Human resource planning reference books

Fundamentals of Human Resource

Sixth Edition

Noe | Hollenbeck | Gerhart | Wright

MANAGEMENT

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fundamentals of Human Resource Management

fundamentals of Human Resource Management

SIXTH EDITION

Raymond A. Noe The Ohio State University

John R. Hollenbeck Michigan State University

Barry Gerhart University of Wisconsin–Madison

Patrick M. Wright University of South Carolina

www.mhhe.com

FUNDAMENTALS OF HUMAN RESOURCE MANAGEMENT, SIXTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2016 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2014, 2011, and 2009. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-0-07-771836-7 MHID 0-07-771836-4

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Library of Congress Cataloging-in-Publication Data

Noe, Raymond A. Fundamentals of human resource management / Raymond A. Noe, John R. Hollenbeck, Barry Gerhart, Patrick M. Wright.—Sixth edition. pages cm ISBN 978-0-07-771836-7 (alk. paper) 1. Personnel management. I. Title. HF5549.F86 2016 658.3--dc23 2014041580

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw- Hill Education does not guarantee the accuracy of the information presented at these sites.

In tribute to the lives of Raymond and Mildred Noe —R.A.N.

To my parents, Harold and Elizabeth, my wife, Patty, and my children, Jennifer, Marie, Timothy, and Jeffrey —J.R.H.

To my parents, Robert and Shirley, my wife, Heather, and my children, Chris and Annie —B.G.

To my parents, Patricia and Paul, my wife, Mary, and my sons, Michael and Matthew —P.M.W.

viii

John R. Hollenbeck holds the positions of University Distinguished Professor at Michigan State University and Eli Broad Professor of Man- agement at the Eli Broad Graduate School of Busi- ness Administration. Dr. Hollenbeck received his PhD in Management from New York University in 1984. He served as the acting editor at Organiza- tional Behavior and Human Decision Processes in 1995, the associate editor of Decision Sciences from 1999 to 2004, and the editor of Personnel Psychology from 1996 to 2002. He has published over 90 articles and book chapters on the topics of team decision making and work motivation. According to the Institute for Scientific Information, this body of work has been cited over 3,000 times by other researchers. Dr. Hollenbeck has been awarded fellowship status in both the Academy of Management and the Ameri- can Psychological Association, and was recognized with the Career Achievement Award by the HR Division of the Academy of Management (2011) and the Early Career Award by the Society of Industrial and Organizational Psychology (1992). At Michigan State, Dr. Hollenbeck has won several teaching awards including the Michigan State Distinguished Faculty Award, the Michigan State Teacher-Scholar Award, and the Broad MBA Most Outstanding Faculty Member.

Raymond A. Noe is the Robert and Anne Hoyt Designated Professor of Management at The Ohio State University. He was previously a profes- sor in the Department of Management at Michigan State University and the Industrial Relations Center of the Carlson School of Management, University of Minnesota. He received his BS in psychology from The Ohio State University and his MA and PhD in psychology from Michigan State University. Professor Noe conducts research and teaches undergraduate as well as MBA and PhD students in human resource management, managerial skills, quantitative methods, human resource information systems, training, employee development, and orga- nizational behavior. He has published articles in the Academy of Management Annals, Academy of Manage- ment Journal, Academy of Management Review, Journal of Applied Psychology, Journal of Vocational Behavior, and Personnel Psychology. Professor Noe is currently on the editorial boards of several journals including Personnel Psychology, Journal of Applied Psychology, and Journal of Organizational Behavior. Professor Noe has received awards for his teaching and research excel- lence, including the Ernest J. McCormick Award for Distinguished Early Career Contribution from the Society for Industrial and Organizational Psychol- ogy. He is also a fellow of the Society of Industrial and Organizational Psychology.

About the Authors

About the Authors ix

Barry Gerhart is Professor of Management and Human Resources and the Bruce R. Ellig Distinguished Chair in Pay and Organizational Effectiveness, School of Business, University of Wisconsin-Madison. He has also served as depart- ment chair or area coordinator at Cornell, Vander- bilt, and Wisconsin. His research interests include compensation, human resource strategy, interna- tional human resources, and employee retention. Professor Gerhart received his BS in psychol- ogy from Bowling Green State Univer sity and his PhD in industrial relations from the University of Wisconsin-Madison. His research has been pub- lished in a variety of outlets, includ ing the Academy of Management Annals, Academy of Management Jour- nal, Annual Review of Psy chology, International Journal of Human Resource Management, Journal of Applied Psychology, Man agement and Organization Review, and Personnel Psychology. He has co-authored two books in the area of compensation. He serves on the edi torial boards of journals such as the Academy of Management Journal, Industrial and Labor Rela- tions Review, International Journal of Human Resource Management, Journal of Applied Psychology, Jour nal of World Business, Management & Organization Review, and Personnel Psychology. Professor Ger hart is a past recipient of the Heneman Career Achievement Award, the Scholarly Achieve ment Award, and of the International Human Resource Management Scholarly Research Award, all from the Human Resources Divi sion, Academy of Management. He is a Fellow of the Academy of Management, the Amer- ican Psychological Association, and the Society for Industrial and Organizational Psychology.

Patrick M. Wright is the Thomas C. Vandiver Bicentennial Chair in the Darla Moore School of Business at the University of South Carolina. Prior to joining USC, he served on the faculties at Cornell University, Texas A&M University, and the Univer- sity of Notre Dame.

Professor Wright teaches, conducts research, and consults in the area of Strategic Human Resource Management (SHRM), particularly focusing on how firms use people as a source of competitive advantage and the changing nature of the Chief HR Officer role. For the past eight years he has been studying the CHRO role through a series of confidential interviews, public podcasts, small dis- cussion groups, and conducting the HR@Moore Survey of Chief HR Officers. In addition, he is the faculty leader for the Cornell ILR Executive Edu- cation/NAHR program, “The Chief HR Officer: Strategies for Success,” aimed at developing poten- tial succes sors to the CHRO role. He served as the lead edi tor on the recently released book, The Chief HR Officer: Defining the New Role of Human Resource Leaders, published by John Wiley and Sons.

