Human resource management byars and rue 10th edition

CONTEXT HRM Report.

Human Resource Management

Tenth Edition

Lloyd L. Byars, Ph.D. Professor Emeritus of Management

College of Management

Georgia Institute of Technology

Leslie W. Rue, Ph.D. Professor Emeritus of Management

Robinson College of Business

Georgia State University

HUMAN RESOURCE MANAGEMENT, TENTH EDITION

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Library of Congress Cataloging-in-Publication Data

Byars, Lloyd L.

Human resource management / Lloyd L. Byars, Leslie W. Rue. — 10th ed.

p. cm.

ISBN-13: 978-0-07-353055-0 (student ed.)

ISBN-10: 0-07-353055-7 (student ed.)

1. Personnel management. I. Rue, Leslie W. II. Title.

HF5549.B937 2011

658.3—dc22

2010025365

www.mhhe.com

iii

To Lloyd L. Byars, Jr., Linda S. Byars,

Susan Ashley Ross, and Elizabeth Lee Means

Lloyd L. Byars

To Elizabeth R. Norris, Margaret

Massie, Leslie W. Rue, Jr., and Passie M. Rue

Leslie W. Rue

v

Preface Today’s most effective and successful organizations fi nd ways to motivate, train, compensate,

and challenge their employees. This is true for all organizations, whether they are manufactur-

ing or service companies, large or small, domestic or international, profi t or nonprofi t, govern-

ment or nongovernment.

Since the publication of the ninth edition of Human Resource Management, the world has con-

tinued to change. The human resource components of most organizations have become even more

diverse and more sophisticated. In addition, other signifi cant changes have occurred that affect

human resource managers. The worldwide recession and accompanying downsizing, changing

government and legal requirements, increased awareness for security issues, new information

systems, demands for a more skilled workforce, and intensifying global competition are just a few

of the factors that have contributed to the complexity of HRM issues for today’s organizations.

FEATURES OF THE BOOK As in previous editions, the tenth edition of Human Resource Management continues to present

both the theoretical and practical aspects of HRM. The theoretical material is presented through-

out the text and highlighted via a marginal glossary. Students are assisted in learning HRM

terminology through these concise defi nitions placed in the margins. They also provide a valu-

able study tool for students. The practical aspects of HRM are presented through lively and

pedagogically effective examples woven throughout the text and end-of-chapter materials.

• There are detailed learning objectives for each chapter.

• Multiple “HRM in Action” boxes are included in each chapter and provide current examples

that illustrate how actual organizations apply concepts presented in the chapters. The over-

whelming majority of these examples are new to this edition.

• A key feature entitled “On the Job” appears after several chapters and offers numerous

other practical examples.

• The URLs for companies referenced in the text have been updated and expanded.

• End-of-chapter materials include these features:

• The “Summary of Learning Objectives” is a synopsis and review of the key learning

objectives within each chapter.

• A list of key terms is provided for each chapter. These lists are new to this edition.

• “Review Questions” provide an opportunity to review chapter concepts through ques-

tions developed to test students’ memory of key issues and concepts within the chapter.

• “Discussion Questions” give students an opportunity to apply critical thinking skills to

in-depth questions.

• Two “Incidents” per chapter act as minicases students can use to analyze and dissect

chapter concepts and applications via real-life scenarios.

• Experential “Exercises” placed at the end of each chapter can be done in class or as

homework and are designed to illustrate major points emphasized in the chapter.

• “Notes and Additional Readings” provide references and more in-depth information on

covered topics.

THE TEACHING PACKAGE Each component of the teaching package has been carefully developed to assist faculty in

teaching and students in learning the important concepts and applications of HRM. The fol-

lowing items are included on the book website at www.mhhe.com/byars10e:

• The Instructor’s Manual offers opportunities for classroom instruction, student participa-

tion, and assignments or research. Each chapter includes a chapter outline, presentation

suggestions, and answers for the “Discussion Questions” and “Incident Solutions” that are

included within the text.

vi Preface

• The Test Bank includes over 600 questions and consists of true/false, multiple choice, and

short-answer questions.

• Power Point slides contain tables and fi gures from the text plus additional graphic material.

• The student center provides chapter review materials and self-grading quizzes. Premium

content access is also available for purchase, including Test Your Knowledge, Self-

Assessments, and Manager’s Hot Seat videos.

In addition, the Human Resource Management Video DVD contains a number of short clips

providing real-world illustrations of chapter concepts.

The Manager’s Hot Seat interactive video series is also available for purchase with this

textbook or online at www.mhhe.com/mhs. This popular simulation allows students to experi-

ence, as close to real-life as possible, what it’s like to be in the manager’s hot seat. Students

watch and comment on the situation as managers in unscripted scenarios make on-the-spot

decisions in confronting real-life issues, such as hiring decisions, teamwork, or the virtual

workplace.

ORGANIZATION OF THE TENTH EDITION The book’s content has been rearranged into fi ve major sections. Part 1, “Introduction and

Background of Human Resources,” is designed to provide the student with the foundation

necessary to embark on a study of the work of human resource management. This section

also explores how the legal environment and the implementation of equal employment op-

portunity infl uence all areas of human resource management. The fi nal chapter in this section

discusses job analysis and job design. Part 2, “Acquiring Human Resources,” discusses the

topics of human resource planning, recruitment, and selection. Part 3, “Training and Develop-

ing Employees,” describes orientation and employee training, management and organizational

development, career planning, and performance management systems. Part 4, “Compensating

Human Resources,” presents an introductory chapter on organizational reward systems and

has separate chapters describing base wage and salary systems, incentive pay systems, and

employee benefi ts. The chapter on employee benefi ts has been moved to this section in this

edition. Part 5, “Employee Well-Being and Labor Relations” explores employee safety and

health, employee relations, the legal environment and structure of labor unions, as well as

union organizing campaigns, and collective bargaining.

Reviewers for this edition:

Janet A. Henquinet

Metropolitan State University

Susan L. Kendall

Arapahoe Community College

Robert D. Lewallen

Iowa Western Community College

Tom J. Sanders

University of Montevallo

Romila Singh

University of Wisconsin-Milwaukee

As with all previous editions, we solicit any ideas and inputs that readers may have con-

cerning the book.

