Chapter 11 Human Resource Management: Finding and Keeping the Best Employees ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives 1 of 2 LO 11-1 Explain the importance of human resource management, and describe current issues in managing human resources. LO 11-2 Illustrate the effects of legislation on human resource management. LO 11-3 Summarize the five steps in human resource planning. LO 11-4 Describe methods that companies use to recruit new employees, and explain some of the issues that make recruitment challenging. LO 11-5 Outline the six steps in selecting employees. ©McGraw-Hill Education. Learning Objectives 2 of 2 LO 11-6 Illustrate employee training and development methods. LO 11-7 Trace the six steps in appraising employee performance. LO 11-8 Summarize the objectives of employee compensation programs, and evaluate pay systems and fringe benefits. LO 11-9 Demonstrate how managers use scheduling plans to adapt to workers’ needs. LO 11-10 Describe how employees can move through a company: promotion, reassignment, termination, and retirement. ©McGraw-Hill Education. Working with People Is Just the Beginning 1 of 2 Human resource management (HRM) • Determining human resource needs • Recruiting, selecting, developing, motivating, evaluating, compensating, and scheduling employees HRM’s role has grown because of: • Increased recognition of employees as a resource • Changes in law that rewrote old workplace practices LO 11-1 ©McGraw-Hill Education. Figure 11.1 Human Resource Management Jump to long description in appendix ©McGraw-Hill Education. LO 11-1 Working with People Is Just the Beginning 2 of 2 The Human Resource Challenge • Multigenerational workforce • Shortages of trained workers in growth areas • Worker shortage in skilled trades • Increasing number of single-parent and two-income families • Expanding global markets with low-wage workers • Increasing benefit demands and benefit costs • A decreased sense of employee loyalty LO 11-1 ©McGraw-Hill Education. Laws Affecting Human Resource Management 1 of 5 Civil Rights Act of 1964 • Title VII prohibits discrimination in hiring, firing, compensation, apprenticeships, training, terms, conditions, or privileges of employment based on: • Race • Religion • Creed • Sex • National Origin • Age LO 11-2 ©McGraw-Hill Education. Laws Affecting Human Resource Management 2 of 5 1972 Equal Employment Opportunity Act (EEOA) • The EEOA strengthened the Equal Employment Opportunity Commission (EEOC), giving the EEOC the right to issue workplace guidelines for acceptable employer conduct. • EEOC could mandate specific recordkeeping procedures and was vested with the power of enforcement. Controversial Procedures of the EEOC • Affirmative action — Employment activities designed to “right past wrongs” by increasing opportunities for minorities and women. • Reverse discrimination — Discrimination against whites or males in hiring or promotion. LO 11-2 ©McGraw-Hill Education. Laws Affecting Human Resource Management 3 of 5 Civil Rights Act of 1991 • Amended Title VII and gave victims of discrimination the right to a jury trial and possible damages Office of Federal Contract Compliance Programs (OFCCP) • Ensures that employers doing business with the federal government comply with the nondiscrimination and affirmative action laws LO 11-2 ©McGraw-Hill Education. Laws Affecting Human Resource Management 4 of 5 Laws Protecting Employees with Disabilities and Older Employees • Americans with Disabilities Act of 1990 (ADA) • Requires employers to give applicants with physical or mental disabilities the same consideration for employment as people without disabilities. • Passage in 2008 of Americans with Disabilities Amendments Act expanded protection. • 2011 saw regulations that widen the range of disabilities covered by the ADA and shift the burden of proof of disability from employees to employers. LO 11-2 ©McGraw-Hill Education. Laws Affecting Human Resource Management 5 of 6 Laws Protecting Employees with Disabilities and Older Employees continued • Age Discrimination in Employment Act (ADEA) • Protects workers 40 and over from employment and workplace discrimination in hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training. LO 11-2 ©McGraw-Hill Education. Determining a Firm’s Human Resource Need 1 of 2 Human Resource Planning Process 1. Preparing a human resource inventory of employees 2. Preparing a job analysis 3. Assessing future human resource demand 4. Assessing future labor supply 5. Establishing a strategic plan LO 11-3 ©McGraw-Hill Education. Determining a Firm’s Human Resource Need 2 of 2 What’s a Job Analysis? • Job analysis — A study of what is done by employees who hold various job titles. • Job description — A summary of the objectives of a job, the type of work to be done, the responsibilities and duties, the working conditions, and the relationship of the job to other functions. • Job specifications — A written summary of the minimum qualifications required of workers to do a particular job. LO 11-3 ©McGraw-Hill Education. Recruiting Employees from a Diverse Population Recruitment — The set of activities used to obtain a sufficient number of the right people at the right time. Human resource managers use both internal and external sources to recruit employees. Small businesses often make use of web sources like GlassDoor, Indeed, and LinkedIn to recruit employees. LO 11-4 ©McGraw-Hill Education. Figure 11.4 Employee Sources Jump to long description in appendix ©McGraw-Hill Education. LO 11-4 Selecting Employees Who Will Be Productive 1 of 3 Selection — The process of gathering information and deciding who should be hired, under legal guidelines, for the best interests of the individual and the organization. Steps in the Selection Process 1. Obtaining complete application forms 2. Conducting initial and follow-up interviews 3. Giving employment tests 4. Conducting background investigations 5. Obtaining results from physical exams 6. Establishing trial (probationary) periods LO 11-5 ©McGraw-Hill Education. Selecting Employees Who Will Be Productive 2 of 3 Hiring Contingent Workers • Contingent workers — Workers who do not have the expectation of regular, full-time employment. • There are about 5.7 million contingent workers in the U.S. • The majority of contingent workers are under 25. • Companies hire contingent workers: • When full-time workers are on leave • During periods of peak demand • In uncertain economic times • To save on employee benefits • To screen candidates for future employment LO 11-5 ©McGraw-Hill Education. Selecting