BUS 101, HKM, North South University
CHAPTER 9: HUMAN RESOURCE MANAGEMENT, MOTIVATION,
AND LABOR-MANAGEMENT RELATIONS
INTRODUCTION
Most organizations devote considerable attention to human resource
management, the function of attracting, developing, and retaining enough
qualified employees to perform the activities necessary to accomplish
organizational objectives.
Human resource managers are responsible for developing specific programs
and activities as well as creating a work environment that generates employee
satisfaction and efficiency.
Relations between employees and firms have changed over the years. Today,
flexibility and complexity characterize the relationship. Managers must
develop programs and policies that satisfy an increasingly diverse employee
population while monitoring a growing number of employment-related laws.
Larger organizations create human resource departments that systemically
handle the tasks of attracting, training, and retaining workers.
A growing number of companies are outsourcing human resource management
to professional employer organizations (PEO), who help firms with hiring and
training employees, administering payroll and benefits programs, handling
workers’ compensation and unemployment insurance, and ensuring compliance
with labor laws. Because the PEO typically negotiates benefits for a large
number of business clients, it can shop for better deals. These are especially
beneficial for smaller firms.
Human resource management can be viewed in two ways. In a narrow sense, it
includes the functions performed by human resource professionals. But in a
broader sense, it involves the entire organization, even when a staff department
assumes those responsibilities or a firm outsources the functions.
Many companies consider workforce diversity to be a source of competitive
advantage in serving various customer groups and thinking creatively. The core
responsibilities of human resource management include planning for staffing
needs, recruitment and selection, training and evaluating performance,
compensation and benefits, and employee separation.
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HUMAN RESOURCE PLANNING
Human resource managers develop staffing plans based on the organization’s
competitive strategies. They forecast the number of employees their firm will
need and determine the skills necessary t implement its plans. Human resource
managers are responsible for adjusting their company’s workforce to meet the
requirements of expanding in new markets; reducing costs, which may require
laying off employees; or adapting to new technology.
They formulate both long- and short-term plans to provide the right number of
qualified employees. Human resource managers also must plan how to attract
and keep good employees with the right combination of pay, benefits, and
working conditions.
At Trilogy Software, this aspect of human resource planning is at the core of
the company’s strategy. Trilogy develops software that handles information
processing related to sales and marketing, an industry in which only fast-
moving, highly sophisticated companies can succeed. So the company has a
strategy to continually expand its staff of software developers.
RECRUITMENT AND SELECTION
In recruiting and selecting employees, human resource managers strive to
match applicants’ skills with those the organization needs. See fig. 9.3
Identify Job Requirements
Choose Sources of Candidates including internet, colleges,
referrals, internal promotion
Review Applications and CVs
Interview Candidates
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Conduct Employment Tests and check references
Conduct Follow-up Interview
Select a Candidate and Negotiate an Offer
Compensation and Benefits
Job Performance Expectations
Accommodations for disabilities
Finding qualified candidates:
Human resource managers must be creative in their search for qualified
employees. Firms access both internal and external sources to find the best
candidates for specific jobs. Internal recruiting is less expensive than external
methods, and it helps boost employee morale. Many firms are using the internet
as a recruiting tool. Online recruiting has become a common method of finding
qualified job candidates.
Selecting and Hiring Employees:
Human resource managers must follow the laws in hiring and selection. These
include civil rights laws, anti-discrimination laws and equal opportunities
policies. Failure to comply with equal employment opportunity legislation can
expose an employer to fines and other penalties.
Increases in protected employees and discrimination lawsuits have elevated the
importance of human resource managers in the hiring process. Recruitment and
selection are expensive processes because a firm incurs costs for advertising
job openings, interviewing applicants, and conducting background checks,
employment tests, and medical exams. A bad hiring decision is even more
expensive.
ORIENTATION, TRAINING, AND EVALUATION
Once hired, employees need information about what is expected of them and
how well they are performing. Companies provide this information through
orientation, training and evaluation.
A newly hired employee often completes an orientation program administered
jointly by the human resource department and the department in which the
employee will work.
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Training Programs:
There are three types of training programs like on-the-job training, computer-
based training and management development program. On-the-job training
prepares employees for job duties by allowing them to perform tasks under the
guidance of experienced employees. Classroom and computer-based training is
becoming popular. Off-the-job training frequently involves use of the internet.
