MPW Chapter 12: Managing Human Resources

C. Discrimination:

(1) Making hiring and promotion decisions based on criteria that are not job-relevant. (2) When someone acts out their negative attitudes toward people who are the targets of their prejudice.

C. When discrimination is found, remedies include providing back pay and taking affirmative action:

-Affirmative action: Requires that employers take positive steps to guarantee equal employment opportunities for people within protected groups.

A. The strategic approach to HRM recognizes three key elements:

-First, all managers are involved in managing HR. -Second, employees are viewed as assets. No strategy can be implemented effectively without the right people to put it into action. Employees, not buildings and machinery, give a company its competitive edge. -Third, HRM is a matching process, integrating the organization's strategy and goals with the correct approach to managing human capital.

A. Some current strategic issues of particular concern to managers include the following: (All of these strategic decisions determine a company's need for skills and employees. Ex12.2)

-Hiring the right people to become more competitive on a global basis -Hiring the right people for improving quality, innovation, and customer service -Knowing the right people to retain after mergers, acquisitions, or downsizing -Hiring the right people to apply new information technology (IT) for e-business

2E. -assessing jobs- Basic building blocks of HRM include job analysis, job descriptions, and job specifications.

-Job analysis: The systematic process of gathering and interpreting information about the essential duties, tasks, and responsibilities of a job. [To perform job analysis, managers or specialists ask about work activities and work flow, the degree of supervision given and received in the job, knowledge and skills needed, performance standards, working conditions, and so forth. ] The manager then prepares a written...and... -job description: A concise summary of the specific tasks and responsibilities of a position. -job specification: Outlines the knowledge, skills, education, physical abilities, and other characteristics needed to perform a specific job adequately.

2G. -compensation equity- Whether the organization uses job-based pay or skill-based pay, good managers strive to maintain a sense of fairness and equity within the pay structure and thereby fortify employee morale.

-Job evaluation: refers to the process of determining the value or worth of jobs within an organization through an examination of job content. [Job evaluation techniques enable managers to compare similar and dissimilar jobs and to determine internally equitable pay rates—that is, pay rates that employees believe are fair compared to those for other jobs in the organization.] Organizations also want to make sure that their pay rates are fair compared to other companies. HR managers may obtain -*wage and salary surveys*: that show what other organizations pay incumbents in jobs that match a sample of "key" jobs selected by the organization. These surveys are available from a number of sources, including the U.S. Bureau of Labor Statistics National Compensation Survey.

3E. -structured interviews: These may include biographical interviews, which ask about the person's previous life and work experiences; behavioral interviews, which ask people to describe how they have performed a certain task or handled a particular problem; and situational interviews, which require people to describe how they might handle a hypothetical situation.

-Nondirective interviews may bring to light information, attitudes, and behavioral characteristics that might be concealed when answering structured questions. -Some organizations put candidates through a series of interviews, each one conducted by a different person and each one probing a different aspect of the candidate. Others use panel interviews. In addition, some firms are using offbeat approaches, sometimes referred to as extreme interviewing, to test job candidates' ability to handle problems, cope with change, think on their feet, and work well with others.

G. -Maintaining an Effective Workforce-

Now we turn to the topic of how managers and HRM professionals maintain a workforce that has been recruited and developed. Maintenance of the current workforce involves compensation, wage and salary systems, benefits, and (occasionally) termination.

2D. employer brand

Similar to a product brand, except that rather than promoting a specific product, its aim is to make an organization seem like a highly desirable place to work. Employer-branding campaigns are like marketing campaigns to "sell" the company and attract the best job candidates.

human capital was cited as the top factor in maintaining competitive success, which reflects the critical role of managing talent.

Smart managers know that employees are the company—if they don't perform well, the company doesn't stand a chance of succeeding.

1D. Many young people don't have any desire to stay with one company throughout their careers. They like the expectations of responsibility, learning, growth, and mobility embedded in the new social contract.

Workplace expert Lynda Gratton says that building trust is more important than loyalty today, when "serial career monogamy" is the order for many young employees, who are continually evaluating whether their work is meaningful and challenging and fits with their lives.

