Adobe systems case assignment

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Read the case about Adobe Systems and answer the five questions noted below. 

Formatting Guidelines! Make sure each question is copied and pasted above the answer. Also, please make sure all responses are numbered in the same order as the assignment. 

Most people know Adobe Systems for its Photoshop software and the Acrobat and Adobe Reader programs for creating and viewing its portable document format (PDF) files. Recently, Adobe has been shifting its focus from packaged software programs to online software. During that transition, Adobe’s senior vice president of people resources, Donna Morris, wondered whether its HR systems—particularly performance management— also needed a new strategy.

Evidence signaled a need for change at the11,500- employee company. Adobe was using a process of annual reviews that ranked employees. Morris’s team calculated that Adobe’s managers spent 80,000 hours per year on the process, equivalent to the time of 40 full-time employees. Was the effort improving performance? Probably not. Every year, immediately following the feedback sessions, voluntary departures by employees spiked. On the corporate blog, Morris wrote a piece about her desire to eliminate formal performance appraisals. It became one of Adobe’s most popular blog posts, and comments poured in from employees who were delighted with the idea and disappointed in managers’ apparent lack of recognition of their accomplishments and failure to support their career development.

Morris determined that she had to act. She announced that Adobe would go forward with abolishing performance appraisals, along with related schedules and forms. Instead, the company would prepare managers to carry out a practice called the Check-In, through which they provide ongoing feedback and coaching. The timing of the feedback is up to the managers, consistent with Adobe’s strategy of encouraging managers to act as “business owners” of the group they lead. Managers were trained to focus on goals, objectives, and career development. Instead of tying pay increases to rankings, managers relate them to employee achievement of their goals.

Instituting a less formal system poses some challenges. For example, without a schedule for conducting performance reviews, Adobe needs a way to ensure that managers are engaging in performance-related discussions. For this, Adobe has employees meet with managers two levels above (their boss’s boss) to discuss whether they have the support they need for their team to meet its goals. The HR department emphasizes training managers in the skills needed for providing feedback.

Reactions to the changes have been overwhelmingly positive. In annual surveys, employees say the Check-ins are easier and more effective than the old system, and that their managers are getting better at helping them improve. Also telling are the rates at which employees leave. Involuntary departures are more common, suggesting that managers are having franker conversations with employees who do not improve. Voluntary departures have dropped by 30%, and a larger share of these are what Adobe calls “non-regrettable” departures.

Please answer the following questions. 

1. How can managers at Adobe ensure that the feedback they provide during check-ins is effective? (Hint: Use the guidance provided in the Giving and Receiving Feedback (Links to an external site.) video, or reference pages 319-320 in the assigned reading.Actions 

2. In terms of the criteria for effective performance management, what advantages does Adobe gain and lose by shifting its methods from rating individuals to measuring results? (Hint: The assigned reading will help you answer question 2. Specifically, reading pages 306 – 312 will be helpful. You can access the reading here) 

3. In order to deliver effective feedback, the Giving and Receiving Feedback (Links to an external site.) video mentions the importance of preparing your feedback in advance. Explain the advantage of managers preparing the feedback in advance of speaking with employees at Adobe. 

4. In order to deliver effective feedback, the Giving and Receiving Feedback (Links to an external site.) video mentions the importance of focusing on your tone. For example, the video mentions it’s helpful for managers to be empathetic. Why would it be important for managers at Adobe to be empathetic towards employees when they are delivering feedback? 

5. Describe something you learned in the Giving and Receiving Feedback (Links to an external site.) video that will help you give feedback outside of work to a family member, significant other, or a friend.

Formatting Guidelines!  Make sure each question is copied and pasted above the answer. Also, please make sure all responses are numbered in the same order as the assignment. 

Fundamentals of Human Resource

Sixth Edition

Noe | Hollenbeck | Gerhart | Wright



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fundamentals of
Human Resource Management

fundamentals of
Human Resource Management


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


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.

1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5

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

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All credits appearing on page or at the end of the book are considered to be an extension of the
copyright page.

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

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


To my parents, Harold and Elizabeth, my wife, Patty, and

my children, Jennifer, Marie, Timothy, and Jeffrey


To my parents, Robert and Shirley, my wife, Heather, and

my children, Chris and Annie


To my parents, Patricia and Paul, my wife, Mary, and my

sons, Michael and Matthew



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.”


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

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 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

• 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

• 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

• 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.

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


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


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.


2 Trends in Human Resource

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

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.

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.


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,; Hay

Group, “More Managers Turn to Google

for HR Information,” Business Wire,

November 20, 2013, http://www; Philip Spriet,

“‘Power On’: From Passing the Buck

to Activating the Line,” Hay Group

Blog, October 16, 2013, http://blog

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!


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


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.


1. When does outsourcing

make strategic sense for an

organization such as Land


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, 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

noe18364_ch02_029-061.indd 45 07/11/14 12:23 PM

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


• Test mobile HRM apps to be

sure they are easy to use and



1. How could offering a mobile

version of its careers website

support an organization’s


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://; Jennifer Alsever,

“Objective: Hire Top Talent,” Fortune,

January 23, 2014,;

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

noe18364_ch02_029-061.indd 50 07/11/14 12:23 PM

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


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.; Shea Bennett, “Social

Media Increases Offi ce Productivity, but

Management Still Resistant, Says Study,”

MediaBistro, June 26, 2013, http://www.; Bernhard Warner,

“When Social Media at Work Don’t Create

Productivity Killing Distractions ” Bloomberg

What Social-Media Policies Are Suitable across Generations?

HRM Social

noe18364_ch02_029-061.indd 32 07/11/14 12:23 PM

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.”


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.

Half of U.S. Employees Interested in Changing Jobs

U.S. labor force

Employed workers

Workers Seeking or Open to a New Job



noe18364_ch02_029-061.indd 52 07/11/14 12:23 PM

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



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.



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.


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,;

Lauren Weber, “BYOD? Leaving a Job Can Mean Losing Pic-

tures of Grandma,” Wall Street Journal, January 21, 2014, http://; 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,

noe18364_ch02_029-061.indd 54 07/11/14 12:23 PM


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.

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-


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

F e a t u r e s


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


® 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 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-
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by building an individual learning path. As
a result, students study smarter and retain
more knowledge.

Results-Driven Support

Grade Distribution









58% more As
with LearnSmart



Student Pass Rate

25% more students
passed with LearnSmart

xxii Results-Driven Support


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

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

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

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

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



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


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

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
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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
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• Collect data and generate reports required by

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Connect Insight is a powerful data analytics tool that
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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

• 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
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Brief Contents

Preface x


The Human Resource Environment 1
1 Managing Human Resources 2

2 Trends in Human Resource

Management 29

3 Providing Equal Employment Opportunity

and a Safe Workplace 62

4 Analyzing Work and Designing Jobs 101


Acquiring, Training, and Developing
Human Resources 131
5 Planning for and Recruiting Human

Resources 132

6 Selecting Employees and Placing Them

in Jobs 167

7 Training Employees 200

8 Developing Employees for Future

Success 236


Assessing and Improving
Performance 269
9 Creating and Maintaining High-

Performance Organizations 270

10 Managing Employees’ Performance 298

11 Separating and Retaining Employees 332


Compensating Human Resources 365
12 Establishing a Pay Structure 366

13 Recognizing Employee Contributions

with Pay 395

14 Providing Employee Benefits 423


Meeting Other HR Goals 459
15 Collective Bargaining and Labor

Relations 460

16 Managing Human Resources

Globally 495

Glossary 530

Credits 540

Name and Company Index 541

Subject Index 555



Preface x


The Human Resource Environment 1
1 Managing Human Resources 2

Introduction 2

Human Resources and Company Performance 3

Responsibilities of Human Resource

Departments 5

Analyzing and Designing Jobs 7

Recruiting and Hiring Employees 7

Training and Developing Employees 8

Managing Performance 8


How Abbott Laboratories Creates a Healthy
Business 9

Planning and Administering Pay and Benefits 9

Maintaining Positive Employee Relations 10

Establishing and Administering Personnel

Policies 10


Writing Effective HR Policies 11

Managing and Using Human Resource Data 11

Ensuring Compliance with Labor Laws 12

Supporting the Organization’s Strategy 12


“Talent Management Sounds Great, but . . .” 13

Skills of HRM Professionals 14


CEO and CFO Relationships with HRM 16

HR Responsibilities of Supervisors 17

Ethics in Human Resource Management 18

Employee Rights 18

Standards for Ethical Behavior 19

Careers in Human Resource Management 20


SHRM’s Social-Media Presence 21

Organization of This Book 22


How Should an Employer Weigh Conflicting
Values? 23

Summary 23

Key Terms 24

Review and Discussion Questions 24

Taking Responsibility: How “Good Things Happen

to” Costco 25

Managing Talent: Ingersoll Rand’s Problem-Solving

Approach to HRM 26

HR in Small Business: Managing HR at a Services

Firm 26

Notes 27

2 Trends in Human Resource

Management 29

Introduction 29

Change in the Labor Force 30

An Aging Workforce 30


What Social-Media Policies Are Suitable across
Generations? 32

A Diverse Workforce 32

Skill Deficiencies of the Workforce 35

High-Performance Work Systems 35

Knowledge Workers 36

Employee Empowerment 38

Teamwork 38

Focus on Strategy 39


Less Helpful than a Search Engine? 40

Contents xxix

Mergers and Acquisitions 40

High Quality Standards 41

Cost Control 42


Outsourcing Enriches the Bottom Line for Land
O’Lakes 45

Expanding into Global Markets 45

Technological Change in HRM 47

Electronic Human Resource

Management (e-HRM) 48

Sharing of Human Resource Information 49


Providing HR Services on Mobile Devices 50

Change in the Employment Relationship 50

A Psychological Contract 51

Declining Union Membership 51


Half of U.S. Employees Interested in Changing Jobs 52

Flexibility 52


How Should Employers Protect Their Data on
Employees’ Devices? 54

Summary 55

Key Terms 56

Review and Discussion Questions 56

Taking Responsibility: Taking Care of People Gives

Cisco Systems a Strategic Advantage 57

Managing Talent: Netflix Treats Workers “Like

Adults” 58

HR in Small Business: Radio Flyer Rolls

Forward 58

Notes 59

3 Providing Equal Employment Opportunity

and a Safe Workplace 62

Introduction 62

Regulation of Human Resource Management 63

Equal Employment Opportunity 64

Constitutional Amendments 64

Legislation 66

Executive Orders 72

The Government’s Role in Providing for Equal

Employment Opportunity 73

Equal Employment Opportunity Commission

(EEOC) 73


Being Strategic about EEO 74

Office of Federal Contract Compliance Programs

(OFCCP) 75

Businesses’ Role in Providing for Equal

Employment Opportunity 76

Avoiding Discrimination 76


The Discrimination Risk of Using Social Media in
Hiring 78


Lack of Rewards May Explain “Leaky
Pipeline” 80

Providing Reasonable Accommodation 81

Preventing Sexual Harassment 82

Valuing Diversity 83

Occupational Safety and Health Act

(OSH Act) 84

General and Specific Duties 85

Enforcement of the OSH Act 87

Employee Rights and Responsibilities 87

Impact of the OSH Act 88

Employer-Sponsored Safety and Health

Programs 88

Identifying and Communicating Job Hazards 89


Morton Salt’s Prize-Winning Safety Program 90

Reinforcing Safe Practices 91


Top 10 Causes of Workplace Injuries 92

Promoting Safety Internationally 93


Is Discrimination against the Unemployed Ethical? 93

Summary 94

Key Terms 95

Review and Discussion Questions 96

Taking Responsibility: Keeping Sprint’s

Subcontractors Safe 96

Managing Talent: Walmart’s Struggle to Manage

Diversity and Safety on a Grand Scale 97

xxx Contents

Managing Talent: Amazon’s Warehouse Jobs:

Good or Grueling Work? 128

HR in Small Business: Inclusivity Defines

BraunAbility’s Products and Its Jobs 128

Notes 129


Acquiring, Training, and Developing
Human Resources 131
5 Planning for and Recruiting Human

Resources 132

Introduction 132

The Process of Human Resource Planning 133

Forecasting 133

Goal Setting and Strategic Planning 136


Trimming More Than Just Fat 139


Using Temporary Employees and Contractors 142

Implementing and Evaluating the HR Plan 144


The Biggest Hiring Challenges Involve Recruiting 145

Applying HR Planning to Affirmative Action 145

Recruiting Human Resources 146

Personnel Policies 147

Recruitment Sources 148

Internal Sources 148


Sources of Talent for Advanced Technology Services 149

External Sources 149


Social Networks Can Also Be Career Networks 152

Evaluating the Quality of a Source 155

Recruiter Traits and Behaviors 156

Characteristics of the Recruiter 157

Behavior of the Recruiter 157

Enhancing the Recruiter’s Impact 157


Is Something Wrong with a Mutual Agreement Not to
“Steal” Employees? 159

Summary 160

HR in Small Business: Company Fails Fair-

Employment Test 98

Notes 99

4 Analyzing Work and Designing Jobs 101

Introduction 101

Work Flow in Organizations 102

Work Flow Analysis 102

Work Flow Design and an Organization’s

Structure 103


Workers Often Don’t Have What They Need to
Succeed 104

Job Analysis 105

Job Descriptions 105

Job Specifications 106


Identifying Relevant KSAOs 108

Sources of Job Information 109

Position Analysis Questionnaire 109

Fleishman Job Analysis System 110

Analyzing Teamwork 111

Importance of Job Analysis 111


With Good Analysis, Work Isn’t Just a Game 112

Competency Models 112

Trends in Job Analysis 114

Job Design 114

Designing Efficient Jobs 115

Designing Jobs That Motivate 115


Big Data for High Efficiency at UPS 116


Occasional Telework Dominates Flexibility Options 121

Designing Ergonomic Jobs 121

Designing Jobs That Meet Mental Capabilities and

Limitations 122


How Can You Ethically Design a Dangerous Job? 124

Summary 125

Key Terms 126

Review and Discussion Questions 126

Taking Responsibility: How Google Searches for

the Right Job Requirements 127

Contents xxxi

Preparing to Interview 189

Selection Decisions 189

How Organizations Select Employees 189


Interview Alarm Bells 190

Communicating the Decision 191


Is a Policy of Not Hiring Smokers Ethical? 191

Summary 192

Key Terms 193

Review and Discussion Questions 194

Taking Responsibility: How Gild Aims to Create

Golden Opportunities for Underappreciated

Workers 194

Managing Talent: Hiring for an Oil Boom 195

HR in Small Business: Kinaxis Chooses Sales

Reps with Personality 196

Notes 197

7 Training Employees 200

Introduction 200

Training Linked to Organizational Needs 201


A Strategic Approach to Learning at ConAgra
Foods 202

Needs Assessment 203

Organization Analysis 203

Person Analysis 204

Task Analysis 205

Readiness for Training 206

Employee Readiness Characteristics 206

Work Environment 206

Planning the Training Program 207

Objectives of the Program 207


Many Companies Outsource Training Tasks 208

In-House or Contracted Out? 208

Choice of Training Methods 209

Training Methods 210

Classroom Instruction 210

Audiovisual Training 211

Computer-Based Training 211


Developing Training Content for Mobile Devices 212

Key Terms 161

Review and Discussion Questions 161

Taking Responsibility: SAP’s Inclusive Approach to

Recruiting 162

Managing Talent: Boeing’s High-Flying Approach

to HR Planning and Recruitment 162

HR in Small Business: For Personal Financial

Advisors, a Small Staffing Plan with a Big

Impact 163

Notes 164

6 Selecting Employees and Placing Them in

Jobs 167

Introduction 167

Selection Process 168

Reliability 170

Validity 170

Ability to Generalize 172


Selection Decisions Affect the Bottom Line 173

Practical Value 173

Legal Standards for Selection 174

Job Applications and Résumés 176

Application Forms 176

Résumés 178

References 178

Background Checks 179


Using Social Media as a Background Check 180

Employment Tests and Work Samples 181

Physical Ability Tests 181


St. Joseph Health Matches Physical Abilities to Job
Requirements 182

Cognitive Ability Tests 182

Job Performance Tests and Work Samples 183

Personality Inventories 183

Honesty Tests and Drug Tests 185

Medical Examinations 186

Interviews 186

Interviewing Techniques 186

Advantages and Disadvantages of

Interviewing 187


Interviewing Job Candidates Effectively 188

xxxii Contents

Formal Education 239

Assessment 240


Setting Up Stretch Assignments for Employees 245

Job Experiences 245

Interpersonal Relationships 249


Online Support for Career Development 250

Systems for Career Management 251

Data Gathering 252


Managers Must Look Outside for Development
Support 253

Feedback 254

Goal Setting 255

Action Planning and Follow-Up 255

Development-Related Challenges 257

The Glass Ceiling 257

Succession Planning 257


A Ceiling above a Ceiling 258

Dysfunctional Managers 260


Should Managers Feel Obligated to Be Mentors? 260

Summary 261

Key Terms 262

Review and Discussion Questions 263

Taking Responsibility: Taking Care of Employees

Helps the Patent Office Serve the Public 263

Managing Talent: Procter & Gamble’s Succession

Management Slip-Up 264

HR in Small Business: Employee Sabbatical

Benefits Others at Little Tokyo Service

Center 265

Notes 266


Assessing and Improving
Performance 269
9 Creating and Maintaining High-

Performance Organizations 270

Introduction 270

On-the-Job Training 213

Simulations 214

Business Games and Case Studies 215

Behavior Modeling 216

Experiential Programs 216

Team Training 217

Action Learning 218

Implementing the Training Program 218

Principles of Learning 218

Transfer of Training 220


Social Learning with Visual Impact on Pinterest 221

Measuring Results of Training 222

Evaluation Methods 222

Applying the Evaluation 223


Training Executives Are Unimpressed with Their
Measurement Processes 224

Applications of Training 224

Orientation of New Employees 224

Diversity Training 225


Internships: Opportunity or Exploitation? 227

Summary 228

Key Terms 230

Review and Discussion Questions 230

Taking Responsibility: How MasTec’s Training

Helps Keep Workers Safe 231

Managing Talent: Hewlett-Packard Builds Its Own

“University” 232

HR in Small Business: How Nick’s Pizza Delivers

Training Results 232

Notes 233

8 Developing Employees for Future

Success 236

Introduction 236

Training, Development, and Career

Management 237

Development and Training 237

Development for Careers 238


How KPMG Develops for the Future 239

Approaches to Employee Development 239

Contents xxxiii

HR in Small Business: Employees Make a

Difference at Amy’s Ice Creams 295

Notes 296

10 Managing Employees’ Performance 298

Introduction 298

The Process of Performance Management 299


“Where Have I Heard That Before?” 301

Purposes of Performance Management 301

Criteria for Effective Performance

Management 302

Methods for Measuring Performance 303


A Goal-Oriented System of Performance
Management 304

Making Comparisons 304

Rating Individuals 306


Popular Performance Measures 307

Measuring Results 311

Total Quality Management 313

Sources of Performance Information 314

Managers 314

Peers 315

Subordinates 315


Crowdsourcing Performance Reviews 316

Self 316

Customers 317

Errors in Performance Measurement 317

Types of Rating Errors 318

Ways to Reduce Errors 318

Political Behavior in Performance Appraisals 318

Giving Performance Feedback 319

Scheduling Performance Feedback 319

Preparing for a Feedback Session 320

Conducting the Feedback Session 320


Discussing Employee Performance 321

Finding Solutions to Performance Problems 321

Legal and Ethical Issues in Performance

Management 322

High-Performance Work Systems 271

Elements of a High-Performance Work System 272

Outcomes of a High-Performance Work System 273

Conditions That Contribute to High

Performance 274

Teamwork and Empowerment 275

Knowledge Sharing 275


When Social-Media Tools Support Knowledge
Sharing 276

Job Satisfaction and Employee Engagement 277


Three in Ten U.S. Workers Describe Themselves as
Engaged 278

Ethics 279

HRM’s Contribution to High Performance 280

HRM Practices 280


Few Companies Are Prepared for Future Talent
Needs 281

HRM Technology 283

HRM Applications 283

Human Resource Information Systems 284

Human Resource Management Online:

E-HRM 285


How e-HRM Helps Plan International Respond to
Crises with Agility 286

Effectiveness of Human Resource

Management 287

Human Resource Management Audits 288

Analyzing the Effect of HRM Programs 288


Making the Most of HR Analytics 290


How Can—and Should—Organizations Measure
Ethics Performance? 291

Summary 292

Key Terms 293

Review and Discussion Questions 293

Taking Responsibility: The Container Store Puts

Employees First 293

Managing Talent: Valuing Labor Drives High

Performance at HindlePower 294

xxxiv Contents

Supervisors and Co-Workers 352


Employees Are Quicken Loans’ Most Valuable
Asset 353

Pay and Benefits 354

Monitoring Job Satisfaction 354


Is It Ethical to Fire by E-mail and Text? 356

Summary 357

Key Terms 358

Review and Discussion Questions 358

Taking Responsibility: General Motors Tries to

Steer in a New Direction 359

Managing Talent: What Makes Genentech So

Great for Scientists? 360

HR in Small Business: Learning to Show

Appreciation at Datotel 361

Notes 362


Compensating Human Resources 365
12 Establishing a Pay Structure 366

Introduction 366

Decisions about Pay 367

Legal Requirements for Pay 368

Equal Employment Opportunity 368

Minimum Wage 369

Overtime Pay 370


Overlooking Overtime 371

Child Labor 371

Prevailing Wages 372

Economic Influences on Pay 372

Product Markets 372

Labor Markets 373


Management, Professional, Computer Occupations
Are the Highest Paid 374

Pay Level: Deciding What to Pay 374

Gathering Information about Market Pay 375

Employee Judgments about Pay

Fairness 375

Legal Requirements for Performance

Management 322

Electronic Monitoring and Employee Privacy 323


How Fair Are Forced Rankings? 324

Summary 324

Key Terms 326

Review and Discussion Questions 327

Taking Responsibility: REI’s Purpose Drives Its

Performance Management 327

Managing Talent: Adobe Systems Asks Managers

to Check-In 328

HR in Small Business: Appraisals Matter at

Meadow Hills Veterinary Center 329

Notes 330

11 Separating and Retaining Employees 332

Introduction 332

Managing Voluntary and Involuntary Turnover 333

Employee Separation 334

Principles of Justice 335

Legal Requirements 336


Employees’ Privacy vs. Employer’s Reputation 338

Progressive Discipline 338

Alternative Dispute Resolution 340


Announcing a Disciplinary Action 341

Employee Assistance Programs 342

Outplacement Counseling 343

Employee Engagement 343


Where Profits Are Growing, More Employees Are
Engaged 344

Job Withdrawal 345

Job Dissatisfaction 345

Behavior Change 347

Physical Job Withdrawal 348


Bizarre Excuses for Absences 349

Psychological Withdrawal 349

Job Satisfaction 350

Personal Dispositions 350

Tasks and Roles 351

Contents xxxv

Performance Bonuses 402


Giving Arbitrary Bonuses to Employees 403

Sales Commissions 403

Pay for Group Performance 404

Gainsharing 404

Group Bonuses and Team Awards 405

Pay for Organizational Performance 406

Profit Sharing 406

Stock Ownership 407


Profit Sharing at Paul Downs Cabinetmakers 408

Balanced Scorecard 410

Processes That Make Incentives Work 411


Scoring Social Influence 412

Participation in Decisions 412

Communication 412


Getting the Most from a Limited Compensation
Budget 413

Incentive Pay for Executives 414

Performance Measures for Executives 414

Ethical Issues 415


Can Incentives Promote Ethics? 416

Summary 416

Key Terms 418

Review and Discussion Questions 418

Taking Responsibility: At Rhino Foods, Incentive

Pay Is an Expression of Respect 418

Managing Talent: Making Hilcorp Energy’s

Employees Feel (and Act) like Owners 419

HR in Small Business: Employees Own Bob’s

Red Mill 420

Notes 421

14 Providing Employee Benefits 423

Introduction 423

The Role of Employee Benefits 424

Benefits Required by Law 426

Social Security 426

Unemployment Insurance 427

Workers’ Compensation 428


Gathering Wage Data at the BLS Website 376

Judging Fairness 376

Communicating Fairness 377


Salary Talk Is Trending 378

Job Structure: Relative Value of Jobs 379

Pay Structure: Putting It All Together 380

Pay Rates 380

Pay Grades 381


Parkland Health Rethinks Entry-Level Pay
Rates 382

Pay Ranges 382

Pay Differentials 383

Alternatives to Job-Based Pay 384

Pay Structure and Actual Pay 385

Current Issues Involving Pay Structure 386

Pay During Military Duty 386

Pay for Executives 386


Is Pay Disparity in the Fast-Food Business
Ethical? 388

Summary 388

Key Terms 390

Review and Discussion Questions 390

Taking Responsibility: IKEA Aims to Pay a Living

Wage 391

Managing Talent: Twitter Tries to Be an Employer

You’d Tweet About 391

HR in Small Business: Changing the Pay Level at

Eight Crossings 392

Notes 393

13 Recognizing Employee Contributions

with Pay 395

Introduction 395

Incentive Pay 396


Employers Stress Merit Pay to Retain Workers 398

Pay for Individual Performance 398

Piecework Rates 399

Standard Hour Plans 400

Merit Pay 400

xxxvi Contents


Meeting Other HR Goals 459
15 Collective Bargaining and Labor

Relations 460

Introduction 460

Role of Unions and Labor Relations 461

National and International Unions 462

Local Unions 463

Trends in Union Membership 463

Unions in Government 465


Profile of a Typical Union Worker 466

Impact of Unions on Company Performance 466

Goals of Management, Labor Unions,

and Society 467

Management Goals 467

Labor Union Goals 468


Machinists and Steelworkers Unions Help
Harley-Davidson Get Lean 469

Societal Goals 469

Laws and Regulations Affecting

Labor Relations 470

National Labor Relations Act (NLRA) 470

Laws Amending the NLRA 471


Avoiding Unfair Labor Practices 472

National Labor Relations Board (NLRB) 473

Union Organizing 474


Protected Social Activity 475

The Process of Organizing 475

Management Strategies 476


Did Too Many Voters Spoil the Election? 477

Union Strategies 477

Decertifying a Union 479

Collective Bargaining 479

Bargaining over New Contracts 479

When Bargaining Breaks Down 481

Contract Administration 483

New Approaches to Labor Relations 485

Unpaid Family and Medical Leave 429

Health Care Benefits 429


Complying with the Affordable Care Act 430

Optional Benefits Programs 431

Paid Leave 432

Group Insurance 433


Social Support for Getting Healthy 437

Retirement Plans 437


401(k) Plans Are a Missed Opportunity for
Many 440

“Family-Friendly” Benefits 442

Other Benefits 443

Selecting Employee Benefits 444

The Organization’s Objectives 444

Employees’ Expectations and Values 444

Benefits’ Costs 446


Big Data Looks Like a Sure Bet for Caesars
Entertainment 447

Legal Requirements for Employee

Benefits 448

Tax Treatment of Benefits 448

Antidiscrimination Laws 448

Accounting Requirements 449


Employees Say Benefits Matter 450

Communicating Benefits to Employees 450


Should All Employees Pay the Same Amount for
Health Insurance? 451

Summary 452

Key Terms 454

Review and Discussion Questions 454

Taking Responsibility: The Starbucks Way to Get

an Education 454

Managing Talent: Sodexo’s Stumble on Benefits for

Workers at Colleges 455

HR in Small Business: Babies Welcomed at

T3 456

Notes 457

Contents xxxvii

Global Employee Development 510

Performance Management across

National Boundaries 510

Compensating an International Workforce 510

Pay Structure 511

Incentive Pay 512

Employee Benefits 512

International Labor Relations 513

Managing Expatriates 514

Selecting Expatriate Managers 514


Online Communities to Support Expatriates’
Spouses 515

Preparing Expatriates 515

Managing Expatriates’ Performance 518

Compensating Expatriates 518


Priciest Cities Are Spread over Three
Continents 520

Helping Expatriates Return Home 521


Can Offshoring Be Done More Ethically? 523

Summary 523

Key Terms 525

Review and Discussion Questions 525

Taking Responsibility: Coping with Pollution in

Beijing 526

Managing Talent: Global Mindset Gives Renault-

Nissan a Strategic Edge 526

HR in Small Business: Is Translating a Global

Business? 527

Notes 528

Glossary 530

Credits 540

Name and Company Index 541

Subject Index 555

Labor-Management Cooperation 485

Nonunion Representation Systems 486


Free Ride or Free Speech? 487

Summary 487

Key Terms 489

Review and Discussion Questions 489

Taking Responsibility: The SEIU’s “Fight for 15”

Campaign 490

Managing Talent: Volkswagen Wants the United

Auto Workers 490

HR in Small Business: Republic Gets Serious 491

Notes 492

16 Managing Human Resources Globally

Introduction 495

HRM in a Global Environment 496

Employees in an International Workforce 497

Employers in the Global Marketplace 498

Factors Affecting HRM in International

Markets 499

Culture 499


Cross-Cultural Management Mishaps 502

Education and Skill Levels 503

Economic System 503

Political-Legal System 504

Human Resource Planning in a Global

Economy 504


Supporting a Multinational Strategy 505

Selecting Employees in a Global Labor

Market 506

Training and Developing a Global Workforce 507

Training Programs for an International

Workforce 507

Cross-Cultural Preparation 508


Standard Chartered Bank Invests in Its
Expatriates 509

The Human Resource


Managing Human Resources


Trends in Human Resource Management


Providing Equal Employment Opportunity and
a Safe Workplace


Analyzing Work and Designing Jobs










Sarah Koustrup calls her position at National Hospitality Services (NHS) in Fargo,
North Dakota, “a job with a lot of meaning.” NHS, which operates more than a
dozen hotels, hired Koustrup to be its director of human resources. In that role,
Koustrup puts into action the chief executive’s vision of a company treating its
employees well so they in turn will treat customers well. She works directly with
the CEO and has input on all areas of the business.

Josephine Simmons also believes her work matters. Simmons, another direc-
tor of human resources, works for SatCom Marketing in Brooklyn Park, Minne-
sota. The telemarketing firm hired her to build a human resources department
from the ground up. SatCom’s chief executive also wanted Simmons to improve
the company’s culture, a challenge that requires skills in creating enthusiasm
about change.

Koustrup and Simmons are enthusiastic about their function: finding great
people and creating the conditions that enable those people to help a company
succeed in its mission. The significance of this work helps explain why, in a
recent pair of surveys, human resources professionals were more likely than
employees overall to say they are satisfied with their current job. Workers in
this field also appreciate the variety in the skills they use and projects they

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 1-1 Defi ne human resource management, and
explain how HRM contributes to an organization’s

LO 1-2 Identify the responsibilities of human resource

LO 1-3 Summarize the types of skills needed for human
resource management.

