Maslow’s Theory Hierarchy of Needs: Needs are ranked in five general categories. Once a given category of needs is achieved people become motivated to reach the next category. The exhibit on this slide shows the 5 needs (most crucial needs at the bottom): Physiological Needs: Food, shelter and clothing. Most jobs help to achieve these needs. Safety Needs: Job security and safe working conditions. Some jobs satisfy these needs. Social Needs: Social interaction and acceptance by others. This is the need to be part of a group, and some companies attempt to satisfy these needs by grouping workers in teams or by organizing social events after work hours. Esteem Needs: Respect, prestige, recognition and power. Some workers may achieve these needs by being promoted within their firms or by receiving special recognition for their work. Self-Actualization: maximization of potential, through fully reaching one’s potential. For example, people may achieve self-actualization by starting and successfully running a specific business that fits their main interests. Different employees may be at different places on the hierarchy.
Human resources management (HRM) encompasses all the tasks involved in acquiring, maintaining, and developing an organization’s human resources. Because of the accelerating rate at which today’s workforce, economy, and corporate cultures are being transformed, the role of HRM is increasingly viewed as a strategic one. Human resources (HR) managers must figure out how to attract qualified employees from a shrinking pool of entry-level candidates; how to train less-educated, poorly skilled employees; how to keep experienced employees when they have few opportunities for advancement; and how to lay off employees equitably when downsizing is necessary. They must also retrain employees to cope with increasing automation and computerization, manage increasingly complex (and expensive) employee benefits programs, shape workplace policies to address changing workforce demographics and employee needs, and cope with the challenge of meeting government regulations in hiring practices and equal opportunity employment.
One of the six functions of the human resources staff members is to plan for a company’s staffing needs. Proper planning is critical because a miscalculation could leave a company without enough employees to keep up with demand, resulting in customer dissatisfaction and lost business. Yet if a company expands its staff too rapidly, profits may be eaten up by payroll, or the firm may have to lay off people who were just recruited and trained at considerable expense. The planning function consists of two steps: (1) forecasting supply and demand and (2) evaluating job requirements.
Human Resource Planning: Planning to satisfy a firm’s needs for employees Consists of three tasks: Forecasting staffing needs: A company will have more time to satisfy staffing needs if they can anticipate those needs in advance. Retirements, expansion plans and temporary production needs are common reasons to require increased staff levels. For example, if a company forecasts the temporary need for more employees due to the upcoming holiday season, the firm can either offer overtime to existing workers or use temporary workers for seasonal work. Job Analysis: The analysis used to determine the tasks and the necessary credentials for a particular position. This analysis, for example, should include input from the position’s supervisor as well as from other employees whose tasks are related. This analysis allows for the creation of: Job Specification: States the credentials necessary to qualify for a job position. Job Description: States the tasks and responsibilities of a job position. For example, people use the job specification to determine whether they qualify for the position, and the job description to determine what the position involves. Recruiting: Some firms use a human resource manager : Helps each specific department recruit candidates for its open position.
Recruitment Internal: An effort to fill open positions with persons already employed by the firm. This can be beneficial because existing employees have already been proven – their personalities are known and their potential can be assessed. Promotions: The assignment of an employee to a higher-level job with more responsibilities and compensation. Many firms, for example have a “promote from within” policy whereby management level positions are only filled by existing employees. External: An effort to fill positions with applicants from outside the firm. Some firms feel that they can recruit more qualified individuals by using external recruiting. Screening: When recruiting externally for employees, the company does not know as much about the candidates as when internal candidates are considered – therefore candidates must be go through a screening process
Screening process is comprised of steps, as illustrated on this slide. The first step is to receive applications. For example, companies normally request and receive resumes at this stage. The second step is to assess each application to screen out unqualified applicants. For example, this is often referred to as a “paper screen” whereby the list of potential applicants is reduced by eliminating those that do not match well with the job specification. The third step is to screen based on the interview process. For example, some companies may have several levels of interviews with multiple people in the organization. This helps to ensure that the potential employees have the skills and traits desired by the company. The fourth step is to screen based on contact with the applicant’s references. This has mixed benefits to the firm, for example, because in a recent survey by the Society for Human Resource management more than 50% of respondents stated that they received inadequate information. The fifth step is to screen based on tests. For example, it is common for some positions that applicants must take a typing test to determine speed and accuracy. The last step is to make the hiring decision. For example, if each of the above steps was carried out, then the company should have narrowed down the number of qualified applicants, which helps make the final hiring decision easier and more appropriate.