Employees Who Will Be Productive 3 of 3 Hiring Contingent Workers continued • Students and the contingent workforce • With temporary staffing agencies, companies have easier access to screened workers. • Worker information is entered into their databases. • When students come back to town, they can call the agency and ask them to put their names into the system for work. LO 11-5 ©McGraw-Hill Education. Training and Developing Employees for Optimum Performance 1 of 5 Training and Development — All attempts to improve productivity by increasing an employee’s ability to perform. • Training focuses on short-term skills. • Development focuses on long-term abilities. Three Steps of Training and Development 1. Assessing organization needs and employee skills to determine training needs 2. Designing training activities to meet identified needs 3. Evaluating the training’s effectiveness LO 11-6 ©McGraw-Hill Education. Training and Developing Employees for Optimum Performance 2 of 5 Most Commonly Used Training and Development Activities • Orientation • On-the-job training • Apprenticeships • Off-the-job training • Online training • Vestibule training • Job simulation LO 11-6 ©McGraw-Hill Education. Training and Developing Employees for Optimum Performance 3 of 5 Management Development • Management development — The process of training and educating employees to become good managers and then monitoring the progress of their managerial skills over time. • Management training includes: • On-the-job coaching • Understudy positions • Job rotation • Off-the-job courses and training LO 11-6 ©McGraw-Hill Education. Training and Developing Employees for Optimum Performance 4 of 5 Networking • Networking — The process of establishing and maintaining contacts with key managers in one’s own organization and other organizations and using those contacts to weave strong relationships that serve as informal development systems. • Mentors — An experienced employee who supervises, coaches, and guides lower-level employees by introducing them to the right people and generally being their organizational sponsor. • Networking and mentoring go beyond the work environment. LO 11-6 ©McGraw-Hill Education. Training and Developing Employees for Optimum Performance 5 of 5 Diversity in Management Development • Reasons to develop female and minority managers 1. It isn’t about legality, morality, or morale but rather about bringing more talent in the door. 2. The best women and minorities will become harder to attract, so companies that commit to development have an edge. 3. Having more women and minorities at all levels lets businesses serve their women and minority customers better. LO 11-6 ©McGraw-Hill Education. Appraising Employee Performance to Get Optimum Results 1 of 2 Performance appraisal — An evaluation that measures employee performance against established standards in order to make decisions about promotions, compensation, training, or termination. A 360-degree review gives managers opinions from people at different levels to get a more accurate idea of the worker’s abilities. LO 11-7 ©McGraw-Hill Education. Appraising Employee Performance to Get Optimum Results 2 of 2 Six Steps of Performance Appraisals 1. Establishing performance standards that are understandable, measurable, and reasonable. 2. Clearly communicating those standards. 3. Evaluating performance against the standards. 4. Discussing the results with employees. 5. Taking corrective action. 6. Using the results to make decisions. LO 11-7 ©McGraw-Hill Education. Compensating Employees: Attracting and Keeping the Best 1 of 4 A managed and competitive compensation program helps: • Attract the kinds of employees the business needs • Build employee incentive to work efficiently and productively • Keep valued employees from going to competitors or starting their own firm • Maintain a competitive market position by keeping costs low due to high productivity from a satisfied workforce • Provide employee financial security through wages and fringe benefits LO 11-8 ©McGraw-Hill Education. Figure 11.5 Pay Systems 1 of 3 Jump to long description in appendix ©McGraw-Hill Education. LO 11-8 Figure 11.5 Pay Systems 2 of 3 Jump to long description in appendix ©McGraw-Hill Education. LO 11-8 Figure 11.5 Pay Systems 3 of 3 Jump to long description in appendix ©McGraw-Hill Education. LO 11-8 Compensating Employees: Attracting and Keeping the Best 2 of 4 Compensating Teams • Team-based pay programs are more challenging than individual pay systems. • The two most common methods for teams involve: • Skill-based: Pay is increased as team members learn and apply new skills. (Eastman Chemical uses this system.) • Gain-sharing: Pay is increased as performance increases compared to previous performance. (Nucor Steel uses this system.) LO 11-8 ©McGraw-Hill Education. Compensating Employees: Attracting and Keeping the Best 3 of 4 Fringe Benefits • Fringe benefits —sick-leave pay, vacation pay, pension plans, and health plans that represent additional compensation to employees beyond base wages. • Fringe benefits include incentives like: • • • • • • • • • Company cars Country club memberships Discounted massages Special home-mortgage rates Paid and unpaid sabbaticals Day care and elder care services Executive dining rooms Dental, eye, and mental health care Student loan debt payment LO 11-8 ©McGraw-Hill Education. Compensating Employees: Attracting and Keeping the Best 4 of 4 Fringe Benefits continued • Cafeteria-style fringe benefits — Fringe benefit plan that allows employees to choose the benefits they want up to a certain dollar amount. • Soft benefits include: • On-site haircuts and shoe repair • Concierge services • Free meals at work • Free car washes • Paid paternal leave LO 11-8 ©McGraw-Hill Education. Scheduling Employees to Meet Organizational and Employee Needs 1 of 3 Flextime plan — Work schedule that gives employees some freedom to choose when to work, as long as they work the required number of hours. Compressed workweek — Work schedule that allows employees to work a full number of hours per week but in fewer days. Job sharing — An arrangement whereby two part-time employees share one full-time job. LO 11-9 ©McGraw-Hill Education. Scheduling Employees to Meet Organizational and Employee Needs 2 of 3 Flextime Plans • Most flextime plans require core time — The period when all employees are expected to be at their job stations. • Flextime is difficult to incorporate into shift work, and managers have to work longer hours. • Communication among employees can also be difficult under