LO 1-4 Explain the role of supervisors in human resource

LO 1-5 Discuss ethical issues in human resource

LO 1-6 Describe typical careers in human resource

Managing Human

PART 1 The Human Resource Environment

CHAPTER 1 Managing Human Resources 3

The challenges and professional rewards that Sarah Koustrup and Josephine
Simmons experience are important dimensions of human resource management
(HRM), the policies, practices, and systems that infl uence employees’ behavior, at-
titudes, and performance. Many companies refer to HRM as involving “people prac-
tices.” Figure  1.1 emphasizes that there are several important HRM practices that
should support the organization’s business strategy: analyzing work and designing
jobs, determining how many employees with specifi c knowledge and skills are needed
(human resource planning), attracting potential employees (recruiting), choosing em-
ployees (selection), teaching employees how to perform their jobs and preparing them
for the future (training and development), evaluating their performance (performance
management), rewarding employees (compensation), and creating a positive work en-
vironment (employee relations). An organization performs best when all of these prac-
tices are managed well. At companies with effective HRM, employees and customers
tend to be more satisfi ed, and the companies tend to be more innovative, have greater
productivity, and develop a more favorable reputation in the community.2

In this chapter, we introduce the scope of human resource management. We begin
by discussing why human resource management is an essential element of an orga-
nization’s success. We then turn to the elements of managing human resources: the
roles and skills needed for effective human resource management. Next, the chapter
describes how all managers, not just human resource professionals, participate in the
activities related to human resource management. The following section of the chap-
ter addresses some of the ethical issues that arise with regard to human resource man-
agement. We then provide an overview of careers in human resource management.
The chapter concludes by highlighting the HRM practices covered in the remainder
of this book.

Human Resources and Company Performance
Managers and economists traditionally have seen human resource management as a
necessary expense, rather than as a source of value to their organizations. Economic
value is usually associated with capital—cash, equipment, technology, and facilities.
However, research has demonstrated that HRM practices can be valuable.3 Deci-
sions such as whom to hire, what to pay, what training to offer, and how to evaluate

Human Resource
Management (HRM)
The policies, practices,
and systems that
infl uence employees’
behavior, attitudes, and

LO 1-1 Defi ne human
resource management,
and explain how HRM
contributes to an organi-
zation’s performance.

Figure 1.1
Human Resource Management Practices











































Strategic HRM


4 PART 1 The Human Resource Environment

employee performance directly affect employees’ motivation and ability to provide
goods and services that customers value. Companies that attempt to increase their
competitiveness by investing in new technology and promoting quality throughout
the organization also invest in state-of-the-art staffi ng, training, and compensation

The concept of “human resource management” implies that employees are resources
of the employer. As a type of resource, human capital means the organization’s em-
ployees, described in terms of their training, experience, judgment, intelligence, rela-
tionships, and insight—the employee characteristics that can add economic value to
the organization. In other words, whether it manufactures automobiles or forecasts
the weather, for an organization to succeed at what it does, it needs employees with
certain qualities, such as particular kinds of training and experience. This view means
employees in today’s organizations are not interchangeable, easily replaced parts of a
system but the source of the company’s success or failure. By infl uencing who works for
the organization and how those people work, human resource management therefore
contributes to basic measures of an organization’s performance, such as quality, profi t-
ability, and customer satisfaction. Figure 1.2 shows this relationship.

In the United States, low-price retailers are notorious for the ways they keep labor
costs down. They pay low wages, limit employees to part-time status (providing little
or no employee benefi ts), and make last-minute adjustments to schedules so staffi ng is
minimal when store traffi c is light. Retailing expert Zeynep Ton has studied retailers
that invest more in employees—paying higher wages and offering full-time schedules,
greater training, and more opportunity for advancement. Ton has found that these
stores tend to enjoy higher sales and greater profi tability. At Costco, for example,
employees earn about 40% more than at the company’s main competitor, Sam’s Club,
and most store managers are promoted from within. Costco’s sales per square foot are
almost double those of Sam’s Club, and its rating in the American Customer Satisfac-
tion Index is comparable to that of the prestigious Nordstrom chain. The QuikTrip
chain of convenience stores trains employees to handle a wide variety of tasks, from
brewing coffee to ordering merchandise and cleaning restrooms. Instead of sending
employees home when traffi c is slow, QuikTrip expects them to handle tasks other

Human Capital
An organization’s
employees, described in
terms of their training,
experience, judgment,
intelligence, relation-
ships, and insight.

Figure 1.2
Impact of Human

Resource Management

CHAPTER 1 Managing Human Resources 5

than selling. Employees have predictable schedules, stay busy
throughout their shift, and sell 66% more per square foot
than the average convenience store. In these and other chains
that see employees as more than just an expense, retailers are
outperforming their competitors.5

Human resource management is critical to the success of
organizations because human capital has certain qualities that
make it valuable. In terms of business strategy, an organization
can succeed if it has a sustainable competitive advantage (is better
than competitors at something and can hold that advantage
over a sustained period of time). Therefore, we can conclude
that organizations need the kind of resources that will give
them such an advantage. Human resources have these neces-
sary qualities:

• Human resources are valuable. High-quality employees provide a needed service as
they perform many critical functions.

• Human resources are rare in the sense that a person with high levels of the needed
skills and knowledge is not common. An organization may spend months looking
for a talented and experienced manager or technician.

• Human resources cannot be imitated. To imitate human resources at a high-
performing competitor, you would have to fi gure out which employees are provid-
ing the advantage and how. Then you would have to recruit people who can do
precisely the same thing and set up the systems that enable those people to imitate
your competitor.

• Human resources have no good substitutes. When people are well trained and highly
motivated, they learn, develop their abilities, and care about customers. It is diffi cult
to imagine another resource that can match committed and talented employees.

These qualities imply that human resources have enormous potential. An or-
ganization realizes this potential through the ways it practices human resource

Effective management of human resources can form the foundation of a high-
performance work system—an organization in which technology, organizational structure,
people, and processes work together seamlessly to give an organization an advantage in
the competitive environment. As technology changes the ways organizations manufacture,
transport, communicate, and keep track of information, human resource management
must ensure that the organization has the right kinds of people to meet the new chal-
lenges. High-performance work systems also have been essential in making organizations
strong enough to weather the storm of the recent recession and remain profi table as the
economy slowly begins to expand again. Maintaining a high-performance work system
may include development of training programs, recruitment of people with new skill sets,
and establishment of rewards for such behaviors as teamwork, fl exibility, and learning. In
the next chapter, we will see some of the changes that human resource managers are plan-
ning for, and Chapter 9 examines high-performance work systems in greater detail.

Responsibilities of Human Resource Departments
In all but the smallest organizations, a human resource department is responsible for
the functions of human resource management. On average, an organization has one or
two full-time HR staff persons for every hundred employees on the payroll.6 One way

LO 1-2 Identify the
responsibilities of human
resource departments.

At Intel, the company’s focus is on keeping employees

loyal, trained, and compensated. In turn, there is a low

turnover rate and a high degree of customer satisfaction.

6 PART 1 The Human Resource Environment

to defi ne the responsibilities of HR departments is to think of HR as a business within
the company with three product lines7:

1. Administrative services and transactions—Handling administrative tasks (for exam-
ple, hiring employees and answering questions about benefi ts) effi ciently and with
a commitment to quality. This requires expertise in the particular tasks.

2. Business partner services—Developing effective HR systems that help the organiza-
tion meet its goals for attracting, keeping, and developing people with the skills it
needs. For the systems to be effective, HR people must understand the business so
it can understand what the business needs.

3. Strategic partner—Contributing to the company’s strategy through an understand-
ing of its existing and needed human resources and ways HR practices can give the
company a competitive advantage. For strategic ideas to be effective, HR people
must understand the business, its industry, and its competitors.

Another way to think of HR responsibilities is in terms of specifi c activities.
Table 1.1 details the responsibilities of human resource departments. These responsi-
bilities include the practices introduced in Figure 1.1 plus two areas of responsibility
that support those practices: (1) establishing and administering personnel policies and
(2) ensuring compliance with labor laws.

Although the human resource department has responsibility for these areas,
many of the tasks may be performed by supervisors or others inside or outside the
organization. No two human resource departments have precisely the same roles
because of differences in organization sizes and characteristics of the workforce,
the industry, and management’s values. In some companies, the HR department
handles all the activities listed in Table 1.1. In others, it may share the roles and du-
ties with managers of other departments such as fi nance, operations, or information

Table 1.1
Responsibilities of HR

Sources: Bureau of Labor Statistics, “Human Resources Managers,” Occupational Outlook Handbook,

2014–2015, January 8, 2014,; SHRM-BNA Survey No. 66, “Policy and Practice

Forum: Human Resource Activities, Budgets, and Staffs, 2000–2001,” Bulletin to Management, Bureau of

National Affairs Policy and Practice Series (Washington, DC: Bureau of National Affairs, June 28, 2001).

Analysis and design of work Work analysis; job design; job descriptions
Recruitment and selection Recruiting; job postings; interviewing; testing; coordinating use of

temporary labor
Training and development Orientation; skills training; career development programs
Performance management Performance measures; preparation and administration of

performance appraisals; discipline
Compensation and benefi ts Wage and salary administration; incentive pay; insurance; vacation

leave administration; retirement plans; profi t sharing; stock plans
Employee relations Attitude surveys; labor relations; employee handbooks; company

publications; labor law compliance; relocation and outplacement services
Personnel policies Policy creation; policy communication
Employee data and
information systems

Record keeping; HR information systems; workforce analytics

Compliance with laws Policies to ensure lawful behavior; reporting; posting information;
safety inspections; accessibility accommodations

Support for strategy Human resource planning and forecasting; talent management;
change management

CHAPTER 1 Managing Human Resources 7

technology. In some companies, the HR department actively
advises top management. In others, the department responds
to top-level management decisions and implements staffi ng,
training, and compensation activities in light of company
strategy and policies. And, in a recent trend, some companies
are doing away with their HR departments altogether, prefer-
ring to fl atten their organizational structure and to encourage
department managers and other employees to handle HR is-
sues as they arise.8

Let’s take an overview of the HR functions and some of the
options available for carrying them out. Human resource man-
agement involves both the selection of which options to use and
the activities involved with using those options. Later chapters
of the book will explore each function in greater detail.

Analyzing and Designing Jobs
To produce their given product or service (or set of products or services), companies
require that a number of tasks be performed. The tasks are grouped together in vari-
ous combinations to form jobs. Ideally, the tasks should be grouped in ways that help
the organization operate effi ciently and obtain people with the right qualifi cations to
do the jobs well. This function involves the activities of job analysis and job design.
Job analysis is the process of getting detailed information about jobs. Job design
is the process of defi ning the way work will be performed and the tasks that a given
job requires.

In general, jobs can vary from having a narrow range of simple tasks to having a
broad array of complex tasks requiring multiple skills. At one extreme is a worker on
an assembly line at a poultry-processing facility; at the other extreme is a doctor in an
emergency room. In the past, many companies have emphasized the use of narrowly
defi ned jobs to increase effi ciency. With many simple jobs, a company can easily fi nd
workers who can quickly be trained to perform the jobs at relatively low pay. However,
greater concern for innovation and quality has shifted the trend to using more broadly
defi ned jobs. Also, as we will see in Chapters 2 and 4, some organizations assign work
even more broadly, to teams instead of individuals.

Recruiting and Hiring Employees
Based on job analysis and design, an organization can determine the kinds of employ-
ees it needs. With this knowledge, it carries out the function of recruiting and hiring
employees. Recruitment is the process through which the organization seeks appli-
cants for potential employment. Selection refers to the process by which the orga-
nization attempts to identify applicants with the necessary knowledge, skills, abilities,
and other characteristics that will help the organization achieve its goals. An organiza-
tion makes selection decisions in order to add employees to its workforce, as well as to
transfer existing employees to new positions.

Approaches to recruiting and selection involve a variety of alternatives. Some orga-
nizations may actively recruit from many external sources, such as Internet job post-
ings, online social networks, and college recruiting events. Other organizations may
rely heavily on promotions from within, applicants referred by current employees, and
the availability of in-house people with the necessary skills.

Job Analysis
The process of getting
detailed information
about jobs.

Job Design
The process of defi ning
the way work will be
performed and the tasks
that a given job requires.

The process through
which the organization
seeks applicants for
potential employment.

The process by which the
organization attempts to
identify applicants with
the necessary knowl-
edge, skills, abilities, and
other characteristics that
will help the organization
achieve its goals.

Home Depot and other retail stores use in-store kiosks

similar to the Career Center shown here to recruit

applicants for employment.

8 PART 1 The Human Resource Environment

At some organizations the selection process may focus on specifi c skills, such as
experience with a particular programming language or type of equipment. At other
organizations, selection may focus on general abilities, such as the ability to work as
part of a team or fi nd creative solutions. The focus an organization favors will affect
many choices, from the way the organization measures ability, to the questions it asks
in interviews, to the places it recruits. Table 1.2 lists the top fi ve qualities that employ-
ers say they are looking for in job candidates.

Training and Developing Employees
Although organizations base hiring decisions on candidates’ existing qualifi cations,
most organizations provide ways for their employees to broaden or deepen their
knowledge, skills, and abilities. To do this, organizations provide for employee training
and development. Training is a planned effort to enable employees to learn job-related
knowledge, skills, and behavior. For example, many organizations offer safety training
to teach employees safe work habits. Development involves acquiring knowledge,
skills, and behaviors that improve employees’ ability to meet the challenges of a vari-
ety of new or existing jobs, including the client and customer demands of those jobs.
Development programs often focus on preparing employees for management respon-
sibility. Likewise, if a company plans to set up teams to manufacture products, it might
offer a development program to help employees learn the ins and outs of effective

Decisions related to training and development include whether the organization
will emphasize enabling employees to perform their current jobs, preparing them for
future jobs, or both. An organization may offer programs to a few employees in whom
the organization wants to invest, or it may have a philosophy of investing in the train-
ing of all its workers. Some organizations, especially large ones, may have extensive
formal training programs, including classroom sessions and training programs on-
line. Other organizations may prefer a simpler, more fl exible approach of encouraging
employees to participate in outside training and development programs as needs are
identifi ed. For an example of a company where decisions about training and other
HR practices are aimed at success in a tumultuous global environment, see the “Best
Practices” box.

Managing Performance
Managing human resources includes keeping track of how well employees are perform-
ing relative to objectives such as job descriptions and goals for a particular position.
The process of ensuring that employees’ activities and outputs match the organiza-
tion’s goals is called performance management. The activities of performance
management include specifying the tasks and outcomes of a job that contribute to the

A planned effort to en-
able employees to learn
job-related knowledge,
skills, and behavior.

The acquisition of
knowledge, skills, and
behaviors that improve
an employee’s ability
to meet changes in job
requirements and in
customer demands.

The process of ensuring
that employees’ activi-
ties and outputs match
the organization’s goals.

Table 1.2
Top Qualities Employers
Look For in Employees

1. Teamwork skills
2. Decision making, problem solving
3. Planning, prioritizing tasks
4. Verbal communication skills
5. Gathering/processing information

Source: Based on National Association of Colleges and Employers, “The Candidate Skills/Qualities

Employers Want,” news release, October 10, 2013,


organization’s success. Then various measures are used to compare the employee’s per-
formance over some time period with the desired performance. Often, rewards—the
topic of the next section—are developed to encourage good performance.

The human resource department may be responsible for developing or obtaining
questionnaires and other devices for measuring performance. The performance mea-
sures may emphasize observable behaviors (for example, answering the phone by the
second ring), outcomes (number of customer complaints and compliments), or both.
When the person evaluating performance is not familiar with the details of the job,
outcomes tend to be easier to evaluate than specifi c behaviors.9 The evaluation may
focus on the short term or long term and on individual employees or groups. Typically,
the person who completes the evaluation is the employee’s supervisor. Often employ-
ees also evaluate their own performance, and in some organizations, peers and subor-
dinates participate, too.

Planning and Administering Pay and Benefits
The pay and benefi ts that employees earn play an important role in motivating them.
This is especially true when rewards such as bonuses are linked to the individual’s or
group’s achievements. Decisions about pay and benefi ts can also support other as-
pects of an organization’s strategy. For example, a company that wants to provide an

Anant Jain left a job at a consumer

goods company to work for the fi –

nance department of Abbott Labo-

ratories. It was a step that would

propel him up the management

ranks. Abbott paid for Jain to earn

an MBA, including the skills neces-

sary for making fi nancial forecasts.

Before long, Jain was ready to move

to Dubai in the United Arab Emirates

to take charge of fi nancial planning

for the Middle Eastern region.

Jain’s story is hardly unique. Ab-

bott’s business strategy is based

on hiring talented people and help-

ing them develop their careers as

they gain skills that increase their

value to the company. When new

employees join Abbott, the human

resources department helps them

set short-term goals and map out

a career path. Reviews of employ-

ees’ performance consider whether

the employees are on track. Further

development comes from a combi-

nation of on-the-job learning, train-

ing programs, and support from


Jain was hired by Abbott’s sub-

sidiary in India, but the commitment

to employee growth and develop-

ment is part of Abbott’s global strat-

egy. The company operates in more

than 150 countries. Its industry—

medical devices and (outside the

United States) pharmaceuticals—

undergoes constant change from

innovation and regulation. To stay

at the forefront of knowledge while

remaining profi table in a turbulent

industry, Abbott needs a special

kind of employee who is fl exible,

open to change, and committed to

excellence. Along with careful hiring

and commitment to training, Ab-

bott recruits and retains talent with

efforts such as a mentoring pro-

gram, surveys of employees, and in

the United States, aid in translating

veterans’ military skills into career-

related skills relevant to the civilian



1. How could a company such as

Abbott benefi t from sending an

employee to school to study

fi nance or another business


2. How do you think hiring and

training could work hand-in-

hand to help a company such

as Abbott meet its business


Sources: Company website, “Careers

and Opportunities,”

com, accessed April 8, 2014; Abbott

India Ltd., “About Us,” http://www., accessed April 8, 2014;

Suprotip Ghosh, “What the Doctor

Ordered,” Business Today, August 4,

2013, pp. 78, 80.

How Abbott Laboratories Creates a Healthy Business

Best Pract ices

10 PART 1 The Human Resource Environment

exceptional level of service or be exceptionally inno-
vative might pay signifi cantly more than competitors
in order to attract and keep the best employees. At
other companies, a low-cost strategy requires knowl-
edge of industry norms, so that the company does
not spend more than it must.

Planning pay and benefi ts involves many decisions,
often complex and based on knowledge of a multitude
of legal requirements. An important decision is how
much to offer in salary or wages, as opposed to bo-
nuses, commissions, and other performance-related
pay. Other decisions involve which benefi ts to offer,
from retirement plans to various kinds of insurance
to time off with pay. All such decisions have implica-
tions for the organization’s bottom line, as well as for
employee motivation.

Administering pay and benefi ts is another big re-
sponsibility. Organizations need systems for keeping track of each employee’s earnings
and benefi ts. Employees need information about their health plan, retirement plan,
and other benefi ts. Keeping track of this involves extensive record keeping and report-
ing to management, employees, the government, and others.

Maintaining Positive Employee Relations
Organizations often depend on human resource professionals to help them maintain posi-
tive relations with employees. This function includes preparing and distributing employee
handbooks that detail company policies and, in large organizations, company publications
such as a monthly newsletter or a website on the organization’s intranet. Preparing these
communications may be a regular task for the human resource department.

The human resource department can also expect to handle certain kinds of commu-
nications from individual employees. Employees turn to the HR department for answers
to questions about benefi ts and company policy. If employees feel they have been dis-
criminated against, see safety hazards, or have other problems and are dissatisfi ed with
their supervisor’s response, they may turn to the HR department for help. Members of
the department should be prepared to address such problems.

In organizations where employees belong to a union, employee relations entail ad-
ditional responsibilities. The organization periodically conducts collective bargain-
ing to negotiate an employment contract with union members. The HR department
maintains communication with union representatives to ensure that problems are re-
solved as they arise.

Establishing and Administering Personnel Policies
All the human resource activities described so far require fair and consistent deci-
sions, and most require substantial record keeping. Organizations depend on their
HR department to help establish policies related to hiring, discipline, promotions, and
benefi ts. For example, with a policy in place that an intoxicated worker will be immedi-
ately terminated, the company can handle such a situation more fairly and objectively
than if it addressed such incidents on a case-by-case basis. The company depends on its
HR professionals to help develop and then communicate the policy to every employee,

One reason W.L. Gore is repeatedly named one of the 100 Best

Companies to Work For in the United States is the company’s unusual

corporate hierarchy that dispenses with titles in favor of small teams

and direct communication among employees. How do you think this

boosts morale in the workplace?


so that everyone knows its importance. If anyone violates the rule, a supervisor can
quickly intervene—confi dent that the employee knew the consequences and that any
other employee would be treated the same way. Not only do such policies promote fair
decision making, but they also promote other objectives, such as workplace safety and
customer service.

Developing fair and effective policies requires strong decision-making skills, the abil-
ity to think ethically, and a broad understanding of business activities that will be covered
by the policies. For more ideas on writing HR policies, see “HR How To.” In addition,
for employees to comply with policies, they have to know and understand the policies.
Therefore, human resource management requires the ability to communicate through
a variety of channels. Human resource personnel may teach policies by giving presenta-
tions at meetings, posting documents online, writing e-mail messages, setting up social-
media pages for employees, and in many other ways.

Managing and Using Human Resource Data
All aspects of human resource management require careful and discreet record keep-
ing, from processing job applications, to performance appraisals, benefi ts enrollment,
and government-mandated reports. Handling records about employees requires
accuracy as well as sensitivity to employee privacy. Whether the organization keeps re-
cords in fi le cabinets or on a sophisticated computer information system, it must have

Effective policies make it clear to

employees what the organization

requires. Policies should be easily

understandable and relevant to em-

ployees. To write effective policies,

apply the following guidelines:

• Decide whether a policy is

needed for a situation. For exam-

ple, does the law require a pol-

icy? Does behavior by employees

or managers suggest that they

need guidance? What would lead

to better outcomes—a consistent

standard or fl exibility?

• Find out whether any legal

requirements affect the policy.

For example, hiring and pro-

motion decisions must meet

legal requirements for avoiding


• Consult with experts to be sure

the needs of the situation are

clear. Experts might include

employees, managers, and the

company’s legal advisers.

• Be specifi c about the policy’s

purpose, the people it applies

to, and the actions to take or

avoid. Avoid jargon, and defi ne

any terms employees may not

fully understand.

• Imagine scenarios where the pol-

icy might come into play. Make

sure the way the policy applies in

each situation is clear and appro-

priate, revising it if necessary.

• Tell where employees can ask

questions or look up answers.


1. Why do you think it is important

to tell employees the purpose of

a policy?

2. Suppose some employees are

coming to work dressed in a

way that distracts others. How

could writing a dress code

policy help in this situation?

If you were a manager, would

you rather handle the situation

by referring to a policy or

discussing a specifi c employee’s

clothing choices? Why?

Sources: HR Council for the Nonprofi t

Sector, “HR Policies and Employment Leg-

islation,” HR Toolkit,,

accessed April 8, 2014; Susan M. Heath-

fi eld, “How to Write a Policy,”

Human Resources, http://humanresources., accessed April 8, 2014; Susan

M. Heathfi eld, “How to Develop a Policy,” Human Resources, http://hu-, accessed April

8, 2014; Suzanne Lucas, “Policies Never

Solve People Problems,” Inc., August 28,


Writing Effective HR Policies

HR How To

12 PART 1 The Human Resource Environment

methods for ensuring accuracy and for balancing privacy concerns with easy access for
those who need information and are authorized to see it.

Thanks to computer tools, employee-related information is not just an administra-
tive responsibility; it also can be the basis for knowledge that gives organizations an
edge over their competitors. Data about employees can show, for example, which of
the company’s talent has the most promise for future leadership, what kinds of em-
ployees tend to perform best in particular positions, and in which departments the
need for hiring will be most pressing. To use the data for answering questions such as
these, many organizations have set up human resource information systems. They may
engage in workforce analytics, which is the use of quantitative tools and scientifi c
methods to analyze data from human resource databases and other sources to make
evidence-based decisions that support business goals. Chapter 2 will take a closer look
at how developments in technology are enabling more sophisticated analysis of em-
ployee data to support decision making.

Ensuring Compliance with Labor Laws
As we will discuss in later chapters, especially Chapter 3, the government has many laws
and regulations concerning the treatment of employees. These laws govern such mat-
ters as equal employment opportunity, employee safety and health, employee pay and
benefi ts, employee privacy, and job security. Government requirements include fi ling
reports and displaying posters, as well as avoiding unlawful behavior. Most managers
depend on human resource professionals to help them keep track of these requirements.

Ensuring compliance with laws requires that human resource personnel keep watch
over a rapidly changing legal landscape. For example, the increased use of and access to
electronic databases by employees and employers suggest that in the near future leg-
islation will be needed to protect employee privacy rights. Currently, no federal laws
outline how to use employee databases in such a way as to protect employees’ privacy
while also meeting employers’ and society’s concern for security.

Lawsuits that will continue to infl uence HRM practices concern job security. Be-
cause companies are forced to close facilities and lay off employees because of eco-
nomic or competitive conditions, cases dealing with the illegal discharge of employees
have increased. The issue of “employment at will”—that is, the principle that an em-
ployer may terminate employment at any time without notice—will be debated. As the
age of the overall workforce increases, as described in the next chapter, the number
of cases dealing with age discrimination in layoffs, promotions, and benefi ts will likely
rise. Employers will need to review work rules, recruitment practices, and performance
evaluation systems, revising them if necessary to ensure that they do not falsely com-
municate employment agreements the company does not intend to honor (such as
lifetime employment) or discriminate on the basis of age.

Supporting the Organization’s Strategy
At one time, human resource management was primarily an administrative function.
The HR department focused on fi lling out forms and processing paperwork. As more
organizations have come to appreciate the signifi cance of highly skilled human re-
sources, however, many HR departments have taken on a more active role in support-
ing the organization’s strategy. As a result, today’s HR professionals need to understand
the organization’s business operations, project how business trends might affect the
business, reinforce positive aspects of the organization’s culture, develop talent for pres-
ent and future needs, craft effective HR strategies, and make a case for them to top

Workforce Analytics
The use of quantita-
tive tools and scientifi c
methods to analyze
data from human re-
source databases and
other sources to make
evidence-based deci-
sions that support busi-
ness goals.


management. Evidence for greater involvement in strategy comes from interviews with
fi nance and HR executives who say they are more interested than ever in collaborating
to strengthen their companies.10 Finance leaders can see that employees are a major
budget item, so they want to make sure they are getting the best value for that expense.
HR leaders, for their part, are learning to appreciate the importance of using quantita-
tive tools to measure performance.

An important element of this responsibility is human resource planning, identify-
ing the numbers and types of employees the organization will require in order to meet
its objectives. Using these estimates, the human resource department helps the organi-
zation forecast its needs for hiring, training, and reassigning employees. Planning also
may show that the organization will need fewer employees to meet anticipated needs.
In that situation, human resource planning includes how to handle or avoid layoffs.
Human resource planning provides important information for talent management—
a systematic, planned effort to attract, retain, develop, and motivate highly skilled em-
ployees and managers. When managers are clear about the kinds of people they will
need to achieve the organization’s goals, talent management combines recruiting, selec-
tion, training, and motivational practices to meet those needs. Approaching these tasks
in terms of talent management is one way HR managers are making the link to orga-
nizational strategy. At Zeno Group, a Chicago public relations fi rm, CFO Tony Blasco
has collaborated with the HR manager to identify people to hire as future strategic
needs arise. Together, says Blasco, they are planning for how future hires will “further
our ambitious growth goals.”11 Unfortunately, as described in the “HR Oops!” box, this
commitment to talent management has yet to catch on at many organizations.

As part of its strategic role, one of the key contributions HR can make is to engage
in evidence-based HR. Evidence-based HR refers to demonstrating that human re-
source practices have a positive infl uence on the company’s profi ts or key stakeholders

Human Resource
Identifying the numbers
and types of employ-
ees the organization
will require to meet its

Talent Management
A systematic, planned
effort to attract, retain,
develop, and motivate
highly skilled employees
and managers.

Evidence-Based HR
Collecting and using data
to show that human re-
source practices have a
positive infl uence on the
company’s bottom line or
key stakeholders.

“We don’t have time for it.” At least,

that seems to be the thinking at

many companies.

Many managers agree that it

sounds wise to plan for the kinds of

people needed to carry out the orga-

nization’s strategy, just as they would

plan for every other resource. And it

makes sense that managers would

set goals for and measure the suc-

cess of employee selection, training,

performance feedback, and retention.

However, when the consult-

ing fi rm Right Management sur-

veyed hundreds of managers, the

researchers found that only 12%

have established and implemented

a strategy for talent management.

Companies are much more likely to

treat HR activities as separate pro-

cesses disconnected from business

objectives. In spite of that, about

half the managers claimed that their

company’s leaders consider talent

management a top priority. Even

worse off may be the companies

where 38% of managers said talent

management is not a priority.


1. Why do you suppose half

the managers say talent

management is important at

their company but only 12%

say their company is doing it?

In other words, what is missing

when people fail to do what they

say is important?

2. How might a company that

uses talent management gain

an advantage over a competitor

that treats HR tasks as unrelated


Sources: Toni Hodges DeTuncq and

Lynn Schmidt, “Examining Integrated

Talent Management,” T+D, September

2013, pp. 31–35; Bloomberg BNA,

“Study Finds Little Consensus on Talent

Management,” Report on Salary Sur-

veys, March 1, 2013, http://news.bna.

com; Right Management, “The Struggle

over Talent Management Strategy,”

Research Highlights, 2012, http://www.

“Talent Management Sounds Great, but . . .”

HR Oops!

14 PART 1 The Human Resource Environment

(employees, customers, community, shareholders). This practice helps show that the
money invested in HR programs is justifi ed and that HRM is contributing to the com-
pany’s goals and objectives. For example, data collected on the relationship between
HR practices and productivity, turnover, accidents, employee attitudes, and medical
costs may show that HR functions are as important to the business as fi nance, account-
ing, and marketing.

Often, an organization’s strategy requires some type of change—for example, add-
ing, moving, or closing facilities; applying new technology; or entering markets in other
regions or countries. Common reactions to change include fear, anger, and confusion.
The organization may turn to its human resource department for help in managing the
change process. Skilled human resource professionals can apply knowledge of human
behavior, along with performance management tools, to help the organization manage
change constructively.