2D. -branding the company as an employer of choice-

You might think with the high unemployment rate currently, companies wouldn't be worried about recruiting good people. But managers are finding that the most skilled and knowledgeable employees are in short supply and great demand. Both small and large companies in a variety of industries are using employer branding to attract desirable job candidates.

A. HRM activities and goals do not take place inside a vacuum, but within the context of issues and factors affecting the entire organization, such as

globalization, changing technology, the need for rapid innovation, quick shifts in markets and the external environment, societal trends, government regulations, and changes in the organization's culture, structure, strategy, and goals.

C. Failure to comply with EEO legislation can result in substantial fines and penalties for employers. Suits for discriminatory practices can cover a broad range of employee complaints. One issue of growing concern is...

sexual harassment, which is also a violation of Title VII of the Civil Rights Act. The EEOC guidelines specify that behavior such as unwelcome advances, requests for sexual favors, and other verbal and physical conduct of a sexual nature becomes sexual harassment when submission to the conduct is tied to continued employment or advancement or when the behavior creates an intimidating, hostile, or offensive work environment

1F. Development is sometimes distinguished from training. The general term training is typically used to refer to teaching people how to perform tasks related to their present jobs...

while development means teaching people broader skills that are not only useful in their present jobs but also prepare them for greater responsibilities in future jobs.

2G. -pay.for.performance- Many of today's organizations develop compensation plans based on a pay-for-performance standard to raise productivity and cut labor costs in a competitive global environment.

-Pay-for-performance: Tying at least a portion of compensation to employee effort and performance. Also called incentive pay. [whether it be through merit-based pay, bonuses, team incentives, or various gain-sharing or profit-sharing plans] With pay-for-performance, incentives are aligned with the behaviors needed to help the organization achieve its strategic goals. Employees have an incentive to make the company more efficient and profitable because if goals are not met, no bonuses are paid.

2F. -Performance Appraisal- During performance appraisal, skillful managers give feedback and praise concerning the acceptable elements of the employee's performance. They also describe performance areas that need improvement.

-Performance appraisal: The process of observing and evaluating an employee's performance, recording the assessment, and providing feedback. One of the biggest corporate talent management mistakes is the failure to provide candid performance assessments that focus on development needs. When employees get this feedback, they can use it to improve their performance. Unfortunately, only three in ten employees surveyed believe that their companies' performance review system actually helps to improve performance, indicating a need for improved methods of appraisal and feedback.

3E. -Employment tests: A test given to employees to evaluate their abilities; can include cognitive ability tests, physical ability tests, personality inventories, and other assessments. -Cognitive ability tests measure an applicant's thinking, reasoning, verbal, and mathematical abilities. IQ tests, for example, have been found to be the most consistent predictor of good performance across a variety of jobs because a high IQ shows a candidate's ability to learn.

-Physical ability tests that measure qualities such as strength, energy, and endurance may be used for jobs such as delivery drivers who must lift heavy packages, electric line workers who must climb ladders and carry equipment, and other positions that involve physical tasks. It is essential that these tests assess only cognitive and physical skills that are job related to avoid violating laws against discrimination. -Many companies also use various types of personality tests to assess such characteristics as openness to learning, agreeableness, conscientiousness, creativity, and emotional stability. In addition, companies look for personality characteristics that match the needs of the particular job so that there is a good fit.

3E. Managers use a variety of interview approaches to get a more reliable picture of a candidate's suitability for the job:

-Structured interviews: An interview that uses a set of standardized questions that are asked of every applicant so comparisons can be made easily. -nondirective interview: A conversation where the interviewer asks broad, open-ended questions and permits the applicant to talk freely with minimal interruption, in an attempt to bring to light information, attitudes, and behavioral characteristics that might be concealed when answering structured questions. -panel interviews: An interview in which the candidate meets with several interviewers who take turns asking questions.

E. -Finding the Right People- Now let's turn to the three broad goals of HRM: finding, developing, and maintaining an effective workforce

-The first step in finding the right people is human resource planning, in which managers or HRM professionals predict the need for new employees based on the types of vacancies that exist, as illustrated in Exhibit 12.6. -The second step is to use recruiting procedures to communicate with potential applicants. -The third step is to select from the applicants those persons believed to be the best potential contributors to the organization. Finally, the new employees are welcomed into the organization.

1G. -Compensation- -compensation: All monetary payments and all nonmonetary goods or benefits used to reward employees.