flextime, and managers have to be alert to any system abuses. • Compressed workweeks • Employees enjoy long weekends after working long days. • Productivity is a concern. • Nurses often work compressed workweeks. LO 11-9 ©McGraw-Hill Education. Figure 11.6 A Flextime Chart Jump to long description in appendix ©McGraw-Hill Education. LO 11-9 Scheduling Employees to Meet Organizational and Employee Needs 3 of 3 Home-Based Work • 24 percent of Americans work from home at least once per week. • 68 percent of Americans expect to work remotely in the future. Job-Sharing Plans • Benefits: • Provide employment opportunities for many people who cannot work full-time. • Workers tend to be enthusiastic and productive. • Absenteeism and tardiness are reduced. • Employers can schedule part-time workers in peak demand periods. • Experienced employees who might otherwise have retired are retained. LO 11-9 ©McGraw-Hill Education. Figure 11.7 Benefits and Challenges of Home-Based Work 1 of 3 Blank Benefits Challenges To Organization • Increases productivity due to fewer sick days, fewer absences, higher job satisfaction, and higher work performance ratings • Broadens available talent pool • Reduces costs of providing on-site office space • Makes it more difficult to appraise job performance • Can negatively affect the social network of the workplace and can make it difficult to promote team cohesiveness • Complicates distribution of tasks (should office files, contact lists, and such be allowed to leave the office?) LO 11-9 ©McGraw-Hill Education. Figure 11.7 Benefits and Challenges of Home-Based Work 2 of 3 Blank Benefits Challenges To Individual • Makes more time available • Can cause feeling of isolation for work and family by from social network reducing or eliminating • Can raise concerns regarding commute time promotions and other • Reduces expenses of buying rewards due to being out of and maintaining office clothes sight, out of mind • Avoids office politics • May diminish individual’s • Helps balance work and influence within company due family to limited opportunity to learn • Expands employment the corporate culture opportunities for individuals with disabilities LO 11-9 ©McGraw-Hill Education. Figure 11.7 Benefits and Challenges of Home-Based Work 3 of 3 Blank Benefits Challenges To Society • Decreases traffic congestion • Discourages community crime that might otherwise occur in bedroom communities • Increases time available to build community ties • Increases need to resolve zoning regulations forbidding business deliveries in residential neighborhoods • May reduce ability to interact with other people in a personal, intimate manner LO 11-9 ©McGraw-Hill Education. Moving Employees Up, Over, and Out Employees are promoted or reassigned; are terminated due to performance or economic situations; or retire. Terminating Employees • As the economic crisis grew, more and more employers have had to lay off employees. • Even when the economy is booming, employers are hesitant to hire full-time workers because of the cost of termination. • Firing employees is more difficult for employers because of laws preventing termination for certain acts. LO 11-10 ©McGraw-Hill Education. Figure 11.8 How to Avoid Wrongful Discharge Lawsuits • Prepare before hiring by requiring recruits to sign a statement that retains management’s freedom to terminate at will. • Don’t make unintentional promises by using such terms as permanent employment. • Document reasons before firing and make sure you have an unquestionable business reason for the firing. • Fire the worst first and be consistent in discipline. • Buy out bad risk by offering severance pay in exchange for a signed release from any claims. • Be sure to give employees the true reasons they are being fired. If you do not, you cannot reveal it to a recruiter asking for a reference without risking a defamation lawsuit. • Disclose the reasons for an employee’s dismissal to that person’s potential new employers. LO 11-10 ©McGraw-Hill Education. Appendix of Long Image Descriptions ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Appendix 1 Figure 11.1 Human Resource Management Organizational goals • Human resource management • Recruitment • Selection • Training and development • Motivation (chapter 10) • Evaluation • Compensation and benefits • Scheduling • Employee–union relations (chapter 12) • Career management All of this occurs within the legal environment. Return to original slide ©McGraw-Hill Education. Appendix 2 Figure 11.4 Employee Sources External sources used to find qualified candidates include private employment agencies, public employment agencies, personal applications, management consultants, new graduates, former employees, part-time applicants, competing organizations, union organizations, advertisements, temporary help services, union halls, trade schools, college placement offices, newspaper ads, trade associations, business associates, college professors, online, job fairs, cooperative education internships, and social media. Internal sources used to find qualified candidates include transfers, promotions, employee recommendations, retrained employees, and department reorganizations. After the human resource department has pulled qualified candidates from external or internal sources, the candidates follow the sequence of the hiring process: selection, hiring, and orientation and training. Return to original slide ©McGraw-Hill Education. Appendix 3 Figure 11.5 Pay Systems 1 of 3 Salary: Fixed compensation computed on weekly, biweekly, or monthly pay periods (e.g., $1,600 per month or $400 per week). Salaried employees do not receive additional pay for any extra hours worked. Hourly wage or daywork: Wage based on number of hours or days worked, used for most blue-collar and clerical workers. Often employees must punch a time clock when they arrive at work and when they leave. Hourly wages vary greatly. The federal minimum wage is $7.25, and top wages go as high as $40 per hour or more for skilled craftspeople. This does not include benefits such as retirement systems, which may add 30 percent or more to the total package. Piecework system: Wage based on the number of items produced rather than by the hour or day. This type of system creates powerful incentives to work efficiently and productively. Return to original slide ©McGraw-Hill Education. Appendix 4 Figure 11.5 Pay Systems 2 of 3 Commission plans: Pay based on some percentage of sales. Often used to compensate salespeople, commission plans resemble piecework systems. Bonus plans: Extra pay for accomplishing