He has published more than 60 research arti cles in journals as well as more than 20 chapters in books and edited volumes. He is the Incoming Editor at the Journal of Management. He has co edited a special issue of Research in Personnel and Human Resources Management titled “Strategic Human Resource Management in the 21st Cen tury” and guest edited a special issue of Human Resource Management Review titled “Research in Strategic HRM for the 21st Century.”

He has conducted programs and consulted for a number of large organizations, including Comcast, Royal Dutch Shell, Kennametal, Astra-Zeneca, BT, and BP. He currently serves as a mem ber on the Board of Directors for the National Academy of Human Resources (NAHR). He is a former board member of HRPS, SHRM Foun dation, and World at Work (formerly American Compensation Asso- ciation). In 2011, 2012, and 2013 he was named by HRM Magazine as one of the 20 “Most Influential Thought Leaders in HR.”

x

Managing human resources is a critical component of any company’s overall mis- sion to provide value to customers, shareholders, employees, and the community in which it does business. Value includes profits as well as employee growth and satisfac- tion, creation of new jobs, contributions to community programs, and protection of the environment. All aspects of human resource management, including acquiring, preparing, developing, and compensating employees, can help companies meet their daily challenges, create value, and provide competitive advantages in the global mar- ketplace. In addition, effective human resource management requires an awareness of broader contextual issues affecting business, such as the economy, legislation, and globalization.

Both the media and academic research show that effective HRM practices result in greater value for shareholders and employees. For example, the human resource practices at companies such as Google, SAS, The Boston Consulting Group, Edward Jones, and Quicken Loans helped them earn recognition on Fortune magazine’s recent list of “The Top 100 Companies to Work For.” This publicity creates a posi- tive vibe for these companies, helping them attract talented new employees, motivate and retain current employees, and make their products and services more desirable to consumers.

Our Approach: Engage, Focus, and Apply Following graduation, most students will find themselves working in businesses or not-for-profit organizations. Regardless of position or career aspirations, their role in directly managing other employees or understanding human resource management practices is critical for ensuring both company and personal success. As a result, Fun- damentals of Human Resource Management, Sixth Edition, focuses on human resource issues and how HR is used at work. Fundamentals is applicable to both HR majors and students from other majors or colleges who are taking an HR course as an elective or a requirement.

Our approach to teaching human resource management involves engaging students in learning through the use of real-world examples and best practices; focusing them on important HR issues and concepts; and applying what they have learned through chapter features and end-of-chapter exercises and cases. Students not only learn about best practices but are actively engaged through the use of cases and decision making. As a result, students will be able to take what they have learned in the course and apply it to solving HRM problems they will encounter on the job.

As described in the guided tour of the book that follows, each chapter includes sev- eral different pedagogical features. “Best Practices” provides examples of companies whose HR activities work well. “HR Oops!” highlights HRM issues that have been handled poorly. “Did You Know?” offers interesting statistics about chapter topics and

Preface

Preface xi

how they play out in real-world companies. “HRM Social” demonstrates how social media and the Internet can be useful in managing HR activities in any organization. “Thinking Ethically” confronts students with issues that occur in managing human resources. For this new edition, we have added questions to each of the features to assist students with critical thinking and to spark classroom discussions.

Fundamentals also assists students with learning “How to” perform HR activities, such as writing effective HR policies, being strategic about equal employment opportu- nities, and making the most of HR analytics. These are all work situations students are likely to encounter as part of their professional careers. The end-of-chapter cases focus on corporate sustainability (“Taking Responsibility”), managing the workforce (“Man- aging Talent”), and HR activities in small organizations (“HR in Small Business”).

Organization of the Sixth Edition Based on user and reviewer feedback, we have made several changes to the chapter organization for the Sixth Edition. The chapter on developing human resources now concludes Part 2, and the chapter on creating and maintaining high-performance organizations has been moved up to open Part 3. We believe these changes will help strengthen the discussion of key concepts.

Part 1 (Chapters 1–4) discusses the environmental forces that companies face in trying to manage human resources effectively. These forces include economic, tech- nological, and social trends; employment laws; and work design. Employers typically have more control over work design than trends and equal employment laws, but all of these factors influence how companies attract, retain, and motivate human resources. Chapter 1 discusses why HRM is a critical component to an organization’s overall suc- cess. The chapter introduces HRM practices and the roles and responsibilities of HR professionals and other managers in managing human resources.

Some of the major trends discussed in Chapter 2 include how workers continue to look for employment as the U.S. economy recovers from recession and how the recov- ery has motivated employees to look for new jobs and career opportunities. The chap- ter also highlights the greater availability of new and less expensive technologies for HRM, including social media and the Internet; the growth of HRM on a global scale as more U.S. companies expand beyond national borders; the types of skills needed for today’s jobs; and the importance of aligning HRM with a company’s overall strategy to gain competitive advantage. Chapter 3 provides an overview of the major laws affect- ing employees and the ways organizations can develop HR practices that comply with the laws. Chapter 4 highlights how jobs and work systems determine the knowledge, skills, and abilities that employees need to perform their jobs and influence employ- ees’ motivation, satisfaction, and safety at work. The chapter also discusses the process of analyzing and designing jobs.

Part 2 (Chapters 5–8) deals with acquiring, training, and developing human resources. Chapter 5 discusses how to develop a human resources plan. It empha- sizes the strengths and weaknesses of different options for dealing with shortages and excesses of human resources, including outsourcing, use of contract workers, and downsizing. Strategies for recruiting talented employees are highlighted, including use of electronic recruiting sources such as social media and online job sites.

Chapter 6 emphasizes that employee selection is a process that starts with screen- ing applications and résumés and concludes with a job offer. The chapter takes a look at the most widely used methods for minimizing mistakes in choosing employees, including employment tests and candidate interviews. Selection method standards,

xii Preface

such as reliability and validity, are discussed in understandable terms. Chapter 7 covers the features of effective training systems. Effective training includes not only creating a good learning environment but also hiring managers who encourage employees to use training content in their jobs and hiring employees who are motivated and ready to learn. Concluding Part 2, Chapter 8 demonstrates how assessment, job experiences, formal courses, and mentoring relationships can be used to develop employees for future success.

