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Human
Resource
Management
R. Wayne Mondy
Joseph J. Martocchio
Fourteenth Edition
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Authorized adaptation from the United States edition, entitled Human Resource Management, 14th edition, ISBN 978-0-13-384880-9, by R. Wayne
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ISBN 10: 1292094370
ISBN 13: 9781292094373
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
10 9 8 7 6 5 4 3 2 1
14 13 12 11 10
Typeset in Times LT Std Roman by Integra Software Services.
Printed and bound by Courier Kendallville in United States of America.
To Judy Bandy Mondy, my love, my inspiration, and my travel partner.
—R. Wayne Mondy
To my parents, for their sacrifices, which have provided me with
great opportunities.
—Joe Martocchio
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Brief Contents
Part One Setting the Stage 23
Chapter 1
Human Resource Management: An Overview 24
Chapter 2
Business Ethics and Corporate Social Responsibility 46
Chapter 3
Equal Employment Opportunity, Affirmative Action, and Workforce Diversity 64
Part Two Staffing 99
Chapter 4
Strategic Planning, Human Resource Planning, and Job Analysis 100
Chapter 5
Recruitment 130
Chapter 6
Selection 154
Part Three Performance Management and Training 185
Chapter 7
Performance Management and Appraisal 186
Chapter 8
Training and Development 212
Part Four Compensation 245
Chapter 9
Direct Financial Compensation (Core Compensation) 246
Chapter 10
Indirect Financial Compensation (Employee Benefits) 278
Part Five Labor Relations, Employee Relations, Safety and Health 305
Chapter 11
Labor Unions and Collective Bargaining 306
Chapter 12
Internal Employee Relations 338
Chapter 13
Employee Safety, Health, and Wellness 360
Part Six Operating in a Global Environment 387
Chapter 14
Global Human Resource Management 388
7
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Contents
Part One Setting the Stage 23
Chapter 1
■■ETHICAL DILEMMA: A Selection Quandary
Human Resource Management: An
Overview 24
Defining Human Resource Management 25
Human Resource Management Functions 25
Staffing 25
Performance Management 26
Human Resource Development 26
Compensation 27
Employee and Labor Relations 27
Safety and Health 27
Human Resource Research 27
Interrelationships of Human Resource Management Functions 27
Who Performs Human Resource Management Activities? 28
Human Resource Management Professional 28
Line Managers 28
Human Resources Outsourcing 29
Human Resources Shared Service Centers 30
Professional Employer Organizations 30
■■HR BLOOPERS: Staffing Stone Consulting
30
Human Resources as a Strategic Business Partner 31
Dynamic Human Resource Management Environment 32
Legal Considerations 33
Labor Market 33
Society 33
Political Parties 33
Unions 33
Shareholders 33
Competition 34
Customers 34
HR Technology 34
Economy 35
Unanticipated Events 35
Corporate Culture and Human Resource Management 35
Employer Branding 36
Human Resource Management in Small Businesses 37
Country Culture and Global Business 37
Human Resource Management Profession 38
Scope of This Book 41
Summary 42 • Key Terms 43 • Exercises 43 • Questions
for Review 44 • Incident 1: HR after a Disaster 44 • Incident
2: Downsizing 45
Chapter 2
Business Ethics and Corporate Social
Responsibility 46
Defining Ethics, Corporate Social Responsibility, and Corporate
Sustainability 47
Business Ethics 47
Sources of Ethical Guidance 48
49
Legislating Ethics 49
Procurement Integrity Act 50
Federal Sentencing Guidelines for Organizations Act 50
Corporate and Auditing Accountability, Responsibility
and Transparency Act 50
Dodd–Frank Wall Street Reform and Consumer Protection Act 51
Whistleblower Protection 51
Creating an Ethical Culture and a Code of Ethics 52
Human Resource Ethics 53
Linking Pay to Ethical Behavior 54
Ethics Training 54
■■HR BLOOPERS: Sales Incentives at Pinser
Pharmaceuticals 55
Corporate Social Responsibility 55
Corporate Sustainability 57
Conducting a Social Audit 59
Can Corporate Social Responsibility Succeed in the Global
Environment? 60
Summary 61 • Key Terms 61 • Exercises 62 • Questions
for Review 62 • Incident 1: Is It Private and Confidential? 62
Incident 2: “You Can’t Fire Me” 63
Chapter 3
Equal Employment Opportunity,
Affirmative Action, and Workforce
Diversity 64
Equal Employment Opportunity: An Overview 66
Federal Laws Affecting Equal Employment Opportunity 66
Constitutional Amendments and the Civil Rights Act of 1866 66
Title VII of the Civil Rights Act of 1964, Amended in 1972 66
Equal Pay Act of 1963, Amended in 1972 69
Lilly Ledbetter Fair Pay Act of 2009 69
Pregnancy Discrimination Act of 1978 69
Civil Rights Act of 1991 70
Age Discrimination in Employment Act of 1967, Amended in 1978
and 1986 70
Age Can Actually Be a Bona Fide Occupational Qualification 71
Rehabilitation Act of 1973 71
Vietnam Era Veteran’s Readjustment Assistance Act of 1974 71
Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as
Amended 72
Americans with Disabilities Act of 1990 72
Americans with Disabilities Act Amendments Act of 2008 72
Immigration Reform and Control Act of 1986 73
Uniformed Services Employment and Reemployment Rights Act
of 1994 73
Genetic Information Nondiscrimination Act of 2008 73
State and Local Laws 74
Who’s Responsible for Ensuring Equal Employment
Opportunity? 74
Equal Employment Opportunity Commission 74
9
10
CoNTENTS
Forecasting Human Resource Availability 108
Shortage or Surplus of Workers Forecasted 109
Office of Federal Contract Compliance Programs 74
Employers 75
Defining and Operationalizing Illegal Discrimination 76
■■ETHICAL DILEMMA: Which “Thinker” Should Go?
Uniform Guidelines on Employee Selection Procedures 76
Concept of Disparate Treatment 76
Concept of Adverse Impact 77
Affirmative Action 78
Uniform Guidelines on Preventing Specific Illegal Employment
Discrimination 81
Guidelines on Sexual Harassment 81
Guidelines on Discrimination Because of National Origin 82
Guidelines on Discrimination Because of Religion 83
Guidelines on Caregiver (Family Responsibility) Discrimination 84
Discrimination Because of Disability 84
■■ETHICAL DILEMMA: What Was the Real Message?
85
Global Sexual Harassment 85
Diversity 86
Diversity Management 86
Elements of the Diverse Workforce 87
Job Descriptions 116
Job Identification 118
Date of the Job Analysis 118
Job Summary 118
Duties Performed 118
Job Specification 118
Standard Occupational Classification (SOC) and the
Occupational Information Network (O*NET) 119
Diversity 91
The Occupational Information Network (O*NET) 120
Multigenerational Diversity 93
Lesbian, Gay, Bisexual, and Transgender Employees 93
Summary 94 • Key Terms 95 • Exercises 95 • Questions
for Review 95 • Incident 1: I Feel Great 96 • Incident 2:
Gender Diversity: Change for the Better? 96
Part Two Staffing 99
Strategic Planning, Human Resource
Planning, and Job Analysis 100
Job Enrichment 124
Job Enlargement 124
Job Rotation 124
Reengineering 125
Summary 126 • Key Terms 127 • Exercises 128
Questions for Review 128 • Incident 1: A Degree for Meter
Readers 128 • Incident 2: Strategic HR? 129
Environmental Assessment 103
Objective Setting 104
Strategy Setting 104
Employee Roles Associated with Competitive Strategies 105
Strategy Implementation 105
Chapter 5
Recruitment 130
Recruitment Defined 131
Human Resource Planning 106
Zero-Base Forecast 108
Bottom-Up Forecast 108
Relationship between Volume of Sales and Number of Workers
Required 108
Job Analysis for Team Members 120
Job Analysis and the Law 122
Competencies and Competency Modeling 122
Job Design Concepts 123
Global Talent Management 125
Strategic Planning Process 101
Mission Determination 102
■■HR BLOOPERS: Workforce Planning at Master Cleaners
Reasons for Conducting Job Analysis 114
Staffing 114
Training and Development 114
Performance Appraisal 114
Compensation 115
Safety and Health 115
Employee and Labor Relations 115
Legal Considerations 115
Questionnaires 116
Observation 116
Interviews 116
Employee Recording 116
Combination of Methods 116
■■HR BLOOPERS: Affirmative Action and Workforce
Forecasting Human Resource Requirements 108
Succession Planning: A Component of Strategic Planning 112
Job Analysis: A Basic Human Resource Management Tool 113
Types of Job Analysis Information 115
Job Analysis Methods 115
Single Parents and Working Mothers 87
Women in Business 87
Mothers Returning to the Workforce (on Ramping) 88
Dual-Career Families 88
Ethnicity and Race 89
Older Workers 89
People with Disabilities 89
Immigrants 90
Foreign Workers 90
Young Persons, Some with Limited Education or Skills 90
Baby Boomers, Gen X, Gen Y, and Gen Z 91
Chapter 4
109
Innovative Recruiting 110
Compensation Incentives 110
Alternatives to Layoffs 110
107
Recruitment Process 131
Internal Recruitment Methods 132
Human Resource Databases 132
Job Posting and Job Bidding 132
■■HR BLOOPERS: Recruiting Skilled Machinists
Employee Referrals 133
External Recruitment Sources 134
High Schools and Vocational Schools 134
Community Colleges 134
133
CoNTENTS
Review of Applications and Review of Résumés 157
Colleges and Universities 135
Competitors in the Labor Market 135
Former Employees 136
Unemployed 136
Military Personnel 136
■■ETHICAL DILEMMA: Unfair Advantage?
