Managing human resources to obtain a competitive advantage and superior profitability is a difficult and demanding task for the HRM function and for all of a company's managers and employees. Each of the components of the HRM system must be carefully designed and managed, which is a complex matter today because intense global competition is taking place and work practices are constantly being changed to help companies adapt to this competition. This chapter made the following major points:

1. Human resource management (HRM) is the set of activities that must to be done to acquire good employees and build their skills and capabilities so they can do their jobs better.
2. A company's HRM system has five components: recruitment and selection, training and development, performance appraisal and feedback, pay and benefits, and labor relations.
3. Recruitment involves all of the activities a company engages in to identify and attract a pool of qualified applicants to fulfill its human resource needs. Selection is the process of deciding which applicant is the best suited for a job and the best fit for the company.
4. Human resource planning is the process of forecasting the type and number of employees a company needs to meet the objectives of its business model. Two important tools of human resource planning are workflow and job analysis.
5. The two methods of finding qualified applicants are internal and external recruitment. Internal recruitment involves a policy of promotion from within the company; external recruitment involves filling open positions with qualified applicants from outside of the organization.
6. A typical selection process has four main steps, screening applications and résumés, applicant testing and reference checks, interviewing, and making the final selection. Companies have a legal and ethical obligation to make the selection process as fair as possible.
7. Training and development is the process through which companies improve the skills, abilities, and knowledge of their employees. Training-needs analysis is a way of determining which employees need which kind of training.
8. Performance appraisal is the process of evaluating the degree to which individual employees have contributed to a company's functional and corporate-wide goals. Performance feedback involves communicating this evaluation to employees to persuade them to maintain or improve their performance levels.
9. Managers need to select the right set of performance measures—the ones that will do the most to improve a company's competitive advantage—and communicate them clearly to employees.
10. Different types of pay include base pay, overtime pay, and bonus pay. Benefits are the monetary rewards employees receive, such as paid health care and life insurance, because they are members of a company.
11. A pay structure determines the relative pay and benefits received by employees doing different types of jobs or jobs at different levels in a company's hierarchy. A company's pay level determines the amount a company chooses to pay its employees relative to other companies in its industry.
12. Incentive pay links the size of the rewards employees receive directly to their success in achieving specific goals. Incentive pay systems are found at the individual, group, and company levels.
13. Trade unions are organizations that represent the interests of workers who perform a similar type of job in a particular company or industry.
14. Collective bargaining is the process through which union representatives and managers negotiate a binding labor agreement, or contract, over work-related issues such as pay, benefits, work rules, safety conditions, and job security.