A management development program provides training designed to improve
the skills and broaden the knowledge of current and potential executives. The
content of management development programs may involve reviews of issues
facing the company, as well as benchmarking, or learning the best practices of
the best companies so they can serve as performance standards to strive for.
Performance Appraisals:
A performance appraisal is an evaluation of an employee’s job performance by
comparing actual results with desired outcomes. Based on this evaluation,
managers make objective decisions about compensation, promotions,
additional training needs, transfers, or terminations. Performance appraisals are
not confined to business. Government agencies, not-for-profit organizations,
and academic institutions also conduct them.
COMPENSATION
Human resource costs represent a sizeable percentage of any firm’s total
product costs, excessive wage rates may make its goods and services too
expensive to compete effectively in the marketplace. Inadequate wages,
however, lead to difficulty in attracting qualified people, high turnover rates,
poor morale, and inefficient production.
The terms wages and salary are often used interchangeably, but they refer to
different types of pay systems. Wages represent compensation based on an
hourly pay rate or the amount of output produced. Firms pay wages to
production employees, maintenance workers, and sometimes retail salespeople.
Salaries represent compensation calculated periodically, such as weekly or
monthly. Office personnel, executives, and professional employees usually
receive salaries.
Most firms base their compensation policies on the following five factors:
1. Salaries and wages paid by other companies that compete for the same
people
2. Government legislation, including the federal, state, or local minimum
wage
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3. The cost of living
4. The firm’s ability to pay
5. Worker productivity
A living wage is generally defined as one that allows a worker to support a
family of four without having to receive any form of public assistance.
Many employers balance rewarding workers with maintaining profits by
linking more of their pay too superior performance. They try to motivate
employees to excel by offering some type of incentive compensation in
addition to salaries or wages. These include the following:
profit sharing (bonuses based on company profits)
gain sharing (bonuses based on surpassing predetermined performance
goals)
lump-sum bonuses and stock options (can buy stock in company)
pay for knowledge (pay increase as new job tasks mastered)
Employee Benefits:
Employee benefits are rewards such as retirement plans, health and disability
insurance, sick leave, child care and elder care, and tuition reimbursement,
provided entirely or in part at the company’s expense.
One increasingly used, but highly controversial, technique involves collecting
data about employees’ weight, smoking and alcohol consumption rates,
exercise habits, and medical test results to use as inputs in creating employee
wellness programs.
Europeans, on average, get six weeks of paid vacation – double or triple what
their American counterparts receive. A 35-hour workweek is commonplace in
Germany, Italy and France. 401(k) plans are retirement savings plans for
which employees can make pretax contributions to retirement accounts.
Flexible Benefits:
Also known as cafetaria plans, such a benefit system offers employees a range
of options from which they can choose including different types of medical
insurance, dental and vision plans, and life and disability insurance.
Contributions to cafetaria accounts are commonly made by both employees and
employers. Some employers give employees a bank of paid time off (PTO) –
days from which can be used without explaining reasons.
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Flexible Work:
These are benefits that allow employees to adjust their working hours and
places of work to accommodate personal needs. These include flextime,
compressed work-weeks, job sharing, and home-based work. This practice is
more common in Europe but growing number of American firms are offering
flextime to workers. The compressed workweek is an option that allows
employees the ability to work weekly hours in fewer days. For example
working 4 ten-hour days and three days off. A job sharing program allows two
or more employees to divide the tasks of one job. Job sharing requires a high
degree of cooperation and communication between the partners.
A home-based work program allows employees to perform their jobs from
home instead of at the work place. Home-based workers are also known as
teleworkers or telecommuters because they ‘commute’ to work via telephones,
email, computers and fax machines. Almost 30 million teleworkers in USA are
employed and growing.
EMPLOYEE SEPARATION
Either employer or employee can take the initiative to terminate employment.
Employees decide to leave firms to start their own business, take jobs with
other firms, move to another city, or retire. Employers sometime terminate
employees because of poor job performance, negative attitudes toward work
and coworkers, or misconduct such as dishonesty. Other reasons for
terminating employees include downsizing, outsourcing and contingency
workers.