■■ETHICAL DILEMMA: Employee Selection
Criteria? 159
Selection Tests 159
136
Self-Employed Workers 137
Ex-Offenders 137
Recruiting Technology 137
Mobile Recruiting 137
Internet Recruiter 138
Virtual Job Fair 138
Corporate Career Web Sites 138
Weblogs (Blogs for Short) 138
General-Purpose Job Boards 138
NACElink Network 139
.Jobs 139
AllianceQ 139
Niche Sites 139
Contingent Workers’ Sites 140
Hourly Workers’ Sites 141
Traditional External Recruitment Methods 141
Media Advertising 141
Private Employment Agencies 142
Public Employment Agencies 142
Executive Search Firms 142
Recruiters 143
Job Fairs 143
Internships 143
Professional Associations 144
Unsolicited Applicants 144
Open Houses 144
Event Recruiting 144
Sign-on Bonuses 144
Competitive Games 145
Tailoring Recruitment Methods to
Sources 145
Environment of Recruitment 146
Labor Market Conditions 146
Active or Passive Job Seekers 147
Legal Considerations 147
Alternatives to Recruitment 148
Promotion Policies 148
Overtime 148
Onshoring 149
Global Implications for Recruitment 149
Summary 150 • Key Terms 151
• Exercises 151 • Questions for Review 151
• Incident 1: A Problem Ad? 152 • Incident 2: I Am Qualified,
Why Not Me? 152
Chapter 6
Selection 154
Significance of Employee Selection 155
Selection Process 155
Preliminary Screening 156
Preliminary Considerations 159
Advantages and Disadvantages of
Selection Tests 159
Characteristics of Properly Designed
Selection Tests 160
Test Validation Approaches 161
Employment Tests 162
Unique Forms of Testing 164
Employment Interview 165
Interview Planning 165
■■HR BLOOPERS: The First Interview
165
Content of the Interview 166
Candidate’s Role and Expectations 166
General Types of Interviews 167
Methods of Interviewing 168
Potential Interviewing Problems 169
Concluding the Interview 171
Pre-employment Screening and Background
Checks 171
Employment Eligibility Verification (Form I-9) 171
Continuous Background Investigation 172
Background Investigation with Social Networking 172
Remembering Hiring Standards to Avoid 172
Selection Decision 174
Medical Examination 174
Notification of Candidates 175
Metrics for Evaluating the Effectiveness of
Recruitment/Selection 175
Quality of Hire 175
Time Required to Hire 175
New-Hire Retention 175
Hiring Manager Overall Satisfaction 176
Turnover Rate 176
Cost Per Hire 176
Selection Rate 176
Acceptance Rate 176
Yield Rate 176
Environmental Factors Affecting the Selection
Process 177
Other HR Functions 177
Legal Considerations 177
Speed of Decision Making 178
Organizational Hierarchy 178
Applicant Pool 178
Type of Organization 179
Probationary Period 179
Organizational Fit 179
Selection Technology 179
Selection in a Global Environment 180
Summary 181 • Key Terms 182 • Exercises 183
Questions for Review 183 • Incident 1: A Matter of
Priorities 184 • Incident 2: But I Didn’t Mean To! 184
11
12
CoNTENTS
Part Three Performance Management
and Training 185
Chapter 7
National Culture and Performance Appraisal 207
Summary 208 • Key Terms 209 • Exercises 209
Questions for Review 209 • Incident 1: These Things Are
a Pain 210 • Incident 2: Performance Appraisal? 210
Performance Management and
Appraisal 186
Performance Management 187
Performance Appraisal 188
Uses of Performance Appraisal 188
Chapter 8
Human Resource Planning 188
Training and Development 188
Career Planning and Development 189
Compensation Programs 189
Internal Employee Relations 189
Assessment of Employee Potential 189
Organizational Analysis 215
Task Analysis 215
Person Analysis 215
Establish Training and Development Program Objectives 216
Training Methods 216
Performance Appraisal Process 189
Establish Performance Criteria (Standards) 190
Classroom Method 217
E-Learning 217
Case Study 218
Behavior Modeling and Tweeting 218
Role-Playing 218
Training Games 218
In-Basket Training 219
On-the-Job Training 219
Apprenticeship Training 219
Team Training 220
Traits, Behaviors, and Competencies 190
Goal Achievement 191
Improvement Potential 191
Responsibility for Performance Appraisal 191
Immediate Supervisor 192
Subordinates 192
Peers and Team Members 192
Self-Appraisal 192
Customer Appraisal 193
360-Degree Feedback 193
Training and Development Delivery Systems 220
Corporate Universities 220
Colleges and Universities 221
Community Colleges 221
Online Higher Education 221
Vestibule System 222
Video Media 222
Simulators 222
Social Networking 222
Performance Appraisal Period 194
Choosing a Performance Appraisal Method 194
Trait Systems 195
Comparison Systems 195
Behavioral Systems 197
Results-Based Systems 199
■■HR BLOOPERS: Appraising Performance at Global
Implementing Training and Development Programs 223
Metrics for Evaluating Training and Development 223
Insurance 199
Problems in Performance Appraisal 201
Reactions 223
Learning 223
Behavior 224
Organizational Results 224
Appraiser Discomfort 201
Subjectivity of Performance Evaluations 201
Employee Anxiety 203
Characteristics of an Effective Appraisal
System 203
Factors Influencing Training and Development 225
Job-Related Criteria 203
Performance Expectations 203
■■ETHICAL DILEMMA: Abdication of Responsibility
Standardization 204
Trained Appraisers 204
Continuous Open Communication 204
Conduct Performance Reviews 205
Due Process 205
Legal Considerations in Performance
Appraisal 205
Performance Appraisal Interview 206
Scheduling the Interview 206
Interview Structure 206
Use of Praise and Criticism 206
Employees’ Role 207
Concluding the Interview 207
Training and Development 212
Training and Development Process 214
Determine Specific Training and Development
Needs 215
204
Top Management Support 225
Shortage of Skilled Workers 225
Technological Advances 226
Global Complexity 226
Learning Styles 226
■■ETHICAL DILEMMA: The Tough Side of Technology
227
Other Human Resource Functions 227
Human Resource Management Training Initiatives 227
Careers and Career Paths 229
Traditional Career Path 229
Network Career Path 229
Lateral Skill Path 230
Dual-Career Path 230
Adding Value to Your Career 230
Demotion 230
Free Agents (Being Your Own Boss) 231
CoNTENTS
Career Planning Approaches 231
Self-Assessment 231
Formal Assessment 232
Career Development and Career Development Methods 234
Manager/Employee Self-Service 235
Discussions with Knowledgeable Individuals 235
Company Material 235
Performance Appraisal System 235
Workshops 235
Management Development 235
Mentoring and Coaching 236
■■HR BLOOPERS: Management Development at Trends
Apparel 237
Reverse Mentoring 237
Organization Development: A Strategic Human
Resources Tool 237
Survey Feedback 238
Quality Circles 238
Team Building 238
Learning Organization as a Strategic Mindset 239
Training in the Global Context 239
Summary 240 • Key Terms 241 • Exercises 241
Questions for Review 242 • Incident 1: Training at
Keller-Globe 242 • Incident 2: There’s No Future Here! 242
Part Four Compensation 245
Chapter 9
Direct Financial Compensation (Core
Compensation) 246
Compensation: An Overview 247
Components of Direct Financial Compensation 249
Employee Base Pay 249
Base Pay 249
Cost-of-Living Adjustments 249
Seniority Pay 249
Performance-Based Pay 251
■■HR BLOOPERS: Motivating Software Development
Teams 256
Person-Focused Pay 257
Determinants of Direct Financial Compensation 258
Contextual Influences on Direct Financial
Compensation 259
Labor Market 259
Labor Unions 259
Economy 259
Interindustry Wage Differentials 259
Legislation 260
Build Job Structures Using Job Evaluation 262
Ranking Method 262
Classification Method 262
Factor Comparison Method 263
Point Method 263
Competitive Compensation Policies 263
Pay Level Compensation Policies 264
Pay Mix 265
Ability to Pay 265
Market Competitive Pay Structures: Job Pricing Using
Compensation Surveys 266
Pay Grades 266
Pay Ranges 267
Broadbanding 268
Two-Tier Wage System 268
Adjusting Pay Rates 268
Salary Compression 269
■■ETHICAL DILEMMA: But He’s a Friend
269
Sales Representative Compensation 270
Contingent Worker Compensation 270
Executive Compensation 270
Base Salary 271
Bonuses and Performance-Based Pay 271
Stock Option Plans 271
Perquisites (Perks) 271
Severance Packages 271
Executive Compensation Issues in the United States 272
Executive Compensation in the Global Environment 273
Summary 274 • Key Terms 275 • Exercises 275
Questions for Review 276 • Incident 1: A Motivated
Worker 276 • Incident 2: The Controversial Job 277
Chapter 10
Indirect Financial Compensation
(Employee Benefits) 278
Indirect Financial Compensation (Employee Benefits) 279
Legally Required Benefits 280
Social Security 280
Unemployment Insurance 281
■■ETHICAL DILEMMA: A Poor Bid
281
Workers’ Compensation 282
Discretionary Benefits 282
Health Care 282
Fee-for-Service Plans 283
Managed Care Plans 283
Specialized Insurance Plans 284
Consumer-Driven Health Care Plans 285
Retirement Plans 286
Defined Benefit Plans 286
Defined Contribution Plans 286
Cash Balance Plans 287
Life Insurance and Disability Insurance 287
Paid Time-Off 287
Vacation 287
Sick Pay and Paid Time Off Banks 288
Sabbaticals 288
Other Types of Paid Time Off 289
Employee Services 289
Child Care 289
Educational Assistance 289
Food Services/Subsidized Cafeterias 290
Scholarships for Dependents 290
Relocation 290
Domestic Partner Benefits and Same-Sex
Marriage 290
Premium Pay 291
13
14
CoNTENTS
Voluntary Benefits 291
Employee Benefits Legislation 292
Laws Affecting Collective Bargaining 314
National Labor Relations Act 314
■■ETHICAL DILEMMA: A Strategic Move
Employee Retirement Income Security Act 292
Consolidated Omnibus Budget Reconciliation Act 292
Older Workers Benefit Protection Act 292
Health Insurance Portability and Accountability Act 292
Family and Medical Leave Act 293
Pension Protection Act 293