Planning begins with forecasting demand, the numbers and kinds of employees that will be needed at various times. The next task is to estimate the supply of available employees. In many cases, that supply is within the company already — perhaps just needing training to fill future requirements. More and more businesses try to save money and increase flexibility by building their workforces around part-time and temporary employees, or “temps,” whose schedules can be rearranged to suit the company’s needs. Outsourcing is another way that companies fulfill their human resources needs without hiring permanent employees. Companies outsource some tasks or projects because the outside source can provide materials, parts, or services better, at a lower price, and more efficiently.
The second step of the planning function is to evaluate job requirements. Management needs a formal and objective method of evaluating job requirements. That method is called job analysis. To obtain the information needed for a job analysis, the human resources staff asks employees or supervisors several questions: What is the purpose of the job? What tasks are involved in the job? What qualifications and skills are needed to do it effectively? In what kind of setting does the job take place? Is there much public contact involved? Does the job entail much time pressure? Sometimes they obtain job information by observing employees directly. Other times they ask employees to keep daily diaries describing exactly what they do during the workday. Once job analysis has been completed, the human resources staff develops a job description, a formal statement summarizing the tasks involved in the job and the conditions under which the employee will work. In most cases, the staff will also develop a job specification, a statement describing the skills, education, and previous experience that the job requires.
Having forecast a company’s supply and demand for employees and evaluated job requirements, the human resource manager’s next step is to match the job specification with an actual person or selection of people. This task is accomplished through recruiting, the process of attracting suitable candidates for an organization’s jobs. Recruiters are specialists on the human resources staff who are responsible for locating job candidates. They use a variety of methods and resources, including internal searches, newspaper and Internet advertising, public and private employment agencies, union hiring halls, college campuses and career offices, trade shows, corporate “headhunters” (people who try to attract people at other companies), and referrals from employees or colleagues in the industry. One of the fastest-growing recruitment resources for both large and small businesses is the Internet.
Generally, employers prefer to look for candidates within their organizations. When hiring outside the company, they rely heavily on referrals from people they know and trust. Placing want-ads is often viewed as a last resort. In contrast, typical job seekers begin their job-search process from the opposite direction (starting with reading a newspaper or Internet ads).
Most companies go through the same basic stages in the hiring process as they sift through applications to come up with the person (or persons) they want. The first stage is to select a small number of qualified candidates from all of the applications received. The second stage in the hiring process is to interview each candidate to clarify qualifications and to fill in any missing information. After the initial prescreening interviews comes the third stage, when the best candidates may be asked to meet with someone in the human resources department who will conduct a more probing interview. For higher-level positions, candidates may go through a series of interviews with managers, potential co-workers, and the employees who will make up the successful candidate’s staff. After all the interviews have been completed, the process moves to the final stages. In the fourth stage, the department supervisor evaluates the candidates, sometimes in consultation with a higher-level manager, the human resources department, and staff. During the fifth stage, the employer checks the references of the top few candidates. The employer may also research the candidates’ education, previous employment, and motor vehicle records. A growing number of employers are also checking candidates’ credit histories. In the sixth stage, the supervisor selects the most suitable person for the job. Now the search is over-provided the candidate accepts the offer.
Violence in the workplace is an increasing threat that can harm employees and customers, hurt productivity, and lead to expensive lawsuits and higher health care costs. This means that companies need to be especially careful about negligent hiring. Employers conduct a variety of background checks on job applicants, including verifying all educational credentials and previous jobs, accounting for any large time gaps between jobs, and checking references. Background checks are particularly important for jobs in which employees are in a position to possibly harm others.
Federal and state laws and regulations govern many aspects of the hiring process. In particular, employers must be careful to avoid discrimination in the wording of their application forms, in interviewing, and in testing. Employers must also respect the privacy of applicants. Asking questions about unrelated factors such as citizenship, marital status, age, and religion violates the Equal Employment Opportunity Commission’s regulations because such questions may lead to discrimination. In addition, employers are not allowed to ask questions about whether a person has children, whether a person owns or rents a home, what caused a physical disability, whether a person belongs to a union, whether a person has ever been arrested, or when a person attended school. The exception is when such information is related to a bona fide occupational qualification for the job. On the other hand, employers must also obtain sufficient information about employees to avoid becoming the target of a negligent-hiring lawsuit. Moreover, the Immigration Reform and Control Act (passed in 1986) forbids almost all U.S. companies from hiring illegal aliens. The act also prohibits discrimination in hiring on the basis of national origin or citizenship status. This creates a difficult situation for employers who must try to determine their applicants’ citizenship, so they can verify that the newly hired are legally eligible to work, without asking questions that violate the law. As you can imagine, striking the balance can be quite a challenge.