-The term compensation refers to (1)all monetary payments and (2)all goods or commodities used in lieu of money to reward employees. An organization's compensation structure includes wages and salaries and benefits such as health insurance, paid vacations, or employee fitness centers. Developing an effective compensation system is an important part of HRM because it helps to attract and retain talented workers. In addition, a company's compensation system has an impact on strategic performance. HR managers design the pay and benefits systems to fit company strategy and to provide compensation equity.

5G. -Termination- Despite the best efforts of line managers and HRM professionals, the organization will lose employees. Some will retire, others will depart voluntarily for other jobs, and still others will be forced out through mergers and cutbacks or for poor performance.

-The value of termination for maintaining an effective workforce: 1. employees who are poor performers can be dismissed. Productive employees often resent disruptive, low-performing employees who are allowed to stay with the company and receive pay and benefits comparable to theirs. 2. managers can use exit interviews as a valuable HR tool, regardless of whether the employee leaves voluntarily or is forced out.

5G. -exit interview: A discussion conducted with departing employees to determine reasons for their departure and learn about potential problems in the organization.

-The value of the exit interview is to provide an inexpensive way to learn about pockets of dissatisfaction within the organization and hence find ways to reduce future turnover. -However, in some cases, employees who leave voluntarily are reluctant to air uncomfortable complaints or discuss their real reasons for leaving. - When people have negative things to say about managers or the company, the online format is a chance to speak their mind without having to do it in a face-to-face meeting

2F. One approach to overcome performance evaluation errors is to use a behavior-based rating technique, such as the behaviorally anchored rating scale. The behaviorally anchored rating scale (BARS) is developed from critical incidents pertaining to job performance. Each job performance scale is anchored with specific behavioral statements that describe varying degrees of performance. By relating employee performance to specific incidents, raters can more accurately evaluate an employee's performance.

-behaviorally anchored rating scale (BARS): A performance evaluation technique that relates an employee's performance to specific job-related incidents. Exhibit 12.11 illustrates the BARS method for evaluating a production line supervisor. The production supervisor's job can be broken down into several dimensions, such as equipment maintenance, employee training, and work scheduling. A BARS should be developed for each dimension. The dimension in Exhibit 12.11 is work scheduling. Good performance is represented by a 4 or 5 on the scale, and unacceptable performance by a 1 or 2. If a production supervisor's job has eight dimensions, the total performance evaluation will be the sum of the scores for each of eight scales.

1F. -corporate universities-

-corporate university: An in-house training and development facility that offers broad-based learning opportunities for employees (&others).

2F. -performance evaluation errors- Although we would like to believe that every manager assesses employees' performance in a careful and bias-free manner, researchers have identified several rating problems. -One of the most dangerous is stereotyping. -Another rating error is the halo effect

-stereotyping: A performance evaluation error that occurs when a manager places an employee into a class or category based on one or a few traits or characteristics. -halo effect: Occurs when a manager gives an employee the same rating on all dimensions of the job, even though performance may be good on some dimensions and poor on others.

2D. -using temporary & part-time employees- Contingent workers are becoming a larger part of the workforce in both the United States and Europe. -Contingent workers: A person who works for an organization, but not on a permanent or full-time basis, including temporary placements, independent contractors, freelancers, and part-time employees.

30-40% are part-time/contract/other nonstandard positions Although many of these people are "involuntary" temporary or part-time workers who lost jobs during the recession, others like the option of working for different companies for short periods of time. For organizations, the primary goal is to access specialized skills for specific projects, enabling the company to maintain flexibility and keep costs low.

2G. As with other aspects of management, big data analytics programs are now being used to make compensation decisions.

A company wondering how to cut attrition can gather data on turnover, promotions, job changes, benefits, work-life balance, and other factors for hundreds of thousands of workers and use predictive analytics to see what truly makes a difference.

1F. -social learning- -Social learning: learning informally from others by using social media tools, including mobile technologies, social networking, wikis and blogs, virtual games, and so forth As shown in Exhibit 12.10, many companies report plans to purchase products and services for online and mobile learning in 2013. This reflects an awareness of the importance of social learning, particularly for younger employees.