Patient Protection and Affordable Care Act 293
Industries 315
Labor—Management Relations Act 316
Antidiscrimination Laws and Executive Orders 316
Steps that Lead to Forming a Bargaining Unit 316
Customized Benefit Plans 295
Global Customized Benefits 295
Communicating Information about the Benefits Package 296
Workplace Flexibility (Work–Life Balance) 296
Flextime 297
Compressed Workweek 298
Job Sharing 298
Two-in-a-Box 298
■■HR BLOOPERS: The Job-Sharing Problem at SunTrust Bank
299
Telecommuting 299
Part-Time Work 300
Summary 300 • Key Terms 301 • Exercises 302
Questions for Review 302 • Incident 1: Is Flextime the Way
Forward? 302 • Incident 2: A Benefits Package Designed
for Whom? 303
Part Five Labor Relations, Employee
Relations, Safety and Health 305
Chapter 11
Labor Unions and Collective
Bargaining 306
Why Do Unions Exist? 307
Why Employees Join Unions 308
Compensation and Employee Benefits 308
Job Security 309
Attitude of Management 309
Union Structure 309
Local Union 309
National Union 310
American Federation of Labor and Congress of Industrial
Organizations 310
Change to Win Coalition 310
Prevalence of Unions 311
Organized Labor’s Strategies for a Stronger
Movement 312
Strategically Located Union Members 312
Pulling the Union Through 312
Political Involvement 312
Union Salting 313
Flooding the Community 313
Public Awareness Campaigns 313
Building Organizing Funds 313
Unions Partnering with High Schools 313
Organizing Younger Workers 313
Organizing through the Card Check 314
314
■■HR BLOOPERS: Stopping Unionization at Packer
Signing of Authorization Cards 317
Petition for Election 317
Election Campaign 318
Election and Certification 318
Collective Bargaining 319
Collective Bargaining Process 319
Bargaining Issues 320
Recognition 320
Management Rights 320
Union Security 321
Compensation 321
Grievance Procedure 322
Employee Security 322
Job-Related Factors 322
Preparation for Negotiations 322
Negotiating the Agreement 323
Breakdowns in Negotiations 325
Third-Party Intervention 325
Union Strategies for Overcoming Negotiation
Breakdowns 326
Management Strategies for Overcoming Negotiation
Breakdowns 327
Reaching the Labor–Management Agreement 327
Ratifying the Labor–Management Agreement 328
Administration of the Labor–Management Agreement 328
Grievance Procedure in a Union Environment 328
Union Decertification 330
Collective Bargaining in the Public Sector 331
Labor Unrest in China 332
Summary 333 • Key Terms 334 • Exercises 335
Questions for Review 335 • Incident 1: Bargaining Process for
Amico Holdings 336 • Incident 2: You Are Out of What? 336
Chapter 12
Internal Employee Relations 338
Employment at Will 339
Discipline and Disciplinary Action 340
Disciplinary Action Process 340
Approaches to Disciplinary Action 342
Hot Stove Rule 342
Progressive Disciplinary Action 342
Disciplinary Action without Punishment 344
Problems in the Administration of Disciplinary Action 344
■■ETHICAL DILEMMA: To Fire or Not to Fire
345
Termination 345
“Just Cause” as a Standard for Choosing to Terminate Employment 345
CoNTENTS
Considerations in Communicating the Termination
Decision 346
■■HR BLOOPERS: Effective Discipline at Berries Groceries
Termination of Employees at Various Levels 347
Termination of Nonmanagerial/Nonprofessional Employees 347
Termination of Middle- and Lower-Level Managers and
Professionals 347
Termination of Executives 347
Demotion as an Alternative to Termination 348
Downsizing 348
Negative Aspects of Downsizing 349
Worker Adjustment and Retraining Notification Act 349
Outplacement 350
Severance Pay 350
Ombudsperson 351
Alternative Dispute Resolution 351
Transfers 352
Promotions 352
Resignations 353
Employee Safety, Health, and
Wellness 360
Nature and Role of Safety, Health, and Wellness 361
Occupational Safety and Health Administration 362
OSHA and Whistle-blowers 364
OSHA and the Small Business 365
■■HR BLOOPERS: Health and Safety Problems at XIF
Chemicals 365
Safety: The Economic Impact 366
Focus of Safety Programs 366
Unsafe Employee Actions 366
Unsafe Working Conditions 366
Developing Safety Programs 366
Musculoskeletal Disorders 369
Ergonomics 369
Workplace Bullying and Violence 370
Workplace Bullying 370
Workplace Violence 371
Vulnerable Employees 371
Burnout 376
Physical Fitness Programs 377
Substance Abuse 377
Alcohol Abuse 378
Drug Abuse 378
Substance-Abuse-Free Workplace 378
Implementing a Drug-Testing Program 380
Employee Assistance Programs 381
Health Care in the Global Environment 381
Chapter 14
Summary 356 • Key Terms 357 • Exercises 357
Questions for Review 357 • Incident 1: Should He Be
Fired? 358 • Incident 2: To Heck with Them! 358
Accident Investigation 368
Evaluation of Safety Programs 368
Potential Consequences of Stress 375
Stressful Jobs 375
Part Six
Retirements 354
Administering Disciplinary Action in Other
Countries 355
■■ETHICAL DILEMMA: Illegal Dumping
Employee Wellness 373
Social Networking and Wellness 374
Nature of Stress 375
Summary 382 • Key Terms 383 • Exercises 383
Questions for Review 384 • Incident 1: What a
Change! 384 • Incident 2: A Commitment to Safety? 384
Analyzing Voluntary Resignations 353
Attitude Surveys: A Means of Retaining Quality
Employees 354
Offboarding 354
Chapter 13
346
Legal Consequences of Workplace Violence 372
Individual and Organizational Characteristics to Monitor 372
Preventive Actions 372
367
Operating in a Global
Environment 387
Global Human Resource
Management 388
Evolution of Global Business 389
Exporting 390
Licensing 390
Franchising 390
Multinational Corporation 391
Global Corporation 391
Global Strategic Human Resource Management 391
Setting the Stage for Global HR Practice 392
Country Politics and Economic Structure 392
Legal System 393
National Cultural Norms 393
Labor Force Characteristics and Dynamics 394
Global Staffing 395
Expatriate 395
Host-Country National 395
Third-Country National 395
Approaches to Global Staffing 395
Recruiting Host-Country Nationals 396
Selecting Expatriates 396
Background Investigation 397
■■HR BLOOPERS: United Architect’s Expatriate
Problems 397
Global Performance Management and Human Resource
Development 398
Performance Management 398
Expatriate Human Resource Development 399
Pre-Move Orientation and Training 399
15
16
CoNTENTS
Continual Development: Online Assistance and Training 399
Repatriation Orientation and Training 399
Global E-learning 400
Virtual Teams in a Global Environment 401
Summary 406 • Key Terms 406 • Exercises 407
Questions for Review 407 • Incident 1: The Overseas
Transfer 407 • Incident 2: Expat in the Heartland 408
Global Compensation 401
Compensation for Host-Country Nationals 401
Expatriate Compensation 402
Global Safety and Health 403
Global Employee and Labor Relations 404
■■ETHICAL DILEMMA: Mordita
404
Globalization for Small to Medium-Sized Businesses 405
Glossary 409
Name Index 420
Company Index 421
Subject Index 423
Preface
Approach to Writing Human Resource Management
We approach the study of human resource management (HRM) in a realistic, practical, interesting, and stimulating manner. We focus on showing how HRM is practiced in the real world. Throughout the book, you will see
examples of how organizations practice HRM. In explaining a concept, we often quote human resources (HR)
professionals, yet all HR discussion is based on sound theoretical concepts and practice. Throughout this book,
the strategic role of HR is apparent in the discussion of each major HRM function. In addition, we show how HR
topics are related to other HR topics. For instance, a firm that emphasizes recruiting top-quality candidates but
neglects to provide satisfactory compensation is wasting time, effort, and money. A firm’s compensation system
will be inadequate unless employees are provided a safe and healthy work environment. If a firm’s compensation system pays below-market wages, the firm will always be hiring and training new employees only to see the
best leave for a competitor’s higher wages. This interrelationship will become more obvious as these topics are
addressed throughout the book. These interrelationships are also shown to be important as organizations work
within the global environment.
Course Prerequisite
This book is designed primarily for the first undergraduate course in HRM. It is intended primarily for students who are being exposed to HRM for the first time. It is designed to put them in touch with the field
through the use of numerous examples and company material and will reinforce the notion that, by definition,
all managers are necessarily involved with HR. The book provides helpful insights for those students who
aspire to management positions.
Overview of the 14th Edition of Human Resource Management
HRM is arguably the most exciting area in business. Much has changed in the world since the writing of the 13th
edition. The continuing uncertainty of the economy affected many aspects of HRM. Debates about whether to
raise the minimum wage pay rate rage on at the national and local levels. Provisions of health-care reform have
been implemented with many more to come online. Major technological changes appear to be increasing with no
end in sight. These changes have dramatically affected how the work of the HR professional is performed such
as with mobile recruiting and learning. Social media tools such as wikis, blogs, LinkedIn, Facebook, and Twitter
have become an integral part of the world of the HR professional. Each edition seems to provide new examples
to be discussed. The need for companies to operate in the global environment continues to expand. The interrelationship of the HRM functions and the increasing use of technology and the importance of global influences
is reflected throughout this book.