Downsizing:
Downsizing is the process of reducing the number of employees within a firm
by eliminating jobs. Many firms have offered early retirements, voluntary
severance and internal reassignment to different jobs. Companies downsize for
many reasons. The two most common objectives of downsizing are to cut
overhead costs and streamline the organizational structure. Downsizing can
lead to increased profits, productivity and better customer service levels. The
bad effects of downsizing are lower morale, less job security and more work
loads.
Outsourcing:
In the face of domestic and international competition, many firms are holding
down costs by evolving into leaner organizations. A number of functions that
were performed previously by company employees may be contracted to other
firms whose employees will perform them in a practice called outsourcing.
Outsourcing started on a small scale, with firms contracting out services like
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maintenance and delivery. Nowadays, services commonly outsourced include
housekeeping, architectural design, and security. Today, outsourcing has
expanded to include outside contracting of many tasks once considered
fundamental internal functions. Hewlett-Packard for example, now outsources
the manufacturing of many of the computers it sells.
Outsourcing allows firms to focus on what they do best, while hiring other
companies to do many non-core tasks.
Using Contingent workers:
Contingent workers are employees who work part-time, temporarily, or only
the time required to fulfill a specific contract. Among highly skilled workers,
contingent work may be a profitable alternative to traditional employment, as
these workers can negotiate contracts that include benefits coverage or secure
salaries large enough to cover self-paid benefits. Some people enjoy the variety
and flexibility that can accompany contingent work.
MOTIVATING EMPLOYEES
Morale is the mental attitude of employees toward their employer and jobs.
High morale is a sign of a well-managed organization because workers’
attitudes toward their jobs affect the quality of their work. Poor morale lurks
behind absenteeism, employee turnover, and lower productivity. In contrast,
high employee morale occurs in organizations where employees feel valued
and heard and where they are able to contribute what they do best. High morale
also results from an organisation’s understanding of human needs and its
success at satisfying those needs in ways that reinforce organizational goals.
Each person is motivated to take action designed to satisfy needs. Once the
need becomes important enough, it produces tension. The individual is then
moved to reduce the tension and return to a condition of equilibrium. See
Figure 9.5 which show the principle behind this process.
The process of motivation:
Need Motivation Goal- Need
(produces) (which leads directed Satisfaction
to) behaviour
Maslow’s hierarchy of needs theory:
Psychologist Abraham Maslow studied how companies can motivate
employees. He proposed that only unsatisfied needs can influence behaviour,
and that there is a hierarchy of needs that need satisfaction. He identified five
types of needs:
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Physiological needs - Basic needs such as food, shelter and clothing. In the
workplace, employers satisfy these needs by paying salaries and wages and
establishing comfortable working environments.
Safety needs – refers to physical and economic protection. Employers satisfy
these needs by providing benefits such as retirement plans, job security, and
safe workplaces.
Social (belongingness) needs – People want to be accepted by family and
groups. At work, employees want to maintain good relationships with other
workers and managers and to participate in group activities.
Esteem needs – People like to receive attention, recognition and appreciation
from superiors and coworkers for a good job work.
Self-actualisation needs – These needs drive people to seek fulfillment,
realizing their own potential and fully using their talents and capabilities.
Employers can satisfy these needs by offering challenging and creative work
assignments and opportunities for advancement based on individual merit.
See Figure 9.6 (page 314)
Job Design and Motivation:
Two ways employers are applying motivational theories to restructure jobs are
job enlargement and job enrichment. Job enlargement is a job design that
expands an employee’s responsibilities by increasing the number and variety of
tasks they entail. Job enrichment is a change in job duties to increase
employees’ authority in planning their work, deciding how it should be done,
and learning new skills that help them grow.
Managers’ Attitudes and Motivation:
Maslow’s theory has helped managers to understand that employees feel needs
beyond those satisfied by monetary rewards. Psychologist McGregor, a student
of Maslow, studied motivation from the perspective of how managers view
employees. He proposed Theory X and Theory Y.
Theory X assumes employees dislike work and try to avoid it whenever
possible. The result is that managers must force or control workers or punish
them to achieve goals.