Many companies rely on pre-employment testing to determine whether applicants are suited to the job and whether they’ll be worth the expense of hiring and training. Companies use three main procedures: job-skills testing, psychological testing, and drug testing. Job-skills tests are the most common type, designed to assess competency or specific abilities needed to perform a job. Psychological tests usually take the form of questionnaires. These tests can be used to assess overall intellectual ability, attitudes toward work, interests, managerial potential, or personality characteristics--including dependability, commitment, and motivation. To avoid the increased costs and reduced productivity associated with drug abuse in the workplace (estimated to cost industry some $100 billion a year), many employers require applicants to be tested for drug use. Companies with mandatory testing have found real advantages, including lower accident rates, fewer disability claims, and decreased violence and absenteeism. Nevertheless, some employers prefer not to incur the extra expense to administer drug tests; others consider such tests an invasion of privacy.
To make sure that all new employees understand the company’s goals, policies, and procedures, most large organizations and many small ones have well-defined orientation programs. In addition to orientation programs, most companies offer training (and retraining), because employee competence has a direct effect on productivity and profits. The more training given to employees, the more likely they will want to stay, because training gives them a sense that they are going somewhere in their careers, even if they’re not getting a promotion.
How do employees know whether they are doing a good job? How can they improve their performance? What new skills should they learn? Most human resources managers attempt to answer these questions by developing performance appraisal systems to objectively evaluate employees according to set criteria. The ultimate goal of performance appraisals is not to judge employees but rather to improve their performance. Thus, experts recommend that performance reviews be an ongoing discipline--not just a once-a-year event linked to employee raises. Most companies require regular written evaluations of each employee’s work. To ensure objectivity and consistency, firms generally use a standard company performance appraisal form to evaluate employees. Many performance appraisal systems require the employee to be rated by several people (including more than one supervisor and perhaps several co-workers). This practice further promotes fairness by correcting for possible biases. One appraisal format that moves the review process from a one-dimensional perspective to a multidimensional format is the 360-degree review. Designed to provide employees with a broader range of perspectives, the 360-degree review solicits feedback from colleagues above, below, and around the employee to provide observations of the person’s performance in several skill and behavioral categories. This means that employees rate the performance of their superiors as well as that of their peers.
Administering compensation, a combination of payments in the form of wages or salaries, incentive payments, employee benefits, and employer services, is another major responsibility of a company’s human resources department. Many blue-collar (production) and some white-collar (management and clerical) employees receive compensation in the form of wages, which are based on calculating the number of hours worked, the number of units produced, or a combination of both time and productivity. Employees whose output is not always directly related to the number of hours worked or the number of pieces produced are paid salaries. As with wages, salaries base compensation on time, but the unit of time is a week, two weeks, a month, or a year. Salaried employees such as managers normally receive no pay for the extra hours they sometimes put in; overtime is simply part of their obligation. To encourage employees to be more productive, innovative, and committed to their work, many companies provide managers and employees with incentives, cash payments that are linked to specific individual, group, and company-wide goals; overall productivity; and company success. These payments take the form of commissions, bonuses, and profit sharing. The success of these programs often depends on how closely incentives are linked to actions within the employee’s control.
Compensation Package: The total monetary compensation and benefits offered to employees. Salary: The dollars paid for a job over a specific period (a wage). For example, $8.00/ hour is a salary level. Stock Options: Allows employees to purchase shares of their employer’s stock at a specific price. For example, employees at a firm may have been given the option to purchase 100 shares of stock at a price of $20 per share. This means that they can purchase the stock for the price, regardless of the stock’s market price. Microsoft attributes much of its success to its use of stock options, because of its strong performance since 1992, its managers who were hired in 1992 or before are now millionaires because their shares are worth more than $1 million. Commissions: Compensation for meeting specific sales objectives. For example, this is usually listed as a percentage of the employee’s total sales volume. Bonuses: An extra onetime payment at the end of a period in which performance was measured. At Disney, for example, 70 percent of bonuses paid to executives are based on specific financial performance measures, such as earnings. Profit Sharing: A portion of the firm’s profits is paid to employees. For example, firms such as Continental Airlines and General Motors offer profit sharing to employees in an effort to motivate employees to perform in a manner that improves profitability. Benefits: Additional privileges beyond compensation payments, such as paid vacation time, health, life or dental insurance, and pension programs. Many firms, for example, provide substantial employee benefits to their employees, and also offer preventive health-care programs to help reduce the high health care costs. Perquisites: Additional privileges beyond compensation payments and employee benefits. These are typically offered to high-level employees, for example, and include “perks” such as free parking, a company car, club membership, telephone credit cards and expense accounts.