Part 3 (Chapters 9–11) focuses on assessing and improving performance. Chap- ter 9 sets the tone for this section of the book by discussing the important role of HRM in creating and maintaining an organization that achieves a high level of per- formance for employees, managers, customers, shareholders, and community. The chapter describes high-performance work systems and the conditions that contribute to high performance. Chapter 10 examines the strengths and weaknesses of different performance management systems. Chapter 11 discusses how to maximize employee engagement and productivity and retain valuable employees as well as how to fairly and humanely separate employees when the need arises because of poor performance or economic conditions.

Part 4 (Chapters 12–14) covers rewarding and compensating human resources, including how to design pay structures, recognize good performers, and provide ben- efits. Chapter 12 discusses how managers weigh the importance and costs of pay to develop a compensation structure and levels of pay for each job given the worth of the jobs, legal requirements, and employee judgments about the fairness of pay levels. Chapter 13 covers the advantages and disadvantages of different types of incentive pay, including merit pay, gainsharing, and stock ownership. Chapter 14 highlights the contents of employee benefits packages, the ways organizations administer benefits, and what companies can do to help employees understand the value of benefits and control benefits costs.

Part 5 (Chapters 15–16) covers other HR topics including collective bargaining and labor relations and managing human resources on a global basis. Chapter 15 explores HR activities as they pertain to employees who belong to unions or who are seeking to join unions. Traditional issues in labor–management relations such as union membership and contract negotiations are discussed. The chapter also highlights new approaches to labor relations, the growing role of employee empowerment, and the shrinking size of union membership.

Concluding Part 5, Chapter 16 focuses on HR activities in international settings, including planning, selecting, training, and compensating employees who work overseas. The chapter also explores how cultural differences among countries and workers affect decisions about human resources.

New Features and Content Changes In addition to all new or revised chapter pedagogy, the Sixth Edition of Fundamentals contains the following features:

• New Format for Chapter Summaries: To help students learn chapter content, the Chapter Summary has been revamped to highlight key points in a bulleted list format for each chapter learning objective.

• Review Questions Keyed to Learning Objectives: As a way of pinpointing key concepts, the chapter review questions now tie in to specific chapter learning objectives for quick student reference.

Preface xiii

• Key Terms in Discussion Order: To assist students in learning important chap- ter topics, key terms are now listed in discussion order rather than alphabetical order at the end of the chapter. The key terms and definitions are also listed in the end-of-book glossary for additional study.

• HR in Small Business: A case has been added to each chapter that highlights some of the HR challenges faced by small businesses.

The following content changes help students and instructors keep current on important HR trends and topics:

• Chapter 1 addresses the new chapter reorganization in Figure 1.1 and Table 1.3. It also discusses a recent trend in which some companies are doing away with sepa- rate HR departments, encouraging managers and other employees to handle HR issues as they arise. Table 1.2 has been updated to list the top qualities employers look for in potential employees. Figure 1.3 has been revised to reflect the compe- tencies and example behaviors defined by the Society of Human Resource Man- agement (SHRM). Figure 1.6 has been updated to reflect current median salaries for HRM positions.

• Chapter 2 provides updated workforce statistics, including projections for num- ber of workers over the next several years, as well as a discussion on various age and ethnic groups within the workforce. Chapter figures have been revised to reflect current labor force data. Other trends discussed include which occupa- tions are expected to gain the most jobs in the coming decade. A new section on the trends in cost control and the impact of the Affordable Care Act is touched on and revisited later in the benefits chapter (Chapter 14). New sections on declining union membership and reshoring of jobs back to the United States have been added.

• Chapter 3 has been updated to include a discussion on the Lilly Ledbetter Fair Pay Act and its impact on pay discrimination and employment law. Chapter figures have been updated to reflect current statistics on age discrimination, dis- ability complaints filed under ADA, types of charges filed with the EEOC, and rates of occupational injuries and illnesses. A section has been added about how to keep emergency response workers safe as they aid victims of disasters.

• Chapter 4 includes a new discussion on analyzing teamwork and an updated dis- cussion on the growing trend among companies to encourage telework arrange- ments with workers.

• Chapter 5’s discussion on downsizing, reducing hours, and outsourcing includes new company examples that help students understand how real-world companies deal with the ups and downs of everyday business and decisions relating to human resources.

• Chapter 6 has several topics that have been updated, including the importance of hiring workers who will fit in well with a company’s culture; how the legalization of marijuana may impact drug testing as part of the employee selection process; and how companies are changing their approach to subjectivity when it comes to interviewing job candidates.

• In the training chapter (Chapter 7), new examples explore how some compa- nies are thinking differently about training strategies, employing virtual reality, simulations, teamwork exercises, and social media for learning reinforcement and employee motivation.

xiv Preface

• Chapter 8 focuses on development and includes an updated section on the use of assessment tools, including the DiSC assessment tool.

• Chapter 9 provides an updated discussion of how HRM practices can contribute to high performance of any organization, including job design, recruitment and selec- tion, training, performance management, and compensation.

• Chapter 10 includes a new discussion on how managers should adjust their approach to performance feedback to the level of performance demonstrated by individual employees.

• Chapter 11 provides an expanded discussion on implementing strategies to ensure a company’s discipline system follows procedures consistent for all employees.

• Chapter 12’s discussion about earnings data for women, men, and minorities has been updated, as well as the discussion about HRM salaries in various parts of the country. The chapter also contains current statistics about CEO pay and compensation.

• Chapter 13 focuses on recognizing employee contributions with pay, including new real-world examples about how businesses are rethinking their approach to performance bonuses, tying them to company performance, and the increased use of retention bonuses for executives and other key employees as part of company mergers and acquisitions.

• Chapter 14 includes updated data on employee benefits as a percentage of total compensation, Social Security information, and taxes paid by employers and employees. The section on health care benefits, including updates about the Patient Protection and Affordable Care Act, has been revised to include current informa- tion and requirements.

• Chapter 15 has been updated with current trends and statistics in union member- ship. Content on work stoppages and lockouts has been added. New sections focus on increased cooperation between unions and management and highlight several nonunion representation systems currently being used by companies across the country.