Lloyd L. Byars

Leslie W. Rue

vii

Brief Contents

PART ONE Introduction and Background of Human

Resources 1

1 Human Resource Management: A Strategic Function 3

2 Equal Employment Opportunity: The Legal Environment 23

3 Implementing Equal Employment Opportunity 45

4 Job Analysis and Job Design 65

PART TWO Acquiring Human Resources 87

5 Human Resource Planning 89

6 Recruiting Employees 111

7 Selecting Employees 125

PART THREE Training and Developing Employees 147

8 Orientation and Employee Training 149

9 Management and Organizational Development 167

10 Career Development 189

11 Performance Management Systems 213

PART FOUR Compensating Human Resources 231

12 The Organizational Reward System 233

13 Base Wage and Salary Systems 251

14 Incentive Pay Systems 273

15 Employee Benefi ts 291

PART FIVE Employee Well-Being and Labor Relations 317

16 Employee Safety and Health 319

17 Employee Relations 343

18 The Legal Environment and Structure of Labor Unions 357

19 Union Organizing Campaigns and Collective Bargaining 373

GLOSSARY 391

INDEX 401

viii

PART ONE INTRODUCTION AND BACKGROUND

OF HUMAN RESOURCES 1

Chapter 1

Human Resource Management: A Strategic

Function 3

Human Resource Functions 4

Who Performs the Human Resource Functions? 5

The Human Resource Department 5

Challenges for Today’s Human Resource

Managers 6

Diversity in the Workforce 6

Regulatory Changes 8

Structural Changes to Organizations 8

Technological and Managerial Changes within

Organizations 9

Human Resource Management in the Future 10

Organizational Performance and the Human

Resource Manager 12

Metrics and the HR Scorecard 12

Communicating Human Resource

Programs 13

Guidelines for Communicating Human Resource

Programs 13

Summary of Learning Objectives 14

Key Terms 15

Review Questions 16

Discussion Questions 16

Incident 1.1: Human Resource Management and

Professionals 16

Incident 1.2: Choosing a Major 17

Exercise 1.1: Changes in Terminology 17

Exercise 1.2: Justifying the Human Resource

Department 17

Exercise 1.3: Test Your Knowledge of

HR History 17

Exercise 1.4: Are You Poised for Success? 18

Notes and Additional Readings 20

Chapter 2

Equal Employment Opportunity: The Legal

Environment 23

Equal Employment Opportunity Laws 24

Equal Pay Act (1963) 24

Title VII, Civil Rights Act (1964) 25

Age Discrimination in Employment Act (1967) 26

Rehabilitation Act (1973) 27

Vietnam-Era Veterans Readjustment Assistance

Act (1974) 27

Pregnancy Discrimination Act (1978) 28

Immigration Reform and Control Act (1986) 28

Americans with Disabilities Act (1990) 28

Older Workers Benefi t Protection Act (1990) 29

Civil Rights Act (1991) 30

Family and Medical Leave Act (1993) 31

Executive Orders 11246, 11375, and 11478 31

State and Local Government Equal

Employment Laws 32

Landmark Court Cases 32

Griggs v. Duke Power Company 34

McDonnell Douglas v. Green 34

Albemarle Paper v. Moody 35

University of California Regents v. Bakke 35

United Steelworkers of America v. Weber 35

Connecticut v. Teal 36

Memphis Firefi ghters, Local 1784 v. Stotts 36

City of Richmond v. J. A. Crosan Company 37

Wards Cove v. Atonio 37

Martin v. Wilks 37

Adarand Contractors v. Peña 38

State of Texas v. Hopwood 38

University of Michigan’s Admission Procedures 38

Enforcement Agencies 38

Equal Employment Opportunity Commission 38

Offi ce of Federal Contract Compliance

Programs 39

Summary of Learning Objectives 39

Key Terms 41

Review Questions 41

Discussion Questions 42

Incident 2.1: Debate over Retirement Age 42

Incident 2.2: Accept Things as They Are 43

Exercise 2.1: Discrimination because of Sex,

Religion, or National Origin 43

Notes and Additional Readings 44

Chapter 3

Implementing Equal Employment

Opportunity 45

EEOC Compliance 46

Legal Powers of the EEOC 46

EEOC Posting Requirements 46

Records and Reports 46

Compliance Process 49

Preemployment Inquiry Guide 51

Affi rmative Action Plans 52

Table of Contents

Table of Contents ix

Bona Fide Occupational Qualifi cation (BFOQ) 52

Business Necessity 53

Sexual Harassment 54

Comparable Worth and Equal Pay Issues 55

Other Areas of Employment Discrimination 56

Religion 56

Native Americans 57

HIV-Positive Status 57

Sexual Orientation 57

Summary of Learning Objectives 58

Key Terms 58

Review Questions 59

Discussion Questions 59

Incident 3.1: The Layoff 59

Incident 3.2: Religion and Real Estate 60

Exercise 3.1: Affi rmative Action Debate 60

Exercise 3.2: How Much Do You Know about Sexual

Harassment? 60

Notes and Additional Readings 61

On the Job: Preemployment Inquiry Guide 61

Chapter 4

Job Analysis and Job Design 65

Basic Terminology 66

Job Analysis 66

Products of Job Analysis 68

Job Analysis Methods 69

The ADA and Job Analysis 72

Potential Problems with Job Analysis 73

Job Design 74

Job Scope and Job Depth 75

Sociotechnical Approach to Job Design 75

The Physical Work Environment 76

Flexible Work Arrangements (FWAs) 76

Summary of Learning Objectives 79

Key Terms 81

Review Questions 81

Discussion Questions 81

Incident 4.1: The Tax Assessor’s Offi ce 81

Incident 4.2: Turnover Problems 82

Exercise 4.1: Introduction to O*NET 82

Exercise 4.2: Writing a Job Description 82

Exercise 4.3: Performing a Job Analysis 83

Notes and Additional Readings 83

On the Job: Sample Job Analysis

Questionnaire 84

PART TWO ACQUIRING HUMAN RESOURCES 87

Chapter 5

Human Resource Planning 89

How HRP Relates to Organizational Planning 90

Strategy-Linked HRP 91

Time Frame of HRP 91

HRP: An Evolving Process 92

Steps in the HRP Process 92

Determining Organizational Objectives 92

Determining the Skills and Expertise Required (Demand) 94

Determining Additional (Net) Human Resource

Requirements 95

Developing Action Plans 96

Synthesizing the HRP Process 98

Succession Planning 100

Human Resource Information Systems (HRIS) 101

HR and the Internet 102

HR Intranets and Portals 102

HR and Web 2.0 104

Software as a Service 104

Summary of Learning Objectives 105

Key Terms 106

Review Questions 106

Discussion Questions 106

Incident 5.1: Human Resource Planning—

What Is That? 107

Incident 5.2: New Boss 107

Exercise 5.1: Avoiding Layoffs? 108

Exercise 5.2: Locating HR Software 108

Notes and Additional Readings 108

Chapter 6

Recruiting Employees 111

Job Analysis, Human Resource Planning, and

Recruitment 112

Personnel Requisition Form 112

Sources of Qualifi ed Personnel 113

Internal Sources 113

External Sources 115

Effectiveness of Recruitment Methods 117

Realistic Job Previews 118

Who Does the Recruiting, and How? 119

Organizational Inducements in Recruitment 120

Equal Employment Opportunity and Recruitment 120

Summary of Learning Objectives 121

Key Terms 122