A simple example might be an employee who asks a question on a blog or in a tweet, seeking advice from colleagues about a process or task. The majority of organizational learning occurs through informal rather than formal channels, so managers are supporting the use of social media technology for learning in day-to-day work. These tools allow people to share information, access knowledge, find resources, and collaborate in a natural way. An IBM survey found that high-performing organizations are 57 percent more likely than other companies to provide employees with collaborative and social media tools

2G. Skill-based pay systems are increasingly popular in both large and small companies. Employees with higher skill levels receive higher pay than those with lower skill levels.

Also called competency-based pay, skill-based pay systems encourage people to develop their skills and competencies, thus making them more valuable to the organization, as well as more employable if they leave their current jobs.

2E. -recruiting- -Recruiting: Activities or practices that define the desired characteristics of applicants for specific jobs; sometimes called talent acquisition (to reflect the importance of the human factor in the orgs success).

Although we frequently think of campus recruiting as a typical recruiting activity, many organizations use internal recruiting, or promote-from-within policies, to fill their high-level positions. Internal recruiting has two major advantages: It is less costly than an external search, and it generates higher employee commitment, development, and satisfaction because it offers opportunities for career advancement to employees rather than outsiders. Frequently, however, external recruiting—recruiting newcomers from outside the organization—is advantageous. Applicants are provided by a variety of outside sources, including advertising, state employment services, online recruiting services, private employment agencies (headhunters), job fairs, and employee referrals

D. The Changing Nature of Careers

Another current issue is the changing nature of careers and a shift in the relationship between employers and employees.

4G. -Rightsizing the Org- In some cases, organizations have more people than they need and have to let some employees go. -Rightsizing: refers to reducing the company's workforce intentionally to the point where the number of employees is deemed to be right for the company's current situation. Also called downsizing, planned reductions in the size of the workforce are a reality for many of today's companies.

As the term rightsizing implies, the goal is to make the company stronger and more competitive by aligning the size of the workforce with the company's current needs. However, some researchers have found that massive cuts often fail to achieve the intended benefits, and in some cases, they significantly harm the organization. Unless HRM departments effectively and humanely manage the rightsizing process, layoffs can lead to decreased morale and performance. Managers can smooth the process by regularly communicating with employees and providing them with as much information as possible, providing assistance to workers who will lose their jobs, and using training and development to help address the emotional needs of remaining employees and enable them to cope with new or additional responsibilities

2E. Another popular use of social media is to find people to serve as either paid or unpaid interns at the orgnization. An internship is an arrangement whereby an intern (usually a high school or college student) exchanges free or low-cost labor for the opportunity to explore whether a particular career is appealing or to gain valuable work experience in a particular field.

Companies are increasingly viewing internships as a valuable recruiting tool because they provide a way to "test-drive" a potential employee, as well as allow the intern to evaluate whether the job and the company make a good fit. The old image of the intern as the "gopher" who makes coffee and photocopies has given way to the budding professional who performs meaningful tasks and learns valuable skills. Interns aren't always offered a job with the company, but one career development expert says that internships are more closely tied to permanent hiring today than ever before.

1F. -Training & Development- Training and development programs represent a planned effort by an organization to facilitate employees' learning of job-related skills and behaviors

Exhibit 12.10 shows some frequently used types and methods of training. Training conducted by a "stand-and-deliver" instructor in a classroom remains the most popular method of training. Interestingly, this method of training, representing 45.2 percent of training hours reported, increased from the 41.2 percent reported in 2011. Online training methods increased only slightly, and delivering training via social media and mobile devices has declined slightly.

F. -Developing Talent-

Following selection, the next goal of HRM is to develop employees into an effective workforce. Key development activities include training and performance appraisal.

2E. HR recruiters are becoming more social, mobile, and data-driven. Recruiters have historically had little data on external candidates, but professional social media can provide recruiters with an immense amount of data, such as work experience, skills, certifications, achievements, connections, and education.

For companies that pay for its profile-searching system, for example, LinkedIn has added a service called "People You May Want to Hire." LinkedIn has created algorithms that search through its massive amounts of data and identify candidates with the exact combination of skills, background, expertise, and passion a company might be looking for. LinkedIn's report indicates that 39 percent of recruiters list social and professional networks as their number-one long-lasting recruiting trend.