Another strategic challenge tackled by a growing number of companies is how
to seek profi ts in ways that communities, customers, and suppliers will support over
the long run. This concern is called sustainability—broadly defi ned as an organiza-
tion’s ability to profi t without depleting its resources, including employees, natural
resources, and the support of the surrounding community. Success at sustainability
comes from meeting the needs of the organization’s stakeholders, all the parties
who have an interest in the organization’s success. Typically, an organization’s stake-
holders include shareholders, the community, customers, and employees. Sustainable
organizations meet their needs by minimizing their environmental impact, providing
high-quality products and services, ensuring workplace safety, offering fair compensa-
tion, and delivering an adequate return to investors. Sustainability delivers a strategic
advantage when it boosts the organization’s image with customers, opens access to new
markets, and helps attract and retain talented employees. In an organization with a sus-
tainable strategy, HR departments focus on employee development and empowerment
rather than short-term costs, on long-term planning rather than smooth turnover and
outsourcing, and on justice and fairness over short-term profi ts.12 At IBM, human
resource management sustainably addresses the company’s global presence and drive
for innovation in several ways. Diversity training helps people work productively in
teams regardless of ethnicity, gender, or other differences. Global Enablement Teams
address employee development needs in various regions by sending employees from
highly developed nations to mentor employees in developing nations; the mentors
teach business skills while learning about these high-potential markets. And IBM’s
Smarter Planet projects to lower resource use and pollution attract talented innova-
tors; job candidates are excited about the chance to be part of this effort.13

Skills of HRM Professionals
With such varied responsibilities, the human resource department needs to bring to-
gether a large pool of skills. The Society of Human Resource Management (SHRM)
has defi ned sets of behaviors and skills associated with success, grouping these into nine
categories it calls HR success competencies: relationship management, ethical practice,
HR expertise, business acumen, critical evaluation, diversity and inclusion, leadership
and navigation, consultation, and communication.14 Figure 1.3 describes the compe-
tencies and provides example behaviors that HR professionals should demonstrate as
part of their growth and development.15 Members of the HR department need to be:

1. Credible activists—Are so well respected in the organization that they can infl uence
the positions taken by managers. HR professionals who are competent in this area

An organization’s ability
to profi t without deplet-
ing its resources, includ-
ing employees, natural
resources, and the sup-
port of the surrounding

The parties with an
interest in the com-
pany’s success (typically,
shareholders, the com-
munity, customers, and

LO 1-3 Summarize the
types of skills needed
for human resource

CHAPTER 1 Managing Human Resources 15

have the most infl uence over the organization’s success, but to build this compe-
tency, they have to gain credibility by mastering all the others.

2. Cultural and change steward—Understands the organization’s culture and helping
to build and strengthen or change that culture by identifying and expressing its
values through words and actions.

3. Talent manager/organizational designer—Knows the ways that people join the orga-
nization and move to different positions within it. To do this effectively requires
knowledge of how the organization is structured and how that structure might be
adjusted to help it meet its goals for developing and using employees’ talents.

4. Strategic architect—Requires awareness of business trends and an understanding of how
they might affect the business, as well as opportunities and threats they might present.

for HR


HR Expertise & Practice
Apply HRM principles
to contribute to
company success

Manage interactions
with others with goal
of providing service
and organizational

Provide guidance
and advice to

Direct initiatives and
processes within
the company


Create a free flow
of communication
among stakeholders
at all levels to produce
meaningful outcomes

Remains current on
laws and regulations;
develops and uses
best practices

Provides customer service
to stakeholders; ensures
strategic alignment
between HR and overall

Demonstrates ability
to understand business
operations and functions;
understands metrics and
their relationship to
business success

Serves as people
management expert;
develops consultative
and coaching skills

Fosters collaboration;
exhibits behaviors
consistent with company

Provides constructive
feedback; helps managers
communicate effectively

Manage human
resources within
and across

Global & Cultural

Ethical Practice
Integrate core values,
integrity, and

Critical Evaluation
Interpret pertinent
information skillfully
to determine impact
of business decisions

Business Acumen
Able to understand
business functions
and metrics on
company and industry

Embraces inclusion;
works effectively
with diverse cultures

acts with personal
and professional

Gathers critical
information; makes
sound decisions
based on evaluation
of information

Figure 1.3
Competencies and Example Behaviors for HR Professionals

Source: Based on Society for Human Resource Management, “SHRM Elements for HR Success,”, accessed May 13, 2014.


A person with this capability spots ways effective management of human resources
can help the company seize opportunities and confront threats to the business.

5. Business allies—Know how the business makes money, who its customers are, and
why customers buy what the company sells.

6. Operational executors—At the most basic level carry out particular HR functions
such as handling the selection, training, or compensation of employees and com-
municating through a variety of media. All of the other HR skills require some
ability as operational executor, because this is the level at which policies and trans-
actions deliver results by legally, ethically, and effi ciently acquiring, developing,
motivating, and deploying human resources.

All of these competencies require interpersonal skills. Successful HR professionals must
be able to share information, build relationships, and infl uence persons inside and outside
the company. The “Did You Know?” box suggests some of the challenges involved.

Did You Know?

Executives want HR leaders to play

a key role in strategic planning,

according to a survey of chief ex-

ecutive offi cers and chief fi nancial

offi cers in the United States and

Europe. But while over half of CEOs

think HR is fulfi lling that role, few

CFOs agree. This is partly because

the fi nancial offi cers want to mea-

sure hard numbers, and many HR

executives are not delivering that

quantitative view of performance.


What skills or competencies could

help HR managers build stronger

relationships with chief fi nancial

offi cers?

Sources: IBM, “Essential Partnerships

for HR,” IBM and Oracle, http://www, accessed April 8, 2014; “New

Study Details Ways Human Resources

Executives Can Take a Bigger Role

in Driving Growth,” Market Wired,

February 11, 2013, http://www; IBM and Oracle,

“CFO Perspectives: How HR Can Take

On a Bigger Role in Driving Growth,”

Economist Intelligence Unit, 2012,

CEO and CFO Relationships with HRM

Consider HR a key
player in strategic

Say HR does a good
job of understanding
the HR needs of
the business

Want HR as a key
player in strategic

100%0% 20% 40% 60% 80%


CHAPTER 1 Managing Human Resources 17

HR Responsibilities of Supervisors
Although many organizations have human resource departments, HR activities are by
no means limited to the specialists who staff those departments. In large organizations,
HR departments advise and support the activities of the other departments. In small
organizations, there may be an HR specialist, but many HR activities are carried out
by line supervisors. Either way, non-HR managers need to be familiar with the basics
of HRM and their role in managing human resources.

At a start-up company, the fi rst supervisors are the company’s founders. Not all
founders recognize their HR responsibilities, but those who do have a powerful advan-
tage. When Rusty George fi rst founded his marketing fi rm, Rusty George Creative, in
Tacoma, Washington, hiring was just something he did to keep up with rising demand.
As he signed on law fi rms, museums, and other clients, he added staff to take care of
them. Then the economy took a dive, and all the clients decided to do without the
fi rm’s services. George had no way to continue paying all 17 of his employees. He laid
off 9 of them. When business started to build again, George knew he had to be more
methodical about hiring. He now analyzes all the costs associated with a new hire,
including parking spaces, equipment, and even coffee. Then he looks at the additional
revenue a particular position can generate. Only when those numbers show that a new
hire will be profi table does George start contacting candidates who have submitted
their résumés. Based on a painful lesson, George has learned to align his hiring prac-
tices with his business requirements.16

As we will see in later chapters, supervisors typically have responsibilities related to
all the HR functions. Figure 1.4 shows some HR responsibilities that supervisors are
likely to be involved in. Organizations depend on supervisors to help them determine
what kinds of work need to be done (job analysis and design) and how many employees
are needed (HR planning). Supervisors typically interview job candidates and partici-
pate in the decisions about which candidates to hire. Many organizations expect su-
pervisors to train employees in some or all aspects of the employees’ jobs. Supervisors
conduct performance appraisals and may recommend pay increases. And, of course, su-
pervisors play a key role in employee relations because they are most often the voice of
management for their employees, representing the company on a day-to-day basis. In
all these activities, supervisors can participate in HRM by taking into consideration the
ways that decisions and policies will affect their employees. Understanding the prin-
ciples of communication, motivation, and other elements of human behavior can help
supervisors inspire the best from the organization’s human resources.

LO 1-4 Explain the role
of supervisors in human
resource management.

Figure 1.4
Supervisors’ Involve-

ment in HRM: Common

Areas of Involvement

18 PART 1 The Human Resource Environment

Ethics in Human Resource Management
Whenever people’s actions affect one another, ethical issues arise, and business deci-
sions are no exception. Ethics refers to fundamental principles of right and wrong;
ethical behavior is behavior that is consistent with those principles. Business decisions,
including HRM decisions, should be ethical, but the evidence suggests that is not
always what happens. Recent surveys indicate that the general public and managers
do not have positive perceptions of the ethical conduct of U.S. businesses. For ex-
ample, in a Gallup poll on honesty and ethics in 21 professions, only 18% of Americans
rated business executives high or very high; close to twice as many rated them low or
very low. And within organizations, a recent survey of workers found that 45% had
witnessed some form of unethical conduct at their workplace.17

Many ethical issues in the workplace involve human resource management. The re-
cent fi nancial crisis, in which the investment bank Lehman Brothers collapsed, insurance
giant AIG survived only with a massive infusion of government funds, and many observers
feared that money for loans would dry up altogether, had many causes. Among these, some
people believe, were ethical lapses related to compensation and other HR policies.

Employee Rights
In the context of ethical human resource management, HR managers must view em-
ployees as having basic rights. Such a view refl ects ethical principles embodied in the
U.S. Constitution and Bill of Rights. A widely adopted understanding of human rights,
based on the work of the philosopher Immanuel Kant, as well as the tradition of the
Enlightenment, assumes that in a moral universe, every person has certain basic rights:

• Right of free consent—People have the right to be treated only as they knowingly
and willingly consent to be treated. An example that applies to employees would be
that employees should know the nature of the job they are being hired to do; the
employer should not deceive them.

• Right of privacy—People have the right to do as they wish in their private lives, and
they have the right to control what they reveal about private activities. One way an
employer respects this right is by keeping employees’ personal records confi dential.

• Right of freedom of conscience—People have the right to refuse to do what violates
their moral beliefs, as long as these beliefs refl ect commonly accepted norms. A
supervisor who demands that an employee do something that is unsafe or envi-
ronmentally damaging may be violating this right if the task confl icts with the em-
ployee’s values. (Such behavior could be illegal as well as unethical.)

• Right of freedom of speech—People have the right to criticize an organization’s ethics
if they do so in good conscience and their criticism does not violate the rights of
individuals in the organization. Many organizations address this right by offering
hot lines or policies and procedures designed to handle complaints from employees.

• Right to due process—If people believe their rights are being violated, they have the
right to a fair and impartial hearing. As we will see in Chapter 3, Congress has ad-
dressed this right in some circumstances by establishing agencies to hear complaints
when employees believe their employer has not provided a fair hearing. For exam-
ple, the Equal Employment Opportunity Commission may prosecute complaints of
discrimination if it believes the employer did not fairly handle the problem.

One way to think about ethics in business is that the morally correct action is the one
that minimizes encroachments on and avoids violations of these rights.

Organizations often face situations in which the rights of employees are affected.
In particular, the right of privacy of health information has received much attention

LO 1-5 Discuss
ethical issues in human
resource management.

The fundamental princi-
ples of right and wrong.

CHAPTER 1 Managing Human Resources 19

in recent years. Computerized record keeping and computer networks have greatly
increased the ways people can gain (authorized or unauthorized) access to records
about individuals. Health-related records can be particularly sensitive. HRM responsi-
bilities include the ever-growing challenge of maintaining confi dentiality and security
of employees’ health information as required by the Health Insurance Portability and
Accountability Act (HIPAA).

Standards for Ethical Behavior
Ethical, successful companies act according to four principles.18 First, in their relation-
ships with customers, vendors, and clients, ethical and successful companies emphasize
mutual benefi ts. Second, employees assume responsibility for the actions of the com-
pany. Third, such companies have a sense of purpose or vision that employees value
and use in their day-to-day work. Finally, they emphasize fairness; that is, another
person’s interests count as much as their own.

Executives at 3M realized the company needed to recommit to principles such as
these when the company was trying for a comeback after several diffi cult years. In
an effort to improve profi ts, past leadership had focused on cutting costs, and 3M’s
reputation as an innovator suffered from neglect. When George W. Buckley took the
chief executive’s job, 3M intended to refocus employees on growth and innovation.
This would require changes in employees’ actions and mind-sets. Angela S. Lalor,
3M’s senior vice president of human resources, explained to the leadership team that
successful change on that scale would require a high level of employee trust. In par-
ticular, employees would need to feel they trusted their immediate supervisors. So the
company’s HR professionals focused on creating plans to build trusting relationships
by ensuring that supervisors treated employees fairly. The company also sought to en-
gage employees by ensuring they were aware of and connected to its efforts to operate
sustainably by reducing pollution, providing grants for community projects, and pro-
moting employee health. Since 3M launched the effort, employee surveys have shown
higher levels of trust in managers and engagement with the company. The company’s
fi nancial performance improved as well.19

For human resource practices to be considered ethical, they must satisfy the three
basic standards summarized in Figure 1.5.20 First, HRM practices must result in the
greatest good for the largest number of people. Second, employment practices must

Figure 1.5
Standards for Identify-

ing Ethical Practices

20 PART 1 The Human Resource Environment

respect basic human rights of privacy, due process, consent, and free speech. Third,
managers must treat employees and customers equitably and fairly. At 3M, the human
resources department helped supervisors treat employees fairly by educating the su-
pervisors in what kinds of conduct employees consider fair—for example, commu-
nicating in ways that are honest, open, and realistic. The training also emphasized
the importance of listening carefully to employees and asking questions rather than
dictating solutions. HR staffers provided supervisors with information about how 3M
establishes pay rates so the supervisors themselves can share the information with
employees and demonstrate that the decisions are based on fair criteria.21

Careers in Human Resource Management
There are many different types of jobs in the HRM profession. Figure 1.6 shows se-
lected HRM positions and their salaries. The salaries vary depending on education and
experience, as well as the type of industry in which the person works. As you can see
from Figure 1.6, some positions involve work in specialized areas of HRM such as re-
cruiting, compensation, or employee benefi ts. Usually, HR generalists make between
$50,000 and $80,000, depending on their experience and education level. General-
ists usually perform the full range of HRM activities, including recruiting, training,
compensation, and employee relations.

The vast majority of HRM professionals have a college degree, and many also have
completed postgraduate work. The typical fi eld of study is business (especially human
resources or industrial relations), but some HRM professionals have degrees in the

LO 1-6 Describe
typical careers in human
resource management.

HR service center representative, entry level

Benefits analyst, intermediate level

Campus recruiter

Human resource assistant, entry level

HRIS specialist

Human resources manager

Training director

Director of human resources


$40,000 $80,000 $120,000 $160,000$0


Figure 1.6
Median Salaries for HRM Positions

Source: Data from Salary Wizard,,, accessed April 8, 2014.


social sciences (economics or psychology), the humanities, and law programs. Those
who have completed graduate work have master’s degrees in HR management, busi-
ness management, or a similar fi eld. This is important because to be successful in HR,
you need to speak the same language as people in the other business functions. You
have to have credibility as a business leader, so you must be able to understand fi nance
and to build a business case for HR activities.

HR professionals can increase their career opportunities by taking advantage of
training and development programs. These may include taking courses toward a mas-
ter’s degree, accepting assignments to spend time observing, or “shadowing,” a man-
ager in another department, or taking a position in another department to learn more
about the business. When Michael Brady was a district HR manager for Walmart, he
would travel with the operations manager for his region. Each manager was interested
in learning more about the other’s perspective on the business, and they eventually
learned enough to help one another spot issues to address. Marian M. Graddick-Weir
started her HR career as a generalist at AT&T. Her supervisor asked her to serve as
chief of staff to the company’s vice chairman. The position was heavy on clerical duties
but gave Graddick-Weir access to the kinds of decisions and conversations that take
place at the highest level of the organization. Graddick-Weir paid attention and then
took that knowledge with her when she returned to the HR department. Today she is
executive vice president of human resources at Merck & Co.22

Some HRM professionals have a professional certifi cation in HRM, but many more
are members of professional associations. The primary professional organization for
HRM is the Society for Human Resource Management (SHRM). SHRM is the world’s
largest human resource management association, with more than 250,000 professional

Members of the Society of Human

Resource Management can connect

with the organization’s resources and

with one another online, thanks to

several applications of social media:

• SHRM has a Twitter account

(, so

members can sign up for the

group’s Twitter feed.

• At the SHRM website, the SHRM

Blog (

gives members a place to read

the organization’s latest thoughts

and get involved in the conver-

sation by reading and posting


• Also at the website, SHRM has

established its own members-

only social network called SHRM

Connect (http:// community Those who join the

network can meet other SHRM

members online and trade ideas.

SHRM’s features include search

capabilities and e-mail alerts so

members can look up and be

aware of discussions on topics

of interest.

• Another way to participate in

member discussions at the

website is to visit HR Talk (http://, a discussion

forum where members can post

questions and answers in vari-

ous HR subject areas.

• SHRM has a members-only

group on LinkedIn, the ca-

reers networking site. The

SHRM Group has more than

2,000 members.


1. Do you use Twitter or LinkedIn?

Would you be interested in

seeing career-related information

in social media such as these?

2. How might participating in online

discussion groups help you in

your career?

Sources: Based on Henry G. Jackson,

“Embracing Social Media,” HR Maga-

zine, December 2011, p. 10; Society for

Human Resource Management, “SHRM

Membership: Do More with More,” mem-

ber benefi ts guide,,

accessed April 8, 2014; SHRM, “HR Talk,”, accessed April 8,

2014; SHRM, “SHRM Connect,” http:

//, accessed

April 8, 2014; “SHRM Group,” LinkedIn,, accessed

April 8, 2014.

SHRM’s Social-Media Presence

HRM Social

22 PART 1 The Human Resource Environment

I. The Human Resource Environment
1. Managing Human Resources
2. Trends in Human Resource Management
3. Providing Equal Employment Opportunity and a Safe Workplace
4. Analyzing Work and Designing Jobs
II. Acquiring, Training, and Developing Human Resources
5. Planning for and Recruiting Human Resources
6. Selecting Employees and Placing Them in Jobs
7. Training Employees
8. Developing Employees for Future Success
III. Assessing and Improving Performance
9. Creating and Maintaining High-Performance Organizations
10. Managing Employees’ Performance
11. Separating and Retaining Employees
IV. Compensating Human Resources
12. Establishing a Pay Structure
13. Recognizing Employee Contributions with Pay
14. Providing Employee Benefits
V. Meeting Other HR Goals
15. Collective Bargaining and Labor Relations
16. Managing Human Resources Globally

Table 1.3
Topics Covered in
This Book

and student members throughout the world. SHRM provides education and informa-
tion services, conferences and seminars, government and media representation, and
online services and publications (such as HR Magazine). You can visit SHRM’s website
to see their services at SHRM also connects with members through
various social-media tools, as described in “HRM Social.”

Organization of This Book
This chapter has provided an overview of human resource management to give you a
sense of its scope. In this book, the topics are organized according to the broad areas
of human resource management shown in Table 1.3. The numbers in the table refer to
the part and chapter numbers.

The remaining chapters in Part 1 discuss aspects of the human resource environment:
trends shaping the fi eld (Chapter 2), legal requirements (Chapter 3), and the work to be
done by the organization, which is the basis for designing jobs (Chapter 4). Part 2 explores
the responsibilities involved in acquiring and equipping human resources for current and
future positions: HR planning and recruiting (Chapter 5), selection and placement of
employees (Chapter 6), training (Chapter 7), and developing (Chapter 8). Part 3 turns to
the assessment and improvement of performance through creation of high-performance
organizations (Chapter 9), performance management (Chapter 10), and appropriate han-
dling of employee separation when the organization determines it no longer wants or
needs certain employees (Chapter 11). Part 4 addresses topics related to compensation:
pay structure (Chapter 12), pay to recognize performance (Chapter 13), and benefi ts
(Chapter 14). Part 5 explores special topics faced by HR managers today: human resource
management in organizations where employees have or are seeking union representation
(Chapter 15) and international human resource management (Chapter 16).

CHAPTER 1 Managing Human Resources 23

Along with examples highlighting how HRM helps a company maintain high per-
formance, the chapters offer various other features to help you connect the principles
to real-world situations. “Best Practices” boxes tell success stories related to the chap-
ter’s topic. “HR Oops!” boxes identify situations gone wrong and invite you to fi nd
better alternatives. “HR How To” boxes provide details about how to carry out a prac-
tice in each HR area. “Did You Know?” boxes are snapshots of interesting statistics
related to chapter topics. Many chapters also include an “HRM Social” box identifying
ways that human resource professionals are applying social media to help their organi-
zations excel in the fast-changing modern world.


LO 1-1 Defi ne human resource management, and explain
how HRM contributes to an organization’s performance.

• Human resource management consists of an organi-
zation’s policies, practices, and systems that infl uence
employees’ behavior, attitudes, and performance.

• HRM infl uences who works for an organization
and how.

• Well-managed human resources can be a source of
sustainable competitive advantage by contributing
to quality, profi ts, and customer satisfaction.

LO 1-2 Identify the responsibilities of human resource

• Analyze and design jobs.
• Recruit and select employees.
• Equip employees by training and developing

• Through performance management, ensure that

employees’ activities and outputs match the orga-
nization’s goals.

• Plan and administer pay and employee benefi ts.



One of the largest relief organizations in the United States

recently struggled with HR policy. As a religious (Christian)-

based organization, it may use religion as the basis for

employment standards. This organization has developed

policies in an employee conduct manual intended to en-

sure that employees demonstrate the beliefs and morals

of its founders’ faith. Among those requirements is “absti-

nence before marriage and fi delity in marriage.”

The problem for the organization’s board of directors

was that some states—including Washington, where

it is headquartered—have made same-sex marriage

legal, so the organization could potentially receive job

applications from people who have married a partner of

the same sex. To respect the values of employees and

donors who hold traditional religious views, the organi-

zation had been denying them employment.

The board decided that religious views in the United

States had become diverse enough that it should begin

to allow people in same-sex marriages to work for the

organization. However, when the board announced the

decision, many donors became upset; by some re-

ports, about 2,000 child sponsorships were ended. The

board quickly reversed its decision. The organization’s

president expressed regret for not having consulted

more with its community of supporters.

The organization tries to set high ethical standards

for its employees. Neither the decision to allow hiring

of workers in same-sex marriages nor the reversal of

that decision violated the law as it applies to a religious-

based organization. However, it did create embarrassing

publicity for an organization that was trying to broaden

its appeal and keep the focus on charity.


1. In this situation, whose rights were affected? What

basic rights were at stake?

2. How well do you think the organization applied

standards for ethical behavior? Why?

Sources: Sarah Pulliam Bailey, “Analysis: World Vision’s Gay

Marriage Flip-Flop Reflects Evangelical Angst as Culture

Shifts,” Salt Lake Tribune, March 28, 2014, http://www.sltrib

.com; Joel Connelly, “World Vision, in Reversal, Won’t Hire

Christians in Same-Sex Marriages,” Seattle Post-Intelligencer,

March 26, 2014,; Sarah Pulliam

Bailey, “World Vision to Recognize Employees’ Same-Sex

Marriages,” Washington Post, March 25, 2014, http://www

24 PART 1 The Human Resource Environment

• Engage in employee relations—for example, com-
munications and collective bargaining.

• Establish and administer personnel policies and
keep records.

• Help ensure compliance with labor laws.
• Support the development and execution of corpo-

rate strategy.

LO 1-3 Summarize the types of skills needed for human
resource management.

• Communication, negotiation, and team develop-
ment skills.

• Decision-making skills based on HR knowledge
and company business.

• Leadership skills for managing confl ict and change.
• Technical skills including knowledge of current

techniques, applicable laws, and computer systems.

LO 1-4 Explain the role of supervisors in human resource

• Help analyze work.
• Interview job candidates and participate in selec-

tion decisions.
• Provide employee training.
• Conduct performance appraisals.

• Recommend pay increases.
• Represent the company to their employees.

LO 1-5 Discuss ethical issues in human resource

• Should make decisions that result in the greatest
good for the largest number of people.

• Should respect basic rights of privacy, due process,
consent, and free speech.

• Should treat others equitably and fairly.
• Should recognize ethical issues that arise in areas

such as employee privacy, protection of employee
safety, and fairness in employment practices.

LO 1-6 Describe typical careers in human resource

• Careers may involve specialized work (e.g.,
recruiting, training, or labor relations).

• Others may be generalists, performing a range of

• A college degree in business or social sciences
usually is required.

• People skills must be balanced with attention to
details of law and knowledge of business.


human resource management
(HRM), 3

human capital, 4
job analysis, 7
job design, 7
recruitment, 7

selection, 7
training, 8
development, 8
performance management, 8
workforce analytics, 12
human resource planning, 13

talent management, 13
evidence-based HR, 13
sustainability, 14
stakeholders, 14
ethics, 18


1. How can human resource management contribute to
a company’s success? (LO 1.1)

2. Imagine that a small manufacturing company decides
to invest in a materials resource planning (MRP)
system. This is a computerized information system
that improves effi ciency by automating such work
as planning needs for resources, ordering materials,
and scheduling work on the shop fl oor. The company
hopes that with the new MRP system, it can grow by
quickly and effi ciently processing small orders for a
variety of products. Which of the human resource
functions are likely to be affected by this change? How

can human resource management help the organiza-
tion carry out this change successfully? (LO 1.2)

3. What skills are important for success in human re-
source management? Which of these skills are al-
ready strengths of yours? Which would you like to
develop? (LO 1.3)

4. Traditionally, human resource management practices
were developed and administered by the company’s
human resource department. Line managers are now
playing a major role in developing and implementing
HRM practices. Why do you think non-HR manag-
ers are becoming more involved? (LO 1.4)

CHAPTER 1 Managing Human Resources 25

5. If you were to start a business, which aspects of
human resource management would you want to en-
trust to specialists? Why? (LO 1.3)

6. Why do all managers and supervisors need knowl-
edge and skills related to human resource manage-
ment? (LO 1.4)

7. Federal law requires that employers not discriminate
on the basis of a person’s race, sex, national origin,
or age over 40. Is this also an ethical requirement? A
competitive requirement? Explain. (LO 1.5)

8. When a restaurant employee slipped on spilled soup
and fell, requiring the evening off to recover, the owner

realized that workplace safety was an issue to which
she had not devoted much time. A friend warned the
owner that if she started creating a lot of safety rules
and procedures, she would lose her focus on custom-
ers and might jeopardize the future of the restaurant.
The safety problem is beginning to feel like an ethi-
cal dilemma. Suggest some ways the restaurant owner
might address this dilemma. What aspects of human
resource management are involved? (LO 1.5)

9. Does a career in human resource management, based
on this chapter’s description, appeal to you? Why or
why not? (LO 1.6)

How “Good Things Happen to” Costco
Talking to a reporter, Costco’s chief executive, Craig
Jelinek, had a habit of stating the conditions in which
“good things will happen to you.” To summarize his
retail company’s strategy, Jelinek said, “As long as you
continue to take care of the customer, take care of em-
ployees, and keep your expenses in line, good things are
going to happen to you.” Indeed, good things have hap-
pened to Costco, which stands out from other retailers
for remaining profi table and avoiding layoffs during the
Great Recession and beyond.

Although Costco has an online presence, the com-
pany is mainly a chain of warehouse stores that charge
consumers a membership fee to enjoy rock-bottom
prices. By ordering in bulk packages, displaying goods
on pallets and steel shelving, and setting markups just a
sliver over costs, Costco lures shoppers with low prices.
It makes most of its profi ts from selling memberships.
Consumers like the arrangement: the renewal rate is
nearly 90%.

Costco’s commitment to shaving expenses carries
over to its plain headquarters but not to the way it
treats employees. Since the 1980s, Costco has in-
creased pay rates every three years, keeping com-
pensation above industry norms. Even during the
fi nancial crisis in 2009, Costco announced raises.
On average, a Costco worker earns $20.89 an hour,
compared with $12.67 for an hourly employee work-
ing full-time for Walmart, which runs Costco’s chief
competitor, Sam’s Club. In addition, Costco reported
that 88% of its employees had company-sponsored
health insurance plans, compared with Walmart’s
statement saying “more than half” of employees were
covered. Costco also has resisted layoffs. For example,
as other companies downsized store workforces and
installed self-checkout lanes, Costco determined that

its employees were more effi cient and better suited to
its customer service goals.

These decisions assume that satisfi ed employees will
build a stronger company by being more committed
to the organization and less likely to quit. Costco has a
low rate of employee turnover (the percentage who quit
each year): 5% among employees with at least a year
on the job, or about one-fourth the industry average.
The company therefore spends less to recruit and train
new employees, and employees have more experience
they can apply to providing great service. Costco also
uses store employees as its main source of management
talent. It pays tuition for hourly workers to pursue their
education and move up the corporate ladder.

Costco’s executives credit the treatment of employ-
ees with helping the company thrive. Its sales and stock
price have been surging over the past few years. The
company has been expanding in Europe and Asia, where
it hopes its commitment to employee well-being will
serve the company equally well.

1. In what ways does Costco meet the criteria for a

“sustainable” organization?
2. What would you describe as Costco’s basic strategy

as a retailer? How do its human resource practices
support that strategy?

Sources: Elizabeth A. Harris, “Walmart Will Lay Off 2,300 Sam’s Club
Workers,” New York Times, January 24, 2014,; Caroline
Fairchild, “Bulking Up Abroad,” Fortune, January 16, 2014, http://money; Brad Stone, “Costco CEO Craig Jelinek Leads the Cheapest,
Happiest Company in the World,” Bloomberg Businessweek, June 6, 2013,; Anne Fisher, “A Blueprint for Creating Better
Jobs—and Bigger Profits,” Fortune, December 12, 2013, http://


26 PART 1 The Human Resource Environment

Ingersoll Rand’s Problem-Solving Approach to HRM
When Craig Mundy joined Ingersoll Rand as a human
resources executive, he brought a business perspec-
tive. His approach was welcome at the company, which
makes transportation and building products in support
of a mission to create “comfortable, sustainable and ef-
fi cient environments.” The business’s perspective is one
of solving problems. In construction, for example, be-
yond selling heating and ventilation systems, it aims to
improve air quality and comfort while reducing energy
consumption. Likewise, in looking at its own opera-
tions, Ingersoll Rand has harnessed employee creativity
to improve energy effi ciency.

In contrast, Mundy knew that the focus of human re-
source management has often been on tasks more than
on solutions. At a previous employer, Mundy had man-
aged business projects. There, the company’s HR staff
was not always as helpful as he would have wished. Ap-
plying the experience, he came to Ingersoll Rand with
determination to solve business problems.