• Concluding the Sixth Edition, Chapter 16 highlights trends in managing human resources globally, including the issue of labor relations in various countries, which may impact a company’s ability to be successful on foreign soil.

The author team believes that the focused, engaging, and applied approach of Funda- mentals distinguishes it from other books that have similar coverage of HR topics. The book has timely coverage of important HR issues, is easy to read, has many features that grab the students’ attention, and gets students actively involved in learning.

We would like to thank those of you who have adopted previous editions of Fun- damentals, and we hope that you will continue to use upcoming editions. For those of you considering Fundamentals for adoption, we believe that our approach makes Fundamentals your text of choice for human resource management.

Acknowledgments The Sixth Edition of Fundamentals of Human Resource Management would not have been possible without the staff of McGraw-Hill Education. Despite the uncertainty surrounding the reorganization at McGraw-Hill, Mike Ablassmeir and Anke Weekes, the editors who worked on this edition of Fundamentals, deserve kudos for their laser focus on ensuring

Preface xv

that we continue to improve the book based on the ideas of both adopters and students. Also, we appreciate that they gave us creative license to use new cases and examples in the chapter pedagogy and text to keep Fundamentals interesting and current. John Weimeister, our former editor, helped us develop the vision for the book and gave us the resources we needed to develop a top-of-the-line HRM teaching package. Jane Beck’s valuable insights and organizational skills kept the author team on deadline and made the book more visu- ally appealing than the authors could have ever done on their own. We would also like to thank Cate Rzasa who worked diligently to make sure that the book was interesting, practical, and readable and remained true to findings of human resource management research. We also thank Michael Gedatus for his marketing efforts for this new edition.

We would like to extend our sincere appreciation to all of the professors who gave of their time to offer their suggestions and insightful comments that helped us to develop and shape this new edition:

Glenda Barrett University of Maryland, University College

Marian Canada Ivy Tech Community College

Jeanie Douglas Columbia College

Joseph Eppolito Syracuse University

Betty Fair Georgia College and State University

Amy Falink University of Minnesota

Lisa Foeman University of Maryland, University College

Deborah Good University of Pittsburgh

Jonathon Halbesleben University of Alabama, Birmingham

Tanya Hubanks Chippewa Valley Technical College

Roy Johnson Iowa State University

Chris McChesney Indian River State College

Garry McDaniel Franklin University

Liliana Meneses University of Maryland, University College

Barbara Minsky Troy State University, Dothan

Richard Murdock Utah Valley University

Dan Nehring Morehead State University

James Phillips Northeastern State University

David Ripley University of Maryland, University College

Rudy Soliz Houston Community College

Gary Stroud Franklin University

Gary Thurgood Texas A&M University, College Station

Sheng Wang University of Nevada, Las Vegas

Donna Wyatt University of Maryland, University College

Joy Young University of South Carolina, Columbia

Our supplement authors deserve thanks for helping us create a first-rate teaching package. Joyce LeMay of Bethel University wrote the newly custom-designed Instruc- tor’s Manual and Dr. Connie Sitterly authored the new PowerPoint presentation.

xvi Preface

We would also like to thank the professors who gave of their time to review the previous editions through various stages of development.

Michelle Alarcon, Esq. Hawaii Pacific University

Dr. Minnette A. Bumpus University of the District of Columbia

Brennan Carr Long Beach City College/El Camino College

Tom Comstock Gannon University

Susie S. Cox McNeese State University

Juan J. DelaCruz Lehman College—CUNY

AnnMarie DiSienna Dominican College

Lorrie Ferraro Northeastern University

Carla Flores Ball State University

Linette P. Fox Johnson C. Smith University

Britt Hastey UCLA, Chapman University, and Los Angeles City College

Kim Hester Arkansas State University

Samira B. Hussein Johnson County Community College

Joseph V. Ippolito Brevard College

Adonis “Sporty” Jeralds The University of South Carolina–Columbia

Guy Lochiatto Mass Bay Community College

Liliana Meneses University of Maryland University College

Kelly Mollica The University of Memphis

Tami Moser Southern Oklahoma State University

Richard J. Wagner University of Wisconsin–Whitewater

Brandon L. Young Embry-Riddle Aeronautical University

Raymond A. Noe John R. Hollenbeck Barry Gerhart Patrick M. Wright

xviixvii

The sixth edition of Fundamentals of Human Resource Management continues to offer students a brief introduction to HRM that is rich with examples and engaging in its application.

Please take a moment to page through some of the highlights of this new edition.

xviiixviii

Students who want to learn more about how human resource management is used in the everyday work environment will fi nd that the sixth edition is engaging, focused, and applied, giving them the HRM knowledge they need to succeed.

WHAT DO I NEED TO KNOW?

2 Trends in Human Resource Management What Do I Need to Know? After reading this chapter, you should be able to:

LO 2-1 Describe trends in the labor force composition and how they affect human resource management.

LO 2-2 Summarize areas in which human resource management can support the goal of creating a high-performance work system.

LO 2-3 Defi ne employee empowerment, and explain its role in the modern organization.

LO 2-4 Identify ways HR professionals can support organi- zational strategies for growth, quality, and effi ciency.

LO 2-5 Summarize ways in which human resource management can support organizations expanding internationally.

LO 2-6 Discuss how technological developments are affecting human resource management.

LO 2-7 Explain how the nature of the employment relationship is changing.

LO 2-8 Discuss how the need for fl exibility affects human resource management.