Review Questions 122

Discussion Questions 122

Incident 6.1: Inside or Outside Recruiting? 123

Incident 6.2: A Malpractice Suit against a Hospital 123

Exercise 6.1: Writing a Résumé 124

Notes and Additional Readings 124

Chapter 7

Selecting Employees 125

The Selection Process 125

Employment Application Form 126

Preliminary Interview 127

Formal Testing 128

x Table of Contents

Second or Follow-Up Interview 131

Reference Checking 132

Physical Examination 132

Making the Final Selection Decision 133

Validation of Selection Procedures 133

Criterion-Related Validity 134

Content and Construct Validity 137

Reliability 137

Uniform Guidelines on Employee Selection

Procedures 137

Adverse (or Disparate) Impact 138

Where Adverse Impact Exists: The Basic Options 139

Summary of Learning Objectives 139

Key Terms 140

Review Questions 140

Discussion Questions 141

Incident 7.1: Promotions at OMG 141

Incident 7.2: The Pole Climbers 142

Exercise 7.1: Developing a Frequency Distribution 143

Notes and Additional Readings 143

On the Job: Sample Online Application

for Employment 144

PART THREE TRAINING AND

DEVELOPING EMPLOYEES 147

Chapter 8

Orientation and Employee Training 149

Orientation 151

Shared Responsibility 151

Organizational Orientation 151

Departmental and Job Orientation 151

Orientation Kit 151

Orientation Length and Timing 153

Follow-Up and Evaluation 154

Training Employees 154

Needs Assessment 155

Establishing Training Objectives 156

Methods of Training 157

On-the-Job Training and Job Rotation 157

Apprenticeship Training 159

Classroom Training 160

Virtual Classroom 160

Evaluating Training 160

Reaction 160

Learning 160

Behavior 161

Results 161

Principles of Learning 162

Motivation to Achieve Personal Goals 162

Knowledge of Results 162

Reinforcement 162

Flow of the Training Program 163

Practice and Repetition 163

Spacing of Sessions 163

Whole or Part Training 163

Summary of Learning Objectives 163

Key Terms 164

Review Questions 164

Discussion Questions 164

Incident 8.1: Starting a New Job 164

Incident 8.2: Implementing On-the-Job Training 165

Exercise 8.1: McDonald’s Training Program 166

Exercise 8.2: Virtual Classroom 166

Notes and Additional Readings 166

Chapter 9

Management and Organizational

Development 167

The Management Development Process 168

Determining the Net Management Requirements 168

Organizational Objectives 168

Management Inventory and Succession Plan 168

Changes in the Management Team 169

Needs Assessment 169

Establishing Management Development Objectives 172

Methods Used in Management Development 174

Understudy Assignments 174

Coaching 174

Experience 175

Job Rotation 175

Special Projects and Committee Assignments 175

Classroom Training 175

In-Basket Technique 176

Web-Based Training 177

Business Simulations 177

Adventure Learning 177

University and Professional Association Seminars 178

Evaluation of Management Development Activities 178

Assessment Centers 179

Organizational Development 179

Diagnosis 180

Strategy Planning 180

Education 181

Evaluation 181

Summary of Learning Objectives 182

Key Terms 182

Review Questions 182

Discussion Questions 183

Incident 9.1: The 40-Year Employee 183

Incident 9.2: Consolidating Three Organizations 184

Exercise 9.1: Training Methods 184

Notes and Additional Readings 185

On the Job: Comparison of Training Methods 185

Chapter 10

Career Development 189

Why Is Career Development Necessary? 190

Table of Contents xi

Who Is Responsible for Career Development? 191

Organization’s Responsibilities 191

Employee’s Responsibilities 191

Manager’s Responsibilities 192

Implementing Career Development 192

Individual Assessment 192

Assessment by the Organization 194

Communicating Career Options 194

Career Pathing 194

Career Self-Management 194

Career Counseling 195

Reviewing Career Progress 196

Career-Related Myths 197

Myths Held by Employees 197

Myths Held by Managers 198

Dealing with Career Plateaus 198

Rehabilitating Ineffective Plateauees 200

Career Lattices 200

The Impact of Dual-Employed Couples and

Single-Parent Employees 201

Outplacement 202

Breaking the Glass Ceiling 202

Career Development Online 203

Summary of Learning Objectives 204

Key Terms 205

Review Questions 205

Discussion Questions 206

Incident 10.1: The Unhappy Power Line Installer 206

Incident 10.2: Hire Me, Hire My Husband! 207

Exercise 10.1: How Do You Rate as a Career

Counselor? 208

Exercise 10.2: Becoming an Effective Career

Planner 209

Exercise 10.3: Online Self-Assessment 209

Notes and Additional Readings 209

On the Job: Online Self-Assessment Tools 210

Chapter 11

Performance Management Systems 213

Understanding Performance 214

Determinants of Performance 214

Environmental Factors as Performance Obstacles 214

Responsibilities of the Human Resource Department

in Performance Management 214

Performance Appraisal: Defi nition and Uses 215

Performance Appraisal Methods 216

Management by Objectives (MBO) 216

Multi-Rater Assessment (or 360-Degree Feedback) 217

Graphic Rating Scale 217

Behaviorally Anchored Rating Scale (BARS) 217

Critical-Incident Appraisal 219

Essay Appraisal 220

Checklist 220

Forced-Choice Rating 220

Ranking Methods 221

Work Standards 222

Potential Errors in Performance Appraisals 222

Overcoming Errors in Performance Appraisals 223

Providing Feedback through the Appraisal Interview 223

Developing Performance Improvement Plans 224

Performance Appraisal and the Law 225

Summary of Learning Objectives 225

Key Terms 226

Review Questions 226

Discussion Questions 227

Incident 11.1: The College Admissions Offi ce 227

Incident 11.2: The Lackadaisical Plant Manager 228

Exercise 11.1: Developing a Performance Appraisal

System 228

Notes and Additional Readings 229

PART FOUR COMPENSATING

HUMAN RESOURCES 231

Chapter 12

The Organizational Reward System 233

Defi ning the System 234

Selection of Rewards 234

Relating Rewards to Performance 235

Job Satisfaction and Rewards 236

The Satisfaction–Performance Controversy 237

Other Factors Affecting Job Satisfaction 238

Employee Compensation 238

Compensation Policies 239

Pay Secrecy 239

Government and Union Infl uence 240

Impact of Comparable Worth 241

The Importance of Fair Pay 241

Pay Equity 242

Pay Satisfaction Model 243

The Role of the Human Resource Manager in the Reward

System 244

Summary of Learning Objectives 245

Key Terms 246

Review Questions 246

Discussion Questions 247

Incident 12.1: An Informative Coffee Break 247

Incident 12.2: Does Money Motivate? 248

Exercise 12.1: Relating Rewards to Performance 249

Notes and Additional Readings 249

Chapter 13

Base Wage and Salary Systems 251

Objective of the Base Wage and Salary System 252