Mundy started by identifying the strategic priorities of
his business unit. He learned, for example, that Ingersoll
Rand was seeking growth in countries with developing
economies, a goal that required excellent country-level
management. Mundy had the HR team determine how
many country managers the company would need, when
the need for each would arise, and what qualities make
someone an excellent country manager. This informa-
tion formed the basis of goals for supporting international
growth. To achieve the goals, the HR team evaluated tal-
ent inside and outside the company and set up ways to
help employees acquire the needed skills.

Mundy developed this approach into a Talent Solu-
tions framework for addressing challenges facing each
business area. He learned that one region had a problem

with high turnover among sales representatives. Managers
had tried to handle the problem by improving the process
for recruiting new sales reps, but the high turnover con-
tinued. Applying the Talent Solutions framework, the HR
team analyzed the pattern of turnover. The analysts found
that turnover was highest after salespeople had been on
the job about two and a half years, and that this was the
point at which they were just becoming productive. The
HR team decided to focus on helping salespeople become
productive faster, so their jobs would become more re-
warding faster. The team studied the entire process of
hiring, training, and retaining employees and set goals for
improvement in each stage of the process. Before long,
salespeople were more engaged, delivered better results,
and were less likely to quit.

Mundy’s focus on business problems and solutions
has improved Ingersoll Rand’s performance. It also has
reshaped the way Ingersoll Rand’s business managers
think about human resource management. Today they see
Mundy’s group as a strategic partner.

1. What important HRM skills has Craig Mundy ap-

plied to his role at Ingersoll Rand?
2. How do talent management and evidence-based HR

support Mundy’s efforts to offer solutions?

Sources: Ingersoll Rand, “Our Culture,”,
accessed April 8, 2014; Ingersoll Rand, “Ingersoll Rand Recognized as One
of the Achievers 50 Most Engaged Workplaces in the United States,” news
release, January 20, 2014,; Ingersoll Rand,
“Ingersoll Rand Changes Segment Reporting to Align with Reorganization
Following Expected Security Spin,” news release, November 6, 2013, http://; Marc Major, “One Step Forward: Driving
Sustainability at Ingersoll Rand,” EHS Today, June 2013, pp. 45–49; J. Craig
Mundy, “Be a Strategic Performance Consultant,” HR Magazine, March 2013.


Managing HR at a Services Firm
Susan K. Dubin describes herself as someone who en-
joys helping others and making her company a positive
place to work. Those attitudes have provided a strong
basis for her successful career in human resource man-
agement. In two different companies, Dubin took on
responsibilities for payroll, training, and employee re-
lations. As she built her experience, she established a
strong working relationship with Danone Simpson, an
insurance agent.

Dubin was impressed with what she saw as Simpson’s
“commitment to client services.” So when Simpson
prepared to open her own insurance services business,
Dubin was interested in signing on. For several years
now, Dubin has been HR director for Montage Insur-
ance Solutions (formerly Danone Simpson Insurance
Services), which operates from offi ces in Woodland
Hills, California. She also answers questions from cli-
ents who call the agency’s HR hotline.


CHAPTER 1 Managing Human Resources 27

Dubin sees herself as contributing to the fastgrow-
ing company’s success. For example, she looks for the
best deals in benefi ts programs in order to have room
in her budget for the little things that contribute to an
employee-friendly workplace: monthly luncheons, raffl e
prizes, and break rooms. That’s a priority, Dubin says,
because employees who are “happy at work” are “more
productive, so everybody wins.” Simpson sees that bal-
ance between nurturing and practicality in Dubin. Ac-
cording to Simpson, Dubin is supportive but also fi rm
in enforcing standards: “She doesn’t put up with any
nonsense . . . but does it in a wonderful way.”

Perhaps the Careers page of the company’s website
puts it best. Besides promoting the agency as an “honest
and hardworking team,” it says simply, “Please be ad-
vised that our organization cares about its employees.”

1. Based on the description in this case, how well would

you say Susan Dubin appreciates the scope of human

resource management? What, if any, additional skills
of an HR professional would you encourage her to

2. Look up descriptions of HR jobs by searching under
“human resources” in the latest edition of the Bu-
reau of Labor Statistics’ Occupational Outlook Hand-
book (available online at What
position in the handbook best matches Dubin’s job,
as described in this case?

3. How would you expect Dubin’s job in a small ser-
vices company to be different from a similar position
in a large manufacturing company?

Source: Montage Insurance Solutions corporate website, http://www, accessed April 16, 2014; Susan Dubin, “How
HR Inspires Me,” Montage Blog,,
accessed April 16, 2014; Mark R. Madler, “Valley’s Top Human Resources
Professionals: Susan K. Dubin,” San Fernando Valley Business Journal,
April 13, 2009, Business & Company Resource Center, http://galenet

1. Adrienne Fox, “The Joy of Work in HR,” HR Magazine,
January 2014,

2. A. S. Tsui and L. R. Gomez-Mejia, “Evaluating Human
Resource Effectiveness,” in Human Resource Management:
Evolving Rules and Responsibilities, ed. L. Dyer (Washington,
DC: BNA Books, 1988), pp. 1187–227; M. A. Hitt, B. W.
Keats, and S. M. DeMarie, “Navigating in the New
Competitive Landscape: Building Strategic Flexibility
and Competitive Advantage in the 21st Century,” Acad-
emy of Management Executive 12, no. 4 (1998), pp. 22–42;
J. T. Delaney and M. A. Huselid, “The Impact of Human
Resource Management Practices on Perceptions of Orga-
nizational Performance,” Academy of Management Journal
39 (1996), pp. 949–69.

3. W. F. Cascio, Costing Human Resources: The Financial Impact of
Behavior in Organizations, 3rd ed. (Boston: PWS-Kent, 1991).

4. S. A. Snell and J. W. Dean, “Integrated Manufacturing and
Human Resource Management: A Human Capital Perspec-
tive,” Academy of Management Journal 35 (1992), pp. 467–504;
M. A. Youndt, S. Snell, J. W. Dean Jr., and D. P. Lepak,
“Human Resource Management, Manufacturing Strategy,
and Firm Performance,” Academy of Management Journal 39
(1996), pp. 836–66.

5. Zeynep Ton, “Why Good Jobs Are Good for Retailers,” Har-
vard Business Review, January– February 2012, pp. 124–31; Brad
Stone, “Costco CEO Craig Jelinek Leads the Cheapest, Hap-
piest Company in the World,” Bloomberg Businessweek, June 6,
2013,; Anne Fisher, “A Blueprint
for Creating Better Jobs—and Bigger Profi ts,” Fortune, Decem-
ber 12, 2013,

6. Steve Wexler, “How Many HR Employees Do You Have—
and Should You Have—in Your Organization?” Institute for

Corporate Productivity, May 21, 2010,;
Eric Krell, “Is HR Doing More with Less? Or Is It Undergo-
ing a Transformation?” HR Magazine, September 2013, www

7. E. E. Lawler, “From Human Resource Management to Or-
ganizational Effectiveness,” Human Resource Management 44
(2005), pp. 165–69.

8. Lauren Weber and Rachel Feintzeig, “Companies Say No to
Having an HR Department,” The Wall Street Journal, April 9,

9. S. Snell, “Control Theory in Strategic Human Resource
Management: The Mediating Effect of Administrative
Information,” Academy of Management Journal 35 (1992),
pp. 292–327.

10. Joanne Sammer, “A Marriage of Necessity,” HR Magazine,
October 2011, pp. 58–62.

11. Ibid., p. 61.
12. Wendy S. Becker, “Are You Leading a Socially Responsible

and Sustainable Human Resource Function?” People &
Strategy, March 2011, pp. 18–23.

13. Brad Power, “IBM Focuses HR on Change,” Bloomberg
Businessweek, January 10, 2012, http://www.businessweek

14. Society for Human Resource Management, “Competencies:
Model,”, accessed April 2, 2014.

15. Robert J. Grossman, “New Competencies for HR,” HR Mag-
azine, June 2007, pp. 58–62.

16. Wendy Kaufman, “A Single Hire Is a Big Deal to a Small
Business,” National Public Radio, October 10, 2011, http://

17. Jeffrey M. Jones, “Record 64% Rate Honesty, Ethics of
Members of Congress Low,” Gallup, December 12, 2011,


28 PART 1 The Human Resource Environment; Corruption Currents, “Survey
Sees Less Misconduct but More Reporting and Retalia-
tion,” The Wall Street Journal, January 5, 2012, http://blogs

18. M. Pastin, The Hard Problems of Management: Gaining the
Ethics Edge (San Francisco: Jossey-Bass, 1986); T. Thomas,
J. Schermerhorn Jr., and J. Dienhart, “Strategic Leadership
of Ethical Behavior in Business,” Academy of Management
Executive 18 (2004), pp. 56–66.

19. Benjamin Schneider and Karen B. Paul, “In the Company
We Trust,” HR Magazine, January 2011, Business & Com-
pany Resource Center,

20. G. F. Cavanaugh, D. Moberg, and M. Velasquez, “The Ethics
of Organizational Politics,” Academy of Management Review 6
(1981), pp. 363–74.

21. Schneider and Paul, “In the Company We Trust.”
22. Adrienne Fox, “Paths to the Top,” HR Magazine, November

2011, pp. 30–35.

2 Trends in Human Resource

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

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.

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.

30 PART 1 The Human Resource Environment

However, these changes may be a sign that today’s businesses are impatient with the
status quo. It is no longer enough to manage human resources a certain way because
other companies do it that way. Rather, HR managers and employees are valuable to the
extent they are willing to understand the organization in business terms, including the
financial, accounting, and analytic tools that managers use to measure their success.3

Despite the hard look that managers are directing at human resource management,
organizations depend on this work more than ever. Even with a slow pace of economic
growth, many employers report that recruiting the specifi c kinds of talent they need is
getting harder. The skills required within industries often are changing as technology
advances, so current employees need training as much as ever. Rising costs of benefi ts,
especially health insurance, have demanded creativity in planning compensation pack-
ages. The diffi cult economy has made it essential for organizations to fi nd ways for their
employees to work more effi ciently—getting more done faster and placing lighter de-
mands on natural resources, all without sacrifi cing quality and customer service. These
effi ciency improvements can only come from creative thinking by highly motivated and
well-trained workers. Addressing all of these challenges and other trends in today’s
business climate requires more innovative human resource management than ever.

This chapter describes major trends that are affecting human resource management.
It begins with an examination of the modern labor force, including trends that are de-
termining who will participate in the workforce of the future. Next is an exploration of
the ways HRM can support a number of trends in organizational strategy, from efforts
to maintain high-performance work systems to changes in the organization’s size and
structure. Often, growth includes the use of human resources on a global scale, as more
and more organizations hire immigrants or open operations overseas. The chapter then
turns to major changes in technology, especially the role of the Internet. As we will ex-
plain, the Internet is changing organizations themselves, as well as providing new ways
to carry out human resource management. Finally, we explore the changing nature of
the employment relationship, in which careers and jobs are becoming more fl exible.

Change in the Labor Force
The term labor force is a general way to refer to all the people willing and able to work.
For an organization, the internal labor force consists of the organization’s workers—
its employees and the people who have contracts to work at the organization. This
internal labor force has been drawn from the organization’s external labor market,
that is, individuals who are actively seeking employment. The number and kinds of
people in the external labor market determine the kinds of human resources available
to an organization (and their cost). Human resource professionals need to be aware of
trends in the composition of the external labor market because these trends affect the
organization’s options for creating a well-skilled, motivated internal labor force.

An Aging Workforce
In the United States, the Bureau of Labor Statistics (BLS), an agency of the Depart-
ment of Labor, tracks changes in the composition of the U.S. labor force and forecasts
employment trends. The BLS has projected that from 2012 to 2022, the total U.S. civil-
ian labor force will grow from 155 million to 163 million workers.4 This 5.5% increase
is noticeably lower than the more than 13% increase experienced during the 1990s.

LO 2-1 Describe trends
in the labor force com-
position and how they
affect human resource

Internal Labor Force
An organization’s work-
ers (its employees and
the people who have
contracts to work at the

External Labor Market
Individuals who are
actively seeking

CHAPTER 2 Trends in Human Resource Management 31

Some of the expected change involves the distribution of work-
ers by age. From 2012 to 2022, the fastest-growing age group
is expected to be workers 55 and older. The 25- to 44-year-old
group will increase its numbers only slightly, so its share of the
total workforce will fall. And young workers between the ages of
16 and 24 will actually be fewer in number. This combination of
trends will cause the overall workforce to age. Figure 2.1 shows
the change in age distribution, as forecast by the Bureau of Labor
Statistics between 2012 and 2022. By 2022, all baby boomers will
be at least 55 years old, swelling the ranks of workers nearing
retirement.5 Human resource professionals will therefore spend
much of their time on concerns related to planning retirement,
retraining older workers, and motivating workers whose careers
have plateaued. Organizations will struggle with ways to control
the rising costs of health care and other benefi ts, and many of
tomorrow’s managers will supervise employees much older than
themselves. At the same time, organizations will have to fi nd ways
to attract, retain, and prepare the youth labor force.

Today’s older generation includes many people who are in no
hurry to retire. They may enjoy making a contribution at work,
have ambitious plans for which they want to earn money, or sim-
ply be among the many who have inadequate savings for full re-
tirement. Therefore, older workers often want to be allowed to
gradually move toward retirement by working part-time or taking
temporary assignments. Scripps Health helps its employees gradu-
ally transition to full retirement. Employees are allowed to reduce
their work hours gradually while maintaining their health insur-
ance. Employees who work at least 16 hours a week are eligible for training programs and
fl extime. Atlantic Health System allows retirees to take part-time jobs, per diem jobs (bill-
ing for each day worked), and temporary assignments. Retired employees have returned
to work as consultants and contract workers, and some have telecommuting arrangements
(working from home). Many of these assignments give older employees a chance to act as
mentors to their younger colleagues.6

With older workers continuing to hold jobs at least part-time, today’s workplaces
often bring together employees representing three or four generations. This creates a

As more and more of the workforce reaches retirement

age, some companies have set up mentoring programs

between older and younger workers so that knowledge

is not lost but passed on. How does the company benefi t

from these mentoring programs?

2012 2022

16 to 24 years old
25 to 54 years old
55 years and older

2012 2022

65% 63%




Figure 2.1
Age Distribution of U.S.

Labor Force, 2012 and


Source: Bureau of Labor Statistics, “Employment Projections, 2012–2022,” news release, December 19, 2013,


need for understanding the values and work habits that tend to characterize each gen-
eration.7 For example, members of the silent generation (born between 1925 and 1945)
tend to value income and employment security and avoid challenging authority. Baby
boomers (born between 1946 and 1964) tend to value unexpected rewards, opportuni-
ties for learning, and time with management. Members of Generation X (1965–1980)
tend to be pragmatic and cynical, and they have well-developed self-management
skills. Those born from 1981 to 1995, often called millennials, or Generation Y, are
comfortable with the latest technology, and they want to be noticed, respected, and
involved. Some generational differences can be addressed through effective human
resource management. For example, organizations train managers to provide frequent
feedback to members of Generation Y, and they show respect for older generations’
hard work and respect for authority by asking them to mentor younger  workers.
Generational differences also can affect how managers approach policies about social
media, as described in the “HRM Social” box.

A Diverse Workforce
Another kind of change affecting the U.S. labor force is that it is growing more diverse
in racial, ethnic, and gender terms. As Figure 2.2 shows, the 2022 workforce is expected
to be 78% white, 12% African American, and 10% Asian and other minorities. The
fastest growing of these categories are Asian and “other groups” because these groups

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

disconnected from the Internet

for a set time each day. But in an

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

policy might not apply equally well to

all employees.


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.; Shea Bennett, “Social

Media Increases Offi ce Productivity, but

Management Still Resistant, Says Study,”

MediaBistro, June 26, 2013, http://www.; Bernhard Warner,

“When Social Media at Work Don’t Create

Productivity-Killing Distractions,” Bloomberg

Businessweek, April 1, 2013.

What Social-Media Policies Are Suitable across Generations?

HRM Social

CHAPTER 2 Trends in Human Resource Management 33

are experiencing immigration and birthrates above the
national average. In addition to these racial categories,
the ethnic category of Hispanics is growing even faster,
and the Hispanic share of the U.S. labor force is ex-
pected to reach 19% of the total by 2022.8 Along with
greater racial and ethnic diversity, there is also greater
gender diversity. More women today than in the past
are in the paid labor force, and the labor force partici-
pation rate for men has been slowly declining. During
the economic recession and slow recovery, women’s
labor force participation rate also declined slightly, but
between 2012 and 2022, women’s share of the labor
force is expected to remain steady, at around 47%.9

One important source of racial and ethnic diversity is
immigration. The U.S. government establishes proce-
dures for foreign nationals to follow if they wish to live
and work permanently in the United States, and it sets
limits on the number of immigrants who are admitted
through these channels. Of the more than 1 million immigrants who come to the United
States legally each year, more than 6 out of 10 are relatives of U.S. citizens. Another 14%
come on work-related visas, some of which are set aside for workers with exceptional
qualifi cations in science, business, or the arts. (About half of the work-related visas go to
the immediate relatives of those coming to the United States to work, allowing workers
to bring their spouse and children.) The U.S. government also grants temporary work
visas to a limited number of highly educated workers, permitting them to work in the
United States for a set period of time but not to remain as immigrants. U.S. law requires
employers to verify that any job candidate who is not a U.S. citizen has received permis-
sion to work in the United States as an immigrant or with a temporary work permit. (This
requirement is discussed in Chapter 6.)

Other foreign-born workers in the United States arrived in this country without
meeting the legal requirements for immigration or asylum. These individuals, known
as undocumented or illegal immigrants, likely number in the millions. While gov-
ernment policy toward immigrants is a matter of heated public debate, the human
resource implications have two practical parts. The fi rst involves the supply of and de-
mand for labor. Many U.S. industries, including meatpacking, construction, farming,
and services, rely on immigrants to perform demanding work that may be low paid.
In other industries, such as computer software development, employers say they have
diffi culty fi nding enough qualifi ed U.S. workers to fi ll technical jobs. These employers
are pressing for immigration laws to allow a greater supply of foreign-born workers.

The other HR concern is the need to comply with laws. In recent years, Immigra-
tion and Customs and Enforcement has focused its efforts on auditing employers to
ensure they are following proper procedures to avoid employing undocumented im-
migrants. Businesses that have justifi ed hiring these people on the grounds that they
work hard and are needed for the business to continue operating now are facing greater
legal risks.10 Even as some companies are lobbying for changes to immigration laws,
the constraints on labor supply force companies to consider a variety of ways to meet
their demand for labor, including job redesign (see Chapter 4), higher pay (Chapter 12),
and foreign operations (Chapter 16).

The greater diversity of the U.S. labor force challenges employers to create HRM
practices that ensure they fully utilize the talents, skills, and values of all employees. As

Other groups





Figure 2.2
Projected Racial/Ethnic Makeup of the U.S. Workforce, 2022

Source: Bureau of Labor Statistics, “Employment Projections,

2012–2022,” news release, December 19, 2013, http://www.bls


34 PART 1 The Human Resource Environment

a result, organizations cannot afford to ignore or discount the potential contributions
of women and minorities. Employers will have to ensure that employees and HRM
systems are free of bias and value the perspectives and experience that women and
minorities can contribute to organizational goals such as product quality and customer
service. As we will discuss further in the next chapter, managing cultural diversity in-
volves many different activities. These include creating an organizational culture that
values diversity, ensuring that HRM systems are bias-free, encouraging career develop-
ment for women and minorities, promoting knowledge and acceptance of cultural dif-
ferences, ensuring involvement in education both within and outside the organization,
and dealing with employees’ resistance to diversity.11 Figure 2.3 summarizes ways in
which HRM can support the management of diversity for organizational success.

Many U.S. companies have already committed themselves to ensuring that they
recognize the diversity of their internal labor force and use it to gain a competitive
advantage. In a recent survey of executives at large global corporations, 85% said a
“diverse and inclusive workforce” is important for encouraging innovation. Majori-
ties of respondents said their companies have a program to recruit a diverse group of
employees (65%) and develop an inclusive workforce (53%).12

An organization doesn’t have to be a huge global enterprise to benefi t from valuing
diversity. In Poughkeepsie, New York, the Bridgeway Federal Credit Union has realized
that it can best serve the groups in its community by ensuring that its employees are
representative of that community. About one-fourth of Bridgeway’s members are African
American, and about 12% are Hispanics. Many of these members come from low-income
households where access to banking services has been limited in the past. To attract and
include employees from this community, Bridgeway conducts outreach events in neigh-
borhoods and provides diversity training programs for its employees. With ideas from
its diverse employees, Bridgeway has come up with helpful products, such as its Drive
Up Savings Account, which provides qualifi ed customers with an auto loan that has a

Figure 2.3
HRM Practices That Support Diversity Management

Source: Based on M. Loden and J. B. Rosener, Workforce America! (Homewood, IL: Business One Irwin, 1991).

CHAPTER 2 Trends in Human Resource Management 35

payment plan in which a part of the monthly payments is directed into a savings plan.
When the loan is paid off, Bridgeway rewards the borrowers by giving them a discount
on the interest they paid, and the customers fi nd that they have saved up a tidy sum.13

Throughout this book, we will show how diversity affects HRM practices. For ex-
ample, from a staffi ng perspective, it is important to ensure that tests used to select em-
ployees are not unfairly biased against minority groups. From the perspective of work
design, employees need fl exible schedules that allow them to meet nonwork needs. In
terms of training, it is clear that employees must be made aware of the damage that
stereotypes can do. With regard to compensation, organizations are providing benefi ts
such as elder care and day care as a way to accommodate the needs of a diverse work-
force. As we will see later in the chapter, successfully managing diversity is also critical
for companies that compete in international markets.

Skill Deficiencies of the Workforce
The increasing use of computers to do routine tasks has shifted the kinds of skills
needed for employees in the U.S. economy. Such qualities as physical strength and
mastery of a particular piece of machinery are no longer important for many jobs.
More employers are looking for mathematical, verbal, and interpersonal skills, such as
the ability to solve math or other problems or reach decisions as part of a team. Often,
when organizations are looking for technical skills, they are looking for skills related to
computers and using the Internet. Today’s employees must be able to handle a variety
of responsibilities, interact with customers, and think creatively.

To fi nd such employees, most organizations are looking for educational achieve-
ments. A college degree is a basic requirement for many jobs today. Competition for
qualifi ed college graduates in many fi elds is intense. At the other extreme, workers with
less education often have to settle for low-paying jobs. Some companies are unable to
fi nd qualifi ed employees and instead rely on training to correct skill defi ciencies.14
Other companies team up with universities, community colleges, and high schools to
design and teach courses ranging from basic reading to design blueprint reading.

Not all the skills employers want require a college education. The National Associ-
ation of Manufacturers year after year has reported that the manufacturing companies
in the United States have diffi culty fi nding enough people who can operate sophisti-
cated computer-controlled machinery. These jobs rely at least as much on intelligence
and teamwork as on physical strength. In some areas, companies and communities
have set up apprenticeship and training programs to fi x the worker shortage. Some
companies are turning to veterans of the wars in Iraq and Afghanistan. These work-
ers have already demonstrated high levels of commitment and teamwork, as well as
the ability to make creative use of the resources at hand in diffi cult situations. Many
of them have been trained already by the military in a variety of technical skills. The
challenge for employers has been to support these employees in other areas, such as
helping them weather the emotional strain of the transition back to civilian life, as well
as training them in the technical requirements of their new jobs.15

High-Performance Work Systems
Human resource management is playing an important role in helping organizations gain
and keep an advantage over competitors by becoming high-performance work
systems. These are organizations that have the best possible fi t between their social sys-
tem (people and how they interact) and technical system (equipment and processes).16 As
the nature of the workforce and the technology available to organizations have changed,

Work Systems
Organizations that have
the best possible fi t
between their social
system (people and how
they interact) and techni-
cal system (equipment
and processes).

36 PART 1 The Human Resource Environment

so have the requirements for creating a high-performance work system. Customers are
demanding high quality and customized products, employees are seeking fl exible work
arrangements, and employers are looking for ways to tap people’s creativity and interper-
sonal skills. Such demands require that organizations make full use of their people’s knowl-
edge and skill, and skilled human resource management can help organizations do this.

Among the trends that are occurring in today’s high-performance work systems
are reliance on knowledge workers, empowerment of employees to make decisions,
and use of teamwork. The following sections describe those three trends, and Chap-
ter  9 will explore the ways HRM can support the creation and maintenance of a
high- performance work system. HR professionals who keep up with change are well
positioned to help create high-performance work systems.

Knowledge Workers
The growth in e-commerce, plus the shift from a manufacturing to a service and in-
formation economy, has changed the nature of employees who are most in demand.
The Bureau of Labor Statistics forecasts that between 2012 and 2022, most new jobs
will be in service occupations, especially health care and social assistance. Construction
jobs also are expected to increase, but mostly to replace jobs that were lost during the
fi nancial crisis and recession of a few years ago.

The number of service jobs has important implications for human resource man-
agement. Research shows that if employees have a favorable view of HRM practices—
career opportunities, training, pay, and feedback on performance—they are more likely
to provide good service to customers. Therefore, quality HRM for service employees
can translate into customer satisfaction.

Besides differences among industries, job growth varies according to the type of job.
Table 2.1 lists the 10 occupations expected to gain the most jobs between 2012 and
2022 and the 10 expected to grow at the fastest rate. Occupations with the most jobs
are expected to involve health care, sales, food preparation, as well as other services.
Many of the fastest-growing occupations also are in the health care fi eld.17 These and
other fast-growing occupations refl ect the steadily growing demand for health care and
an expected rebound in the construction industry. While some of these jobs and other

Personal care aides Industrial-organizational psychologists
Registered nurses Personal care aides
Retail salespersons Home health aides
Home health aides Insulation workers, mechanical
Combined food preparation and serving workersa Interpreters and translators
Nursing assistants Diagnostic medical sonographers
Secretaries and administrative assistantsb Helpers: brickmasons, blockmasons,

stonemasons, and tile and marble setters
Customer service representatives Occupational therapy assistants
Janitors and cleanersc Genetic counselors
Construction laborers Physical therapist assistants

Table 2.1
Top 10 Occupations for
Job Growth

Source: Bureau of Labor

Statistics, “Employment

Projections, 2012–2022,”

news release, December

19, 2013, http://www, Tables 4, 5.

aIncludes fast food.
bExcept legal, medical, and executive.
cExcept maids and housekeeping cleaners.

LO 2-2 Summarize areas
in which human resource
management can sup-
port the goal of creating
a high- performance work

CHAPTER 2 Trends in Human Resource Management 37

fast-growing occupations require a college degree, many of the fast-growing occupations
require only on-the-job training. (Exceptions are industrial-organizational psychologists
and registered nurses.) This means that many companies’ HRM departments will need
to provide excellent training as well as hiring.

These high-growth jobs are evidence of another trend: The future U.S. labor
market will be both a knowledge economy and a service economy.18 Along with low-
education jobs in services like health care and food preparation, there will be many
high-education professional and managerial jobs. To meet these human capital
needs, companies are increasingly trying to attract, develop, and retain knowledge
workers. Knowledge workers are employees whose main contribution to the orga-
nization is specialized knowledge, such as knowledge of customers, a process, or a
profession. Further complicating that challenge, many of these knowledge workers
will have to be “technoservice” workers who not only know a specialized fi eld such
as computer programming or engineering, but also must be able to work directly
with customers.

Knowledge workers are in a position of power because they own the knowledge that
the company needs in order to produce its products and services, and they must share
their knowledge and collaborate with others in order for their employer to succeed. An
employer cannot simply order these employees to perform tasks. Managers depend on
the employees’ willingness to share information. Furthermore, skilled knowledge work-
ers have many job opportunities, even in a slow economy. If they choose, they can leave
a company and take their knowledge to another employer. Replacing them may be dif-
fi cult and time consuming.

The idea that only some of an organization’s workers are knowledge workers has
come under criticism.19 To the critics, this defi nition is no longer realistic in a day of
computerized information systems and computer-controlled production processes. For
the company to excel, everyone must know how their work contributes to the organi-
zation’s success. At the same time, employees—especially younger generations, which
grew up with the Internet—will expect to have wide access to information. From this
perspective, successful organizations treat all their workers as knowledge workers. They
let employees know how well the organization is performing, and they invite ideas
about how the organization can do better.

Can the “knowledge worker” label really fi t everywhere? Think of the expectations
organizations have for the typical computer programmer. These high-in-demand em-
ployees expect to be valued for their skills, not the hours they put in or the way they
dress. Organizations that successfully recruit and retainer computer programmers give
them plenty of freedom to set up their work space and their own schedule. They moti-
vate by assigning tasks that are interesting and challenging and by encouraging friendly
collaboration. To some degree, these kinds of measures apply to many employees and
many work situations. W. W. Grainger, for example, is not a glamorous company, but
it is one that many companies depend on. Grainger distributes an enormous variety of
supplies and parts needed by its business customers. Grainger creates an attractive en-
vironment for the modern-day version of the knowledge worker by helping to match
them up with jobs in which they matter and can excel, even if that means trying out
jobs in a variety of departments. Linda Kolbe, the manager of Grainger’s e-commerce,
started as an administrative assistant and worked her way up, with help from the com-
pany’s mentoring program. And branch manager Roger Lubert has found that the
company is eager to try out his ideas for managing inventory and store operations. The
company treats these and other employees as individuals who can both expand their
knowledge and apply it to benefi t the entire organization.20

Knowledge Workers
Employees whose main
contribution to the or-
ganization is specialized
knowledge, such as
knowledge of custom-
ers, a process, or a

38 PART 1 The Human Resource Environment

Employee Empowerment
To completely benefi t from employees’ knowledge, organizations need a management
style that focuses on developing and empowering employees. Employee empowerment
means giving employees responsibility and authority to make decisions regarding all
aspects of product development or customer service.21 Employees are then held ac-
countable for products and services. In return, they share the resulting losses and re-
wards. Employee empowerment can also extend to innovation. Employees at all levels
are encouraged to share their ideas for satisfying customers better and operating more
effi ciently and safely. This is empowering if management actually listens to the ideas,
implements valuable ones, and rewards employees for their innovations.

