NATURE OF HUMAN RESOURCES MANAGEMENT

Previously, human resources was defined as labor, the physical and mental abilities that people use to produce goods and services. Human resources management (HRM) refers to all the activities involved in determining an organization's human resources needs as well as acquiring, training, and compensating people to fill those needs. Human resource managers are concerned with maximizing the satisfaction of employees and motivating them to meet organizational objectives productively. HRM has increased in importance over the last few decades, in part because managers have developed a better understanding of human relations through the work of Maslow, Herzberg, and others. Moreover, the nature of the human resources themselves is changing.

PLANNING FOR HUMAN RESOURCES NEEDS

When planning and developing strategies for reaching the organization's objectives, a company must consider whether it will have the human resources necessary to carry out its plans. After determining how many employees and what skills are needed to satisfy the overall plans, human resources managers ascertain how many employees the company currently has and how many will be retiring or otherwise leaving the organization during the planning period. The human resources manager then forecasts how many more employees the company will need to hire and what qualifications they must have. HRM planning also requires forecasting the supply of people in the work force who will have the necessary qualifications to meet the organization's future needs. Next, the human resources manager develops a strategy for satisfying the organization's human resources needs.

Human resources managers analyze the jobs within the firm so that they can match the human resources to the available jobs. Job analysis determines, through observation and study, pertinent information about a job--the specific tasks that comprise the job; the knowledge, skills, and abilities necessary to perform the job; and the environment in which the job will be performed. A job description is a formal, written explanation of a specific job and usually includes job title, tasks to be performed, relationship with other jobs, physical and mental skills required, duties, responsibilities, and working conditions. A job specification describes the qualifications necessary for a specific job in terms of education, experience, personal characteristics, and physical characteristics. These analyses help human resources managers develop recruiting materials such as newspaper advertisements.

RECRUITING AND SELECTING NEW EMPLOYEES

Recruiting means forming a pool of qualified applicants from which management can select employees. Internal sources of applicants include the organization's current employees. External sources consist of advertisements in newspapers and professional journals, employment agencies, colleges, vocational schools, recommendations from current employees, unsolicited applications, and online.

Selection is the process of collecting information about applicants and using that information to decide which ones to hire. It includes the application, interviewing, testing, and reference checking. If a firm finds the "right" employees through this process, it will not have to spend as much money later in recruiting, selecting, and training replacement employees. In the first stage of the process, the applicant fills out an application form and perhaps has a brief interview. The goal is to get acquainted with the applicants and to weed out those who are obviously not qualified for the job. The next stage involves interviewing applicants to obtain detailed information about the their experience and skills, reasons for changing jobs, attitudes toward the job, and an idea of whether they would fit in with the company. The third step involves testing applicants through ability, performance, aptitude, IQ, physical, and other tests to assess an applicant's potential and skills. Finally before making a job offer, the company should always check applicants' references.

Legal constraints and regulations are present in almost every phase of the recruitment and selection process, and violations of these regulations can result in lawsuits and fines. Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment and also created the Equal Employment Opportunity Commission (EEOC), a federal agency, to increase job opportunities for women and minorities and eliminate job discrimination based on race, religion, color, sex national origin, or handicap. Other laws affecting HRM include the Americans with Disabilities Act (ADA), which prevents discrimination against disabled persons; the Age Discrimination in Employment Act, which outlaws discrimination based on age; and the Equal Pay Act, which mandates that men and women who do equal work must receive equal pay.

AFFIRMATIVE ACTION

Many companies strive to improve their working environment through affirmative action programs, legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, identifying areas where women and minorities are underrepresented, and establishing specific hiring and promotion goals along with target dates for meeting those goals to resolve the discrepancy. Although affirmative action has helped women and minorities make solid gains in the work force, there are growing signs that affirmative action is not effective enough. Reverse discrimination occurs when a company's policies force it to consider only minorities or women instead of concentrating on hiring the person who is best qualified.

DEVELOPING THE WORK FORCE

After applicants have been offered jobs, they must be formally introduced to the organization and trained. Orientation familiarizes newly hired employees with coworkers, company procedures, and the physical properties of the company. It also socializes new employees into the ethics and culture of the new company.

New employees must undergo training to learn how to do their specific job tasks. On-the-job training allows workers to learn by actually performing the tasks of the job, while classroom training teaches employees with lectures, conferences, video tapes, case studies, and web-based training used in a classroom. Development is training that augments the skills and knowledge of managers and professionals. Training and development are also used to improve the skills of employees in their present positions and to prepare them for increased responsibility and job promotions.

Assessing an employee's performance--strengths and weaknesses on the job--gives employees feedback on how they are doing and what they need to do to improve their performance; provides a basis for determining how to compensate and reward employees; and generates information about the quality of the firm's selection, training, and development activities. Performance appraisals may be objective or subjective. Objective assessments are quantifiable. Subjective appraisals relate the employee's performance to some standard. Performance appraisals are also used to determine whether an employee should be promoted, transferred, or terminated from the organization.

A promotion is an advancement to a higher-level job with increased authority, responsibility, and pay. A transfer is a move to another job within the company at essentially the same level and wage. Separations occur when employees resign, retire, are terminated, or are laid off. Employees may be terminated or fired for poor performance violation of work rules, absenteeism, and so on. Recent legislation and court decisions now require that companies fire employees fairly, for just cause only. A well-organized human resources department strives to minimize losses due to separations and transfers because recruiting and training new employees is very expensive. A high turnover rate in a company may signal problems with the selection or training process, the compensation program, or even the type of company.