Introduction Business experts point out that if you want your company to gain an advan- tage over competitors, you have to do something differently. Some manag- ers are taking a hard look at human resources management, asking if it needs to be a department at all. At the consulting firm LRN Corporation, management decided to eliminate the human resources department. Their idea was that if all managers were responsible for managing talent, they would make those decisions in a way that directly served their group’s per- formance. Beam, the maker of spirits such as Maker’s Mark bourbon and Jim Beam whiskey, made its line managers responsible for hiring, training, and making compensation decisions. They are advised by a small group of “business partners,” who consult with the line managers on HR questions.1

Is this the end of human resource management? Probably not. The typ- ical company today is maintaining the size of its human resource depart- ment and even spending a little more on the function.2 At LRN, current and former employees have said line managers sometimes struggle with mak- ing HR decisions. For example, a line manager needs time to figure out how to define a job and set a salary range for it, which slows down the whole hiring process. At Beam, the HR business partners are playing a more strategic role than a traditional HR staffer focused on routine processes.

noe18364_ch02_029-061.indd 29 07/11/14 12:22 PM

A lot of managers are disappointed in the support they get from their HR teams, according to a survey by the Hay Group, a global consulting fi rm. The survey questioned line manag- ers and HR directors in China, the United Kingdom, and the United States about their working relation- ships. The results suggest that those relationships are often strained.

HR directors reported being chal- lenged by cutbacks in their depart- ment. One-third said they spend 21% to 50% of their time responding to inquiries from managers, and three- fourths said line managers want immediate responses. For their part, 41% of line managers in the United States said the HR department is too

slow in responding, and 47% said they could make decisions better and faster if they had more informa- tion from the department. An embar- rassing 29% rated Google above the HR department for providing perti- nent information.

Hay’s consultants suggest that human resource managers need to focus on how they can empower line managers by providing them with easy access to relevant information.

Questions

1. Suggest one way that HR managers might improve their helpfulness to line managers

2. Suggest one way that line managers can improve communications with HR managers, so they get the support they need.

Sources: Laurence Doe, “Relationship between Line Managers and HR under Increasing Strain, Hay Group Finds,” HR Magazine (UK), November 21, 2013, http://www.hrmagazine.co.uk; Hay Group, “More Managers Turn to Google for HR Information,” Business Wire, November 20, 2013, http://www .businesswire.com; Philip Spriet, “‘Power On’: From Passing the Buck to Activating the Line,” Hay Group Blog, October 16, 2013, http://blog .haygroup.com.

Less Helpful than a Search Engine?

HR Oops!

noe18364_ch02_029-061.indd 40 07/11/14 12:23 PM

Engage students through examples of companies whose HR departments have fallen short. Discussion questions at the end of each feature encourage student analysis of the situ- ation. Examples include “Few Companies Are Prepared for Future Talent Needs,” “401(k) Plans Are a Missed Opportunity for Many,” and “Cross-Cultural Management Mishaps.”

HR Oops!

UPDATED!

Assurance of learning: • Learning objectives open each chapter. • Learning objectives are referenced in the page mar-

gins where the relevant discussion begins and are referenced in each Review and Discussion Question at the end of the chapter.

• The chapter summary is written around the same learning objectives and is provided in an easy-to-read bulleted list format.

• Instructor testing questions are tagged to the appropriate objective they cover.

F e a t u r e s

xixxix

Expanding into Global Markets LO 2-5 Summarize

Land O’Lakes is an example of a company that has successfully re- duced costs by outsourcing human resource activities. Best known for its butter and other dairy products, the company is a food and agricul- ture cooperative owned by the farm- ers who participate in the business. The co-op’s 10,000 employees work toward a strategy of delivering strong fi nancial performance for its farmer- owners while providing programs and services that help the farmers operate more successfully.

In support of that strategy, Pam Grove, the senior director of ben- efi ts and HR operations, led Land O’Lakes to outsource the adminis- tration of employee benefi ts. Man- agement determined that benefi ts administration was not an activity that contributed to the company’s

strategy, and Land O’Lakes already had successfully used an outside fi rm to administer its 401(k) retire- ment savings plan. So Grove ar- ranged to have a fi rm administer its health insurance and pension plans as well.

Outsourcing achieved the basic goal of reducing costs, but that was not the only advantage. Grove freed up time for focusing on strategy- related activities, and she says the outsourcing arrangement also has improved service to employees. When the company tackled health benefi t costs by offering a high- deductible health plan, which shifts spending decisions to employees, Grove and her staff visited 100 Land O’Lakes locations to explain the new option. Employee enrollment was double her expectations, helping

the company save millions of dollars while keeping employees satisfi ed with their benefi ts.

Questions

1. When does outsourcing make strategic sense for an organization such as Land O’Lakes?

2. How does Grove ensure that a cost-conscious practice such as outsourcing is well received by employees?

Sources: Land O’Lakes Inc., “Com- pany,” http://www.landolakesinc .com, accessed April 22, 2014; Land O’Lakes Inc., “Careers,” http://www .landolakesinc.com/careers, accessed April 22, 2014; Susan J. Wells, “Benefi ts Strategies Grow: And HR Leads the Way,” HR Magazine, March 2013.

Outsourcing Enriches the Bottom Line for Land O’Lakes

Best Pract ices

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Engage students through examples of companies whose HR departments are work- ing well. Examples include “Morton Salt’s Prize-Winning Safety Program,” “Employees Are Quicken Loans’ Most Valuable Asset,” and “Machinists and Steelworkers Unions Help Harley-Davidson Get Lean.”

In the age of social networking, information sharing has become far more powerful than simply a means of increasing effi ciency through self-service. Creative organizations are enabling information sharing online to permit a free fl ow of knowledge among the

i ti ’ l E il I t ti l i l t ki t i l i i

Software companies are creating apps that let employees view their pay stubs, request time off, check the amounts of their bonuses, fi ll out and approve time sheets, look up coworkers in company directories, and more. At the same time, a grow- ing number of employees expect to be able to use their mobile devices for looking up work-related infor- mation. Given the possibility of and pressure for mobile HRM, here are some guidelines for making it work:

• Learn which mobile devices employees are using. Make sure applications will run properly on all the devices.

• Set priorities for introducing mobile applications that support your company’s strategy.

• Make sure your company has mobile-friendly versions of

its careers website. Many of today’s job hunters are look- ing for leads on their mobile devices, and they expect to be able to submit an application that way.

• If your company uses online training, create versions that run well on mobile devices.

• Select vendors that not only have software for existing mobile devices but also will be fl exible as hardware changes. Check references to fi nd out whether vendors have a history of keep- ing up with changing technology.

• Investigate the security protec- tion built into any app you are considering.

• Test mobile HRM apps to be sure they are easy to use and understand.