HRM practices such as performance management, training, work design, and com-
pensation are important for ensuring the success of employee empowerment. Jobs
must be designed to give employees the necessary latitude for making a variety of
decisions. Employees must be properly trained to exert their wider authority and use
information resources such as the Internet as well as tools for communicating infor-
mation. Employees also need feedback to help them evaluate their success. Pay and
other rewards should refl ect employees’ authority and be related to successful han-
dling of their responsibility. In addition, for empowerment to succeed, managers must
be trained to link employees to resources within and outside the organization, such
as customers, co-workers in other departments, and websites with needed informa-
tion. Managers must also encourage employees to interact with staff throughout the
organization, must ensure that employees receive the information they need, and must
reward cooperation. Finally, empowered employees deliver the best results if they are
fully engaged in their work. Employee engagement—full involvement in one’s work and
commitment to one’s job and company—is associated with higher productivity, better
customer service, and lower turnover.22

As with the need for knowledge workers, use of employee empowerment shifts the
recruiting focus away from technical skills and toward general cognitive and interper-
sonal skills. Employees who have responsibility for a fi nal product or service must be
able to listen to customers, adapt to changing needs, and creatively solve a variety of

Modern technology places the information that employees need for improving quality
and providing customer service right at the point of sale or production. As a result, the
employees engaging in selling and producing must also be able to make decisions
about how to do their work. Organizations need to set up work in a way that gives
employees the authority and ability to make those decisions. One of the most popular
ways to increase employee responsibility and control is to assign work to teams. Team-
work is the assignment of work to groups of employees with various skills who inter-
act to assemble a product or provide a service. Work teams often assume many activities
traditionally reserved for managers, such as selecting new team members, scheduling
work, and coordinating work with customers and other units of the organization.
Work teams also contribute to total quality by performing inspection and quality-
control activities while the product or service is being completed.

In some organizations, technology is enabling teamwork even when workers are at
different locations or work at different times. These organizations use virtual teams—
teams that rely on communications technology such as videoconferences, e-mail, and
cell phones to keep in touch and coordinate activities.

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

Giving employees
responsibility and au-
thority to make decisions
regarding all aspects of
product development or
customer service.

The assignment of work
to groups of employees
with various skills who
interact to assemble
a product or provide a

CHAPTER 2 Trends in Human Resource Management 39

Teamwork can motivate employees by making work
more interesting and signifi cant. At organizations that
rely on teamwork, labor costs may be lower as well.
Spurred by such advantages, a number of companies are
reorganizing assembly operations—abandoning the as-
sembly line in favor of operations that combine mass
production with jobs in which employees perform mul-
tiple tasks, use many skills, control the pace of work, and
assemble the entire fi nal product.

Witnessing the resulting improvements, companies
in the service sector also have moved toward greater
use of teamwork. Teamwork is a necessary component
of more and more computer programming tasks. Com-
panies that develop software are increasingly using an
approach they call agile, which involves weaving the development process more tightly
into the organization’s activities and strategies. In agile software development, self-
directed teams of developers and programmers work directly with the business users
of the software, using as much face-to-face communication as possible. Rather than
devoting endless hours to negotating contracts and documenting processes, the teams
focus on frequently delivering usable components of the software. Throughout the
development process the team is open to changing requirements and computer code
as a result of their communication with users. Users of agile software development
say it increases customer satisfaction and speeds up the time from concept to usable

Focus on Strategy
As we saw in Chapter 1, traditional management thinking treated human resource
management primarily as an administrative function, but managers today are begin-
ning to see a more central role for HRM. They are looking at HRM as a means to
support a company’s strategy—its plan for meeting broad goals such as profi tability,
quality, and market share. This strategic role for HRM has evolved gradually. At many
organizations, managers still treat HR professionals primarily as experts in designing
and delivering HR systems (see the “HR Oops!” box). But at a growing number of
organizations, HR professionals are strategic partners with other managers.

This means they use their knowledge of the business and of human resources to
help the organization develop strategies and to align HRM policies and practices with
those strategies. To do this, human resource managers must focus on the future as well
as the present, and on company goals as well as human resource activities. They may,
for example, become experts at analyzing the business impact of HR decisions or at
developing and keeping the best talent to support business strategy. Organizations do
this, for example, when they integrate all the activities involved in talent management
with each other and with the organization’s other processes to provide the skills the or-
ganization needs to pursue its strategy. An integrated approach to talent management
includes acquiring talent (recruiting and selection), providing the right opportunities
for training and development, measuring performance, and creating compensation
plans that reward the needed behaviors. To choose the right talent, provide the right
training, and so on, HR professionals need to be in close, ongoing contact with the
members of the organization who need the talent. And when the organization modi-
fi es its strategy, HR professionals are part of the planning process so they can modify

LO 2-4 Identify ways HR
professionals can sup-
port organizational strat-
egies for quality, growth,
and effi ciency.

One way companies can increase employee responsibility and

control is to assign work to teams.


talent management efforts to support the revised strategy. One organization that does
all this is Universal Weather and Aviation, which provides services and support to
the owners of private jets. In this market niche, the company does not expect to fi nd
people with the precise set of skills it needs; rather, its talent management program
emphasizes fi nding individuals who are a good fi t with the organization’s culture and
then training them in the areas where their skills are weak. Executives are rewarded for
achieving talent management objectives that include retaining the best-performing
employees and identifying potential successors to fi ll key positions.24

The specifi c ways in which human resource professionals support the organization’s
strategy vary according to their level of involvement and the nature of the strategy.
Strategic issues include emphasis on quality and decisions about growth and effi ciency.
Human resource management can support these strategies, including efforts such as
quality improvement programs, mergers and acquisitions, and restructuring. Deci-
sions to use reengineering and outsourcing can make an organization more effi cient
and also give rise to many human resource challenges. International expansion pres-
ents a wide variety of HRM challenges and opportunities. Figure 2.4 summarizes these
strategic issues facing human resource management.

Mergers and Acquisitions
Often, organizations join forces through mergers (two companies becoming one) and
acquisitions (one company buying another). Some mergers and acquisitions result in
consolidation within an industry, meaning that two fi rms in one industry join to hold
a greater share of the industry. For example, British Petroleum’s acquisition of Amoco
Oil represented a consolidation, or a reduction of the number of companies in the oil

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.


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,; Hay

Group, “More Managers Turn to Google

for HR Information,” Business Wire,

November 20, 2013, http://www; Philip Spriet,

“‘Power On’: From Passing the Buck

to Activating the Line,” Hay Group

Blog, October 16, 2013, http://blog

Less Helpful than a Search Engine?

HR Oops!

CHAPTER 2 Trends in Human Resource Management 41

industry. Other mergers and acquisitions cross industry lines. In a merger to form Citi-
group, Citicorp combined its banking business with Traveler’s Group’s insurance busi-
ness. Furthermore, these deals more frequently take the form of global megamergers,
or mergers of big companies based in different countries (as in the case of BP-Amoco).

HRM should have a signifi cant role in carrying out a merger or acquisition. Differ-
ences between the businesses involved in the deal make confl ict inevitable. Training efforts
should therefore include development of skills in confl ict resolution. Also, HR profession-
als have to sort out differences in the two companies’ practices with regard to compensa-
tion, performance appraisal, and other HR systems. Settling on a consistent structure to
meet the combined organization’s goals may help bring employees together.

High Quality Standards
To compete in today’s economy, companies need to provide high-quality products and
services. If companies do not adhere to quality standards, they will have diffi culty
selling their product or service to vendors, suppliers, or customers. Therefore, many
organizations have adopted some form of total quality management (TQM)—a
companywide effort to continually improve the ways people, machines, and systems
accomplish work.25 TQM has several core values26:

• Methods and processes are designed to meet the needs of internal and external
customers (that is, whomever the process is intended to serve).

• Every employee in the organization receives training in quality.
• Quality is designed into a product or service so that errors are prevented from occur-

ring, rather than being detected and corrected in an error-prone product or service.

Total Quality
Management (TQM)
A companywide effort to
continually improve the
ways people, machines,
and systems accomplish

Figure 2.4
Business Strategy:

Issues Affecting HRM

42 PART 1 The Human Resource Environment

• The organization promotes cooperation with vendors, suppliers, and customers to
improve quality and hold down costs.

• Managers measure progress with feedback based on data.

Based on these values, the TQM approach provides guidelines for all the organiza-
tion’s activities, including human resource management. To promote quality, organiza-
tions need an environment that supports innovation, creativity, and risk taking to meet
customer demands. Problem solving should bring together managers, employees, and
customers. Employees should communicate with managers about customer needs.

Quality improvement can focus on the HRM function itself. One area where man-
agers are increasingly pressing for improvement is performance management. Busi-
ness consultants note that many companies have grown dissatisfi ed with the ways they
measure and reward performance, believing that the traditional practices do not yield
measurable benefi ts. George Boué, a human resources executive with the real estate
fi rm Stiles Corporation, says his company has tried to improve the quality of perfor-
mance management by hiring coaches to help employees fi gure out how to develop
their skills.27

Cost Control
Some organizations have a low-cost, low-price strategy. These organizations par-
ticularly depend on human resource management to identify ways for limiting costs
related to maintaining a qualifi ed, motivated workforce. However, this challenge is
relevant in any organization. HR managers contribute to success whenever they help
lower costs without compromising quality.

Human resource management supports cost control both by helping the organiza-
tion use human resources more effi ciently and by making HRM processes as effi cient
as possible. This has become particularly relevant to employee benefi ts, specifi cally
health insurance.28 As we will discuss in Chapter 14, the cost of this benefi t has grown
rapidly, while the Affordable Care Act has introduced a set of employer requirements,
which can be expensive. How to manage the costs while meeting the requirements is
complicated. Employers need to weigh factors such as legal requirements, the costs
and types of plans available, the impact on departments’ budgets, and the effect on
employee morale and retention, as well as on the ability to recruit new employees.
Management relies on well-informed HR managers to identify alternatives and rec-
ommend which ones will best support the company’s strategy.

Beyond specifi c issues such as health insurance and the Affordable Care Act, human
resource management can support strategic efforts to control costs through downsiz-
ing, reengineering, and outsourcing.

Downsizing As shown in Figure 2.5, the number of employees laid off when orga-
nizations downsized soared in 2008 and 2009.29 Since those years, downsizing has con-
tinued, but at a declining rate. The surge in unemployment created a climate of fear
for many workers. Even at organizations that were maintaining their workforce, em-
ployees tended to worry, and employees who might have otherwise left tended to hold
on to their jobs if they could. Therefore, an important challenge for employers was
how to maintain a reputation as an employer of choice and how to keep employees en-
gaged in their work and focused on the organization’s goals. The way employers meet
this challenge will infl uence how sustainably they can compete, especially as unem-
ployment falls and talented workers see possibilities for work in other organizations.

CHAPTER 2 Trends in Human Resource Management 43

Downsizing presents a number of challenges and opportunities for HRM. In terms
of challenges, the HRM function must “surgically” reduce the workforce by cutting only
the workers who are less valuable in their performance. Achieving this is diffi cult because
the best workers are most able (and often willing) to fi nd alternative employment and
may leave voluntarily before the organization lays off anyone. Early- retirement programs
are humane, but they essentially reduce the workforce with a “grenade” approach—not
distinguishing good from poor performers but rather eliminating an entire group of
employees. In fact, contrary to popular belief, research has found that downsizing is
associated with negative stock returns and lower profi tability following the layoffs. One
reason may be that although labor costs fall after a downsizing, sales per employee also
tend to fall. Circuit City, for example, tried to save money by laying off its highest-paid
salespeople. Customers soon found that they preferred other electronics retailers, and
Circuit City went out of business. In contrast, Southwest Airlines, which has never laid
off employees—not even after air travel plummeted following the terrorist attacks of
September 11, 2001—has outperformed its rivals. Like Southwest’s managers, Susan
Marvin, president of Marvin Windows, thinks it is illogical to call employees the com-
pany’s “greatest asset” and then lay them off. Although the recent economic recession has
been devastating to the construction business and its suppliers, Marvin has avoided lay-
offs and let employment decline naturally by not replacing employees who have retired
during the lean years. Instead, employees have been doing without bonuses and some
employee benefi ts, and the workweek has been shortened, reducing pay to hourly work-
ers. Susan Marvin is convinced that the impact on morale of everyone pulling together
during tough times builds a strong commitment to the organization.30


















Number of Separations from 2002 to 2012

Figure 2.5
Number of Employees Laid Off during the Past Decade

Sources: Bureau of Labor Statistics, “Extended Mass Layoffs: Fourth Quarter 2011, Annual Totals 2011,” news release, February 10, 2012,; Bureau of Labor Statistics, “Mass Layoff Statistics,” last updated May 13, 2013,

44 PART 1 The Human Resource Environment

Another HRM challenge is to boost the morale of employees who remain after the
reduction; this is discussed in greater detail in Chapter 5. HR professionals should
maintain open communication with remaining employees to build their trust and com-
mitment, rather than withholding information.31 All employees should be informed
why the downsizing is necessary, what costs are to be cut, how long the downsizing
will last, and what strategies the organization intends to pursue. Finally, HRM can
provide downsized employees with outplacement services to help them fi nd new jobs.
Such services are ways an organization can show that it cares about its employees, even
though it cannot afford to keep all of them on the payroll.

Reengineering Rapidly changing customer needs and technology have caused
many organizations to rethink the way they get work done. For example, when an or-
ganization adopts new technology, its existing processes may no longer result in ac-
ceptable quality levels, meet customer expectations for speed, or keep costs to profi table
levels. Therefore, many organizations have undertaken reengineering—a complete
review of the organization’s critical work processes to make them more effi cient and
able to deliver higher quality.

Ideally, reengineering involves reviewing all the processes performed by all the or-
ganization’s major functions, including production, sales, accounting, and human re-
sources. Therefore, reengineering affects human resource management in two ways.
First, the way the HR department itself accomplishes its goals may change dramati-
cally. Second, the fundamental change throughout the organization requires the HR
department to help design and implement change so that all employees will be com-
mitted to the success of the reengineered organization. Employees may need training
for their reengineered jobs. The organization may need to redesign the structure of
its pay and benefi ts to make them more appropriate for its new way of operating.
It also may need to recruit employees with a new set of skills. Often, reengineering
results in employees being laid off or reassigned to new jobs, as the organization’s
needs change. HR professionals should also help with this transition, as they do for

Outsourcing Many organizations are increasingly outsourcing some of their busi-
ness activities. Outsourcing refers to the practice of having another company (a ven-
dor, third-party provider, or consultant) provide services. For instance, a manufacturing
company might outsource its accounting and transportation functions to businesses
that specialize in these activities. Outsourcing gives the company access to in-depth
expertise and is often more economical as well.

Not only do HR departments help with a transition to outsourcing, but many HR
functions are being outsourced. According to a recent survey of human resource man-
agers, about 70% of companies had outsourced at least one HR activity. The functions
that were most likely to be outsourced were employee assistance, retirement planning,
and outplacement.32 Goodyear Tire and Rubber Company improved its recruiting and
hiring practices by outsourcing these activities to a specialist. The recruiting service
provider started by learning about Goodyear’s history, culture, and experiences with
recruiting. It used Internet technology to streamline the hiring process and track the
progress of job candidates throughout that process. After outsourcing this function,
Goodyear began making quicker hiring decisions, improved the diversity and quality
of employees it hired, and reduced employee turnover.33 See the “Best Practices” box
for another example of HR outsourcing.

A complete review of the
organization’s critical
work processes to make
them more effi cient and
able to deliver higher

The practice of having
another company (a ven-
dor, third-party provider,
or consultant) provide


Expanding into Global Markets
Companies are fi nding that to survive they must compete in international markets as
well as fend off foreign competitors’ attempts to gain ground in the United States.
To meet these challenges, U.S. businesses must develop global markets, keep up with
competition from overseas, hire from an international labor pool, and prepare employ-
ees for global assignments. This global expansion can pose some challenges for human
resource management as HR employees learn about the cultural differences that shape
the conduct of employees in other parts of the world.

Companies that are successful and widely admired not only operate on a multina-
tional scale, but also have workforces and corporate cultures that refl ect their global
markets. Yum Brands was quick to seize on the potential of China’s massive popula-
tion: in 1987, its KFC restaurants became the fi rst fast-food chain to enter China,
and its Pizza Hut brand was the fi rst pizza chain there in 1990. Today the company
has more than 6,000 restaurants in the country with plans to open hundreds more.
More than half the company’s sales are made in China. Behind the success of this
overseas expansion is a willingness to adapt menus to local tastes and develop local
management talent.34

The Global Workforce For today’s and tomorrow’s employers, talent comes
from a global workforce. Organizations with international operations hire at least
some of their employees in the foreign countries where they operate. In fact,

LO 2-5 Summarize
ways in which human
resource management
can support organi-
zations expanding

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.


1. When does outsourcing

make strategic sense for an

organization such as Land


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, 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

46 PART 1 The Human Resource Environment

regardless of where their customers are located, organizations are looking overseas
to hire talented people willing to work for less pay than the U.S. labor market re-
quires. The efforts to hire workers in other countries are common enough that they
have spurred the creation of a popular name for the practice: offshoring. Just a few
years ago, most offshoring involved big manufacturers building factories in coun-
tries with lower labor costs. But today it is so easy to send information and software
around the world that even start-ups are hiring overseas. During the 2000s, large
U.S.-based multinational companies were shrinking their domestic employment
while hiring overseas. Even when they made cuts overseas during the last recession,
they tended to cut more domestic than foreign workers. The trend was driven by
more than labor costs: demand for the companies’ products was often growing faster
in other parts of the world. More recently, however, the offshoring trend has slowed.
Labor costs in popular locations such as China have risen, and some companies have
even announced plans for reshoring, or reestablishing some of their operations in
North America.35

Hiring in developing nations such as India, Mexico, and Brazil gives employers
access to people with potential who are eager to work yet who will accept lower
wages than elsewhere in the world. Challenges, however, may include employees’
lack of familiarity with technology and corporate practices, as well as political and
economic instability in the areas. Important issues that HR experts can help com-
panies weigh include whether workers in the offshore locations can provide the
same or better skills, how offshoring will affect motivation and recruitment of em-
ployees needed in the United States, and whether managers are well prepared to
manage and lead offshore employees. At the same time, as companies based in these
parts of the world are developing experienced employees and managers, they are
becoming competitors for global talent. Information technology companies based

in India, for example, have in recent years increased their
hiring of employees in the United States and Europe.36
This poses a new challenge for U.S. recruiters who may
need to improve their tactics and offers if they want to win
the war for the best talent.

Even hiring at home may involve selection of employees
from other countries. The beginning of the 21st century,
like the beginning of the last century, has been a time of
signifi cant immigration, with over a million people obtain-
ing permanent resident status in 2012 alone.37 Figure 2.6
shows the distribution of immigration by continent of ori-
gin. The impact of immigration is especially large in some
regions of the United States, with the largest immigrant
populations being in the cities and suburbs of New York,
Los Angeles, Miami, Chicago, and Houston. About 7 out
of 10 foreign-born workers are Hispanics and Asians.38
Employers in tight labor markets—such as those seeking
experts in computer science, engineering, and information
systems—have been especially likely to recruit interna-
tional students.

International Assignments Besides hiring an interna-
tional workforce, organizations must be prepared to send em-
ployees to other countries. This requires HR expertise in

Moving operations from
the country where a
company is headquar-
tered to a country where
pay rates are lower but
the necessary skills are


North America

Central and
South America




Other 1%

Figure 2.6
Where Immigrants to the United States Came from

in 2012

Source: Department of Homeland Security, Offi ce of

Immigration Statistics, “U.S. Legal Permanent Residents:

2012,” Annual Flow Report, March 2013, Table 3, p. 4,

CHAPTER 2 Trends in Human Resource Management 47

selecting employees for international assignments and preparing them for those
assignments. Employees who take assignments in other countries are called

U.S. companies must better prepare employees to work in other countries. The fail-
ure rate for U.S. expatriates is greater than that for European and Japanese expatriates.39
To improve in this area, U.S. companies must carefully select employees to work abroad
based on their ability to understand and respect the cultural and business norms of
the host country. Qualifi ed candidates also need language skills and technical ability. In
Chapter 16, we discuss practices for training employees to understand other cultures.

Technological Change in HRM
Advances in computer-related technology have had a major impact on the use of
information for managing human resources. Large quantities of employee data
(including training records, skills, compensation rates, and benefi ts usage and cost)
can easily be stored on personal computers and manipulated with user-friendly
spreadsheets or statistical software. Often these features are combined in a human
resource information system (HRIS), a computer system used to acquire, store,
manipulate, analyze, retrieve, and distribute information related to an organiza-
tion’s human resources.40 An HRIS can support strategic decision making, help the
organization avoid lawsuits, provide data for evaluating programs or policies, and
support day-to-day HR decisions. Table  2.2 describes some of the technologies
that may be included in an organization’s HRIS.

The support of an HRIS can help HR professionals think strategically. As strat-
egies are planned, implemented, and changed, the organization must be constantly
prepared to have the right talent in place at all levels. This requires keeping track of an
enormous amount of information related to employees’ skills, experience, and training
needs, as well as the organization’s shifting needs for the future. An HRIS can support
talent management by integrating data on recruiting, performance management, and

Employees who take
assignments in other

LO 2-6 Discuss how
technological devel-
opments are affect-
ing human resource

Human Resource Infor-
mation System (HRIS)
A computer system
used to acquire, store,
manipulate, analyze,
retrieve, and distribute
information related to
an organization’s human

Internet portal Combines data from several sources into

a single site; lets user customize data
without programming skills.

A company’s manager can track
labor costs by work group.

Shared service

Consolidate different HR functions into a
single location; eliminate redundancy and
reduce administrative costs; process all
HR transactions at one time.

AlliedSignal combined more than
75 functions, including fi nance
and HR, into a shared service

Cloud computing,
such as application
service providers

Lets companies rent space on a remote
computer system and use the system’s
software to manage its HR activities,
including security and upgrades.

KPMG Consulting uses an ASP to
host the company’s computerized
learning program.


Provides insight into business trends and
patterns and helps businesses improve

Managers use the system
to analyze labor costs and
productivity among different
employee groups.

Data mining Uses powerful computers to analyze large
amounts of data, such as data about
employee traits, pay, and performance.

Managers can identify high-
potential employees throughout a
large organization and offer them
development opportunities.

Table 2.2
New Technologies
Infl uencing HRM

48 PART 1 The Human Resource Environment

training. Integrating the data means, for example, that the
HRIS user can see how specifi c kinds of recruiting, hiring,
and training decisions relate to performance success. This
helps HR professionals identify how to develop the orga-
nization’s talent and where to recruit new talent so that an
ongoing supply of human resources is available to fi ll new
positions or new openings in existing positions.41

Electronic Human Resource
Management (e-HRM)
Many HRM activities have moved onto the Internet. Elec-
tronic HRM applications let employees enroll in and par-
ticipate in training programs online. Employees can go
online to select from items in a benefi ts package and enroll
in the benefi ts they choose. They can look up answers to
HR-related questions and read company news, perhaps
downloading it as a podcast. This processing and transmis-
sion of digitized HR information is called electronic
human resource management (e-HRM).

E-HRM has the potential to change all traditional HRM
functions. For example, employees in different geographic
areas can work together. Use of the Internet lets companies
search for talent without geographic limitations. Recruit-
ing can include online job postings, applications, and candi-
date screening from the company’s website or the websites
of companies that specialize in online recruiting, such as or CareerBuilder. Employees from different

geographic locations can all receive the same training over the company’s computer

Technology trends that are shaping Internet use are also shaping e-HRM. One
example, introduced in Chapter 1, is social networking. Table 2.3 identifi es some ways
that creative organizations are applying social networking tools to human resource

Another recent technology trend is cloud computing, which generally refers to ar-
rangements in which remote server computers do the user’s computing tasks. Thus, an
organization that once owned a big mainframe computer to process data for payroll
and performance data could contract with a service provider to do the data processing
on its computer network and make the results available online. Access to cloud com-
puting makes powerful HRIS tools available even to small organizations with limited
computer hardware. Some organizations specialize in offering such services. An ex-
ample is Workday, which hosts software for human resource management, including
workforce planning, job design, analysis of compensation to make sure it is aligned
with performance, and assessment of the organization’s skills and training needs.42

Privacy is an important issue in e-HRM. A great deal of HR information is confi –
dential and not suitable for posting on a website for everyone to see. One solution is
to set up e-HRM on an intranet, which is a network that uses Internet tools but limits
access to authorized users in the organization. With any e-HRM application, however,
the organization must ensure that it has suffi cient security measures in place to protect
employees’ privacy.

Electronic Human
Resource Management
The processing and
transmission of digitized
HR information, especially
using computer network-
ing and the Internet.

The Internet and e-HRM are helpful for employees who work

outside the offi ce because they can receive and share infor-

mation online easily. The benefi ts of products such as smart-

phones are enormous, but is it possible to be too accessible?

CHAPTER 2 Trends in Human Resource Management 49

Sharing of Human Resource Information
Information technology is changing the way HR departments handle record keeping
and information sharing. Today, HR employees use technology to automate much of
their work in managing employee records and giving employees access to information
and enrollment forms for training, benefi ts, and other programs. As a result, HR em-
ployees play a smaller role in maintaining records, and employees now get information
through self-service. This means employees have online access to information about
HR issues such as training, benefi ts, compensation, and contracts; go online to enroll
themselves in programs and services; and provide feedback through online surveys.
Today, employees routinely look up workplace policies and information about their
benefi ts online, and they may receive electronic notifi cation when deposits are made
directly to their bank accounts.

Self-service is especially convenient when combined with today’s use of mobile com-
puting devices such as smartphones and tablet computers. For example, organizations
that use the services of ADP can download a free mobile app that enables employees
to look up their payroll and benefi ts information. Employees can use the app to fi ll out
their time sheet or look up their 401(k) (retirement savings plan) contributions and bal-
ance. Employers can use the app to deliver company news or offer a directory with
employees’ contact information.43 To read more ideas for providing HR applications
on mobile devices, see the “HR How To” box.

A growing number of companies are combining employee self-service with manage-
ment self-service, such as the ability to go online to authorize pay increases, approve
expenses, and transfer employees to new positions. More sophisticated systems extend
management applications to decision making in areas such as compensation and per-
formance management. To further support management decisions, the company may
create an HR dashboard, or a display of how the company is performing on specifi c HR
metrics, such as productivity and absenteeism. For example, Cisco Systems helps with
talent management by displaying on its HR dashboard how many of its people move
and why.44 The data can help management identify divisions where the managers are
successfully developing new talent.

System in which em-
ployees have online
access to information
about HR issues and
go online to enroll
themselves in programs
and provide feedback
through surveys.

Sites for capturing, sharing, storing knowledge Preserving knowledge that otherwise could be lost

when employees retire
Online surveys to gather employees’ opinions Increasing employees’ engagement with the jobs

and the organization
Networking tools to create online expert

Identifying employee expertise and making it
available to those who can apply it

Online discussions, such as commenting tools Promoting creativity and innovation
Sites where users can post links to articles,
webinars, training programs, and other information

Reinforcing lessons learned during training and on-
the-job experience

Instant messaging and other communication
tools to use with mentors and coaches

Providing employee development through
mentoring and coaching

Site where the HR department posts job
openings and responds to candidates’ questions

Identifying and connecting with promising job

Table 2.3
HRM Applications for
Social Networking

Sources: P. Brotherson, “Social Networks Enhance Employee Learning,” T 1 D, April 2011, pp. 18–19;

T. Bingham and M. Connor, The New Social Learning (Alexandria, VA: American Society for Training and

Development, 2010); M. Derven, “Social Networking: A Frame for Development,” T 1 D, July 2009,

pp. 58–63; M. Weinstein, “Are You Linked In?” Training, September/October 2010, pp. 30–33.


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
organization’s people. Essilor International uses social networking to improve learning in
the 40 countries where it makes and sells lenses for use by eye doctors. Trainers share
knowledge of what is working best for them: for example, a Thai lens-processing center
came up with a game to teach workers to understand lens shapes and then made it available
online.45 A more dramatic application of social networking to human resource manage-
ment is the talent management at Morning Star, a California tomato processor. Morning
Star has no formal hierarchy or job descriptions. Instead, each employee writes a letter
describing his or her responsibilities. As the company has grown to hundreds of full-time
employees, it began to use a database of the employees’ letters. Employees can go into the
database to modify their letters, search for employees with needed experience, or offer
one another feedback related to the commitments they made in their letters.46

Change in the Employment Relationship
Technology and the other trends we have described in this chapter require manag-
ers at all levels to make rapid changes in response to new opportunities, competi-
tive challenges, and customer demands. These changes are most likely to succeed in
fl exible, forward-thinking organizations, and the employees who will thrive in such

LO 2-7 Explain how the
nature of the employ-
ment relationship is

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


• Test mobile HRM apps to be

sure they are easy to use and



1. How could offering a mobile

version of its careers website

support an organization’s


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://; Jennifer Alsever,

“Objective: Hire Top Talent,” Fortune,

January 23, 2014,;

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

CHAPTER 2 Trends in Human Resource Management 51

organizations need to be fl exible and open to change as well. In this environment, em-
ployers and employees have begun to reshape the employment relationship.47

A Psychological Contract
We can think of that relationship in terms of a psychological contract, a description
of what an employee expects to contribute in an employment relationship and what
the employer will provide the employee in exchange for those contributions.48 Unlike
a written sales contract, the psychological contract is not formally put into words. In-
stead, it describes unspoken expectations that are widely held by employers and em-
ployees. In the traditional version of this psychological contract, organizations expected
their employees to contribute time, effort, skills, abilities, and loyalty. In return, the
organizations would provide job security and opportunities for promotion.

However, this arrangement is being replaced with a new type of psychological
contract. Companies expect employees to take more responsibility for their own
careers, from seeking training to balancing work and family. These expectations re-
sult in less job security for employees, who can count on working for several com-
panies over the course of a career. In exchange for top performance and working
longer hours without job security, employees want companies to provide fl exible
work schedules, comfortable working conditions, more control over how they ac-
complish work, training and development opportunities, and fi nancial incentives
based on how the organization performs. Employees realize that companies cannot
provide employment security, so they want employability. This means they want their
company to provide training and job experiences to help ensure that they can fi nd
other employment opportunities.

In the federal government’s most recent survey of employee tenure, workers age 25 and
older report they had been working with their present employer for a median of just 4.6
years.49 Workers 55 and older tend to have a much longer tenure, and so do workers in
government jobs. Still, if four and a half years with a company is typical, this amounts to
many employers in the course of one’s career. In fact, some employees engage in job hop-
ping, the intentional practice of changing jobs frequently—say, every year or two (see the
“Did You Know?” box).50 Job hopping can be appealing to an employee as a way to stave
off boredom and win some rapid increases in pay and responsibility. Some employees even
are able to pick short-term jobs that give them valuable, carefully targeted experiences.
However, there are some signifi cant disadvantages. Every time the employee starts with
a new employer, the employee needs to learn a new network of contacts and a new set of
policies and procedures. This can slow down the employee’s ability to learn a career in
depth and reduce the employee’s value to each employer. Therefore, employers tend to be
wary of a job candidate who seems to have a history of job hopping. They may interpret
job hopping as evidence of a character fl aw such as inability to make a commitment or lack
of conscientiousness. Often, employees can enjoy variety, develop skills, and build an inter-
esting career without job hopping by asking for challenging assignments and cultivating a
network of professional contacts within their present company.