Conventional Job Evaluation 252

Job Ranking Method 253

Job Classifi cation Method 254

Point Method 254

Factor Comparison Method 257

Comparison of Job Evaluation Methods 258

xii Table of Contents

Pricing the Job 259

Wage and Salary Surveys 259

Wage and Salary Curves 261

Base Wage/Salary Structure 263

New Approaches to the Base Wage/Salary

Structure 263

Broadbanding 264

Skill-Based Pay 264

Competency-Based Pay 265

Market-Based Pay 266

Total Rewards 266

Summary of Learning Objectives 267

Key Terms 268

Review Questions 268

Discussion Questions 269

Incident 13.1: Fair Pay for Pecan Workers 269

Incident 13.2: A Dead-End Street? 269

Exercise 13.1: Ranking Jobs 270

Exercise 13.2: Wage/Salary Survey 270

Notes and Additional Readings 271

Chapter 14

Incentive Pay Systems 273

Requirements of Incentive Plans 274

Individual Incentives 275

Piece Rate Plans 275

Plans Based on Time Saved 275

Plans Based on Commissions 275

Individual Bonuses 276

Suggestion Systems 276

Incentives for Managerial Personnel 276

Stock Options for Nonmanagerial Personnel 281

Group Incentives 281

Gain-Sharing or Profi t-Sharing Plans 282

Scanlon-Type Plans 283

Employee Stock Ownership Plans (ESOPs) 283

Making Incentive Plans Work 285

Summary of Learning Objectives 285

Key Terms 287

Review Questions 287

Discussion Questions 287

Incident 14.1: Rewarding Good Performance at a Bank 287

Incident 14.2: Part-Time Pool Personnel 288

Exercise 14.1: Implementing Incentives 289

Exercise 14.2: Proven Suggestion Systems 289

Exercise 14.3: The Status of the Corporate and Financial

Institutions Compensation Fairness Act (CFICF) 289

Notes and Additional Readings 289

Chapter 15

Employee Benefi ts 291

What Are Employee Benefi ts? 292

Growth in Employee Benefi ts 293

Legally Required Benefi ts 294

Social Security 294

Unemployment Compensation 296

Workers’ Compensation 297

Retirement-Related Benefi ts 298

Company-Sponsored Retirement Plans 298

ERISA and Related Acts 302

Employees Not Covered by Company Retirement

Plans 303

Preretirement Planning 304

Insurance-Related Benefi ts 304

Health Insurance 305

Dental Insurance 306

Life Insurance 306

Accident and Disability Insurance 307

Payment for Time Not Worked 307

Paid Holidays and Paid Vacations 307

Other Benefi ts 307

Employee Preferences among Benefi ts 307

Flexible-Benefi t Plans 308

The Benefi t Package 309

Communicating the Benefi t Package 309

Summary of Learning Objectives 311

Key Terms 313

Review Questions 313

Discussion Questions 314

Incident 15.1: Who Is Eligible for Retirement Benefi ts? 314

Incident 15.2: Benefi ts for Professionals 314

Exercise 15.1: Taking a Raise 315

Notes and Additional Readings 315

PART FIVE EMPLOYEE WELL-BEING AND LABOR

RELATIONS 317

Chapter 16

Employee Safety and Health 319

Occupational Safety and Health Act 320

OSHA Standards 321

Penalties 322

Reporting/Record-Keeping Requirements 322

The Causes of Accidents 323

Personal Acts 323

Physical Environment 324

Accident Proneness 324

How to Measure Safety 324

Organizational Safety Programs 325

Promoting Safety 325

Establishing a Safety Training Program 325

Employee Health 326

Occupational Health Hazards 326

Stress in the Workplace 327

Alcoholism and Drug Abuse 329

AIDS 331

Employee Assistance Programs (EAPs) 332

Work/Life Programs 333

Wellness Programs 334

Table of Contents xiii

Violence in the Workplace 335

Summary of Learning Objectives 335

Key Terms 337

Review Questions 337

Discussion Questions 337

Incident 16.1: Safety Problems at Blakely 338

Incident 16.2: To Fire or Not to Fire? 338

Exercise 16.1: Filing OSHA Reports 339

Exercise 16.2: Preventing Violence in the Workplace 339

Notes and Additional Readings 339

Chapter 17

Employee Relations 343

Employment at Will 343

Causes of Disciplinary Actions 344

Administering Discipline 344

Prediscipline Recommendations 345

Guidelines for Administering Discipline 346

Legal Restrictions 347

Grievance Procedures 348

Just Cause 348

Due Process 350

Duty of Fair Representation 350

Time Delays 351

Grievance Arbitration 351

Summary of Learning Objectives 352

Key Terms 353

Review Questions 353

Discussion Questions 353

Incident 17.1: Tardy Tom 354

Incident 17.2: Keys to the Drug Cabinet 354

Exercise 17.1: Mock Arbitration 355

Notes and Additional Readings 356

Chapter 18

The Legal Environment and Structure

of Labor Unions 357

The Legal Environment of Labor–Management

Relations 358

Sherman Anti-Trust Act (1890) 359

Clayton Act (1914) 360

Railway Labor Act (1926) 360

Norris–La Guardia Act (1932) 360

National Labor Relations (Wagner) Act (1935) 361

Labor–Management Relations (Taft–Hartley)

Act (1947) 361

Labor–Management Reporting and Disclosure

(Landrum–Griffi n) Act (1959) 364

Civil Service Reform Act (1978) 364

Union Structures 365

AFL–CIO 365

National and International Unions 366

City and State Federations 366

Local Unions 366

Current and Future Developments in the Labor

Movement 367

Summary of Learning Objectives 368

Key Terms 369

Review Questions 369

Discussion Questions 369

Incident 18.1: Unions and Management 370

Incident 18.2: Voluntary Resignations during

a Strike 370

Exercise 18.1: Need for Unions 370

Notes and Additional Readings 371

Chapter 19

Union Organizing Campaigns and Collective

Bargaining 373

Union Membership Decision 374

Reasons for Joining 374

The Opposition View 374

Union Organizing Campaign 374

Determining the Bargaining Unit 375

Election Campaigns 375

Election, Certifi cation, and Decertifi cation 376

Good-Faith Bargaining 377

Participants in Negotiations 378

Employer’s Role 378

Union’s Role 379

Role of Third Parties 379

Collective Bargaining Agreements 381

Specifi c Issues in Collective Bargaining

Agreements 382

Management Rights 382

Union Security 382

Wages and Employee Benefi ts 383

Individual Security (Seniority) Rights 384

Dispute Resolution 384

Impasses in Collective Bargaining 384

Trends in Collective Bargaining 385

Summary of Learning Objectives 386

Key Terms 387

Review Questions 387

Discussion Questions 387

Incident 19.1: Florida National Guard and NAGE 387

Incident 19.2: Retiree Benefi ts 388

Exercise 19.1: Contract Negotiations 388

Notes and Additional Readings 389

Glossary 391

Index 401

Part One

Introduction and Background of Human Resources 1. Human Resource Management: A Strategic Function

2. Equal Employment Opportunity: The Legal Environment

3. Implementing Equal Employment Opportunity

4. Job Analysis and Job Design

Im a g e S

o u rc

e /P

u n ch

S to

ck

3

Chapter One

Human Resource Management: A Strategic Function

Chapter Outline

Human Resource Functions

Who Performs the Human Resource

Functions?