E. Underlying the organization's effort to attract employees is a matching model (A human resources approach in which the organization and the individual attempt to match each other's needs, interests, and values.)

For example, a small software developer might require long hours from creative, technically skilled employees. In return, it can offer freedom from bureaucracy, tolerance of idiosyncrasies, and potentially high pay. A large manufacturer can offer employment security and stability, but it might have more rules and regulations and require a greater ability to "get approval from the higher-ups." The individual who would thrive working for the software developer might feel stymied and unhappy working for a large manufacturer. Both the company and the employee are interested in finding a good match.

2G. -Wage & salary Systems- Ideally, management's strategy for the organization should be a critical determinant of the features and operations of the pay system.

For example, managers may have the goal of maintaining or improving profitability or market share by stimulating employee performance. Thus, they should design and use a merit pay system rather than a system based on other criteria such as seniority.

2G. The most common approach to employee compensation is job-based pay, which means linking compensation to the specific tasks an employee performs. However, these systems present several problems.

For one thing, job-based pay may fail to reward the type of learning behavior needed for the organization to adapt and survive in a turbulent environment. In addition, these systems reinforce an emphasis on organizational hierarchy and centralized decision making and control, which are inconsistent with the growing emphasis on employee participation and increased responsibility

2F. The performance appraisal process is widely disliked in organizations, but good performance appraisals are an important part of an overall performance management system that helps retain valued employees by helping them develop their skills, obtain rewards, and advance in the organization

Generally, HRM professionals concentrate on two things to make performance appraisal a positive force in their organizations: (1)the accurate evaluation of performance through the development and application of assessment systems such as rating scales and (2)training managers to use the performance appraisal interview effectively so that managers can provide feedback that will reinforce good performance and motivate employee development. Current thinking is that performance appraisal should be ongoing, not something that is done only once a year as part of a consideration of raises.

The growing clout of the HR function is reflected in the fact that current and former HR managers are increasingly being sought to fill board seats as outside directors at other companies. Ex12.1

Hot-button issues such as executive compensation, changing government regulations, and the frequency of mergers and acquisitions make HRM a critical skill for both business and nonprofit organizations. All managers need to be skilled in the basics of HRM.

1E. -human resource planning- -Human resource planning: The forecasting of human resource needs and the projected matching of individuals with anticipated job vacancies. By anticipating future HR needs, the organization can prepare itself to meet competitive challenges more effectively than organizations that react to problems only as they arise.

Human resource planning begins with several big-picture questions: -What new technologies are emerging, and how will these affect the work system? -What is the volume of the business likely to be in the next five to ten years? -What is the turnover rate, and how much, if any, is avoidable? The responses to these questions are used to formulate specific questions pertaining to HR activities, such as the following: -What types of engineers will we need, and how many? -How many administrative personnel will we need to support the additional engineers? -Can we use temporary, part-time, or virtual workers to handle some tasks?

1D. These changes and the bulleted list items reflect a primarily negative view of the new employer-employee relationship, but there are positive aspects as well.

In a sense, companies and employees become allies helping one another grow stronger. Employees help the company become more adaptable, while the company helps the employee become more employable.

3E. -online checks- The Internet gives recruiters and hiring managers a new way to search for a candidate's criminal record, credit history, and other indications of honesty, integrity, and stability. Moreover, many companies want to see what a candidate has to say about him or herself on blogs and social networking sites to gauge whether the person would be a good fit with the organization.

In a survey by Adecco Staffing, inappropriate content on their social media sites was the number-two reason hiring managers gave for why applicants ages 18 to 32 didn't get jobs (wearing inappropriate attire to job interviews was the top reason). Using social networking as a background check without disclosing the investigation to the candidate can also open organizations to lawsuits. Moreover, because an online search often reveals information such as race, gender, sexual orientation, and so forth, HR managers have to be sure that this information isn't used in a way that could be construed as discriminatory. Because of increasing regulations and closer scrutiny by the courts, 69 percent of companies surveyed by the Society for Human Resource Management in 2013 said that they do not use social media for screening. However, experts say that while HR departments might not be doing it, hiring managers more than likely still are.

C. Changes in the workplace have brought about shifts in the types of complaints being seen. Complaints of sexual harassment by men against both male and female bosses, for example, increased about 5 percent between 1997 and 2010.