The 14th edition of Human Resource Management reveals HR as strategically important to management in
a practical, realistic manner yet maintains a balance of pragmatism and theoretical concepts. As will be noted
throughout this edition, much continues to be done regarding who performs the HR tasks. HR outsourcing, HR
shared service centers, professional employer organizations, and line managers now assist in the accomplishment of HR activities. As a shift is made in the allocation of those who perform the HR function, many HR
departments continue to get smaller. This shift should permit HR to shed its administrative image and focus on
mission-oriented activities.
Dr. Joseph J. Martocchio, a professor of HR at the University of Illinois, Urbana–Champaign for 25 years,
has joined Dr. R. Wayne Mondy as a co-author. Their efforts have built on the excellence of previous editions of
this textbook.
What’s New to This Edition
•
•
A new section on competencies and competency modeling has been added to Chapter 4.
Selection test reliability has been expanded; drug testing has been added to Chapter 6.
17
18
PREFACE
•
•
•
•
•
HR Bloopers, a scenario-based exercise, has been added to every chapter.
The ordering of Chapters 7 and 8 has been reversed. Chapter 7 addresses performance management
and appraisal, whereas Chapter 8 focuses on HR development and training.
A new section on team training and the types and applications of team training has been added to Chapter 8.
Chapters 11 through 13 have been reordered to emphasize the role of labor unions.
A new section on Global HR has been added to Chapter 14.
Features of the Book
•
•
•
•
•
•
•
•
HR Bloopers present scenarios that describe potential mistakes that may occur in HR practice. Questions
that follow in MyManagement Lab® provide students with the opportunity to test their understanding and
recall of the chapter material based on the information contained in the scenario.
Ethical Dilemma offers challenging ethical considerations in HR practice when HR professionals must
make choices between what is right and wrong as well as appropriate versus inappropriate application of HR
practices. Questions that follow provide students with the opportunity to express what they would do and to
consider the factors in the ethical dilemma that might influence a person to make an unethical choice.
Social media topics are examined throughout the text. Many HR professionals use social media for recruitment. Employees and HR professionals use social media to share knowledge. Increasingly, HR professionals understand social media as a communication tool that distinguishes between generations in the
workplace, which is an element of diversity management. Understanding applications of social media is
essential to effective HR activities.
End-of-chapter exercises provide in-depth, thought-provoking questions to the material covered in the text.
Dodd–Frank Wall Street Reform and Consumer Protection Act addresses a variety of executive compensation issues with which HR professionals should be familiar. Executive compensation is determined
quite differently than compensation for other employee groups. We highlight these differences in the relevant chapters.
Patient Protection and Affordable Care Act has created requirements that employers provide health
insurance to their employees or pay substantial penalties. This law has influenced the minimum benefits
that must be included in health insurance. Prior to the passage of this law, health insurance was offered as
a discretionary benefit.
New tables and figures are included throughout the text to enhance student learning by providing visual
examples of HR practices or analytical tools (for example, the series of “what-if” questions that help companies to determine whether individuals are contingent workers or full-fledged employees).
Small business and HR provides students with an appreciation of how HR practices in small businesses are
often different than in larger companies because not all students will choose to work for large corporations.
Topics relevant to small businesses are brought up throughout the text where relevant differences are evident.
For example, some employment laws do not apply to small businesses.
MyManagementLab Suggested Activities
For the 14th edition we the authors are excited that Pearson’s My Management Lab has been integrated fully
into the text. These new features are outlined below. Making assessment activities available online for students
to complete before coming to class will allow you the professor more discussion time during the class to review
areas that students are having difficulty in comprehending.
Learn it
Students can be assigned the Chapter Warm-Up before coming to class. Assigning these questions ahead of time
will ensure that students are coming to class prepared.
Watch It
Recommends a video clip that can be assigned to students for outside classroom viewing or that can be watched
in the classroom. The video corresponds to the chapter material and is accompanied by multiple choice questions
that re-enforce student’s comprehension of the chapter content.
PREFACE
19
Try It
Recommends a mini simulation that can be assigned to students as an outside classroom activity or it can be done
in the classroom.. As the students watch the simulation they will be asked to make choices based on the scenario
presented in the simulation. At the end of the simulation the student will receive immediate feedback based on
the answers they gave. These simulations re-enforces the concepts of the chapter and the students comprehension
of those concepts.
Talk About It
These are discussion type questions which can be assigned as an activity within the classroom.
Assisted Graded Writing Questions
These are short essay questions which the students can complete as an assignment and submit to you the professor
for grading.
New or Substantially Updated Topics by Chapter
We especially appreciate the efforts of the professionals who reviewed and provided valuable suggestions for this
edition. Many of the changes listed are based on their suggestions.
Chapter 1
Expanded discussions of the HR profession and HR as a strategic business partner are included. A competency
model for the work HR professionals perform has been added as well as a brief introduction to the idea that
employees are assets (human capital) and necessary to business success like other forms of business capital such
as manufacturing equipment and monetary resources. HR Bloopers: Staffing Stone Consulting.
Chapter 2
Several new examples are added throughout the chapter to put corporate social responsibility and corporate
sustainability practices in context. HR Bloopers: Sales Incentives at Pinser Pharmaceutical.
Chapter 3
The introduction compares and contrasts equal employment opportunity (EEO) and workforce diversity.
The order of presentation of the two main topics has been changed. EEO precedes diversity management to better correspond with the unfolding of societal changes. A discussion of the Genetic Information
Nondiscrimination Act (GINA) of 2008 has been added. The discussion of the role of the Office of Federal
Contract Compliance Programs (OFCCP) has been expanded. HR Bloopers: Affirmative Action and
Workforce Diversity.
Chapter 4
The discussion of strategic planning takes place at the beginning of the chapter and the logic for how HR
planning and job analysis are informed by the strategic planning process is presented. The material on strategic planning has been enhanced with additional concepts (for example, different types of strategies) and
business examples. A new section on competencies and competency modeling has been added given the
increased use along with or instead of traditional job analysis. HR Bloopers: Workforce Planning at Master
Cleaner.
Chapter 5
The discussion of contingent workers has been expanded. Explicit criteria for distinguishing between contingent workers and employees are now included. HR Bloopers: Recruiting Skilled Machinists.
Chapter 6
The discussions of selection norms and selection test reliability have been expanded. Drug testing has been added
as a possible component of the selection process. The discussion of legal considerations has been expanded and
points to specific legal concerns and particular selection tests. HR Bloopers: The First Interview.
20
PREFACE
Chapter 7
The ordering of Chapters 7 and 8 in the 13th edition have been reversed in the 14th edition. Chapter 7 addresses
performance management and appraisal, whereas Chapter 8 focuses on HR development and training. This
change was made because performance management and appraisal often inform the need for training. The discussion of performance appraisal methods has been expanded greatly and organized into four categories: trait,
comparison systems, behavioral systems, and results-based systems. In addition, samples of many of the methods
have been added to this chapter. HR Bloopers: Appraising Performance at Global Insurance.
Chapter 8
The presentation of training needs assessment was expanded. A brief discussion of massive open online courses
has been added to the e-learning section. A new section on team training and the types and applications of team
training has been included. HR Bloopers: Management Development at Trends Apparel.
Chapter 9
The focus on components of compensation system design has been enhanced. The discussions on seniority pay,
merit pay, incentive pay, and person-focused pay (skill-based and competency-based) have been expanded. The
discussion of pay policy incorporates the role of pay mix as an important element. Interindustry wage differentials are introduced as an explanation to further help understand why pay differs from company to company. HR
Bloopers: Motivating Software Development Teams.
Chapter 10
A brief historical explanation has been added to help students understand the existence of some employee benefit offerings as well as why some are required by law and others are not. The discussion of health-care plans
has been expanded to include fee-for-service plans. Additional information has been added to the section on
consumer-driven health care. The life insurance section has been expanded by including specific kinds of life
insurance options. HR Bloopers: The Job-Sharing Problem at SunTrust Bank.
Chapter 11
Chapters 11 through 13 have been reordered to emphasize the role of labor unions (Chapter 11), internal
employee relations (Chapter 12), and employee safety, health, and wellness (Chapter 13). A brief historical
perspective on the economy and nature of the workplace is presented to help set the context for unionization.
An expanded discussion to help explain the rise of unionization is included. An expanded discussion of the
challenges to the status of unions today is added. Additional reasons for union decertification are discussed.
HR Bloopers: Stopping Unionization at Packer Industries.
Chapter 12
The discussion of employment at will has been expanded to more fully explain the three exceptions. The just
cause standard for terminations is introduced. Along with this discussion, the seven tests to determine whether
a planned termination decision meets the just cause standard are included. HR Bloopers: Effective Discipline at
Berries Groceries.
Chapter 13
Several new examples are added throughout the chapter to enhance the context of safety, health, and wellness in
companies. HR Bloopers: Health and Safety Problems at XIF Chemicals.
Chapter 14
A new section that more effectively sets the context for global HR has been added. It is organized into four
areas—country politics and economic structure, national cultural norms, legal system, and labor force characteristics and dynamics. HR Bloopers: United Architect’s Expatriate Problems
Instructor Resources
At the Instructor Resource Center, www.pearsonglobaleditions.com/Mondy, instructors can easily register
to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media supplements that
accompany this text. Visit http://247.pearsoned.com for answers to frequently asked questions and toll-free
user support phone numbers.
PREFACE
21
The following supplements are available with this text:
•
•
•
•
Instructor’s Resource Manual
Test Bank
TestGen® Computerized Test Bank
PowerPoint Presentation
CourseSmart*
CourseSmart eTextbooks were developed for students looking to save the cost on required or recommended
textbooks. Students simply select their eText by title or author and purchase immediate access to the content for
the duration of the course using any major credit card. With a CourseSmart eText students can search for specific
keywords or page numbers, take notes online, print out reading assignments that incorporate lecture notes, and
bookmark important passages for later review. For more information or to purchase a CourseSmart eTextbook,
visit www.coursesmart.co.uk
2015 Qualitative BusinessVideo Library
Additional videos illustrating the most important subject topics are available in MyManagementLab, under
Instructor Resources: Business Today.