COMPENSATING THE WORK FORCE

Designing a fair compensation plan is an important task because pay and benefits represent a substantial portion of an organization's expenses. Compensation for a specific job is typically determined through a wage/salary survey, which tells the company how much compensation comparable firms are paying for specific jobs that the firms have in common. Compensation for individuals within a specific job category depends on the compensation for that job and the individual's productivity.

Wages are financial rewards based on the number of hours an employee works or the level of output achieved. Time wages, based on the number of hours worked, are most appropriate when employees are continually interrupted and when quality is more important than quantity. Wages may also be based on an incentive system, using either piece wages or commissions. Piece wages are based on the level of output achieved and are most appropriate when work is standardized and when the output of each employee can be accurately measured. The other incentive system, commission, pays a fixed amount or a percentage of the employee's sales. A salary is a financial reward calculated on a weekly, monthly, or annual basis. In addition to the basic wages or salaries paid to employees, a company may offer bonuses for exceptional performance as an incentive to increase productivity further. Another form of compensation is profit-sharing, which distributes a percentage of company profits to the employees whose work helped to generate those profits. Some profit-sharing plans distribute shares of company stock to employees through employee stock ownership plans (ESOPs).

Benefits are nonfinancial forms of compensation provided to employees, such as pension plans for retirement; health, disability, and life insurance; holidays and paid days off for vacation or illness; credit union membership; health programs; child care; elder care; assistance with adoption; and more. Benefits increase employee security and, to a certain extent, morale and motivation. A benefit increasingly offered is the employee assistance program (EAP), which usually provides counseling for and assistance with employees' personal problems that might hurt their job performance if not addressed. Companies try to provide the benefits they believe their employees want, but diverse people may want different things.

MANAGING UNIONIZED EMPLOYEES

Employees who are dissatisfied with their working conditions or compensation negotiate with management to bring about change. Dealing with management on an individual basis is not always effective, however, so employees may organize themselves into labor unions to deal with employers and to achieve better pay, hours, and working conditions. Union growth has slowed in recent years because most blue-collar workers have already been organized; factories have become automated and need fewer blue-collar workers; the economy has become more service-oriented, which requires fewer blue-collar workers; and job enrichment programs and participative management have blurred the line between management and workers. Nonetheless, labor unions have been successful in organizing blue-collar manufacturing, government, and health-care workers, as well as smaller percentages of employees in other industries. Consequently, significant aspects of HRM, particularly compensation, are dictated to a large degree by union contract at many companies.

Collective bargaining is the negotiation process through which management and unions reach an agreement about compensation, working hours, and working conditions for the bargaining unit. The objective of negotiations is to reach agreement about a labor contract, the formal, written document that spells out the relationship between the union and management for a specified period of time, usually two or three years. In collective bargaining, each side tries to negotiate an agreement that meets its demands; compromise is frequently necessary. Many labor contracts contain a cost-of-living escalator clause (COLA), which calls for automatic wage increases during periods of inflation but, during tough economic times, unions may be forced to accept givebacks--wage and benefit concessions made to employers to help them remain competitive and continue to provide jobs for union workers.

Most labor disputes are handled through collective bargaining or grievance procedures. When these processes break down, however, either side may resort to more drastic measures to achieve its objectives. Labor tactics include picketing, a public protest against management practices with union members marching (often waving antimanagement signs and placards) at the employer's plant; strikes, employee walkouts; and boycotts, when union members are asked not to do business with the boycotted organization. Management's version of a strike is the lockout; the work site is actually closed so that employees cannot go to work. Management may also hire strikebreakers, or "scabs," to replace striking employees.

Sometimes, even after lengthy negotiations, strikes, and lockouts, management and labor still cannot resolve a contract dispute. In such cases, outside intervention may be necessary. Conciliation brings in a neutral third party to keep labor and management talking. Mediation brings in a neutral third party to suggest or propose a solution to the problem. Arbitration brings in a neutral third party to settle the dispute; the arbitrator's solution is legally binding and enforceable. Management and labor may submit to compulsory arbitration, in which an outside party (usually the federal government) requests arbitration as a means of eliminating a prolonged strike that threatens to disrupt the economy.

THE IMPORTANCE OF WORKFORCE DIVERSITY

The participation of different ages, genders, races, ethnicities, nationalities, and abilities in the workplace is known as diversity. Differences can be divided into primary and secondary characteristics of diversity to enhance our understanding. The U.S. work force is becoming increasingly diverse.

Women, blacks, Hispanics, and other minorities, and the disabled have traditionally faced discrimination. Consequently, more companies are trying to improve HRM programs to recruit, develop, and retain more diverse employees to better serve their diverse customers. Effectively managing diversity in the work force involves cultivating and valuing its benefits and minimizing its problems.

Fostering and valuing workforce diversity has numerous benefits: more productive use of a company's human resources; reduced conflict among employees; more productive working relationships among diverse employees; increased commitment to and sharing of organizational goals among employees at all organizational levels increased innovation and creativity as diverse employees bring new, unique perspectives to decision-making and problem-solving tasks; and increased ability to serve the needs of an increasingly diverse customer base. Companies that do not value their diverse employees are likely to experience greater conflict, as well as prejudice and discrimination. A discriminatory atmosphere can not only harm productivity and raise turnover, but it may also subject a firm to costly lawsuits and negative publicity.

Astute businesses recognize that they need to modify their HRM programs (recruiting, selecting, compensating, benefits, etc.) to target the needs of all their diverse employees as well as those of the firm itself. As workforce diversity becomes a valued organizational asset, companies spend less time managing conflict and more time accomplishing tasks and satisfying customers.