In addition, there are fewer complaints related to blatant harassment and more related to bosses who make sexually charged comments and send inappropriate e-mail or text messages.

1D. The Changing Social Contract

In the old social contract between organization and employee, the employee could contribute ability, education, loyalty, and commitment and expect in return that the company would provide wages and benefits, work, advancement, and training throughout the employee's working life. Then along came globalization, outsourcing, hyper-competition, and other volatile changes in the environment.

3E. -Selecting- -selection: The process of assessing the skills, abilities, and other attributes of applicants in an attempt to determine the fit between the job and each applicant's characteristics.

In the selection process, employers assess applicants' characteristics in an attempt to determine the "fit" between the job and applicant characteristics. The most frequently used selection devices are the application form, interview, and employment test. In general, the greater the skill requirements and work demands of an open position, the greater the number and variety of selection tools the organization will use.

1D. Exhibit 12.5 lists some elements of the new social contract. The new contract is based on the concept of employability rather than lifetime employment.

Individuals are responsible for developing their own skills and abilities and demonstrating their value to the organization. The employer, in turn, invests in creative training and development opportunities so that people will be more employable when the company no longer needs their services. This means offering: -challenging work assignments -opportunities to participate in decision making -access to info and resources in addition: -important challenge for HRM is revising performance evaluation, compensation, and other practices to be compatible with the new social contract.

2E. Smart managers do much of their recruiting today via the Internet, including social media sites such as LinkedIn, Facebook, and Twitter.

Interestingly, a survey by staffing services firm Spherion found that high-achieving young professionals deem a company's social media reputation as important as the job offer when considering which company they want to work for

C. The Impact of Federal Legislation on HRM Managing HR effectively is a complex challenge for managers. For one thing, the legal and regulatory environment is constantly changing, and HR managers have to stay on top of issues that might have legal consequences.

It is critically important that managers know and apply a variety of federal laws that have been passed to ensure equal employment opportunity (EEO).

2E. Job analysis helps organizations recruit the right kind of people and match them to appropriate jobs. For example, to enhance internal recruiting, Sara Lee Corporation identified six functional areas and 24 significant skills that it wants its finance executives to develop, as illustrated in Exhibit 12.7. Managers are tracked on their development and moved into other positions to help them acquire the needed skills.

Job analysis also enhances recruiting effectiveness by enabling the creation of -realistic job previews (RJPs): which give applicants all pertinent and realistic information—positive and negative—about the job and the organization. [RJPs contribute to greater employee satisfaction and lower turnover because they facilitate matching individuals, jobs, and organizations. Individuals have a better basis on which to determine their suitability to the organization and "self-select" into or out of positions based on full information.]

3E. In addition, companies look for personality characteristics that match the needs of the particular job so that there is a good fit. One company found that people who score well in traits such as assertiveness and extroversion typically make good salespeople, so they looked for those traits in testing candidates for new positions. Interestingly, numerous studies show that personality tests are better predictors of future career success than job interviews, letters of recommendation, and educational credentials.

Many companies, such as Xerox, are also turning to big data analytics, using computers and software to select the right candidates based on their responses to personality tests and other criteria. After a half-year trial letting big data software pick call center workers, Xerox cut attrition by one-fifth.Footnote Another unusual type of test, called a brain teaser, is being used by companies that put a premium on innovativeness and problem solving. The answers aren't as important as how the applicant goes about solving the problem. See how you do answering the brain teasers in Exhibit 12.9.

2F. -assessing performance accurately- Jobs are multidimensional, and therefore performance may be multidimensional as well. A recent trend in performance appraisal is called -360-degree feedback: a process that uses multiple raters, including self-rating, as a way to increase awareness of strengths and weaknesses and guide employee development.

Members of the appraisal group may include supervisors, coworkers, and customers, as well as the individual, thus providing a holistic view of the employee's performance Some companies use social networking style systems to make 360-degree performance feedback a dynamic, ongoing process. One software program from Rypple, for example, lets people post short, Twitter-style questions about their performance of a particular task and get feedback from managers, peers, or anyone else the user selects. Another system from Accenture has employees post photos, status updates, and two or three weekly goals that can be viewed, followed, and assessed by colleagues.