or surpassing certain objectives. There are two types of bonuses: monetary and cashless. Money is always a welcome bonus. Cashless rewards include written thank-you notes, appreciation notes sent to the employee’s family, movie tickets, flowers, time off, gift certificates, shopping sprees, and other types of recognition. Profit-sharing plans: Annual bonuses paid to employees based on the company’s profits. The amount paid to each employee is based on a predetermined percentage. Profit sharing is one of the most common forms of performance-based pay. Return to original slide ©McGraw-Hill Education. Appendix 5 Figure 11.5 Pay Systems 3 of 3 Gain-sharing plans: Annual bonuses paid to employees based on achieving specific goals such as quality measures, customer satisfaction measures, and production targets. Stock options: Right to purchase stock in the company at a specific price over a specific period. Often this gives employees the right to buy stock cheaply despite huge increases in the price of the stock. For example, if over the course of his employment a worker received options to buy 10,000 shares of the company stock at 10 dollars each and the price of the stock eventually grows to 100 dollars, he can use those options to buy the 10,000 shares (now worth 1 million dollars) for 100,000 dollars. Return to original slide ©McGraw-Hill Education. Appendix 6 Figure 11.6 A Flextime Chart Flexible hours can be scheduled between 6:30 a.m. and 6:30 p.m. The core work times are 9:30 to 11:00 a.m. and 2:00 to 3:00 p.m. The lunch period is between 11:00 a.m. and 2:00 p.m. Sarah’s work schedule is outlined on the chart. She starts work at 7:00 a.m., eats lunch from 11:00 to 11:30 a.m., and leaves work for the day at 3:30 p.m. Return to original slide ©McGraw-Hill Education. Chapter 10 Motivating Employees ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives LO 10-1 Explain Taylor’s theory of scientific management. LO 10-2 Describe the Hawthorne studies and their significance to management. LO 10-3 Identify the levels of Maslow’s hierarchy of needs and apply them to employee motivation. LO 10-4 Distinguish between the motivators and hygiene factors identified by Herzberg. LO 10-5 Differentiate among Theory X, Theory Y, and Theory Z. LO 10-6 Explain the key principles of goal-setting, expectancy, reinforcement, and equity theories. LO 10-7 Show how managers put motivation theories into action through such strategies as job enrichment, open communication, and job recognition. LO 10-8 Show how managers personalize motivation strategies to appeal to employees across the globe and across generations. ©McGraw-Hill Education. The Value of Motivation 1 of 5 Intrinsic rewards — The personal satisfaction you feel when you perform well and complete goals. • Examples of intrinsic rewards: • Pride in your performance • Sense of achievement Extrinsic rewards — Something given to you by someone else as recognition of good work. • Kinds of extrinsic rewards: • Pay raises • Praise • Promotions ©McGraw-Hill Education. The Value of Motivation 2 of 5 Frederick Taylor: The “Father” of Scientific Management • Scientific management • Studying workers to find the most efficient ways of doing things and then teaching people those techniques. • Three key elements to increase productivity • Time • Methods of work • Rules of work LO 10-1 ©McGraw-Hill Education. The Value of Motivation 3 of 5 Frederick Taylor: The Father of Scientific Management continued • Time-motion studies — Studies of which tasks must be performed to complete a job and the time needed to do each task. • Led to the development of the Principle of Motion Economy — Theory developed by Frank and Lillian Gilbreth that every job can be broken down into a series of elementary motions. LO 10-1 ©McGraw-Hill Education. The Value of Motivation 4 of 5 Frederick Taylor: The Father of Scientific Management continued • Taylor and UPS • UPS drivers work under strict rules and work requirements. • How to get out of their trucks: • Right foot first • How fast to walk: • 3 ft per second • How many packages to deliver a day • 125 to 175 in off-peak seasons • How to hold their keys: • Teeth up, third finger LO 10-1 ©McGraw-Hill Education. The Value of Motivation 5 of 5 Elton Mayo and the Hawthorne Studies • Researchers studied worker efficiency under different levels of light. • Productivity increased regardless of light condition. • Researchers decided it was a human or psychological factor at play. • Hawthorne Effect — The tendency for people to act differently when they know they are being studied. LO 10-2 ©McGraw-Hill Education. Motivation and Maslow’s Hierarchy of Needs Maslow’s Hierarchy of Needs — Theory of motivation based on unmet human needs from basic physiological needs to safety, social, and esteem needs to selfactualization needs. Needs that have already been met do not motivate. If a need is filled, another higher-level need emerges. LO 10-3 ©McGraw-Hill Education. Figure 10.1 Maslow’s Hierarchy of Needs Jump to long description in appendix ©McGraw-Hill Education. LO 10-3 Herzberg’s Motivating Factors 1 of 2 Herzberg’s research centered on the question: • What creates enthusiasm for workers and makes them work to full potential? Herzberg found job content factors were most important to workers. Workers like to feel they contribute to the company. • Motivators • Job factors that cause employees to be productive and that give them satisfaction. LO 10-4 ©McGraw-Hill Education. Herzberg’s Motivating Factors 2 of 2 Job environment factors maintained satisfaction, but did not motivate employees. Hygiene factors — Job factors that can cause dissatisfaction if missing but that do not necessarily motivate employees if increased. LO 10-4 ©McGraw-Hill Education. Figure 10.2 Herzberg’s Motivators and Hygiene Factors Motivators (These factors can be used to motivate workers.) • Work itself • Achievement • Recognition • Responsibility • Growth and advancement Hygiene (Maintenance) Factors (These factors can cause dissatisfaction, but changing them will have little motivational effect.) • Company policy and administration • Supervision • Working conditions • Interpersonal relations (coworkers) • Salary, status, and job security LO 10-4 ©McGraw-Hill Education. Figure 10.3 Comparison of Maslow’s Hierarchy of Needs and Herzberg’s Theory of Factors Jump to long description in appendix ©McGraw-Hill Education. LO 10-4 McGregor’s Theory X and Theory Y 1 of 3 Douglas McGregor proposed managers had two different sets of assumptions concerning workers. Their attitudes about motivating