Declining Union Membership
Another trend affecting the employment relationship has been ongoing for several
decades. As we will explore in Chapter 15, the percentage of employees who belong to
unions has been declining since the 1980s. Outside of government agencies, fewer U.S.
workers today are union members. This trend is consistent with the idea of individual
workers taking responsibility for their own careers. Whereas once many workers saw

Psychological Contract
A description of what
an employee expects to
contribute in an employ-
ment relationship and
what the employer will
provide the employee
in exchange for those


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.”


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.

Half of U.S. Employees Interested in Changing Jobs

U.S. labor force

Employed workers

Workers Seeking or Open to a New Job

1000 20 40 60 80



strength in numbers from joining a union, perhaps workers of the Internet era will
prefer using numbers a different way: fi nding salary data and employer reviews online
to negotiate their own career paths.

The psychological contract largely results from the HRM challenge of building a
committed, productive workforce in turbulent economic conditions—conditions that
offer opportunity for fi nancial success but can also quickly turn sour, making every
employee expendable. From the organization’s perspective, the key to survival in a
fast-changing environment is fl exibility. Organizations want to be able to change as
fast as customer needs and economic conditions change. Flexibility in human resource
management includes fl exible staffi ng levels and fl exible work schedules.

Flexible Staffi ng Levels A fl exible workforce is one the organization can quickly
reshape and resize to meet its changing needs. To be able to do this without massive
hiring and fi ring campaigns, organizations are using more alternative work arrange-
ments. Alternative work arrangements are methods of staffi ng other than the tra-
ditional hiring of full-time employees. There are a variety of methods, with the
following being most common:

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

Alternative Work
Methods of staffi ng other
than the traditional hiring
of full-time employees
(for example, use of
independent contractors,
on-call workers, tempo-
rary workers, and con-
tract company workers).

CHAPTER 2 Trends in Human Resource Management 53

• Independent contractors are self-employed individuals with multiple clients.
• On-call workers are persons who work for an organization only when they are

• Temporary workers are employed by a temporary agency; client organizations pay the

agency for the services of these workers.
• Contract company workers are employed directly by a company for a specifi c time

specifi ed in a written contract.

However, employers need to use these options with care. In general, if employers direct
workers in the details of how and when they do their jobs, these workers are legally defi ned
as employees, not contractors. In that case, employers must meet the legal requirements for
paying the employer’s share of Social Security, Medicare, and unemployment insurance.

Recent research suggests that the use of contingent workers has been growing and has
surpassed 2 million workers in the United States and one-fourth of total work hours.51

Employers once mainly relied on contingent workers to fi ll administrative jobs, but now
turn to contingent work arrangements for production workers, technical support, and even
some professional tasks, such as graphic design, engineering, and fi nance. A major reason
for the popularity of contingent work arrangements is that paying contractors enables an
organization to pay only for completion of specifi c tasks and therefore to control costs.

More workers in alternative employment relationships are choosing these arrange-
ments, but preferences vary. Most independent contractors and contract workers have
this type of arrangement by choice. In contrast, temporary agency workers and on-call
workers are likely to prefer traditional full-time employment. There is some debate
about whether nontraditional employment relationships are good or bad. Some labor
analysts argue that alternative work arrangements are substandard jobs featuring low
pay, fear of unemployment, poor health insurance and retirement benefi ts, and dissat-
isfying work. Sometimes it is diffi cult or impossible for organizations to know whether
these contract workers, located anywhere in the world, have safe working conditions
and are not children. Others claim that these jobs provide fl exibility for companies and
employees alike. With alternative work arrangements, organizations can more easily
modify the number of their employees. Continually adjusting staffi ng levels is espe-
cially cost effective for an organization that has fl uctuating demand for its products
and services. And when an organization downsizes by laying off temporary and part-
time employees, the damage to morale among permanent full-time workers is likely
to be less severe.

Flexible Work Schedules The globalization of the world
economy and the development of e-commerce have made the
notion of a 40-hour workweek obsolete. As a result, companies
need to be staffed 24 hours a day, seven days a week. Employees
in manufacturing environments and service call centers are being
asked to work 12-hour days or to work afternoon or midnight
shifts. Similarly, professional employees face long hours and work
demands that spill over into their personal lives. E-mail, texts, and
tweets bombard employees with information and work demands.
In the car, on vacation, on planes, and even in the bathroom, em-
ployees can be interrupted by work demands. More demanding
work results in greater employee stress, less satisfi ed employees,
loss of productivity, and higher turnover—all of which are costly
for companies.

Multitasking has become a way of life for many employ-

ees who need to make the most of every minute. This

trend is affecting human resource management and the

employees it supports.

54 PART 1 The Human Resource Environment

Many organizations are taking steps to provide more fl exible work schedules, to pro-
tect employees’ free time, and to more productively use employees’ work time. Workers
consider fl exible schedules a valuable way to ease the pressures and confl icts of trying
to balance work and nonwork activities. Employers are using fl exible schedules to re-
cruit and retain employees and to increase satisfaction and productivity. For Weatherby
Healthcare, this kind of fl exibility is a good fi t with its corporate strategy of provid-
ing superior service by “putting people fi rst.” Weatherby, a physician staffi ng company,
helps hospitals and other health care institutions fi nd qualifi ed physicians. Weatherby’s
employees must be skilled at uncovering its clients’ culture, needs, and preferences and
also be able to identify thousands of top-quality candidates every year, verify their cre-
dentials, and discern which clients would be a match for those candidates. To fi nd and
keep employees with the necessary level of people skills, Weatherby hires primarily for
personal qualities, provides coaching, and works hard to create a positive atmosphere at
work. Then they are allowed freedom to get their work done. Eddie Rodriguez, senior
marketing coordinator, says, “No one’s chained to their desk here.” If workers need a
break, they are free to go play table tennis or watch the news in the employee lounge.
And if they meet their weekly goals by three o’clock on Friday, they are welcome to get
an early start on the weekend.52



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.


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,;

Lauren Weber, “BYOD? Leaving a Job Can Mean Losing Pic-

tures of Grandma,” Wall Street Journal, January 21, 2014, http://; 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,

CHAPTER 2 Trends in Human Resource Management 55


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

• An organization’s internal labor force comes from
its external labor market—individuals actively
seeking employment.

• In the United States, the labor market is aging and
becoming more racially and ethnically diverse,
with women representing roughly half of the total.

• To compete for talent, organizations must be fl exi-
ble enough to meet the needs of older workers and
must recruit from a diverse population; establish
bias-free HR systems; and help employees under-
stand and appreciate cultural differences.

• Organizations need employees with skills that may
be hard to fi nd: decision making, customer service,
and teamwork, as well as technical skills.

• To meet this challenge, organizations may hire
employees who lack certain skills, then train them
for their jobs.

LO 2-2 Summarize areas in which human resource man-
agement can support the goal of creating a high-perfor-
mance work system.

• To fi nd and keep the best possible fi t between their
social system and technical system, HRM recruits
and selects employees with broad skills and strong
motivation, especially in organizations that rely on
knowledge workers.

• Job design and appropriate systems for assessment
and rewards have a central role in supporting em-
ployee empowerment and teamwork.

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

• Employee empowerment means giving employ-
ees responsibility and authority to make decisions
regarding all aspects of product development or
customer service. The organization holds employ-
ees accountable for products and services, and in
exchange, the employees share in the rewards (or
losses) that result.

• Selection decisions should provide employees who
have the necessary decision-making and interper-
sonal skills.

• Job design should give employees latitude for de-
cision making.

• Employees should be trained to handle their broad

• Feedback and rewards must be appropriate for the
work of empowered employees.

• HRM can also play a role in giving employees ac-
cess to the information they need.

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

• HR professionals should be familiar with the
organization’s strategy and may even play a role in
developing the strategy.

• In a merger or acquisition, HRM must lead efforts
to manage change with skillful employee relations
and meaningful rewards. HR professionals can bring
“people issues” to the attention of the managers lead-
ing change, provide training in confl ict-resolution
skills, and apply knowledge of the other organiza-
tion’s culture. HR professionals also must resolve dif-
ferences between the companies’ HR systems, such
as benefi ts packages and performance appraisals.

• For empowering employees to practice total qual-
ity management, job design is essential.

• Cost control may focus on a specifi c issue, such
as managing health benefi ts, or on support for a
strategic move such as downsizing, reengineering,
or outsourcing.

• To support cost control through downsizing, the
HR department can develop voluntary programs
to reduce the workforce or can help identify the
least valuable employees to lay off. Employee rela-
tions can help maintain the morale of employees
who remain after a downsizing.

• In reengineering, the HR department can lead
in communicating with employees and provid-
ing training. It will also have to prepare new ap-
proaches for recruiting and appraising employees
that are better suited to the reengineered jobs.

• Outsourcing presents similar issues related to job
design and employee selection.

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

• Organizations with international operations hire
employees in foreign countries where they oper-
ate, so they need knowledge of differences in cul-
ture and business practices.

• At home, qualifi ed candidates include immigrants,
so HRM needs to understand and train employees
to deal with differences in cultures, as well as to
ensure laws are followed.

• HRM helps organizations select and prepare em-
ployees for overseas assignments.

• To support effi ciency and growth, HR staff can
prepare companies for offshoring, in which op-
erations are moved to countries where wages are
lower or demand is growing. HR experts can help
organizations determine whether workers in off-
shore locations can provide the same or better

56 PART 1 The Human Resource Environment

skills, how offshoring will affect motivation and
recruitment of employees needed in the United
States, and whether managers are prepared to
manage offshore employees.

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

• Information systems for HRM are widely used
and often are provided through the Internet.

• Internet applications include searching for talent
globally, using online job postings, screening can-
didates online, providing career-related informa-
tion on the organization’s website, and delivering
training online.

• Online information sharing enables employee
self-service for many HR needs, from application
forms to training modules to information about
the details of company policies and benefi ts.

• Organizations can structure work that involves
collaboration among employees at different times
and places, so HR professionals must ensure that
communications remain effective enough to de-
tect and correct problems when they arise.

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

• The employment relationship takes the form of
a “psychological contract” that describes what
employees and employers expect from the em-
ployment relationship, including unspoken expec-
tations that are widely held.

• In the traditional version, organizations expected
their employees to contribute time, effort, skills,

abilities, and loyalty in exchange for job security
and opportunities for promotion.

• Modern organizations’ needs are constantly chang-
ing, so organizations require top performance and
longer work hours but cannot provide job security.
Instead, employees seek fl exible work schedules,
comfortable working conditions, greater auton-
omy, opportunities for training and development,
and performance-related fi nancial incentives.

• For HRM, the changes require planning for fl ex-
ible staffi ng levels.

• For employees, the changes may make job hop-
ping look attractive, but this career strategy often
backfi res.

• Union membership has been declining, which is
consistent with the idea of taking personal respon-
sibility for one’s career.

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

• Organizations seek fl exibility in staffi ng levels
through alternatives to the traditional employ-
ment relationship—outsourcing and temporary
and contract workers. The use of such workers can
affect job design and also the motivation of the or-
ganization’s permanent employees.

• Organizations also may seek fl exible work sched-
ules, including shortened workweeks, which can
be a way for employees to adjust work hours to
meet personal and family needs.

• Organizations also may move employees to differ-
ent jobs to meet changes in demand.


internal labor force, 30
external labor market, 30
high-performance work

systems, 35
knowledge workers, 37
employee empowerment, 38
teamwork, 38

total quality management
(TQM), 41

reengineering, 44
outsourcing, 44
offshoring, 46
expatriates, 47

human resource information
system (HRIS), 47

electronic human resource
management (e-HRM), 48

self-service, 49
psychological contract, 51
alternative work arrangements, 52


1. How does each of the following labor force trends
affect HRM? (LO 2-1)

a. Aging of the labor force.
b. Diversity of the labor force.
c. Skill deficiencies of the labor force.
2. At many organizations, goals include improv-

ing people’s performance by relying on knowledge

workers, empowering employees, and assigning
work to teams. How can HRM support these efforts?
(LO 2-2)

3. How do HRM practices such as performance man-
agement and work design encourage employee
empowerment? (LO 2-3)

CHAPTER 2 Trends in Human Resource Management 57

4. Merging, downsizing, and reengineering all can radi-
cally change the structure of an organization. Choose
one of these changes, and describe HRM’s role in
making the change succeed. If possible, apply your
discussion to an actual merger, downsizing, or re-
engineering effort that has recently occurred. (LO 2-4)

5. When an organization decides to operate facilities
in other countries, how can HRM practices support
this change? (LO 2-5)

6. Why do organizations outsource HRM functions?
How does outsourcing affect the role of human re-
source professionals? Would you be more attracted
to the role of the HR professional in an organization

that outsources many HR activities or in the outside
fi rm that has the contract to provide the HR ser-
vices? Why? (LO 2-6)

7. What HRM functions could an organization provide
through self-service? What are some advantages and
disadvantages of using self-service for these func-
tions? (LO 2-6)

8. How is the employment relationship that is typical
of modern organizations different from the relation-
ship of a generation ago? (LO 2-7)

9. Discuss several advantages of fl exible work sched-
ules. What are some disadvantages? (LO 2-8)

Taking Care of People Gives Cisco Systems a Strategic Advantage
Strategic thinking about human resource management
and other services has helped Cisco Systems take care
of its people and even people beyond the organization.
At the same time, it has helped the company, which sells
computer networking hardware and services, maintain
consistent growth and profi tability.

During the recent recession, sales slowed, and Cisco’s
executives sought more effi cient ways to operate. Out of
that effort came a plan for restructuring HRM and other
services such as purchasing and customer support. Man-
agement determined that these services would be deliv-
ered on a global scale as part of a Global Business Services
unit. That unit, in turn, was divided into groups focused
on delivering day-to-day services and others focused on
strategic planning. HRM employees were divided, with
some assigned to tactics and others to strategy.

The head of tactical HRM is Don McLaughlin, Cisco’s
vice president of employee experience. Applying his back-
ground in manufacturing, McLaughlin took a businesslike
approach. He set measurable goals for hiring, training, re-
wards, communication, and work design, treating Cisco’s
employees as customers of those services. He measures the
time to deliver each service and his customers’ satisfaction.
While driving down the cost of each service by at least
10%, McLaughlin has maintained or raised customer sat-
isfaction scores. He works closely with the human resource
partners assigned to support strategy for each Cisco group
around the world. Those HR managers get to know their
businesses and create plans for improving the company’s
talent, leadership, organization, and culture.

One of the regional HR managers is Danielle
Monaghan, human resource partner in Cisco’s Technical
Services Division in San Jose, California. Born in South
Africa, Monaghan worked for other technology compa-
nies before joining Cisco to manage human resources in
Asia. In the Asian assignment, she saw fi rsthand some of

the challenges of recruiting and developing talent in the
continent’s distinctive cultures. In Japan, for example,
she needed to build networks to locate talent, because it
is inappropriate to make a job search public. In China,
the issues are developing leadership skills and learning
to manage the rise of unions. Monaghan’s global per-
spective is now helping Monaghan tackle strategic is-
sues such as workforce planning.

Perhaps one of the company’s most distinctive efforts
is the Cisco Learning Network, which grew out of the
training efforts of Cisco’s education services division. The
division trains customers and partners, and it saw an on-
line network as a way to reach people around the world
with information about how to use the technology Cisco
sells. People from high school students through experi-
enced professionals join the network to take classes, study
together, and share ideas. As participation has ballooned
from 600,000 in the fi rst year to more than 2 million re-
cently, the company added information about careers, job
openings, and industry trends. The data created through
social networking and the connections to a worldwide
community have given Cisco an edge in building its rep-
utation and understanding its labor market.

1. How has Cisco Systems prepared itself for respond-

ing to trends in the labor force?
2. How have Cisco’s HR managers balanced concerns

for cost and quality?

Sources: Ladan Nikravan, “Cisco: Divide and Conquer,” Talent Management,
February 4, 2014,; John Scorza, “An HR Journey
Leads to Insights on Asia,” HR Magazine, July 2013, Business Insights:
Global,; Robert Berkman, “How Cisco’s Learning
Network Became a Social Hub for the IT Industry,” MIT Sloan Manage-

ment Review, February 12, 2013,; “Analysts’
Choice: Strong, Steady Cisco Wins Race,” Dow Theory Forecasts, July 29,
2013, p. 8.


58 PART 1 The Human Resource Environment

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
manager of each group is expected to envision what
that group should accomplish and what skills are nec-
essary. If the manager needs different skills than the
ones already on the team, the manager is supposed to
make changes. To keep workers on the team, Netfl ix
is open about paying salaries in line with the labor
market—what employees would be offered if they
considered leaving for a competitor.

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.

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-
ties would contribute to it being a high-performance
work system?

Sources: Patty McCord, “How Netfl ix Reinvented HR,” Harvard Business

Review, January–February 2014, pp. 71–6; Edward E. Lawler III, “Netfl ix:
We Got It Right!” Forbes, June 24, 2013,; Francesca
Fenzi, “Three Big Ideas to Steal from Netfl ix,” Inc., February 5, 2013,; Robert J. Grossman, “Tough Love at Netfl ix,” HR

Magazine, April 1, 2010,


Radio Flyer Rolls Forward
The mid-2000s were a diffi cult time for Radio Flyer, a
private business famous for its little red wagons. After
spending hundreds of thousands of dollars to develop
what they hoped was a hit, managers realized their idea
wouldn’t fl y, so they killed it. And in the same year, man-
agement decided the company could no longer afford to
build wagons in the United States.

First, the development fl op: Thomas Schlegel, vice
president for product development, thought he had a
winner with an idea for a collapsible wagon to be called
Fold 2 Go Wagon. It would be a fun product that par-
ents could fold up and toss into the back of a minivan for
a trip to the park or other outings. The problem was, a


CHAPTER 2 Trends in Human Resource Management 59

collapsing toy that children sit inside is diffi cult to make
both functional and safe. The costs were excessive.

When Schlegel ended the project, he feared his
reputation might suffer as well. But CEO Robert Pasin
assured Schlegel that failure was acceptable as long as
the company could learn from it. The value placed on
learning became something that Schlegel capitalized
on as his team applied what they learned to the devel-
opment of a new success, the Twist Trike and a new
model of its wagons called the Ultimate Family Wagon.
Furthermore, Pasin expanded that one experience into a
teaching opportunity. He invites new employees to join
him for breakfasts, during which he recalls the incident
as a way to reinforce the company’s commitment to in-
novation and learning.

The story of Radio Flyer’s need to outsource manu-
facturing has what some might see as a less-happy end-
ing. Looking at the numbers, management determined
that it would have to close its factory in Chicago and lay
off about half of its workforce. Manufacturing moved
to a factory in China. Pasin describes the effort as “an
incredibly diffi cult time.”

The company’s effort with its remaining U.S. em-
ployees focused on building morale. These efforts in-
clude creating ideas for employees to have fun and
pursue their passions, with events such as the Radio
Flyer Olympics, during which employees compete in
silly contests like tricycle races. More seriously, teams of

employees tackle issues that they care about. The well-
ness committee put together a cash benefi t that pays
employees up to $300 for participating in health-related
activities such as weight-loss counseling or running
races. Another committee brought together employ-
ees concerned about the environment. They assembled
a campaign aimed at persuading employees to reduce
their carbon footprint.

In caring for the U.S. employees, Radio Flyer hasn’t
forgotten the ones in China. The company tries to
maintain similar levels of benefi ts and engagement
among the four dozen employees in its China offi ce.

1. How could a human resource manager help Radio

Flyer get the maximum benefi t from the motiva-
tional efforts described in this case?

2. Do you think outsourcing would be harder on em-
ployees in a small company such as Radio Flyer than
in a large corporation? Why or why not? How could
HRM help smooth the transition?

3. What additional developments described in this
chapter could help Radio Flyer live out the high
value it places on learning and innovation?

Sources: Radio Flyer corporate website, www.radiofl, accessed April
24, 2014; “2013 Best Small Workplaces: #13: Radio Flyer, Inc.,” Great Place

to Work,, accessed April 24, 2014; Jessie Scanlon,
“Radio Flyer Learns from a Crash,” Bloomberg Businessweek, October 21,

1. Lauren Weber and Rachel Feintzeig, “Companies Say No to
Having an HR Department,” The Wall Street Journal, April
8, 2014,; Todd Henneman, “Is HR at
Its Breaking Point?” Workforce, March 22, 2013, http://www.

2. Eric Krell, “Is HR Doing More with Less? Or Is It Undergo-
ing a Transformation?” HR Magazine, September 2013, Busi-
ness Insights: Global,

3. Bureau of National Affairs, “2014 Outlook: Screening, Re-
cruiting, ACA Compliance, Talent Management on HR’s
Agenda,” HR Focus, February 2014, pp. 1–6.

4. Bureau of Labor Statistics, “Employment Projections, 2012–
2022,” news release, December 19, 2013,

5. Ibid.
6. AARP, “Best Employers for Workers over 50: 2011 Win-

ners,” September 2011,
7. A. Fox, “Mixing It Up,” HR Magazine, May 2011, pp. 22–7;

B. Hite, “Employers Rethink How They Give Feedback,”
The Wall Street Journal, October 13, 2008, p. B5; E. White,
“Age Is as Age Does: Making the Generation Gap Work for
You,” The Wall Street Journal, June 30, 2008, p. B3.

8. Bureau of Labor Statistics, “Employment Projections,

9. Ibid.

10. For background, see Randall Monger and James Yankay,
“U.S. Legal Permanent Residents: 2012,” Annual Flow Re-
port, U.S. Department of Homeland Security, Offi ce of Im-
migration Statistics, March 2013,; U.S.
Citizenship and Immigration Services, “Green Card (Perma-
nent Residence),”, last updated May 13,
2011; U.S. Department of State, “Temporary Worker Visas,”, accessed April 14, 2014; Amy Sher-
man, “Obama Holds Record for Cracking Down on Employ-
ers Who Hire Undocumented Workers, Says Wasserman
Schultz,” Politifact, July 3, 2013,
(rating Wasserman Schultz’s statement “half true”); Doris
Meissner, Donald M. Kerwin, Muzaffar Chishti, and Claire
Bergeron, Immigration Enforcement in the United States: The
Rise of a Formidable Machinery (Washington, DC: Migration
Policy Institute, January 2013), p. 6, accessed at http://www.

11. T. H. Cox and S. Blake, “Managing Cultural Diversity: Im-
plications for Organizational Competitiveness,” The Execu-
tive 5 (1991), pp. 45–56.

12. “Global Diversity and Inclusion: Fostering Innovation
through a Diverse Workforce,” Forbes Insights, July 2011,


60 PART 1 The Human Resource Environment

13. Craig Wolf, “Diversity Helps Bridgeway Grow,” Poughkeepsie
(N.Y.) Journal, January 14, 2012, http://www.poughkeepsie-

14. Bureau of National Affairs, “Employers Report Diffi culty
Finding Qualifi ed Candidates for Certain Positions, Poll Re-
veals,” HR Focus, June 2013, p. 7; Lorri Freifeld, “Bridging the
Skills Gap,” Training, April 3, 2013, http://www.trainingmag.
com; Bureau of National Affairs, “2014 Outlook,” p. 6; K.
Frasch, “The Talent-Job Mismatch,” Human Resource Executive,
March 2013, p. 10.

15. James R. Hagerty, “Industry Puts Heat on Schools to Teach
Skills Employers Need,” The Wall Street Journal, June 6,
2011,; Lucia Mutikani, “Veterans Help
Manufacturers Plug Skills Gap,” Reuters, February 2, 2012,

16. J. A. Neal and C. L. Tromley, “From Incremental Change to
Retrofi t: Creating High-Performance Work Systems,” Acad-
emy of Management Executive 9 (1995), pp. 42–54.

17. Bureau of Labor Statistics, “Employment Projections,

18. M. Hilton, “Skills for Work in the 21st Century: What Does
the Research Tell Us?” Academy of Management Executive, No-
vember 2008, pp. 63–78.

19. Evan Rosen, “Every Worker Is a Knowledge Worker,”
Bloomberg Businessweek, January 11, 2011, http://www; Joe McKendrick, “These Days, Who Is
Not a ‘Knowledge Worker’?” SmartPlanet, April 12, 2010,

20. Corilyn Shropshire, “Grainger Gives Employees Room to
Grow,” Chicago Tribune, November 15, 2011, http://www See also Jessica Stillman, “The Perpet-
ually Vexing Problem of Hiring Programmers,” Inc., January
5, 2012,

21. T. J. Atchison, “The Employment Relationship: Untied or Re-
Tied,” Academy of Management Executive 5 (1991), pp. 52–62.

22. R. Vance, Employee Engagement and Commitment (Alexandria,
VA: Society for Human Resource Management, 2006); M.
Huselid, “The Impact of Human Resource Management
Practices on Turnover, Productivity, and Corporate Finan-
cial Performance,” Academy of Management Journal 38 (1995),
pp. 635–72; S. Payne and S. Webber, “Effects of Service
Provider Attitudes and Employment Status on Citizenship
Behaviors and Customers’ Attitudes and Loyalty Behavior,”
Journal of Applied Psychology 91 (2006), pp. 365–68; J. Hartner,
F. Schmidt, and T. Hayes, “Business-Unit Level Relationship
between Employee Satisfaction, Employee Engagement, and
Business Outcomes: A Meta-analysis,” Journal of Applied Psy-
chology 87 (2002), pp. 268–79.

23. Alex Adamopoulos, “‘Agile’ Grows Up, Readies to Take
Over Your Whole Business,” VentureBeat, February 9, 2012,; Agile Alliance, “What Is Agile Soft-
ware Development?”, accessed
February 10, 2012.

24. Adrienne Fox, “Achieving Integration: Boost Corporate Per-
formance,” HR Magazine, April 2011, Business & Company
Resource Center,

25. J. R. Jablonski, Implementing Total Quality Management: An
Overview (San Diego: Pfeiffer, 1991).

26. R. Hodgetts, F. Luthans, and S. Lee, “New Paradigm Orga-
nizations: From Total Quality to Learning to World-Class,”
Organizational Dynamics, Winter 1994, pp. 5–19.

27. Bureau of National Affairs, “2014 Outlook,” pp. 4–5.
28. Ibid., p. 3; Bureau of National Affairs, “Experts Detail the

Evolving Role of HR and Compensation,” Report on Salary
Surveys, July 2013, pp. 8–10; Bureau of National Affairs, “HR
in the Middle as Employers Consider Health Care Coverage
Options,” Managing Benefi ts Plans, March 2014, pp. 5–6.

29. Bureau of Labor Statistics, “Extended Mass Lay-
offs: Fourth Quarter 2011, Annual Totals 2011,”
news release, February 10, 2012, http://www.bls
.gov/mls; Bureau of Labor Statistics, “Mass Layoff Statistics,”
last updated May 13, 2013, In response to
budget cuts, the BLS stopped publishing mass layoff statistics
after the fi rst quarter of 2013.

30. “Lay Off the Layoffs,” Newsweek, February 4, 2010, http://; Ryan Bakken, “Marvin:
A Window on the Economy,” Grand Forks (ND) Herald, No-
vember 21, 2011, Business & Company Resource Center,

31. A. Church, “Organizational Downsizing: What Is the Role of
the Practitioner?” Industrial- Organizational Psychologist 33, no. 1
(1995), pp. 63–74.

32. Dori Meinert, “HR Budgets Show Modest Growth,” HR
Magazine, November 2011, p. 24.

33. The Right Thing, “The Goodyear Tire and Rubber Com-
pany Discovers Key to Successful Outsourcing Partner-
ships,” Workforce Management, March 2011, p. S2.

34. Yum Brands, “Yum Restaurants China,” http://www.yum
.com, accessed April 24, 2014; Laurie Burkitt, “Yum Bids to
Regain Consumer Confi dence in China with New Menu,”
Wall Street Journal, March 27, 2014,;
Caitlin Bowling, “China: The Key to Yum Brands Bounce-
Back Year,” Louisville Business First, April 24, 2014, http://; Reuters, “Yum Brands’
China Restaurant Sales Improve, Shares Rise,” April 22,

35. David Wessel, “Big U.S. Firms Shift Hiring Abroad,” The
Wall Street Journal, April 19, 2011,;
David Wessel, “U.S. Firms Keen to Add Foreign Jobs,” The
Wall Street Journal, November 22, 2011, http://online.wsj
.com; M. Hess, “Homeward Bound,” Workforce Management,
February 2013, pp. 26–31; Emily Chasan, “Outsourcing
Loses Its Luster for U.S. Tech Companies,” The Wall Street
Journal, March 6, 2014,

36. Megha Bahree, “Indian Tech Firms Look to Hire Abroad,”
The Wall Street Journal, November 11, 2011, http://online; Bureau of National Affairs, “2014 Outlook,” p. 5.

37. Monger and Yankay, “U.S. Legal Permanent Residents:

38. Audrey Singer, “Immigrants in 2010 Metropolitan America: A
Decade of Change,” State of Metropolitan America, no. 43, Brook-
ings Institution, October 24, 2011,;
Bureau of Labor Statistics, “Foreign-Born Workers: Labor
Force Characteristics, 2012,” news release, May 22, 2013, http://

39. R. L. Tung, “Expatriate Assignments: Enhancing Success and
Minimizing Failure,” Academy of Management Executive 12,
no. 4 (1988), pp. 93–106.

40. M. J. Kavanaugh, H. G. Guetal, and S. I. Tannenbaum,
Human Resource Information Systems: Development and Applica-
tion (Boston: PWS-Kent, 1990).

CHAPTER 2 Trends in Human Resource Management 61

41. Dave Zielinski, “HRIS Features Get More Strategic,” HR
Magazine, December 2011, p. 15.

42. Ed Frauenheim, “Strong to the Core,” Workforce Management,
August 2013, Business Insights: Global, http://bi.galegroup

43. “Payroll as You Go,” Entrepreneur, October 2011, p. 45.
44. N. Lockwood, Maximizing Human Capital: Demonstrating HR

Value with Key Performance Indicators (Alexandria, VA: SHRM
Research Quarterly, 2006).

45. “Social Technologies on the Front Line: The Management 2.0
M-Prize Winners,” McKinsey Quarterly, September 2011, http://

46. Ibid.
47. J. O’Toole and E. Lawler III, The New American Workplace

(New York: Palgrave Macmillan, 2006).
48. D. M. Rousseau, “Psychological and Implied Contracts in

Organizations,” Employee Rights and Responsibilities Journal
2 (1989), pp. 121–29.

49. Bureau of Labor Statistics, “Employee Tenure in 2012,” news
release, September 18, 2012,

50. Dan Schawbel, “How Job Hopping Can Hurt Your
Career,” CNN, January 17, 2012, http://articles; Chrissy Scivicque, “How to Stop Job Hopping
Once and for All,” Forbes, January 23, 2012, http://www; Alina Dizik, “The Pros and Cons of Job-
Hopping,” CNN, July 4, 2011,

51. Fast Fact, “Temporary Workforce Stronger than Ever,”
T  1  D, May 2011, p. 21; Kate Lister, “Freelance Nation,”
Entrepreneur, September 2010, pp. 89–97; Pete Fehrenbach,
“Temp Help as Labor Force De-volatile-izer,” Industry Week,
October 2013, p. 40.