The Human Resource Department

Challenges for Today’s Human Resource

Managers

Diversity in the Workforce

Regulatory Changes

Structural Changes to Organizations

Technological and Managerial Changes

within Organizations

Human Resource Management in the Future

Organizational Performance and the

Human Resource Manager

Metrics and the HR Scorecard

Communicating Human Resource Programs

Guidelines for Communicating Human

Resource Programs

Summary of Learning Objectives

Key Terms

Review Questions

Discussion Questions

Incident 1.1: Human Resource Management

and Professionals

Incident 1.2: Choosing a Major

Exercise 1.1: Changes in Terminology

Exercise 1.2: Justifying the Human

Resource Department

Exercise 1.3: Test Your Knowledge

of HR History

Exercise 1.4: Are You Poised for Success?

Notes and Additional Readings

Chapter Learning Objectives

After studying this chapter, you should be

able to:

1. Defi ne human resource management.

2. Describe the functions of human

resource management.

3. Summarize the types of assistance the

human resource department provides.

4. Explain the desired relationship

between human resource managers

and operating managers.

5. Identify several challenges today’s

human resource managers currently face.

6. Outline several potential challenges

and contributions that an increasingly

diverse workforce presents.

7. Discuss the role of human resource

managers in the future.

8. Explain how human resource managers

can affect organizational performance.

9. Summarize several guidelines to follow

when communicating human resource

programs.

Human resource management (HRM) encompasses those activities designed to provide for and coordinate the human resources of an organization. The human resources (HR) of an

organization represent one of its largest investments. In fact, government reports show that ap-

proximately 64 percent of national income is used to compensate employees. 1 The value of an or-

ganization’s human resources frequently becomes evident when the organization is sold. Often the

human resource management Activities designed to provide

for and coordinate the human

resources of an organization.

4 Part One Introduction and Background of Human Resources

purchase price is greater than the total value of the physical and fi nancial assets. This difference,

sometimes called goodwill, partially refl ects the value of an organization’s human resources. In

addition to wages and salaries, organizations often make other sizable investments in their hu-

man resources. Recruiting, hiring, and training represent some of the more obvious examples.

Human resource management is a modern term for what was traditionally referred to as per-

sonnel administration or personnel management . However, some experts believe human resource

management differs somewhat from traditional personnel management. They see personnel man-

agement as being much narrower and more clerically oriented than human resource management.

For the purposes of this book, we will only use the term human resource management .

HUMAN RESOURCE FUNCTIONS

Human resource functions refer to those tasks and duties performed in both large and small organizations to provide for and coordinate human resources. Human resource functions

encompass a variety of activities that signifi cantly infl uence all areas of an organization. The

Society for Human Resource Management (SHRM) has identifi ed six major functions of

human resource management:

1. Human resource planning, recruitment, and selection.

2. Human resource development.

3. Compensation and benefi ts.

4. Safety and health.

5. Employee and labor relations.

6. Human resource research.

Table 1.1 identifi es many of the activities that comprise each major human resource function.

Ensuring that the organization fulfi lls all of its equal employment opportunity and other govern-

ment obligations is an activity that overlays all six of the major human resource functions.

human resource functions Tasks and duties human

resource managers perform

(e.g., determining the

organization’s human resource

needs; recruiting, selecting,

developing, counseling, and

rewarding employees; acting

as liaison with unions and

government organizations;

and handling other matters of

employee well-being).

TABLE 1.1 Activities of the Major

Human Resource Functions

Human Resource Planning, Recruitment, and Selection

• Conducting job analyses to establish the specifi c requirements of individual jobs within the organization.

• Forecasting the human resource requirements the organization needs to achieve its objectives.

• Developing and implementing a plan to meet these requirements.

• Recruiting the human resources the organization requires to achieve its objectives.

• Selecting and hiring human resources to fi ll specifi c jobs within the organization.

Human Resource Development

• Orienting and training employees.

• Designing and implementing management and organizational development programs.

• Building effective teams within the organizational structure.

• Designing systems for appraising the performance of individual employees.

• Assisting employees in developing career plans.

Compensation and Benefi ts

• Designing and implementing compensation and benefi t systems for all employees.

• Ensuring that compensation and benefi ts are fair and consistent.

Safety and Health

• Designing and implementing programs to ensure employee health and safety.

• Providing assistance to employees with personal problems that infl uence their work performance.

Employee and Labor Relations

• Serving as an intermediary between the organization and its union(s).

• Designing discipline and grievance handling systems.

Human Resource Research

• Providing a human resource information base.

• Designing and implementing employee communication systems.

Chapter 1 Human Resource Management: A Strategic Function 5

Talent management is a relatively new and all-encompassing term used in the human resources fi eld. Talent management refers to the broad spectrum of HR activities involved

in obtaining and managing the organization’s human resources. This includes everything

from crafting a job advertisement to tracking an employee’s progress up the career ladder to

separation of the employee from the organization. 2 The specifi c aspects of talent management

are covered in the different chapters of this book.

In an attempt to cover each of the major areas of human resource management, this

book contains six major sections. Part 1 serves as an introduction and presents material

that applies to all major human resource functions. It contains an introductory chapter,

two chapters on equal employment opportunity, and a chapter on job analysis and design.

Part 2 explores those human resource functions specifi cally concerned with acquiring

the organization’s human resources: human resource planning, recruiting, and selecting.

Part 3 concentrates on those functions related to the training and development of the or-

ganization’s human resources. This section includes chapters on orientation and employee

training, management and organization development, career planning, and performance

appraisal. Part 4 covers the basic aspects of employee compensation: the organizational

reward system, base wage and salary systems, and incentive pay systems, and employee

benefi ts. Part 5 deals with employee well-being and labor relations. This part includes

chapters on safety and health, employee relations, unions, and the collective bargaining

process. Issues related to globalization of HR are dispersed throughout the relevant chap-

ters of the book.

Who Performs the Human Resource Functions? Most managers are periodically involved to some extent in each of the major human resource

functions. For example, at one time or another, almost all managers are involved in some

aspect of employee recruiting, selecting, training, developing, compensation, team building,

and evaluation. In small organizations, most human resource functions are performed by the

owner or by operating managers . These managers perform the human resource functions in addition to their normal managerial activities. Many medium-size and even some large

organizations use human resource generalists. A human resource generalist devotes a majority of his or her working time to human resource issues, but does not specialize in

any specifi c areas of human resource management. Large organizations usually have a

human resource department that is responsible for directing the human resource functions.

In addition to one or more human resource generalists, such a department is normally staffed

by one or more human resource specialists . These specialists are trained in one or more specifi c areas of human resource management. However, even in large organizations that

have a human resource department with many human resource generalists and specialists,

most operating managers must regularly perform and be involved with many of the human

resource functions.

