HUMAN RESOURCE MANAGEMENT, MOTIVATION, AND LABOR-MANAGEMENT RELATIONS
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.
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.
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.
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
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.
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 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:
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:
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, 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.
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
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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