52. Ed Finkel, “Positive Thinking,” Modern Healthcare, October
24, 2011, Business & Company Resource Center, http://; Weatherby Healthcare, “About Us,”, accessed January 25,

3 Providing Equal
Employment Opportunity
and a Safe Workplace

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 3-1 Explain how the three branches of government
regulate human resource management.

LO 3-2 Summarize the major federal laws requiring equal
employment opportunity.

LO 3-3 Identify the federal agencies that enforce equal
employment opportunity, and describe the role of

LO 3-4 Describe ways employers can avoid illegal
discrimination and provide reasonable

LO 3-5 Defi ne sexual harassment, and tell how employers
can eliminate or minimize it.

LO 3-6 Explain employers’ duties under the Occupational
Safety and Health Act.

LO 3-7 Describe the role of the Occupational Safety and
Health Administration.

LO 3-8 Discuss ways employers promote worker safety
and health.

When Donald Sterling, then owner of the Los Angeles Clippers basketball team,
chided a female friend for bringing her black friends to games, he might have
thought the conversation was purely personal. Even when he discovered that the
conversation had been recorded and leaked to the media, he might have thought
the exposure of blatantly racist remarks was just a personal embarrassment. If he
thought so, he soon discovered that he was wrong. Furious Clippers players pro-
tested, and Clippers fans threatened to boycott the remaining games of the season.

NBA Commissioner Adam Silver stepped in and investigated. He determined
that Sterling’s actions were not merely rude but a violation of the NBA’s core val-
ues. Noting that the NBA has a history of taking “a leadership role in matters
of race relations,” Silver called Sterling’s comments “contrary to the principles of
inclusion and respect that form the foundation of our diverse, multicultural and
multiethnic league.” Silver fined Sterling $2.5 million and barred him from entering any
Clippers facility. Sterling’s family recently sold the team to former Microsoft CEO, Steve
Ballmer.1 Silver’s decision made a point that is relevant outside the world of sports: the
leaders of an organization set the tone for the organization. Organizations depend on
leaders to model ethical and legal conduct that is consistent with their values, and they
depend on employees to follow that good example.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 63

As we saw in Chapter 1, human
resource management takes place
in the context of the company’s
goals and society’s expectations for
how a company should operate.
In the United States, the federal
government has set some limits
on how an organization can prac-
tice human resource management.
Among these limits are require-
ments intended to prevent discrim-
ination in hiring and employment
practices and to protect the health
and safety of workers while they
are on the job. Questions about a
company’s compliance with these
requirements can result in law-
suits and negative publicity that
often cause serious problems for
a company’s success and survival.
Conversely, a company that skill-
fully navigates the maze of regula-
tions can gain an advantage over
its competitors. A further advantage may go to companies that go beyond mere legal
compliance to make fair employment and worker safety important components of the
company’s business strategy. The NBA commissioner was not required to punish Don-
ald Sterling because of a law; rather, he was maintaining a climate in the professional
basketball league that would be favorable to the best players of all races and welcoming
to fans of all races and ethnicities. Similarly, an employer that requires employees to treat
one another with respect fosters a climate that attracts and keeps talented workers.

This chapter provides an overview of the ways government bodies regulate equal
employment opportunity and workplace safety and health. It introduces you to major
laws affecting employers in these areas, as well as the agencies charged with enforcing
those laws. The chapter also discusses ways organizations can develop practices that
ensure they are in compliance with the laws.

One point to make at the outset is that managers often want a list of dos and don’ts
that will keep them out of legal trouble. Some managers rely on strict rules such as
“Don’t ever ask a female applicant if she is married,” rather than learning the reasons
behind those rules. Clearly, certain practices are illegal or at least inadvisable, and this
chapter will provide guidance on avoiding such practices. However, managers who
merely focus on how to avoid breaking the law are not thinking about how to be ethi-
cal or how to acquire and use human resources in the best way to carry out the compa-
ny’s mission. This chapter introduces ways to think more creatively and constructively
about fair employment and workplace safety.

Regulation of Human Resource Management
All three branches of the U.S. government—legislative, executive, and judicial—play
an important role in creating a legal environment for human resource management.
The legislative branch, which consists of the two houses of Congress, has enacted a

LO 3-1 Explain how the
three branches of gov-
ernment regulate human
resource management.

One way the executive branch communicates information about laws is through websites like

Youth Rules!. This site is designed to provide young workers with a safe workplace by making

them aware of laws that, for example, restrict the amount of work they can do and the machinery

they can operate.

64 PART 1 The Human Resource Environment

number of laws governing human resource activities. Senators and U.S. representa-
tives generally develop these laws in response to perceived societal needs. For example,
during the civil rights movement of the early 1960s, Congress enacted Title VII of the
Civil Rights Act to ensure that various minority groups received equal opportunities
in many areas of life.

The executive branch, including the many regulatory agencies that the president
oversees, is responsible for enforcing the laws passed by Congress. Agencies do this
through a variety of actions, from drawing up regulations detailing how to abide by
the laws to fi ling suit against alleged violators. Some federal agencies involved in reg-
ulating human resource management include the Equal Employment Opportunity
Commission and the Occupational Safety and Health Administration. In addition,
the president may issue executive orders, which are directives issued solely by the
president, without requiring congressional approval. Some executive orders regulate
the activities of organizations that have contracts with the federal government. For
example, President Lyndon Johnson signed Executive Order 11246, which requires
all federal contractors and subcontractors to engage in affi rmative-action programs
designed to hire and promote women and minorities. (We will explore the topic of
affi rmative action later in this chapter.)

The judicial branch, the federal court system, infl uences employment law by inter-
preting the law and holding trials concerning violations of the law. The U.S. Supreme
Court, at the head of the judicial branch, is the court of fi nal appeal. Decisions made
by the Supreme Court are binding; they can be overturned only through laws passed
by Congress. The Civil Rights Act of 1991 was partly designed to overturn Supreme
Court decisions.

Equal Employment Opportunity
Among the most signifi cant efforts to regulate human resource management are those
aimed at achieving equal employment opportunity (EEO)—the condition in which
all individuals have an equal chance for employment, regardless of their race, color,
religion, sex, age, disability, or national origin. The federal government’s efforts to cre-
ate equal employment opportunity include constitutional amendments, legislation,
and executive orders, as well as court decisions that interpret the laws. Table 3.1 sum-
marizes major EEO laws discussed in this chapter. These are U.S. laws; equal employ-
ment laws in other countries may differ.

Constitutional Amendments
Two amendments to the U.S. Constitution—the Thirteenth and Fourteenth—have
implications for human resource management. The Thirteenth Amendment abolished
slavery in the United States. Though you might be hard-pressed to cite an example
of race-based slavery in the United States today, the Thirteenth Amendment has been
applied in cases where discrimination involved the “badges” (symbols) and “incidents”
of slavery.

The Fourteenth Amendment forbids the states from taking life, liberty, or property
without due process of law and prevents the states from denying equal protection of
the laws. Recently it has been applied to the protection of whites in charges of reverse
discrimination. In a case that marked the early stages of a move away from race-based
quotas, Alan Bakke alleged that as a white man he had been discriminated against in
the selection of entrants to the University of California at Davis medical school.2 The

LO 3-2 Summarize
the major federal laws
requiring equal employ-
ment opportunity.

Equal Employment
Opportunity (EEO)
The condition in which
all individuals have an
equal chance for em-
ployment, regardless of
their race, color, religion,
sex, age, disability, or
national origin.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 65


Thirteenth Amendment Abolished slavery All individuals Court system
Fourteenth Amendment Provides equal protection for

all citizens and requires due
process in state action

State actions (e.g.,
decisions of government
organi zations)

Court system

Civil Rights Acts (CRAs)
of 1866 and 1871 (as

Grants all citizens the right
to make, perform, modify,
and terminate contracts and
enjoy all benefi ts, terms, and
conditions of the contractual

All individuals Court system

Equal Pay Act of 1963 Requires that men and women
performing equal jobs receive
equal pay

Employers engaged in
interstate commerce


Title VII of CRA Forbids discrimination based
on race, color, religion, sex, or
national origin

Employers with 15 or more
employees working 20 or
more weeks per year; labor
unions; and employment


Age Discrimination in
Employment Act of 1967

Prohibits discrimination in
employment against individuals
40 years of age and older

Employers with 15 or more
employees working 20
or more weeks per year;
labor unions; employment
agencies; federal government


Rehabilitation Act of 1973 Requires affi rmative action in
the employment of individuals
with disabilities

Government agencies;
federal contractors and
subcontractors with contracts
greater than $2,500


Pregnancy Discrimination
Act of 1978

Treats discrimination based on
pregnancy-related conditions as
illegal sex discrimi nation

All employees covered by
Title VII


Americans with Disabilities
Act of 1990

Prohibits discrimination against
individuals with disabilities

Employers with more than
15 employees


Executive Order 11246 Requires affi rmative action in
hiring women and minorities

Federal contractors and
subcontractors with
contracts greater than


Civil Rights Act of 1991 Prohibits discrimination (same
as Title VII)

Same as Title VII, plus applies
Section 1981 to employment
discrimination cases


Uniformed Services
Employment and
Reemployment Rights
Act of 1994

Requires rehiring of employees
who are absent for military
service, with training and
accommodations as needed

Veterans and members of
reserve components

Veterans’ Employment and
Training Service

Genetic Information
Nondiscrimination Act of

Prohibits discrimination
because of genetic information

Employers with 15 or more


Lilly Ledbetter Fair Pay Act
of 2009

Allows employees to claim
discriminatory compensation
within a set time after receiving
a discriminatory paycheck

Employees covered by Title
VII of CRA, Age Discrimination
in Employment Act, and
Americans with Disabilities


Table 3.1
Summary of Major EEO Laws and Regulations

66 PART 1 The Human Resource Environment

university had set aside 16 of the available 100 places for “disadvantaged” applicants
who were members of racial minority groups. Under this quota system, Bakke was able
to compete for only 84 positions, whereas a minority applicant was able to compete for
all 100. The federal court ruled in favor of Bakke, noting that this quota system had
violated white individuals’ right to equal protection under the law.

An important point regarding the Fourteenth Amendment is that it applies only to
the decisions or actions of the government or of private groups whose activities are
deemed government actions. Thus, a person could fi le a claim under the Fourteenth
Amendment if he or she had been fi red from a state university (a government organi-
zation) but not if the person had been fi red by a private employer.

The periods following the Civil War and during the civil rights movement of the
1960s were times when many voices in society pressed for equal rights for all without
regard to a person’s race or sex. In response, Congress passed laws designed to provide
for equal opportunity. In later years, Congress has passed additional laws that have
extended EEO protection more broadly.

Civil Rights Acts of 1866 and 1871 During Reconstruction, Congress passed
two Civil Rights Acts to further the Thirteenth Amendment’s goal of abolishing slav-
ery. The Civil Rights Act of 1866 granted all persons the same property rights as white
citizens, as well as the right to enter into and enforce contracts. Courts have inter-
preted the latter right as including employment contracts. The Civil Rights Act of
1871 granted all citizens the right to sue in federal court if they feel they have been
deprived of some civil right. Although these laws might seem outdated, they are still
used because they allow the plaintiff to recover both compensatory and punitive dam-
ages (that is, payment to compensate them for their loss plus additional damages to
punish the offender).

Equal Pay Act of 1963 Under the Equal Pay Act of 1963, if men and women in
an organization are doing equal work, the employer must pay them equally. The act
defi nes equal in terms of skill, effort, responsibility, and working conditions. However,
the act allows for reasons why men and women performing the same job might be paid
differently. If the pay differences result from differences in seniority, merit, quantity or
quality of production, or any factor other than sex (such as participating in a training
program or working the night shift), then the differences are legal.

Title VII of the Civil Rights Act of 1964 The major law regulating equal em-
ployment opportunity in the United States is Title VII of the Civil Rights Act of 1964.
Title VII directly resulted from the civil rights movement of the early 1960s, led by
such individuals as Dr. Martin Luther King Jr. To ensure that employment opportuni-
ties would be based on character or ability rather than on race, Congress wrote and
passed Title VII, and President Lyndon Johnson signed it into law in 1964. The law is
enforced by the Equal Employment Opportunity Commission (EEOC), an agency
of the Department of Justice.

Title VII prohibits employers from discriminating against individuals because of
their race, color, religion, sex, or national origin. An employer may not use these char-
acteristics as the basis for not hiring someone, for fi ring someone, or for discriminating

Equal Employment
Commission (EEOC)
Agency of the Depart-
ment of Justice charged
with enforcing Title VII
of the Civil Rights Act of
1964 and other antidis-
crimination laws.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 67

against them in the terms of their pay, conditions of employment, or privileges of
employment. In addition, an employer may not use these characteristics to limit, seg-
regate, or classify employees or job applicants in any way that would deprive any indi-
vidual of employment opportunities or otherwise adversely affect his or her status as
an employee. The act applies to organizations that employ 15 or more persons work-
ing 20 or more weeks a year and that are involved in interstate commerce, as well as
state and local governments, employment agencies, and labor organizations.

Title VII also states that employers may not retaliate against employees for either
“opposing” a perceived illegal employment practice or “participating in a proceed-
ing” related to an alleged illegal employment practice. Opposition refers to expressing
to someone through proper channels that you believe an illegal employment act has
taken place or is taking place. Participation in a proceeding refers to testifying in an
investigation, hearing, or court proceeding regarding an illegal employment act. The
purpose of this provision is to protect employees from employers’ threats and other
forms of intimidation aimed at discouraging employees from bringing to light acts
they believe to be illegal. Companies that violate this prohibition may be liable for
punitive damages.

Age Discrimination in Employment Act (ADEA) One category of employ-
ees not covered by Title VII is older workers. Older workers sometimes are concerned
that they will be the targets of discrimination, especially when a company is downsiz-
ing. Older workers tend to be paid more, so a company that wants to cut labor costs
may save by laying off its oldest workers. To counter such discrimination, Congress
in 1967 passed the Age Discrimination in Employment Act (ADEA), which prohibits
discrimination against workers who are over the age of 40. Similar to Title VII, the
ADEA outlaws hiring, fi ring, setting compensation rates, or other employment deci-
sions based on a person’s age being over 40.

Many fi rms have offered early-retirement incentives as an alternative or supple-
ment to involuntary layoffs. Because this approach to workforce reduction focuses on
older employees, who would be eligible for early retirement, it may be in violation of
the ADEA. Early-retirement incentives require that participating employees sign an
agreement waiving their rights to sue under the ADEA. Courts have tended to uphold
the use of early-retirement incentives and waivers as long as the individuals were not
coerced into signing the agreements, the agreements were presented in a way the em-
ployees could understand (including technical legal requirements such as the ages of
discharged and retained employees in the employee’s work unit), and the employees
had been given enough time to make a decision.3 Also, these waivers must meet the
basic requirements of a contract, so the employer must offer something of value—for
example, payment of a percentage of the employee’s salary—in exchange for the em-
ployee giving up rights under the waiver.

To defend against claims of discrimination, one practical way is to establish
performance-related criteria for layoffs, rather than age- or salary-related criteria. Of
course, those criteria must be genuinely performance related. The EEOC recently
sued a Michigan manufacturer for apparently manipulating its layoff criteria in order
to target the oldest engineers for layoffs. In the fi rst round of layoffs at Hutchin-
son Sealing Systems, the oldest project engineer was the one who met the criteria.
Then the company revised its criteria and laid off two more engineers, again the oldest
on the payroll. If the criteria had not been changed, younger engineers would have met
the layoff criteria, and the EEOC saw that as evidence of age discrimination.4

68 PART 1 The Human Resource Environment

Age discrimination complaints make up a large percentage of the complaints fi led
with the Equal Employment Opportunity Commission, and whenever the economy is
slow, the number of complaints grows. For example, as shown in Figure 3.1, the num-
ber of age discrimination cases jumped in 2008, when many fi rms were downsizing,
and has fallen slightly as the recovery has proceeded at a slow pace. Another increase
in age discrimination claims accompanied the economic slowdown at the beginning
of the 2000s.

In today’s environment, in which fi rms are seeking talented individuals to achieve
the company’s goals, older employees can be a tremendous pool of potential resources.
Researchers have found that although muscle power tends to decline with age, older
workers tend to offer other important strengths, including conscientiousness and in-
terpersonal skills.5 Older workers also may have acquired deep knowledge of their
work, industry, and employer. Successful companies are fi nding ways to keep these
valuable older workers on the job and contributing. Union Carbide asks retired man-
agers to serve as mentors for its current managers. In Australia, a bank called Westpac
has identifi ed knowledgeable older workers, labeled them “sages,” and asked them to
create a database of what they know about the organization and their work. At Mercy
Health Systems, workers approaching retirement are allowed to take leaves of absence
with benefi ts, and retired workers are invited to be part of a temporary workforce that
comes back during periods of heavy demand.

Vocational Rehabilitation Act of 1973 In 1973, Congress passed the Voca-
tional Rehabilitation Act to enhance employment opportunity for individuals with dis-
abilities. This act covers executive agencies and contractors and subcontractors that
receive more than $2,500 annually from the federal government. These organizations
must engage in affi rmative action for individuals with disabilities. Affi rmative action

Affi rmative Action
An organization’s active
effort to fi nd opportuni-
ties to hire or promote
people in a particular

Figure 3.1
Age Discrimination Complaints, 1999–2013























Source: Equal Employment Opportunity Commission,

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 69

is an organization’s active effort to fi nd opportunities to hire or promote people in a
particular group. Thus, Congress intended this act to encourage employers to recruit
qualifi ed individuals with disabilities and to make reasonable accommodations to all
those people to become active members of the labor market. The Department of
Labor’s Employment Standards Administration enforces this act.

Vietnam Era Veterans’ Readjustment Act of 1974 Similar to the Reha-
bilitation Act, the Vietnam Era Veterans’ Readjustment Act of 1974 requires federal
contractors and subcontractors to take affi rmative action toward employing veterans
of the Vietnam War (those serving between August 5, 1964, and May 7, 1975). The
Offi ce of Federal Contract Compliance Procedures, discussed later in this chapter, has
authority to enforce this act.

Pregnancy Discrimination Act of 1978 An amendment to Title VII of the
Civil Rights Act of 1964, the Pregnancy Discrimination Act of 1978 defi nes discrimi-
nation on the basis of pregnancy, childbirth, or related medical conditions to be a form
of illegal sex discrimination. According to the EEOC, this means that employers may
not treat a female applicant or employee “unfavorably because of pregnancy, child-
birth, or a medical condition related to pregnancy or childbirth.”6 For example, an em-
ployer may not refuse to hire a woman because she is pregnant. Decisions about work
absences or accommodations must be based on the same policies as the organization
uses for other disabilities. Benefi ts, including health insurance, should cover pregnancy
and related medical conditions in the same way that it covers other medical conditions.

Americans with Disabilities Act (ADA) of 1990 One of the farthest-
reaching acts concerning the management of human resources is the Americans with
Disabilities Act. This 1990 law protects individuals with disabilities from being dis-
criminated against in the workplace. It prohibits discrimination based on disability in
all employment practices, such as job application procedures, hiring, fi ring, promo-
tions, compensation, and training. Other employment activities covered by the ADA
are employment advertising, recruitment, tenure, layoff, leave, and fringe benefi ts.

The ADA defi nes disability as a physical or mental impairment that substantially
limits one or more major life activities, a record of having such an impairment, or
being regarded as having such an impairment. The fi rst part of the defi nition refers to
individuals who have serious disabilities—such as epilepsy, blindness, deafness, or pa-
ralysis—that affect their ability to perform major bodily functions and major life ac-
tivities such as walking, learning (for example, functions of the brain and immune
system), caring for oneself, and working. The second part refers to individuals who
have a history of disability, such as someone who has had cancer but is currently in
remission, someone with a history of mental illness, and someone with a history of
heart disease. The third part of the defi nition, “being regarded as having a disability,”
refers to people’s subjective reactions, as in the case of someone who is severely disfi g-
ured; an employer might hesitate to hire such a person on the grounds that people will
react negatively to such an employee.7

The ADA covers specifi c physiological disabilities such as cosmetic disfi gurement
and anatomical loss affecting the body’s systems. In addition, it covers mental and psy-
chological disorders such as mental retardation, organic brain syndrome, emotional
or mental illness, and learning disabilities. Conditions not covered include obesity,
substance abuse, irritability, and poor judgment.8 Also, if a person needs ordinary

Under the Americans
with Disabilities Act,
a physical or mental
impairment that sub-
stantially limits one or
more major life activities,
a record of having such
an impairment, or being
regarded as having such
an impairment.

70 PART 1 The Human Resource Environment

eyeglasses or contact lenses to perform each major life activity with little or no dif-
fi culty, the person is not considered disabled under the ADA. (In determining whether
an impairment is substantially limiting, mitigating measures, such as medicine, hearing
aids, and prosthetics, once could be considered but now must be ignored.) Figure 3.2
shows the types of disabilities associated with complaints fi led under the ADA in 2013.

In contrast to other EEO laws, the ADA goes beyond prohibiting discrimination to
require that employers take steps to accommodate individuals covered under the act.
If a disabled person is selected to perform a job, the employer (perhaps in consultation
with the disabled employee) determines what accommodations are necessary for the
employee to perform the job. Examples include using ramps and lifts to make facili-
ties accessible, redesigning job procedures, and providing technology such as TDD
lines for hearing-impaired employees. Some employers have feared that accommoda-
tions under the ADA would be expensive. However, the Department of Labor has
found that two-thirds of accommodations cost less than $500, and many of these cost
nothing.9 As technology advances, the cost of many technologies has been falling. In
addition, the federal government has created a tax credit, the Work Opportunity Tax
Credit, of up to $2,400 for each qualifi ed disabled worker hired. That means accom-
modating disabled workers can lower an employer’s income taxes.

Civil Rights Act of 1991 In 1991 Congress broadened the relief available to
victims of discrimination by passing a Civil Rights Act (CRA 1991). CRA 1991 amends
Title VII of the Civil Rights Act of 1964, as well as the Civil Rights Act of 1866, the
Americans with Disabilities Act, and the Age Discrimination in Employment Act of
1967. One major change in EEO law under CRA 1991 has been the addition of com-
pensatory and punitive damages in cases of discrimination under Title VII and the
Americans with Disabilities Act. Before CRA 1991, Title VII limited damage claims
to equitable relief, which courts have defi ned to include back pay, lost benefi ts, front
pay in some cases, and attorney’s fees and costs. CRA 1991 allows judges to award

Figure 3.2
Disabilities Associated

with Complaints Filed

under ADA

Source: Equal Employ-

ment Opportunity Com-

mission, “ADA Charge

Data by Impairments/

Bases: Receipts, FY1997–

FY2013,” http://www1., accessed April

29, 2014.


Regarded as
disabled (11.4%)

Back (9.0%)

orthopedic (8.8%)

Record of
disability (6.6%)

Diabetes (4.7%)

Cancer (3.7%)

Heart (3.6%)

Other neurological

Hearing (2.9%)


Other (21.9%)

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 71

compensatory and punitive damages when the plaintiff proves the discrimination was
intentional or reckless. Compensatory damages include such things as future monetary
loss, emotional pain, suffering, and loss of enjoyment of life. Punitive damages are a
punishment; by requiring violators to pay the plaintiff an amount beyond the actual
losses suffered, the courts try to discourage employers from discriminating.

Recognizing that one or a few discrimination cases could put an organization out
of business, and so harm many innocent employees, Congress has limited the amount
of punitive damages. As shown in Table 3.2, the amount of damages depends on the
size of the organization charged with discrimination. The limits range from $50,000
per violation at a small company (14 to 100 employees) to $300,000 at a company with
more than 500 employees. A company has to pay punitive damages only if it discrimi-
nated intentionally or with malice or reckless indifference to the employee’s federally
protected rights.

Uniformed Services Employment and Reemployment Rights Act of
1994 When members of the armed services were called up following the terrorist
attacks of September 2001, a 1994 employment law—the Uniformed Services Employ-
ment and Reemployment Rights Act (USERRA)—assumed new signifi cance. Under
this law, employers must reemploy workers who left jobs to fulfi ll military duties for
up to fi ve years. When service members return from active duty, the employer must
reemploy them in the job they would have held if they had not left to serve in the
military, providing them with the same seniority, status, and pay rate they would have
earned if their employment had not been interrupted. Disabled veterans also have
up to two years to recover from injuries received
during their service or training, and employers must
make reasonable accommodations for a remaining

Service members also have duties under
USERRA. Before leaving for duty, they are to
give their employers notice, if possible. After their
service, the law sets time limits for applying to be
reemployed. Depending on the length of service,
these limits range from approximately 2 to 90 days.
Veterans with complaints under USERRA can ob-
tain assistance from the Veterans’ Employment
and Training Service of the Department of Labor.

Genetic Information Nondiscrimination
Act of 2008 Thanks to the deco ding of the
human genome and developments in the fi elds of
genetics and medicine, researchers can now iden-
tify more and more genes associated with risks for

14 to 100 employees $ 50,000
101 to 200 employees 100,000
201 to 500 employees 200,000
More than 500 employees 300,000

Table 3.2
Maximum Punitive
Damages Allowed under
the Civil Rights Act
of 1991

Aric Miller, an Army reservist sergeant, was deployed for service with the

363rd military police unit in Iraq for over a year. When he returned to the

states, he was able to resume his job as an elementary school teacher

thanks to the 1994 Uniformed Services Employment and Reemployment

Rights Act. The act requires employers to reemploy service members in

the job they would have held if they had not left to serve in the military.

Why is this act important?

72 PART 1 The Human Resource Environment

developing particular diseases or disorders. While learning that you are at risk of, say,
colon cancer may be a useful motivator to take precautions, the information opens up
some risks as well. For example, what if companies began using genetic screening to
identify and avoid hiring job candidates who are at risk of developing costly diseases?
Concerns such as this prompted Congress to pass the Genetic Information Nondis-
crimination Act (GINA) of 2008.

Under GINA’s requirements, companies with 15 or more employees may not use
genetic information in making decisions related to the terms, conditions, or privileges
of employment—for example, decisions to hire, promote, or lay off a worker. This
genetic information includes information about a person’s genetic tests, genetic tests
of the person’s family members, and family medical histories. Furthermore, employ-
ers may not intentionally obtain this information, except in certain limited situations
(such as an employee voluntarily participating in a wellness program or requesting
time off to care for a sick relative). If companies do acquire such information, they
must keep the information confi dential. The law also forbids harassment of any em-
ployee because of that person’s genetic information.

Lilly Ledbetter Fair Pay Act of 2009 In reaction to a Supreme Court deci-
sion overturning an EEOC policy that defi ned the time frame when employees may
fi le a complaint, Congress passed the Lilly Ledbetter Fair Pay Act. The act covers
discrimination in pay; that is, when an individual receives different pay than his or
her coworkers, and the difference is due to race, color, religion, sex, national origin,
age, or disability. Named after the worker whose pay discrimination complaint did not
withstand the Supreme Court’s ruling, the act made the EEOC’s policy a federal law. It
provides three ways to determine the time period within which an employee may fi le
a complaint: counting from (1) when the employer’s decision or other discriminatory
practice happened; (2) when the person became subject to the decision or practice; or
(3) when the compensation was affected by the decision or practice, including each
time the employee received a discriminatory level of compensation from the employer.

Executive Orders
Two executive orders that directly affect human resource management are Executive
Order 11246, issued by Lyndon Johnson, and Executive Order 11478, issued by Rich-
ard Nixon. Executive Order 11246 prohibits federal contractors and subcontractors
from discriminating based on race, color, religion, sex, or national origin. In addition,
employers whose contracts meet minimum size requirements must engage in affi r-
mative action to ensure against discrimination. Those receiving more than $10,000
from the federal government must take affi rmative action, and those with contracts
exceeding $50,000 must develop a written affi rmative-action plan for each of their
establishments. This plan must be in place within 120 days of the beginning of the
contract. This executive order is enforced by the Offi ce of Federal Contract Compli-
ance Procedures.

Executive Order 11478 requires the federal government to base all its employment
policies on merit and fi tness. It specifi es that race, color, sex, religion, and national ori-
gin may not be considered. Along with the government, the act covers all contractors
and subcontractors doing at least $10,000 worth of business with the federal govern-
ment. The U.S. Offi ce of Personnel Management is in charge of ensuring that the
government is in compliance, and the relevant government agencies are responsible
for ensuring the compliance of contractors and subcontractors.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 73

The Government’s Role in Providing for Equal
Employment Opportunity
At a minimum, equal employment opportunity requires that employers comply with
EEO laws. To enforce those laws, the executive branch of the federal government uses
the Equal Employment Opportunity Commission and the Offi ce of Federal Contract
Compliance Programs.

Equal Employment Opportunity Commission (EEOC)
The Equal Employment Opportunity Commission (EEOC) is responsible for enforc-
ing most of the EEO laws, including Title VII, the Equal Pay Act, and the Americans
with Disabilities Act. To do this, the EEOC investigates and resolves complaints about
discrimination, gathers information, and issues guidelines. As described in “HR How
To,” the EEOC has tried to increase its effectiveness by setting priorities where it be-
lieves its enforcement will have the most impact.

When individuals believe they have been discriminated against, they may fi le a com-
plaint with the EEOC or a similar state agency. They must fi le the complaint within
180 days of the incident. The meaning of an “incident” for this purpose is defi ned by
law. For example, the Lilly Ledbetter Fair Pay Act establishes that for determining
pay discrimination, an incident can be receiving a paycheck. Figure 3.3 illustrates the
number of charges fi led with the EEOC for different types of discrimination in 2013.

LO 3-3 Identify the
federal agencies that en-
force equal employment
opportunity, and describe
the role of each.

Figure 3.3
Types of Charges Filed with the EEOC









Total Charges: 93,727


















l P










l o



Source: Equal Employment Opportunity Commission, “Charge Statistics FY 1997 through FY 2013,”, accessed

April 29, 2014.


Recently, the Equal Employment

Opportunity Commission an-

nounced that it would be more

strategic about how it carries out

its mission. Employers may fi nd

it useful to be equally strategic in


The EEOC established six areas

that would be priorities because

they have the greatest potential to

reduce and deter employment dis-

crimination. The six areas are (1)

eliminating barriers in recruitment

and hiring; (2) protecting immigrant,

migrant, and other workers con-

sidered vulnerable; (3) addressing

emerging issues, such as accom-

modating workers with disabili-

ties and preventing discrimination

against gay and lesbian employ-

ees, which could take the form of

sex discrimination; (4) enforcing

equal pay laws; (5) preserving ac-

cess to the legal system by target-

ing retaliation; and (6) preventing


Employers must, of course, obey

all the EEO laws. But the commis-

sion’s focus on these concerns sug-

gest that employers can have the

most impact on compliance and

reduce legal problems by ensuring

that the organization is performing

well in the same six areas. Employ-

ers should:

• Review all of their selec-

tion methods to be sure

none of them discriminates


• Ensure all employees know how

to avoid harassing or segregat-

ing groups of workers, such as

immigrants or gay and lesbian


• Train all supervisors and HR

decision makers in avoiding dis-

crimination and retaliation.