The Human Resource Department As mentioned previously, most medium-size and some large organizations use human resource

generalists and do not have a human resource department. In these situations, the functions

performed by human resource generalists are essentially the same as those that would be per-

formed by a human resource department. Therefore, the following discussion also applies to

the role of human resource generalists in organizations that do not have a human resource

department.

The primary function of a human resource department is to provide support to operating

managers on all human resource matters. Thus, most human resource departments fulfi ll a

traditional staff role and act primarily in an advisory capacity. In addition to advising operating

managers, a human resource department customarily organizes and coordinates hiring and

training; maintains personnel records; acts as a liaison between management, labor, and

government; and coordinates safety programs. Therefore, accomplishing the human resource

goals of an organization requires close coordination between the human resource department

and the operating managers.

Precisely how all of the functions related to human resources are split between operating

managers and the human resource department varies from organization to organization. For

talent management The broad spectrum of

HR activities involved in

obtaining and managing

the organization’s human

resources.

operating manager Person who manages

people directly involved

with the production of an

organization’s products or

services (e.g., production

manager in a manufacturing

plant, loan manager in a bank).

human resource generalist Person who devotes a majority

of working time to human

resource issues, but does not

specialize in any specifi c areas.

human resource specialist Person specially trained in

one or more areas of human

resource management (e.g.,

labor relations specialist, wage

and salary specialist).

6 Part One Introduction and Background of Human Resources

example, the human resource department in one company may do all the hiring below a certain

level. In another company, all the hiring decisions may be made by operating managers, with

the human resource department acting only in an advisory capacity.

It is helpful to view the human resource department as providing three types of assist-

ance: (1) specifi c services, (2) advice, and (3) coordination. Table 1.2 presents some typical

examples of each of these types of assistance. Figure 1.1 illustrates the different roles a human

resource department or a human resource generalist might fi ll.

As stated earlier, a human resource department normally acts in an advisory capacity

and does not have authority over operating managers. As a result, confl ict can occur when

operating managers appear to ignore the suggestions and recommendations of the human

resource department. If the human resource department is to be effective, it must continually

cultivate good relations with operating managers. Likewise, operating managers must under-

stand the human resource functions to effectively utilize the human resource department.

CHALLENGES FOR TODAY’S HUMAN RESOURCE MANAGERS

Human resource management has expanded and moved beyond mere administration of the

traditional activities of employment, labor relations, compensation, and benefi ts. Today HRM

is much more integrated into both the management and the strategic planning process of the

organization. 3

One reason for this expanded role is that the organizational environment has become much

more diverse and complex. Compared to a workforce historically dominated by white males,

today’s workforce is very diverse and projected to become more so. Diversity in the work-

force encompasses many different dimensions, including sex, race, national origin, religion,

age, sexual orientation, and disability. Diversity in the workplace presents new and differ-

ent challenges for all managers. Other challenges are the result of changes in government

requirements, organizational structures, technology, and management approaches. Each of

these issues is discussed below.

Diversity in the Workforce Recent forecasts by the U.S. Bureau of Labor Statistics project that the total U.S. labor force

will consist of only 33 percent white, non-Hispanic males by the year 2018. 4 Table 1.3 shows

the projected numbers of entrants and leavers in the total workforce of the groups shown for

FIGURE 1.1 Three Types of Assistance

Provided by a Human

Resource Department

Specific services

Human resource

department Operating managerAdvice

Coordination

Specifi c Services Advice Coordination

Maintaining employee records Disciplinary matters Performance appraisals

Handling initial phases of employee

orientation

Equal employment

opportunity matters

Compensation matters

TABLE 1.2 Examples of the Types

of Assistance Provided

by a Human Resource

Department

Chapter 1 Human Resource Management: A Strategic Function 7

the years 2008–2018. As the table indicates, almost half the new entrants during that time

span will be women. This one dimension of diversity has many ramifi cations for organizations

in the areas of child care, spouse relocation assistance programs, pregnancy leave programs,

fl exible hours, and stay-at-home jobs.

These same projections also predict that white, non-Hispanic males will comprise fewer

than one-third of new labor force entrants for the years 2008–2018. In 2008, Hispanics repre-

sented approximately 14 percent of the labor force, with over 22 million workers. This fi gure

is expected to grow by more than 7.3 million by 2018 to a total of 29.3 million. The Asian

labor force, which is the smallest group in the U.S. labor force, is expected to have the second

highest (behind Hispanics) annual rate of growth from 2.6 percent of the total U.S. work force

in 2008 to 5.6 percent by 2018. In addition to the possibility of having differing educational

backgrounds, immigrant employees are likely to have language and cultural differences.

Organizations must begin now to successfully integrate these people into their workforces.

Almost everyone has heard the phrase “the graying of America.” By the year 2018, the

average age of employees will climb to 42.3 from 41.2 in 2008 and from 34.8 in 1978. 5 With

the aging of the overall U.S. population along with the emergence of the baby boomers, the

percentage of older employees in the labor force is also expected to increase. The increase in

the percentage of older employees will have a mixed effect. The older workforce will likely

be more experienced, reliable, and stable, but possibly less adaptable to change and retraining.

One result of this trend is that the retirement age has already begun to increase.

Group*

2008–18

2008 Entrants Leavers Stayers 2018

Number, 16 years and older

Total 154,287 37,632 25,008 129,279 166,911

Men 82,520 20,429 14,267 68,253 88,682

Women 71,767 17,203 10,741 61,026 78,229

White 125,635 27,990 21,135 104,500 132,490

Men 68,351 15,554 12,174 56,177 71,731

Women 57,284 12,436 8,961 48,323 60,759

Black 17,740 5,403 2,899 14,841 20,244

Men 8,347 2,673 1,441 6,906 9,579

Women 9,393 2,730 1,458 7,935 10,665

Asian 7,202 2,837 694 6,508 9,345

Men 3,852 1,493 450 3,402 4,895

Women 3,350 1,344 244 3,106 4,450

All other groups** 3,710 1,402 280 3,430 4,832

Men 1,970 709 202 1,768 2,477

Women 1,740 693 78 1,662 2,355

Hispanic origin 22,024 9,237 1,957 20,067 29,304

Men 13,255 5,078 1,282 11,973 17,051

Women 8,769 4,159 675 8,094 12,253

Other than Hispanic 132,263 28,395 23,051 109,212 137,607

Men 69,265 15,351 12,985 56,280 71,631

Women 62,998 13,044 10,066 52,932 65,976

White Non-Hispanic 105,209 20,847 19,222 85,987 106,834

Men 55,971 11,907 10,803 45,168 57,075

Women 49,238 8,940 8,419 40,819 49,759

*Numbers in thousands.

** The “All other groups” category includes those classed as of multiple racial origin, the race categories of American Indian and Alaska

Native, or Native Hawaiian and Other Pacifi c Islanders.