Acknowledgments
As with the previous editions, the support and encouragement of many practicing HRM professionals and faculty
members has helped to make this book possible. The reviewers for this edition were especially valuable. These
individuals are:
Bruce Louis Rich
California State University–Saint Marcos
Thomas Norman
California State University–Dominguez Hills
Carolyn A. Waits
Cincinnati State Technical & Community College
Dr.Darlene M. Andert
Florida Gulf Coast University
Denise H. Barton
Wake Technical Community College
Bobbie Knoblauch
Wichita State University
Nancy Zimmerman
Community College of Baltimore
County–Cantonsville
The authors would also like to acknowledge the following contributors for the hard work they did in providing
content for the MyLab activities:
Dan Morrell,
Middle Tennessee State University
Gordon Schmidt,
Indiana University-Purdue University Fort Wayne
Susan C. Schanne,
Eastern Michigan University
About R. Wayne Mondy
I have always had a strong interest in business practices as evidenced by my many years of academic and professional experience. I believe that managing people is the crucial side of business because a firm’s human resources
are the foundation on which everything is accomplished. Prior to entering academics, I had business experience
with such companies as Peat, Marwick, Mitchell, and Co. (now KPMG), General Electric Corporation, Gulf
South Research Institute, and Houston Data Center. In addition, I served in the U.S. Air Force as a management
analysis officer. Several examples in your text relate to my business experience.
I received my DBA from Louisiana Tech University and have enjoyed many years of teaching and administration, having served as professor, department head of the Department of Management & Marketing, and
Dean of the College of Business. I have authored or co-authored seven college textbooks in a total of thirty-one
editions, fifty-four articles, and twenty papers. The textbooks are Management: Concepts, Practices, and Skills
(8th edition); Human Resource Management (14th edition); Personal Selling: Function, Theory and Practice
* This product may not be available in all markets. For more details, please visit www.coursesmart.co.uk or contact your local representative.
22
PREFACE
(4th edition); Supervision (3rd edition); Management Concepts and Canadian Practices (2nd edition); Staffing
the Contemporary Organization; and Management and Organizational Behavior. In addition to the 14th edition of
Human Resource Management, the book has been translated into Spanish (Administracin de Recursos Humanos,
Prentice Hall, 1997, 2001, and 2005), and Chinese (Prentice Hall, 1998, 2002, 2005, and 2011). A special 2008
two-part international edition of the 10th edition was prepared for India, Bangladesh, Bhutan, Pakistan, Nepal, Sri
Lanka, and the Maldives. In addition, a Pearson International Edition was prepared for the 10th edition. A 2010
international edition was prepared for the 11th edition. Articles have been published in such journals as Business
Journal, Journal of Education for Business, HR Magazine, and The Journal of Business Ethics.
I am also Life Certified as a Senior Professional in Human Resources (SPHR) by the Human Resource
Certification Institute. During my career at various universities, I have had the opportunity to charter three
student chapters of the Society for Human Resource Management. In one instance, about 20 students wanted
to take the certification examination. I was excited about their enthusiasm until they informed me, “Dr. Mondy,
you have to take it, too.” I have never studied so hard but we all were successful in achieving our objectives.
That is how I received my SPHR designation—I earned it.
R. Wayne Mondy, SPHR
About Joseph J. Martocchio
My interest in the human resource management field began while I was a junior at Babson College. I found
myself wanting to practice in the field as well as to become a university professor and researcher. I pursued
both professional desires by working at Cameron and Colby (a reinsurance company) in Boston and for General
Electric’s Aerospace business group in Valley Forge, Pennsylvania.
I advanced my education in the HR field by earning a master’s degree and Ph.D. degree at Michigan State
University. My master’s degree enabled me to build an even stronger foundation in practice and my doctoral degree provided me with the skills to conduct scholarly research and teach college-level courses. Since earning my
graduate degrees, I have been a professor in the School of Labor and Employment Relations at the University of
Illinois, Urbana–Champaign and assumed administrative roles as a Provost Fellow, Associate Dean for Academic
Affairs, and Interim Dean. All the while, I have taught a variety of courses in the HR field. These include compensation systems, employee benefits, employment systems (HR and labor relations), HR planning and staffing,
and statistics. For many years, I served as the faculty advisor to the student chapter of the Society for Human
Resource Management at the University of Illinois during which time students earned Merit Awards and Superior
Merit awards on multiple occasions.
As a researcher, I have studied a variety of topics that include employee absenteeism, employee training and
development, compensation systems, employee benefits, and generational diversity. My work appears in leading
scholarly journals such as Academy of Management Journal, Academy of Management Review, Journal of Applied
Psychology, Journal of Management, and Personnel Psychology. I received the Ernest J. McCormick Award for
Distinguished Early Career Contributions from the Society for Industrial and Organizational Psychology (SIOP),
and I was subsequently elected as a Fellow in both the American Psychological Association and SIOP. Following
the attainment of this recognition, I served as the Chair of the HR Division of the Academy of Management as
well as in various other leadership roles within that organization.
Besides writing scholarly articles, I have two sole-authored textbooks: Strategic Compensation: A Human
Resource Management Approach (Pearson Higher Education), which is in its 8th edition, and Employee Benefits:
A Primer for Human Resource Professionals (McGraw-Hill), which is in its 5th edition. The compensation textbook was translated for use in China and India. Joining as a co-author on the 14th edition of Human Resource
Management has been an exciting opportunity.
Joe Martocchio
Pearson gratefully acknowledges and thanks the following people for their work on the Global Edition:
Contributors:
Hussein Nabil Ismail, School of Business, Lebanese American University (LAU), Lebanon
Anita Peša, Department of Economics, University of Zadar, Croatia
Reviewers:
Roshidi Hassan, Department of Management, Universiti Teknologi Mara
Anna Tsui, Department of Management, The Chinese University of Hong Kong
Sun Li Yun, School of Business, Macau University of Science and Technology
Part One
Setting the Stage
Chapter 1
Human Resource Management: An Overview
Chapter 2
Business Ethics and Corporate Social
Responsibility
Chapter 3
Equal Employment Opportunity, Affirmative
Action, and Workforce Diversity
1
Human Resource Management:
An Overview
Chapter ObjeCtives After completing this chapter, students should be able to:
1
Define human resource management.
2
Identify the human resource management
functions.
3
Describe who performs human resource
management activities.
4
Explain how HR serves as a strategic
business partner.
5
Identify the elements of the dynamic HRM
environment.
6
Explain the importance of corporate
culture and human resource
management.
7
Describe the importance of employer
branding.
8
Discuss human resource management
issues for small businesses.
9
Identify ways that country culture
influences global business.
10
Describe the human resource
management profession.
MyManagementLab®
Improve Your Grade!
Over 10 million students improved their results using the Pearson MyLabs.Visit
mymanagementlab.com for simulations, tutorials, and end-of-chapter problems.
Learn It
If your professor has chosen to assign this, go to mymanagementlab.com to see what
you should particularly focus on and to take the Chapter 1 Warm-Up.
24
ObjeCtive 1.1
Define human resource
management.
human resource management
(HRM)
Utilization of individuals to achieve
organizational objectives.
ObjeCtive 1.2
Identify the human resource
management functions.
staffing
Process through which an
organization ensures that it
always has the proper number
of employees with the appropriate
skills in the right jobs, at the right
time, to achieve organizational
objectives.
Defining human resource Management
human resource management (hrM) is the use of individuals to achieve organizational
objectives. Basically, all managers get things done through the efforts of others. Consequently,
managers at every level must concern themselves with HRM. Individuals dealing with human
resource matters face a multitude of challenges, ranging from a constantly changing workforce to ever-present government regulations, a technological revolution, and the economy
of the United States and the world. Furthermore, global competition has forced both large
and small organizations to be more conscious of costs and productivity. Because of the critical nature of human resource issues, these matters must receive major attention from upper
management.
The remainder of this chapter will enable you to gain an appreciation of HRM as a critical
business function. In the next sections, we will introduce you to the functions that make up HRM
and identify who is responsible for managing human resources (HR). Then, we will discuss HR
as a strategic business partner and the dynamic role of the environment that influences HRM
practice. Finally, we turn our attention to the importance of corporate and national culture and
discuss the HRM profession.
human resource Management Functions
People who are engaged in managing HR develop and work through an integrated HRM
system. As Figure 1-1 shows, six functional areas are associated with effective HRM: staffing,
human resource development, performance management, compensation, safety and health, and
employee and labor relations. These functions are discussed next.
Staffing
staffing is the process through which an organization ensures that it always has the proper
number of employees with the appropriate skills in the right jobs, at the right time, to achieve
organizational objectives. Staffing involves job analysis, human resource planning, recruitment,
and selection, all of which are discussed in this text.1
25
Part 1 • Setting the Stage
Human Resource
Development
Sta
Figure 1-1
Human Resource
Management Functions
ffi
ng
26
HR Web Wisdom
Pearson Web site for 14th
Edition of Human Resource
Management
www.pearsonhighered.com/
mondy
Students can visit this Web site to
get additional HR Web Wisdoms,
in-the-news articles, cases, and
chapter quizzes.
performance management
(PM)
Goal-oriented process
directed toward ensuring that
organizational processes are in
place to maximize the productivity
of employees, teams, and
ultimately, the organization.
human resource development
(HRD)
Major HRM functions consisting
not only of training and
development but also of individual
career planning and development
activities, organization
development, and performance
management and appraisal.