workers were tied to these assumptions. McGregor called them Theory X and Theory Y. LO 10-5 ©McGraw-Hill Education. McGregor’s Theory X and Theory Y 2 of 3 Theory X • Assumptions of Theory X management: • Workers dislike work and seek to avoid it. • Workers must be forced, controlled, directed, or threatened with punishment to get them to perform. • Workers prefer to be directed and avoid responsibility. • Primary motivators are fear and punishment. LO 10-5 ©McGraw-Hill Education. McGregor’s Theory X and Theory Y 3 of 3 Theory Y • Assumptions of Theory Y management: • People like work; it’s a part of life. • Workers seek goals to which they are committed. • Commitment to goals depends on perceived rewards. • Most people will seek responsibility. • People can use creativity to solve problems. • Intellectual capacity is only partially realized. • People are motivated by a variety of rewards. LO 10-5 ©McGraw-Hill Education. Ouchi’s Theory Z William Ouchi researched cultural differences between the U.S. (Type A) and Japan (Type J). • Type J are committed to the organization and group. • Type A are focused on the individual. Theory Z is the hybrid approach of Types A and J. LO 10-5 ©McGraw-Hill Education. Figure 10.4 Theory Z: A Blend of American and Japanese Management Approaches Jump to long description in appendix ©McGraw-Hill Education. LO 10-5 Figure 10.5 A Comparison of Theories X, Y, and Z 1 of 2 Theory X Theory Y Theory Z 1. Employees dislike work and will try to avoid it. 1. Employees view work as a 1. Employee involvement is the key to increased natural part of life. productivity. 2. Employees prefer to be controlled and directed. 2. Employees prefer limited control and direction. 2. Employee control is implied and informal. 3. Employees seek security, not responsibility. 3. Employees will seek responsibility under proper work conditions. 3. Employees prefer to share responsibility and decision making. LO 10-5 ©McGraw-Hill Education. Figure 10.5 A Comparison of Theories X, Y, and Z 2 of 2 Theory X Theory Y Theory Z 4. Employees must be intimidated by managers to perform. 4. Employees perform 4. Employees perform better in work environments better in environments that foster trust and that are nonintimidating. cooperation. 5. Employees are motivated by financial rewards. 5. Employees are motivated by many different needs. 5. Employees need guaranteed employment and will accept slow evaluations and promotions. LO 10-5 ©McGraw-Hill Education. Goal-Setting Theory and Management by Objectives 1 of 2 Goal-setting theory — The idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions. LO 10-6 ©McGraw-Hill Education. Goal-Setting Theory and Management by Objectives 2 of 2 Applying Goal-Setting Theory • Management by objectives (MBO) — Involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees. • Managers formulate goals in cooperation with everyone in the organization. • Need to monitor results and reward achievement. LO 10-6 ©McGraw-Hill Education. Meeting Employee Expectations: Expectancy Theory 1 of 2 Expectancy Theory — The amount of effort employees exert on a specific task depends on their expectations of the outcome. Employees ask: • Can I accomplish the task? • What’s my reward? • Is the reward worth the effort? Expectations can vary from person to person. LO 10-6 ©McGraw-Hill Education. Figure 10.6 Expectancy Theory Jump to long description in appendix ©McGraw-Hill Education. LO 10-6 Meeting Employee Expectations: Expectancy Theory 2 of 2 Researchers Nadler and Lawler modified expectancy theory and suggested five steps for managers: 1. Determine what rewards employees value. 2. Determine each employee’s performance standard. 3. Ensure that performance standards are attainable. 4. Tie rewards to performance. 5. Be sure employees feel rewards are adequate. LO 10-6 ©McGraw-Hill Education. Treating Employees Fairly: Equity Theory Equity Theory — The idea that employees try to maintain equity between inputs and outputs compared to others in similar positions. Workers often base perception of their outcomes on a specific person or group. Perceived inequities can lead to lower productivity, reduced quality, increased absenteeism, and even resignation. LO 10-6 ©McGraw-Hill Education. Putting Theory into Action 1 of 4 Motivation through Job Enrichment • Job enrichment — A motivational strategy that emphasizes motivating the worker through the job itself. • It is based on Herzberg’s motivators, such as responsibility, achievement, and recognition. • Key characteristics of work 1. Skill variety 2. Task identity 3. Task significance 4. Autonomy 5. Feedback LO 10-7 ©McGraw-Hill Education. Putting Theory into Action 2 of 4 Motivation through Job Enrichment continued • Types of job enrichment • Job enlargement — A job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment. • Job rotation — A job enrichment strategy that involves moving employees from one job to another. LO 10-7 ©McGraw-Hill Education. Putting Theory into Action 3 of 4 Motivating through Open Communication • Create a culture that rewards listening. • Train managers to listen. • Use effective questioning techniques. • Remove barriers to open communication. • Avoid vague and ambiguous communication. • Make it easy to communicate. • Ask employees what is important to them. LO 10-7 ©McGraw-Hill Education. Putting Theory into Action 4 of 4 Recognizing a Job Well Done • Raises are not the only ways to recognize an employee’s performance. Recognition can also include: • Advancement opportunities • Challenging work • Noticing positive actions out loud • Paid time off • Prime parking spots • More vacation days • Flexible schedules • Small equity stake or stock options LO 10-7 ©McGraw-Hill Education. Personalizing Motivation 1 of 7 Motivating Employees across the Globe • Cultural differences make worker motivation a challenging task for global managers. • High-context cultures require relationships and group trust before performance. • Low-context cultures believe relationship building distracts from tasks. LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 2 of 7 Motivating Employees across Generations • Baby Boomers (1946–1964) • Experienced great economic prosperity, job security, and optimism about their future • Generation X (1965–1980) • Raised in dual-career families, attended day care, and have a feeling of insecurity about jobs • Generation Y or Millennials (1980–1995) • Raised by indulgent parents and don’t remember a time without the Internet and mobile cell phones; main constant in life is inconsistency LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 