Insurance is the most popular employee benefit. Many businesses offer substantial compensation in the form of life and health insurance. Studies show that 72 percent of workers at large firms have some form of company-sponsored retirement coverage. Three of the most popular types of company-sponsored pension plans are defined contribution plans, defined benefit plans, and 401(k) plans. Another employee benefit is the employee stock-ownership plan (ESOP), under which a company places a certain amount of its stock in trust for some or all of its employees, with each employee entitled to a certain share. A related method for tying employee compensation to company performance is the stock option plan. Stock options grant employees the right to purchase a set number of shares of stock at a specific price during a certain time period. The Family Medical and Leave Act (FMLA) requires employers with 50 or more workers to provide up to 12 weeks of unpaid leave per year for childbirth, adoption, or the care of a family member with a serious illness. Day care or elder care is another important benefit, especially for two-career couples. According to the U.S. Labor Department, 48 percent of all employers with more than 100 workers offer employee assistance programs (EAPs). EAPs offer private and confidential counseling to employees who need help with personal problems.
Of course, providing competitive compensation and good employee benefits is no guarantee that employees will stay with the company. Employees leave companies for a variety of reasons. Some may decide to retire. Others may resign voluntarily to pursue a better opportunity. Still others may make a change because they are promoted, reassigned, or terminated. Whatever the reason, when a vacancy occurs, companies must go to the trouble and expense of finding a replacement, whether from inside or outside the company. Overseeing changes in the employment status is another responsibility of the human resources department.
Employee Skills Technical: employees must be trained to perform the tasks they engage in daily. For example, Ace Hardware offers courses to train its employees in the use of the products that it sells. Many firms find that due to advances in computer technologies, they must offer technical training to their workers. Decision-Making: Companies should provide guidelines for employees to consider when making decisions and generating ideas. For example, Xerox trains all of its employees to follow a six-step process when generating ideas and making decisions. Customer service: Customer services skills training needs to be provided to employees who frequently deal with customers. For example, Marriott International provides training on servicing customers, with refresher sessions after the first and second months. Safety: Companies often train employees on safety within the working environment, such as how to operate machinery and equipment. For example, United Parcel Service (UPS) implements training programs for its employees on handling hazardous materials. Human Relations: Supervisors may receive training on how to manage other employees. For example, Denny’s offers employee training on diversity to prevent racial discrimination, and to create an environment in which people work together more effectively, thereby increasing the firm’s performance.
Evaluating employee performance For most employees, their overall performance is normally based on multiple criteria. Therefore, an evaluation can best be conducted by segmenting the evaluation into the criteria that are relevant for each particular job position. For example, some employees may have excellent technical skills, yet not be dependable. The exhibit on this slide illustrates hot the measures vary by type of job. Other types of characteristics, for example, that are not shown on this slide, for some positions are organization, communication and decision-making skills.
Firms can follow certain steps to demonstrate fairness and recognition of employee’s rights, while following legal guidelines: Supervisors should communicate job responsibilities to employees when they are hired. They should also communicate any changes in those responsibilities over time, and should be done in writing. The letters, for example, not only provide legal protection, but also force the supervisors to pinpoint the specific tasks for employees in a particular job position. Supervisors should inform of deficiencies when they become aware of them. Many companies do this, for example, in the form a standard periodic review. Some supervisors prefer to inform employees immediately, rather than wait for the review period. Employees should be given the chance to provide feedback. Supervisors should be consistent when conducting performance evaluations. For example, employees who have a similar deficiency should be treated equally in the evaluation process.
Labor Conflicts Picketing: Walking around near the employer’s building with signs complaining of poor working conditions. Boycott: Refusing to purchase products and services offered. Strike: A discontinuation of employee services. For example, two recent well-publicized strikes were by employees at UPS and General Motors. The goal of the UPS strike was to achieve better wages. The objective of the general Motors strike was to ensure that some of GM’s plants would not be closed. Management may respond in a couple of ways Injunction: A court order to prevent a union from a particular activity, such as picketing Lockout: Prevents employees from working until an agreement between management and labor is reached. For example, when 33,000 machinists went on strike at Boeing in 1995, they forced Boeing to provide a larger salary increase as an inventive to end the strike. However, a strike at Bridgestone/Firestone was not as successful, as the firm hired replacement workers.