However, Theory Y assumes that the typical person likes work and learns,
under proper conditions, to accept and seek responsibilities to fulfill social,
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esteem and self-actualisation needs. Theory Y emphasizes self-control and self-
direction.
Another perspective on management proposed by management professor
William Ouchi has been labeled Theory Z. Organisations structured on Theory
Z concepts attempt to blend the best of American and Japanese management
practices.
UNION-MANAGEMENT RELATIONS
Today, the people who head organizations that provide needed goods and
services, the people who do the work, and the government organizations that
maintain societies make up various industrial relationships that stretch across
the globe.
Development of Labor Unions:
A labor union is a group of workers who have banded together to achieve
common goals in the key areas of wages, hours and working conditions. Labor
unions can be found at the local, national and international levels.
Although only about 10% of workers in the private sector are unionized, over
40% of government workers belong to unions in the US. After thousands of
layoffs during the recent recession, interest in labor unions is growing among
white-collar and service workers.
Labor Legislation:
Over the last hundred years in the USA, many laws have been enacted that
affect labor legislation:
Norris-La Guardia Act 1932: Reduced management’s ability to obtain court
injunctions to halt union activities. Before this act, employers could easily
obtain decrees – called injunctions – forbidding strikes, peaceful picketing, and
even membership drives.
National Labor Relations Act 1935 (Wagner Act): legalized collective
bargaining and required employers to negotiate with elected representatives of
their employes. Established the National Labor Relations Board (NLRB) to
supervise union elections and prohibit unfair labor practices such as firing
workers for joining unions.
Fair Labor Standards Act of 1938: Set the initial federal minimum wage and
maximum basic workweek for workers employed in industries engaged in
interstate commerce. Outlawed child labor.
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Taft-Hartley Act 1947 (labor-management relations act): Limited unions’
power by prohibiting such practices as coercing employees to join unions;
coercing employers to discriminate against employees who are not union
members
Landrum-Griffin act 1959: Amended Taft-Hartley act to promote honesty
and democracy in running union’s internal affairs. Required unions to set up a
constitution and bylaws and to hold regularly scheduled elections of union
officers by secret ballot. Set forth a bill of rights for members.
Plant-closing notification act 1988: Required employers with more than 100
employes to give workers and local elected officials 60 days’ warning of a
shutdown or mass layoff. Created worker readjustment program to assist
displaced workers.
The collective Bargaining Process:
Labor unions work to increase job security for their members and improvement
of wages, hours and working conditions. These goals are achieved primarily
through collective bargaining, the process of negotiation between management
and union representatives for the purpose of arriving at mutually acceptable
wages and working conditions for employees.
Settling Union-Management Disputes:
The courts are the most visible and familiar vehicle for dispute settlement, but
most disputes are settled by negotiations. The union contract serves as a guide
to relations between the firm’s management and its employees. The rights of
each party are stated in the agreement. In the event of disagreement, there is a
grievance – a complaint by workers that management is violating some part of
union contract.
Mediation is the process of settling union-management disputes through
recommendations of an impartial third party. When disputes cannot be solved
voluntarily through mediation, the parties can turn to arbritation – bringing in
an impartial third party who renders a binding decision.
Competitive tactics:
Union tactics:
The chief tactics of unions are strikes, picketing and boycotts. The strike is one
of the most effective tools of the labor union. It involves a temporary work
stoppage by employees until a dispute has been settled or a contract signed.
Picketing is workers marching at the entrances of the employer’s business as a
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public protest against some management practice. A boycott is an organized
attempt to keep the public from purchasing the products of a firm.
Management tactics:
Management also has tactics for dealing with organized labor. In the past it has
used the lockout – a management strike to bring pressure on union members by
closing the firm. Many companies replace striking workers with strikebreakers
– nonunionised workers who cross picket lines to fill the jobs of striking
workers. Some employers have formed employers’ associations to cooperate in
their efforts and present a united front in dealing with labor unions.
Employee-Management Relations in Nonunion organizations:
Some industries have been slow for organizing workers such as high-tech and
electronics and service industries like finance, but interest in organizing labor is
growing in these industries.
Grievance programs for nonunion employees:
Workers who believe they have suffered discrimination, sexual harassment,
dismissal without cause, or inadequate promotion opportunities can file
lawsuits against their employers.
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