Sa
fet
He y an
alt d
h
Employee and
Labor Relations
ion
sat
en
mp
Co
ce
an t
rm en
rfo em
Pe nag
Ma
Human
Resource
Management
Job analysis is the systematic process of determining the skills, duties, and knowledge
required for performing jobs in an organization. It impacts virtually every aspect of HRM,
including planning, recruitment, and selection. Human resource planning is the systematic
process of matching the internal and external supply of people with job openings anticipated in
the organization over a specified period. The data provided set the stage for recruitment or other
HR actions. Recruitment is the process of attracting individuals on a timely basis, in sufficient
numbers, and with appropriate qualifications to apply for jobs with an organization. Selection is
the process of choosing the individual best suited for a particular position and the organization
from a group of applicants. Successful accomplishment of the staffing function is vital if the
organization is to effectively accomplish its mission. These topics are collectively often referred
to as staffing.
Performance Management
performance management is a goal-oriented process that is directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams, and
ultimately, the organization. Performance appraisal is a formal system of review and evaluation of individual or team task performance. It affords employees the opportunity to capitalize
on their strengths and overcome identified deficiencies, thereby helping them to become more
satisfied and productive employees.
Human Resource Development
human resource development is a major HRM function consisting not only of training and
development but also of career planning and development activities, organization development,
and performance management and appraisal. Training is designed to provide learners with the
knowledge and skills needed for their present jobs. Development involves learning that goes
beyond today’s job and has a more long-term focus.
Organization development (OD) is planned and systematic attempts to change the organization (corporate culture), typically to a more behavioral environment. OD applies to an entire
system, such as a company or a plant. A number of OD methods are discussed that serve to
improve a firm’s performance.
Career planning is an ongoing process whereby an individual sets career goals and identifies
the means to achieve them. According to the U.S. Bureau of Labor Statistics, today’s employees
will work for approximately 9 to 11 companies during their careers based on the assumption that
ChaPter 1 • human reSourCe management: an overview
27
most people will work 30 to 40 years.2 A survey conducted by NYU’s School of Continuing and
Professional Studies showed that on average, individuals will change careers (not merely “jobs”)
three times in their life.3 Employee loyalty loses its meaning in this environment.
Career development is a formal approach used by the organization to ensure that people
with the proper qualifications and experiences are available when needed. Individual careers
and organizational needs are not separate and distinct. Organizations should assist employees in
career planning so the needs of both can be satisfied.
Compensation
The question of what constitutes a fair day’s pay has plagued management, unions, and workers
for a long time. A well-thought-out compensation system provides employees with adequate and
equitable rewards for their contributions to meeting organizational goals. As used in this book,
the term compensation includes the total of all rewards provided to employees in return for their
services. The rewards may be one or a combination of the following:
direct financial compensation
(core compensation)
Pay that a person receives in
the form of wages, salary,
commissions, and bonuses.
indirect financial
compensation (employee
benefits)
All financial rewards that are
not included in direct financial
compensation.
nonfinancial compensation
Satisfaction that a person receives
from the job itself or from the
psychological and/or physical
environment in which the
person works.
•
•
•
Direct Financial Compensation (Core Compensation): Pay that a person receives in the
form of wages, salaries, commissions, and bonuses.
indirect Financial Compensation (employee benefits): All financial rewards that are not
included in direct compensation, such as paid vacations, sick leave, holidays, and medical
insurance.
Nonfinancial Compensation: Satisfaction that a person receives from the job itself or
from the psychological or physical environment in which the person works.
Employee and Labor Relations
Businesses are required by law to recognize a union and bargain with it in good faith if the firm’s
employees want the union to represent them. In the past, this relationship was an accepted way
of life for many employers, but most firms today would rather have a union-free environment.
When a labor union represents a firm’s employees, the human resource activity is often referred
to as labor relations, which handles the job of collective bargaining. Internal employee relations
comprise the HRM activities associated with the movement of employees within the organization such as promotions, demotion, termination, and resignation.
Safety and Health
safety
Protection of employees from
injuries caused by work-related
accidents.
health
Employees’ freedom from physical
or emotional illness.
safety involves protecting employees from injuries caused by work-related accidents. health
refers to the employees’ freedom from physical or emotional illness. These aspects of the job are
important because employees who work in a safe environment and enjoy good health are more
likely to be productive and yield long-term benefits to the organization. Today, because of federal
and state legislation that reflect societal concerns, most organizations have become attentive to
their employees’ safety and health needs.
Human Resource Research
Although human resource research is not a distinct HRM function, it pervades all functional
areas, and the researcher’s laboratory is the entire work environment. For instance, a study
related to recruitment may suggest the type of worker most likely to succeed in the culture of a
particular firm. Research on job safety may identify the causes of certain work-related accidents.
The reasons for problems such as excessive absenteeism or excessive grievances may not be
readily apparent. However, when such problems occur, human resource research can often find
the causes and offer possible solutions. Human resource research is clearly an important key to
developing the most productive and satisfied workforce possible.
Interrelationships of Human Resource Management Functions
All HRM functional areas are highly interrelated. Management must recognize that decisions
in one area will affect other areas. For instance, a firm that emphasizes recruiting top-quality
candidates but neglects to provide satisfactory compensation is wasting time, effort, and money.
28
Part 1 • Setting the Stage
In addition, a firm’s compensation system will be inadequate unless employees are provided a
safe and healthy work environment. If a firm’s compensation system pays below-market wages,
the firm will always be hiring and training new employees only to see the best leave for a competitor’s higher wages. The interrelationships among the HRM functional areas will become
more obvious as these topics are addressed throughout the book.
ObjeCtive 1.3
Describe who performs human
resource management activities.
Who performs human resource
Management activities?
The person or units who perform the HRM tasks have changed dramatically in recent years,
and today there is no typical HR department. Many of these changes are being made so that
HR professionals can accomplish a more strategic role. Also, the recent recession forced some
HR departments to accomplish more with less, and some companies have downsized the HR
department to keep production-oriented people. This restructuring often resulted in a shift in
who carries out each function, not the elimination of the previously identified HR functions.
Some organizations continue to perform the majority of HR functions within the firm. However,
as internal operations are reexamined, questions are raised, such as: Can some HR tasks be
performed more efficiently by line managers or outside vendors? Can some HR tasks be centralized or eliminated altogether? Can technology improve the productivity of HR professionals?
One apparent fact is that all functions within today’s organizations are being scrutinized for
cost cutting, including HR. All units must operate under a lean budget in this competitive global
environment, and HR is no exception.
Evidence provided by The Hackett Group shows that the HR functions have been impacted
more than other support functions with regard to reductions in staff and operating budgets.4 In
fact, the most efficient companies typically spend nearly 30 percent less per employee on HR and
operate with 25 percent fewer HR employees.5 Mobile HR has been a major factor in this trend
as we discuss later in the chapter. Many HR departments continue to get smaller because others
outside the HR department now perform certain functions. HR outsourcing, shared service centers, professional employer organizations, and line managers now assist in the accomplishment
of many traditional HR activities. Let us first look at the role of the traditional HR professional.
Human Resource Management Professional
human resource professional
Individual who normally acts in an
advisory or staff capacity, working
with other professionals to help
them deal with human resource
matters.
Historically, the HR manager was responsible for each of the six HR functions. A human resource
management professional is an individual who normally acts in an advisory or staff capacity,
working with other managers to help them address human resource matters. Often, HR departments
are created, with the central figure being the HR manager or executive. The HRM professional is
primarily responsible for coordinating the management of HR to help the organization achieve its
goals. Figure 1-2 displays a summary of a typical human resource professional’s job along with the
typical tasks performed by these professionals.
Line Managers
line managers
Individuals directly involved
in accomplishing the primary
purpose of the organization.
All managers get things done through the efforts of others. Consequently, managers at every
level naturally concern themselves with HRM, for example, making decisions about which
job candidates are likely to meet the needs of company, conducting employee performance
evaluations, and determining pay raise amounts. Individuals directly involved in accomplishing the primary purpose of the organization are line managers. As the traditional work of HR
managers evolves, line managers have assumed some tasks typically done by HR professionals.6 Automation has assisted greatly in this process. Managers are being assisted by manager
self-service, the use of software, and the corporate network to automate paper-based human
resource processes that require a manager’s approval, recordkeeping or input, and processes
that support the manager’s job. Everything from recruitment, selection, and performance
appraisal to employee development has been automated to assist line managers in performing
traditional HR tasks.
There is a shared responsibility between line managers and HR professionals. Frequently,
the line manager looks to HR for guidance in topics such as selection, training, promotion, and
ChaPter 1 • human reSourCe management: an overview
Figure 1-2
Human Resource
Professional Job
Description
Source: National Center for
O*NET Development.
11-3121.00. O*NET OnLine.
Retrieved January 14, 2014,
from http://www.onetonline.org/
link/summary/11-3121.00
29
Plan, direct, or coordinate hr activities and staff of an organization.
Sample of reported job titles: human resources manager (hr manager), Director of
human resources, human resources Director (hr Director), employee Benefits manager,
human resources vice President, employee relations manager
Tasks
•
•
•
•
•
•
•
•
•
•
Serve as a link between management and employees by handling questions, interpreting and administering contracts and helping resolve work-related problems.
analyze and modify compensation and benefits policies to establish competitive
programs and ensure compliance with legal requirements.
advise managers on organizational policy matters such as equal employment
opportunity and sexual harassment, and recommend needed changes.
Perform difficult staffing duties, including dealing with understaffing, refereeing
disputes, firing employees, and administering disciplinary procedures.
Plan and conduct new employee orientation to foster positive attitude toward
organizational objectives.
identify staff vacancies and recruit, interview, and select applicants.
Plan, direct, supervise, and coordinate work activities of subordinates and staff
relating to employment, compensation, labor relations, and employee relations.
Plan, organize, direct, control, or coordinate the personnel, training, or labor
relations activities of an organization.
represent organization at personnel-related hearings and investigations.
administer compensation, benefits and performance management systems, and
safety and recreation programs.
taking disciplinary action. The relationship between HR professionals and line managers is
illustrated by the following account:
Bill Brown, the production supervisor for Ajax Manufacturing, has just learned that one of
his machine operators has resigned. He immediately calls Sandra Williams, the HR manager,
and says, “Sandra, I just had a Class A machine operator quit down here. Can you find some
qualified people for me to interview?” “Sure Bill,” Sandra replies. “I’ll send two or three
down to you within the week, and you can select the one that best fits your needs.”