3E. -application form: A selection device that collects information about the applicant's education, previous work experience, and other background characteristics. Research shows that biographical information inventories can validly predict future job success.

One pitfall to be avoided is the inclusion of questions that are irrelevant to job success. In line with EEO guidelines, the application form should not ask questions that will create an adverse impact on protected groups unless the questions are clearly related to the job.Footnote For example, employers should not ask whether the applicant rents or owns his or her own home because (1)an applicant's response might adversely affect his or her chances at the job, (2)minorities and women may be less likely to own a home, and (3)home ownership is probably unrelated to job performance. By contrast, passing the CPA exam is relevant to job performance in a CPA firm; thus, it is appropriate to ask whether an applicant for employment has passed the CPA exam, even if only one-half of all female or minority applicants have done so, versus nine-tenths of white male applicants.

3G. -Benefits- An effective compensation package requires more than money. Although salary is an important component, benefits are equally important.

Organizations are required by law to provide some benefits, such as Social Security, unemployment compensation, and workers' compensation. Other types of benefits, such as vacations and things such as onsite daycare or educational reimbursements, are not required by law but are provided by organizations to attract and maintain an effective workforce. The benefits packages provided by large companies attempt to meet the needs of all employees. Some companies, particularly in the technology industry where skilled employees are hard to find, offer extremely generous benefit packages.

1F. -promotion from within- Another way to further employee development is through promotion from within, which helps companies retain and develop valuable people.

Promotions provide more challenging assignments, prescribe new responsibilities, and help employees grow by expanding and developing their abilities.

A. The Strategic Approach

The best HR departments not only support strategic objectives, but also actively pursue an ongoing, integrated plan for furthering the organization's performance Research has found that effective HRM and the alignment of HR strategies with the organization's strategic direction have a positive impact on performance, including higher employee productivity and stronger financial results. Hiring and keeping high-quality employees with the right set of skills is one of the most urgent concerns for today's organizations.

2F. Another alternative performance-evaluation method is the performance review ranking system.Footnote This method is increasingly controversial because it essentially evaluates employees by pitting them against one another. As most commonly used, these systems rank employees according to their relative performance: 20 percent would be placed in the top group of performers; 70 percent have to be ranked in the middle; and 10 percent are ranked at the bottom.

The bottom tier are given a set period of time to improve their performance, and if they don't improve, they are fired. The idea behind the forced ranking of employees is that everyone will be motivated to improve performance. -The advantages of a performance-ranking system are that it (1)forces reluctant managers to make difficult decisions and identify the best and worst performers; and (2)creates and sustains a high-performance culture in which people continuously improve. -The disadvantages are that the system (1)may increase cutthroat competition among employees; (2)discourages collaboration and teamwork; and (3)potentially harms morale. Many companies have dropped the ranking system or modified it so that it doesn't insist on quotas for underperformers.

human resource management (HRM)

The design and application of formal systems to ensure the effective and efficient use of human talent to accomplish organizational goals. -includes activities undertaken to attract, develop, and maintain an effective workforce -managers have to find the right people, place them in positions where they can be most effective, and develop them so that they contribute to company success.

Human capital

The economic value of the combined knowledge, experience, skills, and capabilities of employees.

2D. Innovations in HRM

The field of HRM is constantly changing. Some important HRM issues today are branding the company as an employer of choice, acquiring companies to obtain talent, and addressing the needs of temporary employees and part-time workers.

B. The importance of human capital for business results is illustrated in Exhibit 12.3, which shows a portion of a framework developed by Accenture and used by software and services company SAP. SAP needed a way to evaluate and revise its human capital processes to shift to a new strategy that called for stronger customer focus and greater individual employee accountability. The idea is to show how investments in human capital contribute to stronger organizational performance and better financial results

The framework begins at the bottom (level 3) by assessing internal processes such as workforce planning, career development, performance appraisal, and so forth. Managers use these activities to increase human capital capabilities that drive higher performance in key areas such as innovation or customer service (level 2). Improvements in key performance areas, in turn, lead to improved business results (level 1).

1F. -on.the.job. training- -on-the-job training (OJT): A process in which an experienced employee is asked to teach a new employee how to perform job duties.