3 of 7 Motivating Employees across Generations continued • Generation Z (1995–2009) • Grew up post 9/11, in the wake of the Great Recession and amid many reports of school violence; main constant in life is inconsistency • Generation Alpha (born after 2010) LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 4 of 7 Motivating Employees across Generations continued • Generation X in the workplace • Desire economic security but focus more on career security than job security • Good motivators as managers due to emphasis on results rather than work hours • Tend to be flexible and good at collaboration and consensus building • Very effective at giving employee feedback and praise LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 5 of 7 Motivating Employees across Generations continued • Millennials in the workplace • Tend to be impatient, skeptical, blunt, and expressive • Are tech-savvy and able to grasp new concepts • Able to multi-task and are efficient • Are tolerant • Place a high value on work-life balance • Fun and stimulation are key job requirements • Tend to job surf due to the state of the economy LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 6 of 7 Motivating Employees across Generations continued • Generation Z in the workplace • Tend to be cautious and security-minded • Inspired to improve the world • Are resilient and pragmatic • Are tech-savvy • Want to be a part of a community within the workplace • Place emphasis on practical benefits, such as health care LO 10-8 ©McGraw-Hill Education. Personalizing Motivation 7 of 7 Motivating Employees across Generations continued • Communication across the generations • Baby Boomers prefer meetings and conference calls. • Gen Xers prefer e-mail and will choose meetings only if there are no other options. • Millennials prefer to use technology to communicate, particularly through social media. • Gen Zers prefer face-to-face meetings and shy away from phone calls. LO 10-8 ©McGraw-Hill Education. Appendix of Long Image Descriptions ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Appendix 1 Figure 10.1 Maslow’s Hierarchy of Needs From the bottom of the pyramid to the top, the needs are: physiological needs, safety needs, social needs, esteem needs, and self-actualization. Return to original slide ©McGraw-Hill Education. Appendix 2 Figure 10.3 Comparison of Maslow’s Hierarchy of Needs and Herzberg’s Theory of Factors Two charts divided into sections are shown side by side. The first row of the charts are Maslow’s self-actualization and Herzberg’s motivational factors of the work itself, achievement, and possibility of growth. The second row of the charts are Maslow’s esteem needs and Herzberg’s motivational factors of advancement, recognition, and status. The third row of the charts are Maslow’s social needs and Herzberg’s hygiene factors of interpersonal relations with superiors, subordinates, and peers, and supervision. The fourth row of the charts are Maslow’s safety needs and Herzberg’s hygiene factors of company policy and administration, job security, and working conditions. The last row of the charts are Maslow’s physiological needs and Herzberg’s hygiene factors of salary and personal life. Return to original slide ©McGraw-Hill Education. Appendix 3 Figure 10.4 Theory Z: A Blend of American and Japanese Management Approaches Type A (American) • • • • • • • Short-term employment Individual decision making Individual responsibility Rapid evaluation and promotion Explicit, formalized control Specialized career paths Segmented concern for employees Type J (Japanese) • • • • • • • Lifetime employment Consensual decision making Collective responsibility Slow evaluation and promotion Implicit, informal control Nonspecialized career paths Holistic concern for employees Type Z (Modified American) • • • • • • • Long-term employment Collective decision making Individual responsibility Slow evaluation and promotion Implicit, informal control with explicit, formalized control Moderately specialized career paths Holistic concern for employees (including family) Return to original slide ©McGraw-Hill Education. Appendix 4 Figure 10.6 Expectancy Theory The flow chart starts with a question related to a task: “Can I accomplish this task?” If the answer is no, the person is not motivated. If the answer is yes, a question related to outcome is asked: “Is the reward worth it?” If the answer is no, the person is not motivated. If the answer is yes, the person is motivated. Return to original slide ©McGraw-Hill Education. Chapter 9 Production and Operations Management ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Learning Objectives LO 9-1 Describe the current state of U.S. manufacturing and what manufacturers have done to become more competitive. LO 9-2 Describe the evolution from production to operations management. LO 9-3 Identify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible manufacturing, lean manufacturing, mass customization, robotics, and 3D printing. LO 9-4 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control. LO 9-5 Explain the use of PERT and Gantt charts to control manufacturing processes. ©McGraw-Hill Education. Manufacturing and Services in Perspective 1 of 2 Manufacturing in the U.S. • Since 1979, the number of U.S. workers employed by factories has steadily dropped. • American factories can operate efficiently without large amounts of human labor. The U.S. economy is no longer manufacturing-based. • 80 percent of jobs are in the service sector. • American factories can’t fill positions as engineers and computer experts flock to the tech industry. LO 9-1 ©McGraw-Hill Education. Manufacturing and Services in Perspective 2 of 2 Manufacturers and Service Organizations Become More Competitive • U.S. manufacturers must compete with China, Germany, South Korea, and India. • How can U.S. businesses maintain a competitive edge? • Keeping up with latest production techniques • Focusing on customers • Maintaining close relationships with suppliers • Practicing continuous improvement LO 9-1 ©McGraw-Hill Education. From Production to Operations Management 1 of 3 Production — The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge. Production management — The term used to describe all the activities managers do to help firms create goods. LO 9-2 ©McGraw-Hill Education. From Production to Operations Management 2 of 3 Operations management — A specialized area in management that converts or transforms resources (including human resources) into goods and services. Operations management includes: • Inventory management • Quality control • Production scheduling • Follow-up services LO 9-2 ©McGraw-Hill Education. From Production to Operations Management 3 of 3 Operations Management in the Service Sector • All about creating a good experience for those who use the service. • In hotels, like Hilton, operations management includes smoothrunning elevators, fine restaurants, comfortable beds, and a front desk that processes people quickly. LO 9-2 ©McGraw-Hill Education. Figure 9.1 The Production Process Jump to long description in appendix ©McGraw-Hill Education. LO 9-3 Production Processes 1 of 9 Form utility — The value producers add to materials in the creation of finished goods and services. Grove’s Basic Production Requirements 1. To build and deliver products in response to the demands of the customer at the scheduled delivery time 2. To provide an acceptable quality level 3. To provide everything at the lowest possible cost LO 9-3 ©McGraw-Hill Education. Production Processes 2 of 9 Process manufacturing — That part of the production process that physically or chemically changes materials. Assembly process — That part of the production process that puts together components. Production processes are either continuous or intermittent. • Continuous process — Long production runs turn out finished goods over time. • Intermittent process — The production run is short and the machines are changed frequently to make different products. LO 9-3 ©McGraw-Hill Education. Production Processes 3 of 9 The Need to Improve Production Techniques and Cut Costs • Developments making U.S. companies more competitive: 1. Computer-aided design and manufacturing 2. Flexible manufacturing 3. Lean manufacturing 4. Mass customization 5. Robotics 6. 3D printing LO 9-3 ©McGraw-Hill Education. Production Processes 4 of 9 Computer-Aided Design and Manufacturing • Computer-aided design (CAD) — The use of computers in the design of products. • Computer-aided manufacturing (CAM) — The use of computers in the manufacturing of products. • Computer-integrated manufacturing (CIM) — The uniting of computer-aided design with computer-aided manufacturing. • CIM is expensive but it drastically reduces the time needed to program machines to make parts. LO 9-3 ©McGraw-Hill Education. Production Processes 5 of 9 Flexible Manufacturing • Flexible manufacturing — Designing machines to do multiple tasks so that they can produce a variety of products. • Allen-Bradley uses flexible manufacturing to build motor starters. • Machines and robots build, test, and package parts. LO 9-3 ©McGraw-Hill Education. Production Processes 6 of 9 Lean Manufacturing • Lean manufacturing — The production of goods using less of everything compared to mass production. • Compared to others, lean companies: • Take less human effort • Take less manufacturing space • Require less investment in tools • Require less engineering time to develop a new product LO 9-3 ©McGraw-Hill Education. Production Processes 7 of 9 Mass Customization • Mass customization — Tailoring products to meet the needs of individual customers. • More manufacturers are learning to customize. • Mass customization exists in the service sector too. LO 9-3 ©McGraw-Hill Education. Production Processes 8 of 9 Robotics • The use of robotics allows manufacturing to continue 24 hours a day, seven days a week with great precision. • Robotics have improved productivity while reducing the number of jobs for humans. • Robots work in service businesses, such as hotels, as well. LO 9-3 ©McGraw-Hill Education. Production Processes 9 of 9 3D Printing and Additive Manufacturing • Products are created one layer at a time by a nozzle. • For now, 3D printing is typically used to make prototypes and molds. Using Sensing, Measurement, and Process Control • Sensors can detect the moment anything goes wrong. • Nanomanufacturing allows manipulation of materials on a molecular or atomic scale. LO 9-3 ©McGraw-Hill Education. Operations Management Planning 1 of 13 Operations management planning helps solve problems like: • Facility location • Facility layout • Materials requirement planning • Purchasing • Inventory control • Quality control LO 9-4 ©McGraw-Hill Education. Operations Management Planning 2 of 13 Facility Location • Facility location — The process of selecting a geographic location for a company’s operations. • Rising numbers of online businesses means brick-and-mortar retailers must find great locations. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 3 of 13 Facility Location for Manufacturers • Considerations for moving facilities to a new location: • Labor costs • Availability of resources • Access to transportation • Proximity to suppliers and customers • Crime rates • Quality of life for employees • Cost of living • Need to train or retrain local workforce LO 9-4 ©McGraw-Hill Education. Operations Management Planning 4 of 13 Interfirm Operations Management • Sometimes businesses outsource engineering, design, and manufacturing to other companies. • Often these relationships are managed through the Internet. • Many companies are developing Internet-focused strategies. Facility Location in the Future • Information technology gives firms increased flexibility in terms of location. • Telecommuting — Working from home via computer and modem. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 5 of 13 Facility Layout • Facility layout — The physical arrangement of resources (including people) in the production process. • Facility layout depends on the processes performed: • Service: Help customers find products • Manufacturing: Improve efficiency LO 9-4 ©McGraw-Hill Education. Operations Management Planning 6 of 13 Facility Layout continued • Facility layout options 1. Assembly line layout — Workers do only a few tasks at a time. 2. Modular layout — Teams of workers produce more complex units of the final product. 3. Fixed-position layout — Allows workers to congregate around the product. 4. Process layout — Similar equipment and functions are grouped together. LO 9-4 ©McGraw-Hill Education. Figure 9.2 Typical Layout Designs 1 of 4 Product Layout (also called Assembly-Line Layout) LO 9-4 ©McGraw-Hill Education. Figure 9.2 Typical Layout Designs 2 of 4 Process Layout Jump to long description in appendix ©McGraw-Hill Education. LO 9-4 Figure 9.2 Typical Layout Designs 3 of 4 Cellular or Module Layout Jump to long description in appendix ©McGraw-Hill Education. LO 9-4 Figure 9.2 Typical Layout Designs 4 of 4 Fixed-Position Layout Jump to long description in appendix ©McGraw-Hill Education. LO 9-4 Operations Management Planning 7 of 13 Materials Requirement Planning • Materials requirement planning (MRP) — A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place. • Enterprise resource planning (ERP) — A newer version of MRP that combines the computerized functions of all the divisions and subsidiaries of the firm—such as finance, human resources, and order fulfillment—into a single integrated software program that uses a single database. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 8 of 13 Purchasing • Purchasing — The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services. • The Internet has transformed purchasing. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 9 of 13 Just-in-Time Inventory Control • Just-in-time (JIT) inventory control — A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line. • To work effectively, the process requires excellent coordination with suppliers. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 10 of 13 Quality Control • Quality — Consistently producing what the customer wants while reducing errors before and after delivery to the customer. • Six Sigma quality — A quality measure that allows only 3.4 defects per million opportunities. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 11 of 13 Quality Control continued • Statistical quality control (SQC) — The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning. • Statistical process control (SPC) — The process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. • Measuring quality along the production process reduces the need for quality control at the end. LO 9-4 ©McGraw-Hill Education. Operations Management Planning 12 of 13 The Baldrige Awards • Companies can apply for awards in these areas: • Manufacturing • Services • Small businesses • Nonprofit/government • Education • Health care LO 9-4 ©McGraw-Hill Education. Operations Management Planning 13 of 13 ISO 9001 and ISO 14001 Standards • The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. • ISO 9001 — The common name given to quality management and assurance standards. • ISO 14001 — A collection of the best practices for managing an organization’s impact on the environment. LO 9-4 ©McGraw-Hill Education. Control Procedures: PERT and Gantt Charts 1 of 2 Program Evaluation and Review Technique (PERT) — A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. LO 9-5 ©McGraw-Hill Education. Control Procedures: PERT and Gantt Charts 2 of 2 Steps Involved in PERT 1. Analyzing and sequencing tasks 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the first two steps 4. Identifying the critical path • Critical path — The sequence of tasks that takes the longest time to complete. Gantt chart — Bar graph showing production managers what projects are being worked on and what stage they are in at any given time. LO 9-5 ©McGraw-Hill Education. Figure 9.3 PERT Chart for a Music Video Jump to long description in appendix ©McGraw-Hill Education. LO 9-5 Figure 9.4 Gantt Chart for a Doll Manufacturer Jump to long description in appendix ©McGraw-Hill Education. LO 9-5 Preparing for the Future Tremendous opportunities exist for careers in operations management. Those who see future trends and have the skills to work in highly automated factories will benefit. LO 9-5 ©McGraw-Hill Education. Appendix of Long Image Descriptions ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Appendix 1 Figure 9.1 The Production Process The production process takes inputs such as land, labor, capital, entrepreneurship, and knowledge to produce outputs in the form of goods, services, and ideas. This is accomplished by using the production control activities of planning, routing, scheduling, dispatching, and follow-up. Return to original slide ©McGraw-Hill Education. Appendix 2 Figure 9.2 Typical Layout Designs 2 of 4 The chart shows a series of functions following a specific order: storage, cutting, stamping, deburring, bending, assembly, packing, and shipping. Some steps may be skipped if needed. The process may move from cutting to assembly or from deburring to assembly. Return to original slide ©McGraw-Hill Education. Appendix 3 Figure 9.2 Typical Layout Designs 3 of 4 The chart shows the following workstations: saws, planing machines, drills, lathes, sanders, and assembly tables. The process starts at the saws, then can go in any order through the other workstations before ending at assembly tables. Return to original slide ©McGraw-Hill Education. Appendix 4 Figure 9.2 Typical Layout Designs 4 of 4 Workers include a roofing contractor, general carpentry and supplies, grading equipment and operators, an architect, a painting contractor, a finish carpenter, a plaster contractor, an electrical contractor, a masonry contractor, and a plumbing contractor. Return to original slide ©McGraw-Hill Education. Appendix 5 Figure 9.3 PERT Chart for a Music Video The PERT chart includes boxes for each of the activities, linked by arrows to show dependencies and flow of work. Each arrow is labeled with the duration, in weeks. A bold arrow shows the critical path, from start to video filmed, as 15 weeks. Activities in the critical path are star and song chosen, set designed, set materials purchased, set constructed, dance rehearsed, and video filmed. Other activities include dancers selected, dance choreographed, costumes designed, dancers measured, and costumes made. Return to original slide ©McGraw-Hill Education. Appendix 6 Figure 9.4 Gantt Chart for a Doll Manufacturer The Gantt chart is set up as a bar chart, with labels on the vertical axis and horizontal axis. The machines and parts of the doll that need to be completed are listed on the vertical axis, and the horizontal axis progresses in one-week increments. Bars show the expected duration of each activity and are color-coded to show completed work and work to be done. • Machine A (Heads molded): began at week 1 and should have been completed by the end of week 3. The heads finished about a half week early. • Machine B (Bodies molded): began at week 2 and were completed on schedule at the end of week 3. • Machine C (Fabric cut): will start at week 4 and should be completed by the end of week 4. • Machine D (Clothing sewn): will start at week 5 and should be completed by the end of week 5. • Line A (Assembly): will start at week 6 and should be completed by the end of week 7. • Line B (Painting): will start into week 7 and will be completed by the end of week 7. The dolls should be completed by the end of week 7. Return to original slide ©McGraw-Hill Education. 
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