Questions

1. How could offering a mobile version of its careers website support an organization’s strategy?

2. What could be an advantage of using a software vendor for mobile HR apps, instead of having your organization’s employees create the apps?

Sources: Dave Zielinski, “The Mobiliza- tion of HR Tech,” HR Magazine, February 2014, Business Insights: Global, http:// bi.galegroup.com; Jennifer Alsever, “Objective: Hire Top Talent,” Fortune, January 23, 2014, http://money.cnn.com; Tom Keebler, “New Considerations for HR Service Delivery Success: Where to Begin?” Workforce Solutions Review, December 2013, pp. 17–19.

Providing HR Services on Mobile Devices

HR How To

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Engage students through examples of how HR departments use social media as part of their daily activities. Examples include “The Discrimination Risk of Using Social Media in Hiring,” “Salary Talk Is Trending,” and “Social Support for Getting Healthy.”

Some managers believe organiza- tions need policies restricting em- ployees’ access to social media such as Twitter and Facebook. Their belief is based on the assumption that using social media is merely a distraction from doing real work. However, the research evidence for this assumption is mixed—and the impact of social media may vary across generations of workers.

Some studies simply ask em- ployees for their opinions about their access to social media. A survey of Canadian workers found that almost two-thirds have been distracted by social media, e-mail, or Web browsing. One-third re- ported losing more than an hour a day in checking e-mail and social media, and two-thirds said they would get more done if they were

international survey of information workers, almost half said using so- cial media had increased their pro- ductivity. The younger the workers, the more likely they were to asso- ciate social-media use with greater productivity and to say they could do their jobs even better if their em- ployer would loosen restrictions on the use of social media.

Another study, conducted by the Warwick Business School, in the United Kingdom, measured output instead of opinions. According to the researchers, using social media was associated with greater productiv- ity. The two-year study of employees at a telecommunications company found that they were more produc- tive when they used social media to communicate with customers. The mixed results suggest that a single

Questions

1. Thinking about your current job or a job you would like to have, would access to social media help or distract you? Do you think your age plays a role in your opinion? Why?

2. How could human resource management support decisions about creating a policy for using social media?

Sources: Thomson Reuters, “Two-Thirds of Workers Distracted by Emails, Inter- net, Social Media: Survey,” Canadian HR Reporter, April 17, 2014, http://www. hrreporter.com; Shea Bennett, “Social Media Increases Offi ce Productivity, but Management Still Resistant, Says Study,” MediaBistro, June 26, 2013, http://www. mediabistro.com; Bernhard Warner, “When Social Media at Work Don’t Create Productivity Killing Distractions ” Bloomberg

What Social-Media Policies Are Suitable across Generations?

HRM Social

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Engage students through specific steps to create HRM programs and tackle common challenges. Examples include “Writing Effective HR Policies,” “Providing HR Ser- vices on Mobile Devices,” and “Complying with the Affordable Care Act.”

Did You Know?

Half of employed workers are look- ing for a new job or would welcome an offer, according to a U.S. survey by the Jobvite software company. Looking at both employed and

unemployed workers, Jobvite found that 71% are actively seeking or open to a new job. Jobvite’s CEO notes that workers with mobile devices are looking for jobs “all the time.”

Question

What challenges and opportuni- ties do employers face in a climate where half of an organization’s em- ployees feel ready to leave?

Sources: Bureau of National Affairs, “Half of Workers Open to or Actively Seeking New Job, Jobvite Survey Finds,” HR Focus, March 2014, p. 16; Dinah Wisenberg Brin, “Study: Most U.S. Workers Willing to Quit,” Society for Human Resource Management, February 25, 2014, http://www.shrm. org; company website, “Jobvite Seeker Nation Study,” 2014, http://recruiting. jobvite.com.

Half of U.S. Employees Interested in Changing Jobs

U.S. labor force

Employed workers

Workers Seeking or Open to a New Job

rs

e

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Engage students through interesting sta- tistics related to chapter topics. Examples include “Half of U.S. Employees Interested in Changing Jobs,” “Selection Decisions Affect the Bottom Line,” and “Employers Stress Merit Pay to Retain Workers.”

Best Pract ices

HRM Social Did You Know?

HR How To UPDATED! UPDATED!

UPDATED! UPDATED!

xxxx

Focused on ethics. Reviewers indicate that the Thinking Ethically feature, which confronts students in each chapter with an ethical issue regarding managing human resources, is a high- light. This feature has been updated throughout the text.

Apply the concepts in each chapter through comprehensive review and discussion questions, which are now keyed to chapter learning objectives.

Apply concepts in each chapter through three cases that focus on corporate sustainability, talent management, and HR in small business. These cases can be used as the basis for class lectures, and the questions provided at the end of each case are suitable for assignments or discussion.

THINKING ETHICALLY

HOW SHOULD EMPLOYERS PROTECT THEIR DATA ON EMPLOYEES’ DEVICES?

One area in which business managers might consult with HR managers involves the treatment of company data on employees’ electronic devices. In the past, or- ganizations stored their data on their own hardware. But laptop computers and, more recently, tablet computers and smartphones make it possible for employees to carry around data on these mobile devices. Increasingly often, the devices are not even owned by the company, but by the employees themselves. For example, an em- ployee’s smartphone might include business as well as personal contacts in several mobile apps.

The situation is convenient for everyone until something goes wrong: a device is lost, an employee becomes upset with a manager, or the organization lays off some workers. From the standpoint of pro- tecting data, the obvious solution is to remove the data from the devices. So far, no law forbids this. However, it has consequences for the employees. Remotely wiping data from a device will remove all of it, including the user’s personal data, such as photos and addresses.

Companies are addressing concerns by crafting se- curity policies for employees who want to use their own devices for work-related tasks such as e-mail. Typi- cally, the policy requires the employee to download a program for mobile device management. If specifi ed

conditions arise, such as loss of the device or termina- tion of the employee, the company can use the software to send the device a message that wipes out all the data stored on the device. The company also can give the employee some notice, allowing time to save personal data, but this increases the risk to the company. Some employees have complained about their phones being unexpectedly erased after they left a company. They admit they might have been given a link to terms and conditions but tend not to read the terms of using a pro- gram such as company e-mail.