TABLE 1.3 Civilian Labor Force, 2008,

and Projected 2018;

Entrants and Leavers,

Projected 2008–18

Source: Mitra Toossi, “Labor Force

Projections to 2018: Older Workers

Staying More Active,” Monthly Labor

Review , November 2009, p. 47.

8 Part One Introduction and Background of Human Resources

Globalization of HR

Another dimension of diversity is related to the increasing globalization of many companies.

As companies become more global, diversity must be defi ned in global and not just Western

terms. 6 Defi ning diversity in global terms means looking at all people and everything that makes

them different from one another, as well as the things that make them similar. Differentiating

factors often go beyond race and language and may include such things as values, habits,

and customs. A recent survey conducted by Jeitosa Group International and the International

Association for Human Resource Information Management identifi ed the following areas as

key human resource–related challenges facing global companies:

• Cultural differences (53 percent).

• Compliance with data-privacy regulations (42 percent).

• Varying economic conditions across countries (36 percent).

• Time zone differences (32 percent).

• Legal environment (32 percent).

• International compliance (26 percent).7

Keeping diversity in mind , one key to a successful global HR program is to rely on local

people to deal with local issues. This approach only makes sense when one considers the fact

that locals almost always have a better understanding of local diversity-related issues.

Challenges and Contributions of Diversity

What challenges and contributions does the increasingly diverse workforce present? From

an overall viewpoint, organizations must get away from the tradition of fi tting employees

into a single corporate mold. 8 Everyone will not look and act the same. Organizations must

create new human resource policies to explicitly recognize and respond to the unique needs

of individual employees.

Greater diversity will not only create certain specifi c challenges but also make some important

contributions. Communication problems are certain to occur, including misunderstandings

among employees and managers as well as the need to translate verbal and written materials

into several languages. Solutions to these problems will necessitate additional training involving

work in basic skills such as writing and problem solving. An increase in organizational

factionalism will require dedicating increasing amounts of time to dealing with special interest

and advocacy groups.

In addition to creating the above challenges, greater diversity presents new opportunities.

Diversity contributes to creating an organizational culture that is more tolerant of different

behavioral styles and wider views. This often leads to better business decisions. Another

potential payoff is a greater responsiveness to diverse groups of customers.

The increasing diversifi cation of the workplace is fact. Learning to effectively manage

a diverse workforce should be viewed as an investment in the future. HRM in Action 1.1

describes how and why Scotiabank of Canada encourages diversity among its workforce.

Regulatory Changes The deluge of government regulations and laws has placed a tremendous burden on human

resource managers. Organizations face new regulations routinely issued in the areas of environ-

ment, safety and health, equal employment opportunity, pension reform, and quality of work

life. Often new regulations require signifi cant paperwork and changes in operating procedures.

Implementing these changes frequently falls on human resource managers. In addition, every

year thousands of cases relating to the interpretation of human resource issues are brought

before the courts. Once a case has been decided , human resource managers must implement

the fi ndings. Many of the new changes to health care and health insurance will have to be im-

plemented by human resource personnel and will have a signifi cant impact on their activities.

Structural Changes to Organizations In recent times, organizations have undergone many structural changes that present challenges

for human resource managers—and they continue to face such changes. Some of the structural

Organizations must successfully integrate different cultures and age groups. Photodisc/PunchStock

9

changes are caused by downsizing, outsourcing, rightsizing, and reengineering. Downsizing is laying off large numbers of managerial and other employees. As a result of downsizing and/

or attempts to reduce costs, many companies are outsourcing services that the human resource

department previously provided. Outsourcing is subcontracting work to an outside company that specializes in that particular type of work. Some examples of human resource services

being outsourced include retirement plan administration, payroll, training, and management

development programs. Under the right circumstances outsourcing certain HR activities can be

more effi cient and less costly. A recent survey by Hewitt Associates, a global human resources

services fi rm, of 104 organizations, approximately two-thirds of which are publicly traded

companies, found that most of the responding companies have achieved their expected benefi ts

from outsourcing. The survey also reported that one-third of the responding companies were

currently more inclined to outsource than they were two years ago. 9 Organizations that human

resource tasks are outsourced to are referred to as professional employer organizations (PEO’s).

PEO’s provide integrated services to effectively manage human resource responsibilities and

employer risks for clients. 10

downsizing Laying off large numbers

of managerial and other

employees.

outsourcing Subcontracting work to

an outside company that

specializes in that particular

type of work.

Rightsizing is the continuous and proactive assessment of mission-critical work and its staffi ng requirements. 11 Rightsizing differs from downsizing in that it is an ongoing planning

process to determine the optimal number of employees in every area of the organization. Other

companies are implementing reengineering programs. Reengineering is a fundamental re- thinking and radical redesign of business processes to achieve dramatic improvements in cost,

quality, service, and speed. 12 In essence, reengineering usually results in sweeping changes in

management and organizational structures.

Technological and Managerial Changes within Organizations New technologies and management approaches have added to the challenges facing human

resource managers. While the technological changes affecting human resource managers are

widespread, none are more dramatic than those related to information systems. In addition

to their uses in performing the traditional functions of accounting and payroll calculations,

computerized information systems are now being used to maintain easily accessible employee

data that are valuable in job placement and labor utilization. Information systems are also

being used in employee training, succession planning, and compensation management, and to

track and report affi rmative action activity. Cyberspace and the Internet are changing the way

many human resource managers operate. Today more and more human resource managers are

going online to recruit personnel, conduct research using electronic databases, send e-mail,

and engage in valuable networking and discussions.

Many organizations have implemented Web-based human resource systems that allow

employees to complete many HR-related tasks online. These systems are sometimes

referred to as electronic human resources (eHR). These self-service systems have the ad-

vantages of employee convenience, immediate response, increased accuracy, and reduced

rightsizing Continuous and proactive

assessment of mission-critical

work and its staffi ng

requirements.

reengineering Fundamental rethinking and

radical redesign of business

processes to achieve dramatic

improvements in cost, quality,

service, and speed.

ENCOURAGING DIVERSITY AT SCOTIABANK Scotiabank Group, one of Canada’s leading fi nancial

institutions, is a fi rm believer that diversity is good for

business. At Scotiabank diversity is more about having an

employee population that mirrors its customers and less

about compliance measures. Cory Garlough, vice president,

employee relationships, believes there are many additional

benefi ts to diversity: “Having a more diverse workforce

has resulted in more creativity and innovation in our

services. Input from a variety of different groups infl uences

everything from branch layout to marketing materials.”

Scotiabank operates under an “inclusive umbrella” and

reaches out to attract and retain many diverse groups of

employees through university recruitment efforts, specialized

career fairs, and targeted recruitment materials. One example

of how Scotiabank attracts diverse groups is regarding

employees with disabilities. A central budget, known as the

Scotiability Fund, has been established to pay for measures

required to accommodate these employees. This ensures

that funding is not an issue for any departments or branches

when it comes to hiring employees with disabilities. Quoting

Garlough, “Our goal is to remove barriers so that employees

who have disabilities feel comfortable that they can be

accommodated and successful.”