In this instance, both Bill and Sandra are concerned with accomplishing organizational
goals, but from different perspectives. As an HR manager, Sandra identifies applicants who meet
the criteria specified by Bill. Yet, Bill will make the final decision about hiring because he is
responsible for the machine operators’ performance. His primary responsibility is production;
hers is human resources. As an HR manager, Sandra must constantly deal with the many problems related to HR that Bill and the other managers face. Her job is to help them meet the human
HR needs of the entire organization.
Human Resources Outsourcing
HR outsourcing (HRO)
Process of hiring external
HR professionals to do the
HR work that was previously
done internally.
hr outsourcing (hrO) is the process of hiring external HR professionals to do the HR work that
was previously done internally. It is estimated that HRO is a $42 billion industry with expected
future annual growth to be approximately 5 percent.7 In the early days of HRO, cost savings was
the primary driver in determining which activities to outsource. Today, outsourcing agreements are
focusing more on quality of service and saving time, which is often more important than saving
money.8 Ron Gier, vice president of human capital planning and employee relations for Sprint, said,
“Outsourcing is about concentrating where you are going to put your energy, where you are going
to build competency as a company and where you can use a partner to perform activities that are
not core to your business.”9 This permits HR to focus on strategic organizational issues.10 As will be
stressed throughout the text, strategic HR has become a major driver for HR professionals.11
Discrete services outsourcing involves one element of a business process or a single set
of high-volume repetitive functions to be outsourced.12 Benefits have often been the HR task
30
Part 1 • Setting the Stage
most likely to be outsourced. Dan Thomas, president of Trivalent Benefits Consulting Inc., said,
“Benefits administration has become so complex that it really takes someone who works with it
every single day to keep track of all of the different laws and changes that are going on.”13 For
example, a survey conducted by the ADP Institute revealed that more than half of employers
(52 percent of midsized and 54 percent of large) believe that benefits administration will be
more complex as a result of the Affordable Care Act. An even higher percentage of employers
(57 percent of midsized and 64 percent of large) believe that health care reform will cause the
time spent on benefits administration to increase.14
Business process outsourcing (BPO) is the transfer of the majority of HR services to a third
party. Typically larger companies are involved with BPO, both as a provider and a user. A major
HR outsourcer is IBM that has more than $100 billion in revenue.15 Kraft Foods Inc. and IBM
signed a multiyear BPO agreement in which IBM took over workforce administration, compensation, and performance reporting for all of Kraft’s 98,000 employees spread across 72 countries.16 Florida created a Web-based HR information system and outsourced administration of
most HR functions for approximately 240,000 state employees and retirees. Outsourced services
included recruiting, payroll, and HR administration services and benefits administration.17
Human Resources Shared Service Centers
shared service center (SSC)
A center that takes routine,
transaction-based activities
dispersed throughout the
organization and consolidates
them in one place.
A shared service center (ssC), also known as a center of expertise, takes routine, transactionbased activities dispersed throughout the organization and consolidates them in one place. For
example, a company with 20 strategic business units might consolidate routine HR tasks and perform them in one location. Shared service centers provide an alternative to HRO and can often
provide the same cost savings and customer service. Fewer HR professionals are needed when
shared service centers are used, resulting in significant cost savings. The most common HR functions that use SSCs are benefits and pension administration, payroll, relocation assistance and
recruitment support, global training and development, succession planning, and talent retention.
Professional Employer Organizations
professional employer
organization (PEO)
A company that leases employees
to other businesses.
A professional employer organization (peO) is a company that leases employees to other businesses. When a decision is made to use a PEO, the company releases its employees, who are then
hired by the PEO. The PEO then manages the administrative needs associated with employees.
It is the PEO that pays the employees’ salaries; it also pays workers’ compensation premiums,
payroll-related taxes, and employee benefits. The PEO is responsible to the IRS if, for example,
the payroll taxes go unpaid. The company reimburses the PEO, which typically charges a fee
Hr B looper s
Staffing Stone Consulting
Business at Stone Consulting is growing faster
than Shelly Stone expected. She just signed a contract on another big
project that she believes secures her future in the consulting business.
However, she has been so busy selling the firm’s services that
she has put little thought into how she is going to staff the projects
she has recently sold. She opened the firm more than a year ago and
quickly hired five consultants and an office manager to help her get
the business off the ground.
Unfortunately, one of the consultants has already left the firm
after making a huge mistake that caused Shelly to lose a client. Some
of the other consultants have raised some concerns with Shelly as
well. They’ve asked about pay increases and also her promise to eventually provide them with health insurance. However, she hasn’t had
time to even think about these issues because she has focused her
attention on finding new clients. As she looks over her project list she
realizes she needs to start thinking about staffing fast. Her current
team is already committed to other projects and the new projects she
has secured need to get started right away. The office manager interrupts her thoughts to tell her a potential client is on the line. Excited
about yet another opportunity, Shelly jumps on the call, quickly forgetting her staffing concerns.
If your professor has assigned this, go to mymanagementlab.com to complete the HR Bloopers exercise and test your application of these
concepts when faced with real-world decisions.
ChaPter 1 • human reSourCe management: an overview
31
of from 2 to 7 percent of the customer’s gross wages, with percentages based on the number of
leased employees. Because the PEO is the employees’ legal employer it has the right to hire,
fire, discipline, and reassign an employee. However, the client company maintains enough control so it can run the day-to-day operations of its business. Although PEOs have been available
since the early 1980s, they have recently become a multibillion dollar industry. In fact, there is
an estimated two to three million U.S. workers employed under a PEO-type arrangement and
that number is certain to grow.18 PEOs permit business owners to focus on their core business,
whereas the PEO handles HR activities.19 Companies using a PEO typically have a high level of
benefits and greater HR expertise than they could possibly have had on their own.
ObjeCtive 1.4
Explain how HR serves as
a strategic business partner.
human capital
As defined by economists, refers to
sets of collective skills, knowledge,
and ability that employees can
apply to create economic value for
their employers.
human resources as a strategic business partner
In the environment presently confronting HR, many HR professions are increasingly taking on the
role of being a strategic partner with upper management.20 In this role, HR professionals are able
to focus on matters that are truly important to the company as a whole.21 For example, increasing sales and building customer loyalty to the brand are important goals of soft drink companies
such as Coca Cola and PepsiCo. Increasing sales require hiring highly dedicated and motivated
sales and distribution employees. As a strategic business partner, HR helps to identify and develop
the employees necessary for excellent performance, builds recruitment systems, training programs
for product distribution and interactions with customers, constructs performance management, and
structures compensation programs that will greatly incentivize these employees to excel. The rapidly evolving world of HR will increasingly require HR professionals to thoroughly understand
all aspects of what the companies they work for do. Essentially, they must know more than just
HR work.22 In moving from a transactional to a strategic model, HR professionals work toward
solving strategic problems in the organization. No longer is an administrative and compliance role
appropriate as their primary jobs. For instance, preparing the company’s affirmative action plan or
administering the payroll system are compliance and administrative tasks. HR executives today
need to think like the CEO to become a strategic partner in achieving organizational plans and
results.23 In doing so, they understand the production side of the business and help to determine the
strategic capabilities of the company’s workforce, both today and in the future. HR professionals
need to be agile in their thinking as they adapt to the ebbs and flows of business. Therefore, HR
executives are ensuring that human resources support the firm’s mission.
HR professionals have changed the way they work. Working as a strategic business partner
requires a much deeper and broader understanding of business issues.24 What strategically
should HR be doing exactly? Possible strategic tasks for HR include making workforce strategies
fundamental to company strategies and goals; increasing HR’s role in strategic planning, mergers, and acquisitions; developing awareness or an understanding of the business; and helping line
managers achieve their goals as in the previous example of soft drink companies.
HR professionals can give the CEO and CFO a powerful understanding of the role that
employees play in the organization and the way it combines with business processes to expand or
shrink shareholder value. HR professionals are integrating the goals of HR with the goals of the
organization and focusing on expanding its strategic and high-level corporate participation with
an emphasis on adding value. In doing so, HR is demonstrating that it can produce a return on
investment for its programs. It analyzes HR activities to determine whether they are maintaining
acceptable profit margins. For example, HR professionals strive to develop cost-effective training strategies that boost sales revenue that far exceeds the cost of training. The CEO needs help
in matters that HR professionals are qualified to handle. HR professionals are the enablers; they
are the ones who should know about change and develop strategies to make it work.
A useful way to better understand how HR serves as a strategic business partner is to think
about the use of capital for value creation. Capital refers to the factors that enable companies to
generate income, higher company stock prices, economic value, strong positive brand identity,
and reputation. There is a variety of capital that companies use to create value, including financial capital (cash) and capital equipment (state-of-the-art robotics used in manufacturing).
Employees represent a specific type of capital called human capital. human capital, as
defined by economists, refers to sets of collective skills, knowledge, and ability that employees
can apply to create value for their employers. Companies purchase the use of human capital by
32
Part 1 • Setting the Stage
paying employees an hourly wage, salary, or bonuses and providing benefits such as paid vacation and health insurance. Also, companies help develop human capital to their advantage by
offering training programs aimed at further boosting employee productivity.
The meaning of value creation differs according to a company’s mission. It is useful to think
about the differences between for-profit and not-for-profit organizations. For example, Microsoft
and Frito Lay are for-profit companies that strive to generate annual profits for company shareholders. These companies promote profit generation by selling quality software and quality snack
products, respectively. The American Red Cross is an illustration of a not-for-profit organization
that relies on charitable monetary contributions and grant money to create societal value. The
people who contribute money and other resources do not seek monetary gain. Instead, they value
supporting humanitarian causes such as disaster relief. The American Red Cross provides disaster
relief after the occurrence of devastating events, including the typhoon in the Philippines that
destroyed cities and villages in 2013.