Questions

1. Imagine you work in the human resources depart- ment of a company considering a policy to protect its data on employees’ mobile devices. In advising on this policy, what rights should you consider?

2. What advice would you give or actions would you take to ensure that the policy is administered fairly and equitably?

Sources: “Using Your Personal Phone for Work Could Cost You,” CBS Miami, March 26, 2014, http://miami.cbslocal.com; Lauren Weber, “BYOD? Leaving a Job Can Mean Losing Pic- tures of Grandma,” Wall Street Journal, January 21, 2014, http:// online.wsj.com; Society for Human Resource Management, “Safety and Security Technology: Can an Employer Remotely Wipe/Brick an Employee’s Personal Cell Phone?” SHRM Knowledge Center, November 5, 2013, http://www.shrm.org.

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REVIEW AND DISCUSSION QUESTIONS

1. What is the role of each branch of the federal gov- ernment with regard to equal employment oppor- tunity? (LO 3-1)

2. For each of the following situations, identify one or more constitutional amendments, laws, or execu- tive orders that might apply. (LO 3-2)

a. A veteran of the Vietnam conflict experiences lower-back pain after sitting for extended peri- ods of time. He has applied for promotion to a supervisory position that has traditionally involved spending most of the workday behind a desk.

b. One of two female workers on a road construc- tion crew complains to her supervisor that she feels uncomfortable during breaks, because the other employees routinely tell off-color jokes.

c. A manager at an architectural firm receives a call from the local newspaper. The reporter wonders how the firm wishes to respond to calls from two of its employees alleging racial discrimination. About half of the firm’s employ- ees (including all of its partners and most of its architects) are white. One of the firm’s clients is the federal government.

3. For each situation in the preceding question, what actions, if any, should the organization take? (LO 3-4)

4. The Americans with Disabilities Act requires that employers make reasonable accommodations for individuals with disabilities. How might this

requirement affect law enforcement offi cers and fi refi ghters? (LO 3-4)

5. To identify instances of sexual harassment, the courts may use a “reasonable woman” standard of what constitutes offensive behavior. This standard is based on the idea that women and men have dif- ferent ideas of what behavior is appropriate. What are the implications of this distinction? Do you think this distinction is helpful or harmful? Why? (LO 3-5)

6. Given that the “reasonable woman” standard re- ferred to in Question 5 is based on women’s ideas of what is appropriate, how might an organization with mostly male employees identify and avoid be- havior that could be found to be sexual harassment? (LO 3-5)

7. What are an organization’s basic duties under the Occupational Safety and Health Act? (LO 3-6)

8. OSHA penalties are aimed at employers, rather than employees. How does this affect employee safety? (LO 3-7)

9. How can organizations motivate employees to pro- mote safety and health in the workplace? (LO 3-8)

10. For each of the following occupations, identify at least one possible hazard and at least one action employers could take to minimize the risk of an in- jury or illness related to that hazard. (LO 3-8)

a. Worker in a fast-food restaurant b. Computer programmer c. Truck driver d. House painter

noe18364_ch03_062-100.indd 96 07/11/14 12:24 PM

58 e u a esou ce o e t

Netflix Treats Workers “Like Adults” When Patty McCord talks about human resource man- agement at Netfl ix, she refers to treating people “like adults.” McCord, until recently the company’s chief tal- ent offi cer, means the company hires people who are mature enough to take responsibility and then simply gives them responsibility. The result, McCord insists, is that employees live up to what is expected of them. If not, the company feels free to fi nd someone else. That direct approach makes sense to the knowledge work- ers who populate the results-oriented, data-respecting world of information technology.

When McCord was at Netfl ix, she and CEO Reed Hastings settled on fi ve principles that would direct the company’s approach to human resource management:

1. Hire, reward, and keep only “fully formed adults.” For McCord and Hastings, such employees use common sense, address problems openly, and put company in- terests ahead of their own. People like this need not be managed with endless policies. Rather, the com- pany can trust them to take off time when they need it and spend money appropriately. The employees also are literally adults; Netfl ix favors hiring experi- enced workers over recruiting at colleges.

2. Tell the truth about performance. Managers are expected to make performance feedback part of their routine conversations with employees. If an employee is no longer working out, managers are supposed to let him or her know directly, offering a good severance pack- age to smooth a dignifi ed path to the exit.

3 Managers are responsible for creating great teams The

4. The company’s leaders must create the company culture. Netfl ix executives are supposed to model behaviors such as truth-telling and treating people like adults.

5. HR managers should think of themselves fi rst as business- people. As chief talent manager, McCord focused on the company’s fi nancial success and products, not on employee morale. She assumed that if employees, as adults, were able to make Netfl ix a high-performance organization and be compensated fairly, that would improve morale more than anything.

To put these principles into action, Netfl ix rewards high- performing employees with fair pay and a fl exible sched- ule. Employees who do not perform up to standards are asked to leave. Rewarding high performance, in fact, makes it easier to allow fl exibility and empowerment, be- cause managers do not have to police every action and decision. It also creates an environment in which employ- ees do not assume they have a Netfl ix job forever. Rather, they are responsible for doing good work and developing the skills that continue to make them valuable to their employer. Netfl ix’s approach to talent helps the company stay agile—perhaps agile enough to withstand the shift- ing winds of entertainment in the digital age.

Questions 1. How well suited do you think Netfl ix’s principles are

to managing the knowledge workers (mainly soft- ware engineers) who work for Netfl ix? Explain.

2. What qualities of Netfl ix support the idea that it is a high-performance work system? What other quali-

MANAGING TALENT

noe18364_ch02_029-061.indd 58 07/11/14 12:23 PM

F e a t u r e s

xxi

Across the country, instructors and students continue to raise an important question: How can Human Resource Management courses further support students throughout the learning process to shape future business leaders? While there is no one solution, we see the impact of new learning technologies and innovative study tools that not only fully engage students in course material but also inform instructors of the stu- dents’ skill and comprehension levels.

