Human resource management: the function of attracting, developing, and
retaining employees who can perform the activities needed to meet
The core responsibilities of human resource management are:
o Planning for staffing needs
o Employee recruitment and selection
o Employee training and performance evaluation
o Employee compensation and benefits
o Employee separation
By accomplishing these tasks, human resource managers achieve the
o Providing qualified, well-trained employees for the organization
o Maximizing employee effectiveness in the organization
o Satisfying individual employee needs through monetary
compensation, benefits, opportunities to advance, and job satisfaction
HR plans must be based on an organization’s overall competitive strategies.
HR managers work with other managers to determine how many workers
will be needed and what skills they will need and what skills they will learn
on the job.
HR managers are often asked for their input on decisions to lay off workers
to reduce costs or hire new workers increasing costs.
Methods of recruiting workers include:
o College/university job fairs
o Personal referrals
o Want ads
Listings on firm’s own website
Listings on social networking sites (i.e. FaceBook)
Listings on job sites (i.e. Monster.com)
Provincial and federal employment laws state that employers cannot
discriminate against job applicants, or treat them unfairly, because of their
race, religion, colour, sex, national origin etc.
o Failure to follow the terms of equal employment opportunity laws can
result in costly legal fees, expensive fines, bad publicity, and poor
o These laws even provide a basis for how the interviewing process
must be carried out.
An interviewer may not ask job applicants about their marital
status, children, race or nationality, age, criminal records,
mental illness, medical history, or alcohol and substance abuse. Drug testing for job applicants is one method employers use to screen out
Another issue is whether employees can be required to speak a particular
language in the workplace.
Employers may legally establish requirements for specific jobs – true
occupational qualifications (i.e. only women applicants for a job under a
designer of women’s clothing)
Costs associated with reqcruiting and selecting employees include:
o Employment testing
o Medical exams
Once the employee has been hired, there are costs for training and for
One estimate suggests that the total cost of a hiring mistake amounts to 24x
the applicants annual pay (important for HR managers to make the best
Employment tests are used to prove the applicant has certain skills, such as
mechanical, technical, language, and computer skills.
o Cognitive ability tests accurately predict job performance on many
types of jobs.
Newly hired employees learn what is expected of them and how well they are
Employees learn about company policies regarding their rights
They might receive an employee manual that includes the
company’s code of conduct/ethics.
Provides workers with an opportunity to build their skills and
Helps employers to keep long-term, loyal, high-performing
On-the-job training: prepares employees for job duties by
having them perform tasks under the guidance of experienced
Apprenticeship: an employee who is an apprentice
learns a job by working as an assistant to a trained
worker (usually in blue-collar trades – such as
Classroom training: lectures, conferences, workshops, or
seminars that provide information.
Computer-based training (low-cost): offer consistent
presentations (includes videos that stimulate the work
environment); employees can learn at their own pace. Online training (interactive learning): employees may work
with a mentor/instructor who is located elsewhere; might
include simulations where decisions have to be made
regarding their work.
Management development program: training designed to
improve the skills and broaden the knowledge of current or
future managers and executives.
I.e. the Conference Board of Canada provides
management training in leadership, team development,
and strategic implementation.
Performance appraisal: evaluation of and feedback on
employee’s job performance (can include attendance).
Used to make decisions about:
Additional training needs
An effective performance review should meet the following
Take place several times a year
Be linked to organizational goals
Be based on objective measures
Take place in the form of a two-way conversation
Forms of appraisal used:
o Co-workers assess the employees job
o Employees are asked to evaluate their
360° performance review
o Feedback is gathered from a review panel of 8-
12 people (includes co-workers, supervisors,
team members, subordinates, sometimes
o The major benefit is the multiple points of view
of the panel members.
o A potential disadvantage is its anonymous
nature (employees with personal likes/dislikes
might try to influence the outcome).
o Employees benefit by:
Being more involved with the process Understand more about their own
Understand more about their own role in
o Managers benefit by:
Getting more in-depth feedback from all
parts of the organization
Compensation: the amount employees are paid in money and benefits.
Compensation is divided into:
o 70% wages/salaries
o 30% benefits
The amount employees are paid, including any benefits they receive, has a
huge effect on:
o Where people live
o What they eat
o How they spend their leisure time
o Job satisfaction
Balancing compensation for employees at all job levels can be a challenge for
Wage: pay based on an hourly rate or the amount of work accomplished.
o I.e. factory workers, construction workers, auto mechanics, retail
salespeople, restaurant wait staff
o Wage earners are eligible for overtime pay.
Salary: pay calculated on a periodic basis, such as weekly or monthly (hours
worked does not matter).
o I.e. office personnel, executives, and professional employees
o Salary earners are not eligible for overtime pay.