Every organization relies on capital to create value, but the combination of capital used to
create value differs from company to company. For example, Frito Lay uses state-of-the-art manufacturing equipment, and the American Red Cross does not. However, every organization shares
in common the employment of individuals and the necessity of managing employees to successfully create value. Indeed, HRM is the business function of managing employees to facilitate an
organization’s efforts to create value.
ObjeCtive 1.5
Identify the elements of the
dynamic HRM environment.
Dynamic human resource Management
environment
Many interrelated factors affect HRM practice within and outside the organization. As illustrated
in Figure 1-3, environmental factors include legal considerations, labor market, society, political
parties, unions, shareholders, competition, customers, technology, the economy, and unanticipated events. Each factor, either separately or in combination with others, can create constraints
or opportunities for HRM.
EXTERNAL ENVIRONMENT
Labor Market
INTERNAL ENVIRONMENT
Human Resource
Development
Operations
Sta
ffi
ng
Marketing
Society
Unanticipated Events
Legal Considerations
Competition
Sa
fet
He y an
alt d
h
Shareholders
Other
Functional
Areas
Unions
Political Parties
Employee and
Labor Relations
Economy
on
Customers
Human
Resource
Management
i
sat
Finance
en
mp
Co
ce
an t
rm en
rfo em
Pe nag
Ma
Technology
Figure 1-3
Environment of Human
Resource Management
ChaPter 1 • human reSourCe management: an overview
33
Legal Considerations
A significant external force affecting HRM relates to federal, state, and local legislation and
the many court decisions interpreting this legislation. For example, the Age Discrimination
in Employment Act is an example of a federal law that protects older workers from illegal
discrimination. In addition, presidential executive orders have had a major impact on HRM.
These legal considerations affect virtually the entire spectrum of human resource policies. Laws,
court decisions, and executive orders affecting other HRM activities will be described in the
appropriate chapters.
Labor Market
Potential employees located within the geographic area from which employees are normally
recruited comprise the labor market. The capabilities of a firm’s employees determine, to a large
extent, how well the organization can perform its mission. Because new employees are hired
from outside the firm, the labor market is considered an important environmental factor. The
labor market is always changing, and these shifts inevitably cause changes in the workforce of
an organization. For example, members of the aging baby boom cohort, the largest current generation of employees, are retiring in large numbers; however, younger generations are smaller
and less well-prepared to assume leadership roles because they have had much less time in the
workforce to develop them.
Society
Society may also exert pressure on HRM. The public is no longer content to accept, without
question, the actions of business. To remain acceptable to the general public, a firm must accomplish
its purpose while complying with societal norms.
Ethics is the discipline dealing with what is good and bad, or right and wrong, or with
moral duty and obligation. Corporate social responsibility (CSR) is closely related to ethics.
CSR is the implied, enforced, or felt obligation of managers, acting in their official capacity,
to serve or protect the interests of groups other than themselves.25 We take up these subjects
in Chapter 2.
Political Parties
Closely related to society, but not the same, are political parties. The Democratic and Republican
parties are the two major political parties in the United States. These parties often have differing
opinions on how HRM should be accomplished. For example, Democrats tend to favor government regulation that protects the rights of virtually all employees to receive at least a minimum
wage (the Fair Labor Standards Act) and health insurance (Patient Protection Affordability and
Accountability Act). Republicans, on the other hand, tend not to favor government regulation,
believing that businesses should have as much flexibility as possible to operate successfully.
Unions
union
Consists of employees who have
joined together for the purpose of
negotiating terms of employment
such as wages and work hours.
Wage levels, benefits, and working conditions for millions of employees reflect decisions made
jointly by unions and management. A union consists of employees who have joined together
for the purpose of negotiating terms of employment such as wages and work hours. The United
Auto Workers is an example of a large labor union. Unions are treated as an environmental factor
because, essentially, they become a third party when dealing with the company.
Shareholders
shareholders
Owners of a corporation.
The owners of a corporation are called shareholders. Because shareholders, or stockholders,
have invested money in the firm, they may at times challenge programs considered by management to be beneficial to the organization. Stockholders are wielding increasing influence,
and management may be forced to justify the merits of a particular program in terms of how
it will affect future projects, costs, revenues, profits, and even benefits to society as a whole.26
Considerable pressure has recently been exerted by shareholders and lawmakers to control
the salaries of corporate executives as we shall see in the discussion of the Dodd-Frank Act in
Chapters 2 and 9.27
34
Part 1 • Setting the Stage
Competition
Firms may face intense global competition for both their product or service and labor markets.
Unless an organization is in the unusual position of monopolizing the market it serves, other
firms will be producing similar products or services. A firm must also maintain a supply of
competent employees if it is to succeed, grow, and prosper. But other organizations are also
striving for that same objective. A firm’s major task is to ensure that it obtains and retains
a sufficient number of employees in various career fields to allow it to compete effectively.
A bidding war often results when competitors attempt to fill certain critical positions in
their firms. Even in a depressed economy, firms find creative ways to recruit and retain such
employees. For example, a company may offer a signing bonus (that is, a one-time monetary
payment) to offset lower pay.
Customers
The people who actually use a firm’s goods and services also are part of its external environment. Because sales are crucial to the firm’s survival, management has the task of ensuring
that its employment practices provide excellent customer support service. Customers constantly
demand high-quality products and after-purchase service. Therefore, a firm’s workforce should
be capable of providing top-quality goods and after-sale customer support. These conditions
relate directly to the skills, qualifications, and motivations of the organization’s employees.
HR Technology
human resource information
system (HRIS)
Any organized approach for
obtaining relevant and timely
information on which to base HR
decisions.
The rate of technological change is staggering. The development of technology has created new
roles for HR professionals but also places additional pressures on them to keep abreast of the
technology. We will briefly review three applications: human resource information systems,
cloud computing, and social media.
With the increased technology sophistication has come the ability to design a more useful
human resource information system (hris), which is any organized approach for obtaining
relevant and timely information on which to base HR decisions. The HRIS brings under one
encompassing technology system many human resource activities. Think of an HRIS as an
umbrella for merging the various subsystems discussed throughout this text. Today, mainstay
HR responsibilities such as planning, recruitment, selection, oversight of legal and regulatory
compliance, benefits administration, and the safeguarding of confidential employee information cannot be carried out effectively without an HRIS. Throughout the text, topics will be
highlighted that are part of an HRIS. In addition, all of the HRIS applications may be accessed
through cloud computing.
A rapidly developing trend is the increased mobility of tasks performed by HR professionals.28 A major factor contributing to HR mobility is cloud computing, a means of providing software and data via the Internet. Cloud computing and the use of mobile devices are
changing the way HR work is performed, and the change is moving at an amazing pace.29
With the cloud there is no more expensive, capital-intensive hardware and infrastructure and
no more expensive, time-consuming, staff-intensive upgrades.30 Cloud computing permits
businesses to buy and use what they need, when they need it. It allows large organizations
to move away from managing their own computer centers and focus on the core competencies of the firm. Cloud users have the ability to access the application securely from anywhere
in the world.31 HR professionals can be virtually anywhere and access the cloud, all through
any standard Web. HR departments are leveraging the increasing popularity of social media,
including LinkedIn, Facebook, YouTube, and Twitter. In the 2011 Achievers Social HR survey, respondents expressed the belief that social networking is an important tool for recruiting,
retaining, and managing employees. The majority of respondents, 81.9 percent, believe that
social networks will be used as an HR tool in their organizations within the next 12 months,
and the low cost associated with using social media is a positive contributing factor.32 There are
three main applications of social media. First, companies may engage in targeted recruiting and
sourcing passive and active applicants. Second, companies may use social media to promote
knowledge sharing, training and development, and reinforcing identification with the organization and promoting the brand.
ChaPter 1 • human reSourCe management: an overview
35
Economy
The economy of the nation and world is a major environmental factor affecting HRM. As a
generalization, when the economy is booming, it is more difficult to recruit qualified workers.
On the other hand, when a downturn is experienced, more applicants are typically available.
To complicate this situation even further, one segment of the country may be experiencing an
economic downturn, another a slow recovery, and another a boom. A major challenge facing HR
is working within this dynamic, ever-changing economic environment because it impacts every
aspect of HRM.33
Unanticipated Events
Unanticipated events are occurrences in the environment that cannot be foreseen. The Deepwater
Horizon oil spill off the Gulf Coast in 2010 caused major modifications in the performance
of many HR functions. Every disaster—whether human-made or natural—likely requires a tremendous amount of adjustment with regard to HRM. For example, after Hurricane Katrina,
Tulane University reduced the number of employees. On a global perspective, think of the many
different ways HR was affected by the tsunami in Japan. Japanese automobile plants in the
United States were forced to temporarily shut down because of a lack of parts produced in
Japan. Other recent disasters, such as heat waves, earthquakes, tornadoes, floods, and fires, have
created their own type of difficulty.
ObjeCtive 1.6
Explain the importance of
corporate culture and human
resource management.
corporate culture
System of shared values, beliefs,
and habits within an organization
that interacts with the formal
structure to produce behavioral
norms.
Corporate Culture and human resource
Management
As an internal environment factor affecting HRM, corporate culture refers to the firm’s social
and psychological climate. Corporate culture is defined as the system of shared values,
beliefs, and habits within an organization that interacts with the formal structure to produce
behavioral norms.
Culture gives people a sense of how to behave and what they ought to be doing. Each individual gradually forms such perceptions over a period of time as the person performs assigned
activities under the general guidance of a superior and a set of organizational policies. The culture existing within a firm influences the employees’ degree of satisfaction with the job as well
as the level and quality of their performance. The assessment of how desirable the organization’s
culture is may differ for each employee. One person may perceive the environment as bad, and
another may see the same...
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