Interactive learning tools, including those offered through McGraw-Hill Connect, are being implemented to increase teaching effectiveness and learn- ing efficiency in thousands of colleges and universities. By facilitating a stron- ger connection with the course and incorporating the latest technologies—such as McGraw-Hill LearnSmart, an adaptive learning program—these tools enable students to succeed in their college careers, which will ultimately increase the per- centage of students completing their postsecondary degrees and create the business leaders of the future.

McGraw-Hill Connect

business

® Connect is an all-digital teaching and learning environment designed from the ground up to work with the way instructors and students think, teach, and learn. As a digital teaching,

assignment, and assessment platform, Connect strengthens the link among faculty, stu- dents, and coursework, helping everyone accomplish more in less time.

LearnSmart THE SMARTEST WAY TO GET FROM B TO A

LearnSmart is the most widely used and intelligent adaptive learning resource. It is proven to strengthen memory recall, improve course retention, and boost grades by distinguishing between what students know and what they don’t know and honing in on the concepts that they are most likely to forget. LearnSmart con- tinuously adapts to each student’s needs by building an individual learning path. As a result, students study smarter and retain more knowledge.

Results-Driven Support

Grade Distribution

Without LearnSmart

A 30.5%

B 33.5%

C 22.6%

A 19.3%

B 38.6%

C 28.0%

With LearnSmart

58% more As with LearnSmart

With LearnSmart

Without LearnSmart

Student Pass Rate

25% more students passed with LearnSmart

xxii Results-Driven Support

SmartBook A REVOLUTION IN READING

Fueled by LearnSmart, SmartBook is the first and only adaptive reading experience available today. SmartBook personalizes content for each student in a continuously adapting reading experience. Reading is no longer a passive and linear experience, but an engaging and dynamic one where students are more likely to master and retain important concepts, coming to class better prepared.

LearnSmart Achieve EXCEL IN YOUR CLASS

Accelerate student success with Learn- Smart Achieve™—the first and only adap- tive study experience that pinpoints

individual student knowledge gaps and provides targeted, interactive help at the moment of need.

Interactive Applications A HIGHER LEVEL OF LEARNING

These exercises require students to APPLY what they have learned in a real-world scenario. These online exercises will help students assess their understanding of the concepts.

Media Rich eBook Connect provides students with a cost-saving alternative to the traditional textbook. A seamless integration of a media rich eBook features the following:

• A web-optimized eBook, allowing for anytime, anywhere online access to the textbook.

• Powerful search function to pinpoint and connect key concepts in a snap. • Highlighting and note-taking capabilities as well as access to shared instructors’

notations.

xxiii

Connect and LearnSmart allow students to present course material to students in more ways than just the explanations they hear from me directly. Because of this, students are processing the material in new ways, requiring them to think. I now have more students asking questions in class because the more we think, the more we question.

Instructor at Hinds Community College

business

® McGraw-Hill strengthens the link between faculty, students, and coursework, helping everyone accomplish more in less time.

Efficient Administrative Capabilities Connect offers you, the instructor, auto-gradable material in an effort to facilitate teaching and learning.

The Best Instructor Support on the Market

60 minutes without Connect

Reviewing Homework

60 minutes without Connect

15 minutes with Connect

60 minutes without Connect

0 minutes with Connect

12 minutes with Connect

Giving Tests or Quizzes Grading

Student Progress Tracking Connect keeps instructors informed about how each student, section, and class is per- forming, allowing for more productive use of lecture and office hours. The progress tracking function enables instructors to:

• View scored work immediately and track individual or group performance with assignment and grade reports.

• Access an instant view of student or class performance relative to learning objectives. • Collect data and generate reports required by

many accreditation organizations, such as AACSB.

Actionable Data Connect Insight is a powerful data analytics tool that allows instructors to leverage aggregated information about their courses and students to provide a more per- sonalized teaching and learning experience.

xxiv The Best Instructor Support on the Market

Connect Instructor Library Connect’s instructor library serves as a one-stop, secure site for essential course materi- als, allowing you to save prep time before class. The instructor resources found in the library include: • Instructor’s Manual: The custom-designed Instructor’s Manual includes chapter

summaries, learning objectives, an extended chapter outline, key terms, description of text boxes, discussion questions, summary of end-of-chapter cases, and additional activities.

• Test Bank: The Test Bank has been revised and updated to reflect the content of the Sixth Edition of the book. Each chapter includes multiple-choice, true/false, and essay questions.

• EZ Test: McGraw-Hill’s EZ Test is a flexible and easy-to-use electronic testing program. The program allows instructors to create tests from book-specific items. It accommodates a wide range of question types and instructors may add their own questions. Multiple versions of the test can be created and any test can be exported for use with course management systems such as BlackBoard, D2L, or Moodle. The program is available for Windows and Macintosh environments.

• PowerPoint: The slides include lecture material, additional content to expand concepts in the text, and discussion questions, and the PowerPoint slides also include detailed teaching notes.

• Videos: Human Resource Management Video DVD, volume 3, offers video clips on HRM issues for each chapter of this edition. You’ll find a new video produced by the SHRM Foundation entitled “Once the Deal Is Done: Making Mergers Work.” Three new videos specifically address employee benefits: “GM Cuts Ben- efits and Pay,” “Sulphur Springs Teachers,” and “Google Employees’ Perks.” Other new videos available for this edition include “E-Learning English” for the chapter on employee development and “Recession Job Growth” for the chapter on HR planning recruitment. Two new videos specifically address recession-related HR issues: “Some Workers Willing to Sacrifice to Avoid Layoffs” and “Stretched Small Business Owners Forced to Lay Off Employees.” Other notable videos available for this edition include “Johnson & Johnson eUniversity” for the chapter on training and “Hollywood Labor Unions” for the chapter on collective bargaining and labor relations.

Video Library DVDs McGraw-Hill offers the most comprehensive video support for the Human Resource Management classroom through course library video DVDs. This discipline has library volume DVDs tailored to integrate and visually reinforce chapter concepts. The library volume DVD contains more than 40 clips! The rich video material, organ- ized by topic, comes from sources such as PBS, NBC, BBC, SHRM, and McGraw- Hill. Video cases and video guides are provided for some clips.