Source: Neil Crawford and Andres Tapia, “Diving Deeper into the Talent Pool,” Benefi ts Canada, January 2008, pp. 19–23.

HRM in Action 1.1

10

costs. Some examples of self-service HR-related options include payroll systems that let

employees input hours worked and requests for vacation time, payroll direct deposits that

allow employees to view current and historical pay information, and various aspects of ben-

efi ts administration.

Since the introduction of eHR in the 1990s, the fundamentals of eHR products haven’t

changed because the basic problems they address are the same. 13 However, the manner in

which the eHR products are delivered and maintained has undergone a major overhaul and vast

improvement. As part of this evolution, the costs have dropped and what used to take months

to implement can now be done in hours. Another reason for the growth of eHR products is

that today’s employees are much more receptive to being sent to a Web site for information.

Because of the widespread use of information systems and technology in the HR fi eld, specifi c

applications as related to the different HR functions are discussed throughout this book. HRM

in Action 1.2 discusses some of the lessons learned from implementing eHR at two Philips

facilities in the Netherlands.

More and more frequently, companies are using telecommuting . Options range from allowing employees to work at home one day a week to running entire projects, or even fi rms,

through electronic communication, with employees all over the country or even on different

continents working closely together, yet never meeting face to face.

Empowerment of employees and self-managed work teams are two specifi c management

approaches that are having a signifi cant impact on today’s human resource managers.

Empowerment is a form of decentralization that involves giving subordinates substantial authority to make decisions. Under empowerment, managers express confi dence in the ability

of employees to perform at high levels. Employees are also encouraged to accept personal

responsibility for their work. In organizations using self-managed work teams , groups of employees do not report to a single manager; rather, groups of peers are responsible for a

particular area or task.

The breadth of the changes in so many areas—workforce diversity, the regulatory envi-

ronment, organizational structure, new technologies, management approaches—will have a

powerful impact on today’s human resource managers.

Human Resource Management in the Future To meet the challenges of the future, tomorrow’s human resource departments must possess

different competencies and be much more sophisticated than their predecessors. 14 Given the

expanding role human resource departments must fi ll, it is essential that human resource

managers be integrally involved in the organization’s strategic and policy-making activities.

Fortunately, there are signs that this is happening in many organizations. For example, in

telecommuting Working at home by using an

electronic linkup with a central

offi ce.

empowerment Form of decentralization that

involves giving subordinates

substantial authority to make

decisions.

self-managed work teams Groups of peers are responsible

for a particular area or task.

INTRODUCING eHR AT PHILIPS ELECTRONICS AND PHILIPS NETHERLANDS Philips Electronics Netherlands and Philips Netherlands

together employ over 1,000 people in Eindhoven,

Netherlands. After eHR had been implemented at both

Philips facilities, a survey was conducted to determine the

employees’ attitudes toward the new system. The survey

was conducted online and included 99 managers and 257

nommanagers.

While many factors infl uence employee attitudes toward

eHR, two main factors were found to impact attitude towards

eHR: (1) Previous experiences with Information Technology

(IT) systems and (2) the employee’s preferences as to the

role played by HR in the organization. The fi rst fi nding

implies that for an eHR implementation to be successful, the

broader IT environment should be taken into consideration.

If the image IT already has within an organization is

positive, the eHR should be relatively easy to implement. If

not, one should expect a slow process of gaining trust and

credibility while implementing eHR. The second fi nding

indicates that employees will be more positive towards an

eHR implementation if they prefer a strategic role for HR as

opposed to a more transactional role.

One overall conclusion from the Philips’ experience is

that organizations should not leave the introduction of eHR

to the technical people alone.

Sources: “The Introduction of e-HRM at Philips: Some Lessons for Large Organizations: Don’t Leave It All to the Technical Specialists,” Human Resource Management International Digest 16, No. 2 (2008), p. 20; and M. Voermons and M. van Veldhoven, “Attitudes Towards e-HRM: An Empirical Study at Philips,” Personnel Review 36, No. 6 (2007), p. 887.

HRM in Action 1.2

Chapter 1 Human Resource Management: A Strategic Function 11

the majority of Fortune 500 companies, the head of the human resource department is an

offi cer (usually a vice president) who answers to the chief executive offi cer (CEO). In many

companies, the head of the human resource department sits on the board of directors, the plan-

ning committee, or both.

If tomorrow’s human resource managers are to earn the respect of their colleagues and

top management, they must overcome certain negative impressions and biases sometimes

associated with human resource management. They can do so in several ways. First, human re-

source managers should become well-rounded businesspeople. In addition to having a sound

background in the basic disciplines of the profession, human resource professionals need to

understand business complexities and strategies. 15 The following suggestions can help human

resource managers become more familiar with their businesses:

• Know the company strategy and business plan.

• Know the industry.

• Support business needs.

• Spend more time with the line people.

• Keep your hand on the pulse of the organization.

• Learn to calculate costs and solutions in hard numbers. 16

A 2007 survey of 589 HR professionals by the Society for Human Resource Management

(SHRM) found that nearly two-thirds of HR professionals viewed their department’s role as

equally strategic and transactional; only one-third reported their department’s role as prima-

rily transactional. HR professionals from small organizations were more likely than those

from large organizations to report that they viewed their HR functions as being primarily

transactional.17 A 2008 poll also conducted by SHRM of 345 randomly selected HR profes-

sionals found that 58 percent of the respondents believed that HR’s role in their organization’s

strategic planning had increased signifi cantly.18 A British survey published in 2009 of 269 HR

professionals reported that 65 percent of the respondents believed that the HR profession

was more strategic than when they began their careers.19 Outsourcing many of the clerical

functions, eHR, and the use of other computerized information systems (discussed further in

Chapter 5) have all contributed to making today’s HR managers more strategic.

HR professionals who thoroughly understand their businesses will help overcome the

common idea that human resource people are unfamiliar with the operating problems and

issues facing the organization. Figure 1.2 lists several pertinent questions that human resource

managers should be able to answer to develop greater understanding of the organization’s

business strategies. HRM in Action 1.3 describes why and how Cardinal Health is expanding

the strategic role of its HR functions.

Human resource managers should also become fully knowledgeable about present and

future trends and issues in HR and other related fi elds. This will help them guard against

becoming enamored with passing fads or ineffective techniques.

Finally, human resource managers should promote effective human resource utilization

within the organization. Rather than taking a moralistic approach when dealing with operating

managers, human resource managers should stress the importance of increasing profi ts

through effectively using the organization’s human resources. In this light, human resource

managers should learn to be proactive and seize opportunities to demonstrate how they can

positively affect the bottom line.

FIGURE 1.2 Questions for

Understanding the

Organization’s Business

Strategy

Source: Adapted from Daphne Woolf,

“The Long Road to the Executive

Boardroom,” Canadian HR Reporter ,