An effective compensation system should:
o Attract well-qualified workers
o Keep them satisfied in their jobs
o Inspire them to succeed
Most firms base their compensation policies on:
o What competing companies are paying
o Government regulation
o The cost of living
o Company profits
o An employee’s productivity
Programs that try to motivate employees to excel by offering some incentive
compensation in addition to salaries/wages include:
o Profit sharing: awards that are bonuses based on company profits.
o Gain sharing: companies share the financial value of productivity
gains, cost savings, or quality improvements with their workers.
o Lump-sum bonuses and stock options: such as one-time payments
and the right to purchase stock in the company based on performance. o Pay for knowledge: distributes wage or salary increases as employees
learn new job tasks.
Employee benefits: additional compensation – such as vacation time,
retirement savings plans, profit-sharing, health insurance, gym
memberships, child and elder care, and tuition reimbursement – aid entirely
or in part by the company.
Some benefits are required by law (i.e. firms may be required to make
Incentives for employees to live healthier lives (to lower costs associated
with health because they continually increase) can include:
o Gym memberships
o Nutrition programs
o Wellness visits to the doctor
o Smoking-cessation classes
Flexible benefit plans (cafeteria plans): offer a choice of benefits, including
different types of medical insurance, dental and vision plans, and life and
o Typically, employees each receive a set allowance (called flex
dollars/credits) to pay for benefits that suit their needs.
o Contributions to cafeteria accounts can be made by both the employee
o Offer tax benefits to both employees and employers.
o Used to address the increasing diversity in the workforce.
Paid time off (PTO): instead of having a set number of holidays, vacation
days, and sick days (days are in a bank).
o A major advantage is that employees can use days from their PTO
accounts without having to explain why they need the time (freedom).
o A major disadvantage is that it is an expensive benefit for employers.
Flexible work plans: plans that allow employees to adjust their working
hours or their places of work according to their needs.
o Options include:
Allows employees to set their own work hours within
certain limits (i.e. all workers need to be present
between 10 – 3 but they can choose to start early or end
Effective in jobs that are independent.
In Europe, 56% of all companies offer some kind of
Web-based software makes it easy for larger
organizations to make scheduling easier (i.e. employees
can log in and request certain shifts or schedule
Compressed workweeks Allow employees to work longer hours on fewer days
(i.e. 4 10-hour days rather than 5 8-hour days).
o Reduces the number of hours employees spend
commuting each week
o Stretches out the company’s overall workday,
providing more availability to customers in other
Used frequently in hospitals, airlines, and police and fire
Allows two or more employees to divide up the tasks of
Appealing to those who prefer to work part-time rather
Requires a lot of cooperation and communication
between the partners, but a company benefits from the
talents of both people.
Home-based work (telecommuting)
Allows employees to work from the comfort of their
own home while they are connected to their employers
through the Internet, voice and video conferencing, and
o Employees who want freedom
o Persons with disabilities
o Older workers
Company benefits because they can expand their pool of
talent and increase productivity without increasing
Telecommuters need to be self-disciplined and reliable
o Their managers need to be comfortable with
setting goals and managing from afar.
NA = 34 million telecommuters (projected 63 million by
o Reduces employee turnover and absenteeism and boosts productivity
and job satisfaction.
o +70% generation Y professional are concerned with balancing career
and personal life.
Most reject the idea of sitting in an office cubicle for 8-10 hours
Employee separation: a broad term for the loss of an employee for any
reason, voluntary or involuntary. o Turnover occurs when an employee leaves his or her job.
Voluntary turnover occurs when the employee decides to
resign for his or her own reasons (i.e. take another job, start a
new business, pay issues, job security worries etc.).
Exit interviews are sometimes used by HR managers to
find out why employees are resigning in an attempt to
address the issue and keep the employee.
Involuntary turnover occurs when employees are terminated
because of poor job performance or unethical behaviour n
their business practices or in the workplace.
Also includes when firms are forced to eliminate jobs as
a cost-cutting measure (i.e. downsizing/outsourcing).
HR managers need to remain calm and professional
when dealing with emotional employees who have been
o They must also be educated in employment laws
so the termination if handled properly (some
employees file formal complaints saying they
have been wrongfully dismissed).
Downsizing: the process of reducing the number of employees
within a firm by eliminating jobs.
Can be done by offering early retirement or voluntary
After downsizing, some firms report improvements in
profits, market share, employee productivity, quality,
and customer service.
Negative effects associated with downsizing:
o Anxiety, health problems, and lost productivity
among the remaining workers
o Expensive severance packages paid to laid-off
o A domino effect on the local economy –
unemployed workers have less money to spend,
which creates less demand for consumer goods
and services, which increases the likelihood of
more layoffs and other failing businesses.
If a firm is committed to its workforce as a part of its
mission, it will do everything it can to support both the
workers who must leave and the workers