The most common type of training is on-the-job training (OJT), where an experienced employee is asked to take a new employee "under his or her wing" and show the newcomer how to perform job duties. OJT has many advantages, such as few out-of-pocket costs for training facilities, materials, or instructor fees and easy transfer of learning back to the job. When implemented well, OJT is considered the fastest and most effective means of facilitating learning in the workplace. One type of OJT involves moving people to various types of jobs within the organization, where they work with experienced employees to learn different tasks. This cross-training may place an employee in a new position for as short a time as a few hours or for as long as a year, enabling the individual to develop new skills and giving the organization greater flexibility.

C. Some of the most significant legislation and executive orders are summarized in Exhibit 12.4

The point of the laws is to stop discriminatory practices that are unfair to specific groups and to define enforcement agencies for these laws. EEO legislation attempts to balance the pay given to men and women; provide employment opportunities without regard to race, religion, national origin, and gender; ensure fair treatment for employees of all ages; and avoid discrimination against disabled individuals.

1D. Consider the following list found on a bulletin board at a company undergoing major restructuring: We can't promise you how long we'll be in business. We can't promise you that we won't be acquired. We can't promise that there'll be room for promotion. We can't promise that your job will exist when you reach retirement age. We can't promise that the money will be available for your pension. We can't expect your undying loyalty, and we aren't even sure we want it.

The recent economic downturn has accelerated the erosion of the old social contract. Employer-subsidized retirement benefits are in serious decline, for example, with only about 20 percent of employees covered by traditional pension plans today. During the recent recession, many companies suspended their contributions to employee 401(k) plans. Moreover, many organizations that cut benefits say that they don't intend to restore them

C. Exhibit 12.4 also lists major federal laws related to compensation and benefits and health and safety issues. This is only a sampling of the federal laws that HR managers must know and understand. In addition, many states and municipalities have their own laws that relate to HR issues.

The scope of HR legislation is increasing at federal, state, and municipal levels. In addition, social and technological changes bring new legal challenges. The National Labor Relations Board (NLRB) recently filed suit on behalf of Dawnmarie Souza, who was fired because of a comment she made on Facebook—the NLRB's first (but likely not last) case involving a firing related to social media

3E. -interview- Some type of interview is used as a selection technique in almost every job category in nearly every organization. This is another area where the organization can get into legal trouble if the interviewer asks questions that violate EEO guidelines. Exhibit 12.8 lists some examples of appropriate and inappropriate interview questions.

There is some evidence that the typical interview is not generally a good predictor of job performance. Many companies are bringing in coaches or using training programs to boost managers' interviewing skills because bad hires are costly. interviewers who let their own insecurities or biases subconsciously drive the interviewing process can have a worse effect on hiring decisions than if a candidate were simply chosen at random Managers can improve their interviewing skills, and candidates can improve their chances of having a successful interview, by understanding some dos and don'ts related to the interview, as outlined in the "Manager's Shoptalk."

2D. -acquiring start-ups to get the talent- -acqui-hiring: When established companies such as Facebook, Google, Yahoo, LinkedIn, and Salesforce.com buy early-stage start-ups, often shutting them down, simply to acquire their engineering talent.

These deals, ranging from about $3 million to $6 million, have increased amid soaring demand for talented software engineers. The strategy makes sense for the larger companies because they get teams of engineers who are accustomed to working together. For entrepreneurs, it's a trade-off.

2D. In the past, most temporary workers were in clerical and manufacturing positions, but in recent years, demand has grown for contingent professionals, such as

accountants and financial analysts, interim managers, IT specialists, product managers, lawyers, and even CEOs. Sometimes called supertemps, these are people who are highly skilled and choose to pursue independent careers. Supertemps often do mission-critical work. Ed Trevasani, who loves the freedom and flexibility of contingent work, has served as interim CEO for an international firm, developed a mergers and acquisitions strategy for a global manufacturer, and led the IT selection process for a major insurance company.

A. The three broad HRM activities outlined in Exhibit 12.2 are:

to find the right people, manage talent so that people achieve their potential, and maintain the workforce over the long term.

B. To build human capital, HRM develops strategies for finding the best people, enhancing their skills and knowledge with:

training programs and opportunities for personal and professional development, and providing compensation and benefits that support the sharing of knowledge and appropriately reward people for their contributions to the organization. (Ex12.3)