• Keep complete records of

performance reviews and pay

decisions to ensure that pay

gaps are due to performance



1. Suppose you are an HR

manager in a U.S. company.

How would you explain to your

company’s business managers

the importance of the EEOC’s

strategic priorities?

2. How would you suggest

that your department apply

these priorities in planning

its management training


Sources: Nicole Saleem, “National Pri-

orities: The EEOC’s Four Year Plan,” 101

Practice Series (American Bar Associa-

tion Young Lawyers Division), http://www., accessed April 30, 2014;

Andrea Davis, “EEOC Goes CSI,” Em-

ployee Benefi t News, April 15, 2013, pp. 8,

10; Lydell C. Bridgeford, “Q&A: Key Take-

aways from EEOC’s Strategic Enforcement

Plan,” Bloomberg BNA Labor & Employ-

ment Blog, January 7, 2013, http://www.; Equal Employment Opportunity

Commission, “EEOC Approves Strategic

Enforcement Plan,” news release, Decem-

ber 18, 2012,

Being Strategic about EEO

HR How To

Many individuals fi le more than one type of charge (for instance, both race discrimi-
nation and retaliation), so the total number of complaints fi led with the EEOC is less
than the total of the amounts in each category.

After the EEOC receives a charge of discrimination, it has 60 days to investigate
the complaint. If the EEOC either does not believe the complaint to be valid or fails
to complete the investigation within 60 days, the individual has the right to sue in
federal court. If the EEOC determines that discrimination has taken place, its repre-
sentatives will attempt to work with the individual and the employer to try to achieve
a reconciliation without a lawsuit. Sometimes the EEOC enters into a consent decree
with the discriminating organization. This decree is an agreement between the agency
and the organization that the organization will cease certain discriminatory practices
and possibly institute additional affi rmative-action practices to rectify its history of
discrimination. A settlement with the EEOC can be costly, including such remedies as
back pay, reinstatement of the employee, and promotions.

If the attempt at a settlement fails, the EEOC has two options. It may issue a “right
to sue” letter to the alleged victim. This letter certifi es that the agency has investigated
the victim’s allegations and found them to be valid. The EEOC’s other option, which
it uses less often, is to aid the alleged victim in bringing suit in federal court.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 75

The EEOC also monitors organizations’ hiring practices. Each year organiza-
tions that are government contractors or subcontractors or have 100 or more em-
ployees must fi le an Employer Information Report (EEO-1) with the EEOC. The
EEO-1 report is an online questionnaire requesting the number of employees in
each job category (such as managers, professionals, and laborers), broken down by
their status as male or female, Hispanic or non-Hispanic, and members of various
racial groups. The EEOC analyzes those reports to identify patterns of discrimina-
tion, which the agency can then attack through class-action lawsuits. Employers
must display EEOC posters detailing employment rights. These posters must be in
prominent and accessible locations—for example, in a company’s cafeteria or near its
time clock. Also, employers should retain copies of documents related to employ-
ment decisions—recruitment letters, announcements of jobs, completed job applica-
tions, selections for training, and so on. Employers must keep these records for at
least six months or until a complaint is resolved, whichever is later.

Besides resolving complaints and suing alleged violators, the EEOC issues guide-
lines designed to help employers determine when their decisions violate the laws en-
forced by the EEOC. These guidelines are not laws themselves. However, the courts
give great consideration to them when hearing employment discrimination cases.
For example, the Uniform Guidelines on Employee Selection Procedures is a set
of guidelines issued by the EEOC and other government agencies. The guidelines
identify ways an organization should develop and administer its system for selecting
employees so as not to violate Title VII. The courts often refer to the Uniform Guide-
lines to determine whether a company has engaged in discriminatory conduct. Simi-
larly, in the Federal Register, the EEOC has published guidelines providing details about
what the agency will consider illegal and legal in the treatment of disabled individuals
under the Americans with Disabilities Act.

Office of Federal Contract Compliance Programs (OFCCP)
The Offi ce of Federal Contract Compliance Programs (OFCCP) is the agency
responsible for enforcing the executive orders that cover companies doing business
with the federal government. As we stated earlier in the chapter, businesses with con-
tracts for more than $50,000 may not discriminate in employment based on race, color,
religion, national origin, or sex, and they must have a written affi rmative-action plan
on fi le. This plan must include three basic components:

1. Utilization analysis—A comparison of the race, sex, and ethnic composition of the
employer’s workforce with that of the available labor supply. The percentages in
the employer’s workforce should not be greatly lower than the percentages in the
labor supply.

2. Goals and timetables—The percentages of women and minorities the organization
seeks to employ in each job group, and the dates by which the percentages are to
be attained. These are meant to be more fl exible than quotas, requiring only that
the employer have goals and be seeking to achieve the goals.

3. Action steps—A plan for how the organization will meet its goals. Besides working
toward its goals for hiring women and minorities, the company must take affi rma-
tive steps toward hiring Vietnam veterans and individuals with disabilities.

Each year, the OFCCP audits government contractors to ensure they are actively pur-
suing the goals in their plans. The OFCCP examines the plan and conducts on-site visits
to examine how individual employees perceive the company’s affi rmative-action policies.

EEO-1 Report
The EEOC’s Employer In-
formation Report, which
counts employees sorted
by job category, sex, eth-
nicity, and race.

Uniform Guidelines on
Employee Selection
Guidelines issued by the
EEOC and other agen-
cies to identify how an
organization should
develop and administer
its system for selecting
employees so as not to
violate antidiscrimination

Offi ce of Federal
Contract Compliance
Programs (OFCCP)
The agency respon-
sible for enforcing the
executive orders that
cover companies doing
business with the federal

76 PART 1 The Human Resource Environment

If the agency fi nds that a contractor or subcontractor is not complying with the require-
ments, it has several options. It may notify the EEOC (if there is evidence of a violation
of Title VII), advise the Department of Justice to begin criminal proceedings, request
that the Secretary of Labor cancel or suspend any current contracts with the company,
and forbid the fi rm from bidding on future contracts. For a company that depends on the
federal government for a sizable share of its business, that last penalty is severe.

Businesses’ Role in Providing for Equal
Employment Opportunity
Rare is the business owner or manager who wants to wait for the government to iden-
tify that the business has failed to provide for equal employment opportunity. Instead,
out of motives ranging from concern for fairness to the desire to avoid costly lawsuits
and settlements, most companies recognize the importance of complying with these
laws. Often, management depends on the expertise of human resource professionals
to help in identifying how to comply. These professionals can help organizations take
steps to avoid discrimination and provide reasonable accommodation.

Avoiding Discrimination
How would you know if you had been discriminated against? Decisions about human
resources are so complex that discrimination is often diffi cult to identify and prove.
However, legal scholars and court rulings have arrived at some ways to show evidence
of discrimination.

Disparate Treatment One potential sign of discrimination is disparate
treatment— differing treatment of individuals, where the differences are based on the
individuals’ race, color, religion, sex, national origin, age, or disability status. For ex-
ample, disparate treatment would include hiring or promoting one person over an
equally qualifi ed person because of the individual’s race. Or suppose a company fails to
hire women with school-age children (claiming the women will be frequently absent)
but hires men with school-age children. In that situation, the women are victims of
disparate treatment, because they are being treated differently based on their sex. To
sustain a claim of discrimination based on disparate treatment, the women would have
to prove that the employer intended to discriminate.

To avoid disparate treatment, companies can evaluate the questions and investi-
gations they use in making employment decisions. These should be applied equally.
For example, if the company investigates conviction records of job applicants, it
should investigate them for all applicants, not just for applicants from certain ra-
cial groups. Companies may want to avoid some types of questions altogether. For
example, questions about marital status can cause problems, because interviewers
may unfairly make different assumptions about men and women. (Common ste-
reotypes about women have been that a married woman is less fl exible or more
likely to get pregnant than a single woman, in contrast to the assumption that a
married man is more stable and committed to his work.)

Evaluating interview questions and decision criteria to make sure they are job re-
lated is especially important given that bias is not always intentional or even conscious.
Researchers have conducted studies fi nding differences between what people say about
how they evaluate others and how people actually act on their attitudes. Duke Uni-
versity business professor Ashleigh Shelby Rosette has found various ways to uncover

LO 3-4 Describe ways
employers can avoid
illegal discrimination
and provide reasonable

Disparate Treatment
Differing treatment of
individuals, where the
differences are based
on the individuals’ race,
color, religion, sex,
national origin, age, or
disability status.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 77

how individuals evaluate the performance of others.10 In a recent study, she and col-
leagues compared the way sports reporters interpreted the performance of college
quarterbacks—the leaders of football teams. The researchers found that when teams
with a white quarterback performed well, the commentators more often gave credit to
the intelligence of the quarterback. When the winning teams had a black quarterback,
the announcers were more likely to praise the athletic strengths of the quarterback.
When teams with a black quarterback lost, the announcers blamed the quarterback’s
decision making. In prior research, Rosette has found similar patterns in commentary
about the leadership of corporations. In describing successful companies led by black
managers, analysts more often credit the managers for their good sense of humor or
speaking ability or even point to a favorable market rather than crediting the leaders
for their intelligence. Notice that the pattern is not to say people consciously think
the black leaders lack intelligence; rather, the association between the leader and intel-
ligence simply is not made. These results suggest that even when we doubt we have
biases, it may be helpful to use decision-making tools that keep the focus on the most
important criteria.

Is disparate treatment ever legal? The courts have held that in some situations, a
factor such as sex or religion may be a bona fi de occupational qualifi cation
(BFOQ), that is, a necessary (not merely preferred) qualifi cation for performing a job.
A typical example is a job that includes handing out towels in a locker room. Requiring
that employees who perform this job in the women’s locker room be female is a BFOQ.
However, it is very diffi cult to think of many jobs where criteria such as sex and reli-
gion are BFOQs. In a widely publicized case from the 1990s, Johnson Controls, a
manufacturer of car batteries, instituted a “fetal protection” policy that excluded
women of childbearing age from jobs that would expose them to lead, which can cause
birth defects. Johnson Controls argued that the policy was intended to provide a safe
work place and that sex was a BFOQ for jobs that involved exposure to lead. However,
the Supreme Court disagreed, ruling that BFOQs are limited to policies directly re-
lated to a worker’s ability to do the job.11

Disparate Impact Another way to assess potential discrimination is by iden-
tifying disparate impact—a condition in which employment practices are seem-
ingly neutral yet disproportionately exclude a protected group from employment
opportunities. In other words, the company’s employment practices lack obvious
discriminatory content, but they affect one group differently than others. Exam-
ples of employment practices that might result in disparate impact include pay,
hiring, promotions, or training. In the area of hiring, for example, many companies
encourage their employees to refer friends and family members for open positions.
These referrals can produce a pool of well-qualifi ed candidates who would be a
good fi t with the organization’s culture and highly motivated to work with people
they already know. However, given people’s tendency to associate with others like
themselves, this practice also can have an unintentional disparate impact on groups
not already well represented at the employer. Organizations that encourage em-
ployee referrals therefore should combine the program with other kinds of recruit-
ment and make sure that every group in the organization is equally encouraged to
participate in the referral program.12 For another example of disparate impact, see
“HRM Social.”

A commonly used test of disparate impact is the four-fi fths rule, which fi nds evi-
dence of potential discrimination if the hiring rate for a minority group is less than
four-fi fths the hiring rate for the majority group. Keep in mind that this rule of thumb

Bona Fide Occupational
Qualifi cation (BFOQ)
A necessary (not merely
preferred) qualifi cation
for performing a job.

Disparate Impact
A condition in which
employment practices
are seemingly neutral
yet disproportionately
exclude a protected
group from employment

Four-Fifths Rule
Rule of thumb that pro-
vides (or shows) evidence
of potential discrimination
if an organization’s hiring
rate for a minority group
is less than four-fi fths the
hiring rate for the majority


compares rates of hiring, not numbers of employees hired. Figure 3.4 illustrates how to
apply the four-fi fths rule.

If the four-fi fths rule is not satisfi ed, it provides evidence of potential discrimination.
To avoid declarations of practicing illegally, an organization must show that the disparate
impact caused by the practice is based on a “business necessity.” This is accomplished by
showing that the employment practice is related to a legitimate business need or goal.
Of course, it is ultimately up to the court to decide if the evidence provided by the orga-
nization shows a real business necessity or is illegal. The court will also consider if other
practices could have been used that would have met the business need or goal but not
resulted in discrimination.

An important distinction between disparate treatment and disparate impact is
the role of the employer’s intent. Proving disparate treatment in court requires
showing that the employer intended the disparate treatment, but a plaintiff need
not show intent in the case of disparate impact. It is enough to show that the result
of the treatment was unequal. For example, the requirements for some jobs, such
as fi refi ghters or pilots, have sometimes included a minimum height. Although the
intent may be to identify people who can perform the jobs, an unintended result
may be disparate impact on groups that are shorter than average. Women tend to

At many organizations, the people

who make hiring decisions conduct

an online search of social media to

learn more about candidates. The

objective is to gain greater insight

into people’s character and spot red

fl ags that a person might behave

unprofessionally. However, some

recent research at Carnegie Mellon

University suggests that screen-

ing candidates with social media

contributes to discriminatory hiring


The study was an experiment in

which the researchers created fi c-

tional résumés and social-media

profi les and sent the résumés to

U.S. businesses that had advertised

job openings. All the résumés listed

the same qualifi cations under dif-

ferent names, but the social media

hinted that applicants were either

Christian or Muslim or that they

were either gay or straight. The

companies were more likely to call

the applicants with the Christian-

sounding profi les than the ones

who seemed to be Muslim. Broken

down geographically, the difference

was statistically signifi cant in some

states. The researchers did not fi nd

a difference in response rates re-

lated to sexual orientation.

The Equal Employment Oppor-

tunity Commission has recognized

concerns about whether use of

social media promotes discrimi-

natory employment decisions. It

recently held a meeting to gather

information about the issue. Pan-

elists described the need for

caution—that employers must be

sure the information they gather

is related to job qualifi cations.

They also suggested that employ-

ers consider using a third-party

company to conduct background

checks on social media. That

agency would report only the job-

related information obtained from

the background check and omit

protected information, such as an

employee’s religion, health, and

pregnancy status.


1. Explain how the Carnegie Mellon

study is an example of disparate


2. For the employee characteristics

protected by EEO laws, which

could you avoid revealing on a

social-media career site such

as LinkedIn? Which would be

diffi cult or impossible to avoid


Sources: Jon Hyman, “EEOC Holds Pub-

lic Meeting on Social Media in the Work-

place,” Workforce, March 13, 2014, http://; Equal Employment

Opportunity Commission, “Social Media

Is Part of Today’s Workplace but Its Use

May Raise Employment Discrimination

Concerns,” news release, March 12, 2014,; Jennifer Valentino-

DeVries, “Bosses May Use Social Media

to Discriminate against Job Seekers,” Wall

Street Journal, November 20, 2013, http://

The Discrimination Risk of Using Social Media in Hiring

HRM Social

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 79

be shorter than men, and people of Asian ancestry tend to be shorter than people
of European ancestry.

One way employers can avoid disparate impact is to be sure that employment
decisions are really based on relevant, valid measurements. If a job requires a certain
amount of strength and stamina, the employer would want measures of strength and
stamina, not simply individuals’ height and weight. The latter numbers are easier
to obtain but more likely to result in charges of discrimination. Assessing validity
of a measure can be a highly technical exercise requiring the use of statistics. The
essence of such an assessment is to show that test scores or other measurements are
signifi cantly related to job performance. Some employers are also distancing them-
selves from information that could be seen as producing a disparate impact. For ex-
ample, many employers are investigating candidates by looking up their social-media
profi les. This raises the possibility that candidates for hiring or promotion could say
the company passes them over because of information revealed about, say, their re-
ligion or ethnic background. Therefore, some companies hire an outside researcher
to check profi les and report only information related to the person’s job-related
qualifi cations.13

Many employers also address the challenge of disparate impact by analyzing their
pay data to look for patterns that could signal unintended discrimination. If they fi nd
such patterns, they face diffi cult decisions about how to correct any inequities. An
obvious but possibly expensive option is to increase the lower-paid employees’ pay so
it is comparable to pay for the higher-paid group. If these pay increases are diffi cult to
afford, the employer could phase in the change gradually. Another way to handle the
issue is to keep detailed performance records, because they may explain any pay dif-
ferences. Finally, to make a pay gap less likely in the future, employers can ensure that
lower-paid employees are getting enough training, experience, and support to reach
their full potential and earn raises.14

Figure 3.4
Applying the Four-Fifths



EEO Policy Employers can also avoid discrimination and defend against claims of
discrimination by establishing and enforcing an EEO policy. The policy should defi ne
and prohibit unlawful behaviors, as well as provide procedures for making and investi-
gating complaints. The policy also should require that employees at all levels engage in
fair conduct and respectful language. Derogatory language can support a court claim
of discrimination.

Affi rmative Action and Reverse Discrimination In the search for ways
to avoid discrimination, some organizations have used affi rmative-action pro-
grams, usually to increase the representation of minorities. In its original form,
affi rmative action was meant as taking extra effort to attract and retain minority
employees. These efforts have included extensively recruiting minority candidates
on college campuses, advertising in minority-oriented publications, and providing
educational and training opportunities to minorities. Such efforts have helped to
increase diversity among entry-level employees. Although as the “HR Oops!” box
describes, other efforts are needed to promote diversity at the top. Over the years,
however, many organizations have resorted to quotas, or numerical goals for the
proportion of certain minority groups, to ensure that their workforce mirrors the
proportions of the labor market. Sometimes these organizations act voluntarily; in
other cases, the quotas are imposed by the courts or the EEOC.

Whatever the reasons for these hiring programs, by increasing the proportion of
minority or female candidates hired or promoted, they necessarily reduce the propor-
tion of white or male candidates hired or promoted. In many cases, white and/or male

At the biggest U.S. companies,

evidence shows increasing levels

of diversity among nonmanagement

employees. But when researchers

measure the percentage of women

and minorities at each level of the

organization, they fi nd less and

less diversity as they move up the

hierarchy. In other words, the tal-

ent pipeline is leaking women and


One reason may be that al-

though companies say they want

to promote diversity and inclu-

sion, they do not actually reward

managers for their performance

in this area. According to a poll

of executives by Korn Ferry, a re-

cruiting agency, 96% agree that

“having a diverse and inclusive

workforce can improve employee

engagement and business per-

formance.” Almost three-quarters

said their company has a strategy

for promoting diversity and inclu-

sion. However, only about half said

their performance appraisals mea-

sure how well they promote diver-

sity. Less than one-fourth said any

part of their bonus pay is tied to

performance on diversity.

Learning to work with people

who are different from oneself can

take extra energy and insight. Ex-

ecutives are under daily pressure

to deliver results. If they are not re-

warded for helping diverse employ-

ees navigate their career paths—or

punished for failing to do so—they

might well consider that promoting

employees like themselves is the

path of least resistance.


1. How might a bonus related

to diversity affect the ways

executives promote, train, and

develop their employees?

2. What issues of fairness would

you need to consider in tying

part of an executive’s bonus to

performance on diversity?

Sources: Dennis McCafferty, “How

Diversity Delivers on ROI, Employee

Engagement,” CIO Insight, December

3, 2013,;

Andrew McIlvaine, “Engaging the C-

Suite,” HRE Online, November 20,

2013,; Anne

Fisher, “Could Bonuses Lead to More

Diversity at the Top?” Fortune, October

30, 2013, http://management.fortune.

Lack of Rewards May Explain “Leaky Pipeline”

HR Oops!

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 81

individuals have fought against affi rmative action and quotas, alleging what is called
reverse discrimination. In other words, the organizations are allegedly discriminating
against white males by preferring women and minorities. Affi rmative action remains
controversial in the United States. Surveys have found that Americans are least likely
to favor affi rmative action when programs use quotas.15

Besides going beyond EEO laws to actively recruit women and minorities, some
companies go beyond the USERRA’s requirement to reemploy workers returning
from military service. These companies actively seek returning veterans to hire. In
doing so, they are addressing a pressing need in U.S. society. Recent fi gures show that
the unemployment rate for veterans of the wars in Iraq and Afghanistan was recently
9%, which is higher than the overall U.S. rate.16

Providing Reasonable Accommodation
Especially in situations involving religion and individuals with disabilities, equal em-
ployment opportunity may require that an employer make reasonable
accommodation. In employment law, this term refers to an employer’s obligation to
do something to enable an otherwise qualifi ed person to perform a job. Accommoda-
tions for an employee’s religion often involve decisions about what kinds of clothing to
permit or require. Imperial Security ran afoul of discrimination laws when it would not
allow a Muslim security guard to wear a khimar, a covering for her hair, ears, and neck.
When the employee arrived for her fi rst day on the job, she was asked to remove the
khimar. When she said she couldn’t because her religion required it, the company fi red
her. In contrast, Belk, a retailer, requested that an employee wear a Santa hat and holi-
day apron during the weeks leading up to Christmas. The employee, a Jehovah’s Wit-
ness, explained that her religion does not permit her to celebrate holidays, so she
would not wear the items. Her company also fi red her for not complying with its dress
requirements. In both cases, the EEOC fi led a lawsuit against the employer and even-
tually settled for tens of thousands of dollars.17

In the context of religion, this principle recognizes that for some individuals, reli-
gious observations and practices may present a confl ict with work duties, dress codes,
or company practices. For example, some religions require head coverings, or individ-
uals might need time off to observe the sabbath or other holy days, when the company
might have them scheduled to work. When the employee has a legitimate religious
belief requiring accommodation, the employee should demonstrate this need to the
employer. Assuming that it would not present an undue hardship, employers are re-
quired to accommodate such religious practices. They may have to adjust schedules so
that employees do not have to work on days when their religion forbids it, or they may
have to alter dress or grooming requirements.

For employees with disabilities, reasonable accommodations also vary according to
the individuals’ needs. As shown in Figure 3.5, employers may restructure jobs, make
facilities in the workplace more accessible, modify equipment, or reassign an employee
to a job that the person can perform. In some situations, a disabled individual may
provide his or her own accommodation, which the employer allows, as in the case of a
blind worker who brings a guide dog to work.

If accommodating a disability would require signifi cant expense or diffi culty, how-
ever, the employer may be exempt from the reasonable accommodation requirement
(although the employer may have to defend this position in court). An accommodation
is considered “reasonable” if it does not impose an undue hardship on the employer,
such as an expense that is large in relation to a company’s resources.

An employer’s obligation
to do something to en-
able an otherwise quali-
fi ed person to perform
a job.

82 PART 1 The Human Resource Environment

Preventing Sexual Harassment
Based on Title VII’s prohibition of sex discrimination, the EEOC defi nes sexual ha-
rassment of employees as unlawful employment discrimination. Sexual harassment
refers to unwelcome sexual advances. The EEOC has defi ned the types of behavior
and the situations under which this behavior constitutes sexual harassment:

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical
contact of a sexual nature constitute sexual harassment when

1. Submission to such conduct is made either explicitly or implicitly a term or condition
of an individual’s employment,

2. Submission to or rejection of such conduct by an individual is used as the basis for
employment decisions affecting such individual, or

3. Such conduct has the purpose or effect of unreasonably interfering with an indi-
vidual’s work performance or creating an intimidating, hostile, or offensive working

Under these guidelines, preventing sexual discrimination includes managing the
workplace in a way that does not permit anybody to threaten or intimidate employees
through sexual behavior.

LO 3-5 Defi ne sexual
harassment, and tell how
employers can eliminate
or minimize it

Sexual Harassment
Unwelcome sexual
advances as defi ned by
the EEOC.

Figure 3.5
Examples of Reasonable Accommodations under the ADA

Making facilities

work schedules

Acquiring or modifying

Modifying exams
or training programs

readers or

Note: Reasonable accommodations do not include hiring an unqualifi ed person, lowering quality standards, or compromising co-workers’ safety.

Source: Based on Equal Employment Opportunity Commission, “The ADA: Your Responsibilities as an Employer,” modifi ed August 1, 2008, www

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 83

In general, the most obvious examples of sexual harassment involve quid pro quo
harassment, meaning that a person makes a benefi t (or punishment) contingent on an
employee’s submitting to (or rejecting) sexual advances. For example, a manager who
promises a raise to an employee who will participate in sexual activities is engaging in
quid pro quo harassment. Likewise, it would be sexual harassment to threaten to reas-
sign someone to a less-desirable job if that person refuses sexual favors.

A more subtle, and possibly more pervasive, form of sexual harassment is to create
or permit a “hostile working environment.” This occurs when someone’s behavior in
the workplace creates an environment in which it is diffi cult for someone of a particular
sex to work. Common complaints in sexual harassment lawsuits include claims that ha-
rassers ran their fi ngers through the plaintiffs’ hair, made suggestive remarks, touched
intimate body parts, posted pictures with sexual content in the workplace, and used
sexually explicit language or told sex-related jokes. The reason that these behaviors are
considered discrimination is that they treat individuals differently based on their sex.

Although a large majority of sexual harassment complaints received by the EEOC
involve women being harassed by men, a growing share of sexual harassment claims
have been fi led by men. Some of the men claimed that they were harassed by women,
but same-sex harassment also occurs and is illegal. In one case, a teenager working at
McDonald’s eventually overcame his embarrassment and reported that a male man-
ager was making sexual comments and had started grabbing him. Three other employ-
ees also came forward and fi led a complaint with the EEOC. The restaurant settled the
lawsuit for $90,000.19

To ensure a workplace free from sexual harassment, organizations can follow some
important steps. First, the organization can develop a policy statement making it very
clear that sexual harassment will not be tolerated in the workplace. Second, all em-
ployees, new and old, can be trained to identify inappropriate workplace behavior. In
addition, the organization can develop a mechanism for reporting sexual harassment
in a way that encourages people to speak out. Finally, management can prepare to act
promptly to discipline those who engage in sexual harassment, as well as to protect the
victims of sexual harassment.

Valuing Diversity
As we mentioned in Chapter 2, the United States is a diverse nation, and becoming
more so. In addition, many U.S. companies have customers and operations in more
than one country. Managers differ in how they approach the challenges related to this
diversity. Some defi ne a diverse workforce as a competitive advantage that brings them
a wider pool of talent and greater insight into the needs and behaviors of their diverse
customers. These organizations say they have a policy of valuing diversity.

The practice of valuing diversity has no single form; it is not written into law or
business theory. Organizations that value diversity may practice some form of affi rma-
tive action, discussed earlier. They may have policies stating their value of understand-
ing and respecting differences. Organizations may try to hire, reward, and promote
employees who demonstrate respect for others. They may sponsor training programs
designed to teach employees about differences among groups. Whatever their form,
these efforts are intended to make each individual feel respected. Also, these actions
can support equal employment opportunity by cultivating an environment in which
individuals feel welcome and able to do their best.

Valuing diversity, especially in support of an organization’s mission and strat-
egy, need not be limited to the categories protected by law. For example, many

84 PART 1 The Human Resource Environment

organizations see workers struggling to meet the demands of family and career, so
they provide family-friendly benefi ts and policies, as described in Chapter 14. Man-
agers and human resource professionals also are concerned about learning how to
treat transgender employees respectfully and appropriately. Transgender individuals
who are transitioning to the opposite sex would typically change their names. This
change involves administrative decisions for a human resource department. Some of
these—for example, changing e-mail addresses and business cards—are a simple mat-
ter of calling employees by the names they wish to use. Typically, organizations already
do this when, for example, Rebecca Jones wants to be known as Becky or Paul John
Smith wants to be known as P. J. If company policies are too rigid to allow this kind of
personal decision, the needs of the transgender employee may prompt a review of the
policies. Other aspects of the change must meet legal requirements; for example, the
name on tax documents must match the name on the employee’s Social Security card,
so changing those documents must wait for a legal name change. Even so, employers
can respect diversity by demanding no more documentation for name changes in this
situation than in other types of name changes (for example, for a woman who wishes
to change her name after getting married).20

Occupational Safety and Health Act (OSH Act)
Like equal employment opportunity, the protection of employee safety and health is
regulated by the government. Through the 1960s, workplace safety was primarily an
issue between workers and employers. By 1970, however, roughly 15,000 work-related
fatalities occurred every year. That year, Congress enacted the Occupational Safety
and Health Act (OSH Act), the most comprehensive U.S. law regarding worker
safety. The OSH Act authorized the federal government to establish and enforce

LO 3-6 Explain employ-
ers’ duties under the
Occupational Safety and
Health Act

Occupational Safety and
Health Act (OSH Act)
U.S. law authorizing the
federal government to
establish and enforce
occupational safety and
health standards for all
places of employment
engaging in interstate

Organizations that value diversity may try to hire, reward, and promote employees who demonstrate respect for others.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 85

occupational safety and health standards for all places of employment engaging in in-
terstate commerce.

The OSH Act divided enforcement responsibilities between the Department
of  Labor and the Department of Health. Under the Department of Labor, the
Occupational Safety and Health Administration (OSHA) is responsible for in-
specting employers, applying safety and health standards, and levying fi nes for viola-
tion. The Department of Health is responsible for conducting research to determine
the criteria for specifi c operations or occupations and for training employers to com-
ply with the act. Much of the research is conducted by the National Institute for Oc-
cupational Safety and Health (NIOSH).

General and Specific Duties
The main provision of the OSH Act states that each employer has a general duty to
furnish each employee a place of employment free from recognized hazards that cause
or are likely to cause death or serious physical harm. This is called the act’s general-duty
clause. Employers also must keep records of work-related injuries and illnesses and
post an annual summary of these records from February 1 to April 30 in the following
year. Figure 3.6 shows a sample of OSHA’s Form 300A, the annual summary that must
be posted, even if no injuries or illnesses occurred.

The act also grants specifi c rights; for example, employees have the right to:

• Request an inspection
• Have a representative present at an inspection
• Have dangerous substances identifi ed
• Be promptly informed about exposure to hazards and be given

access to accurate records regarding exposure
• Have employer violations posted at the work site

Although OSHA regulations have a (sometimes justifi able) repu-
tation for being complex, a company can get started in meet-
ing these requirements by visiting OSHA’s website (www.osha
.gov) and looking up resources such as the agency’s Small Busi-
ness Handbook and its step-by-step guide called “Compliance As-
sistance Quick Start.”

The Department of Labor recognizes many specifi c types
of hazards, and employers must comply with all the occupa-
tional safety and health standards published by NIOSH. One
area of concern is the illnesses and injuries experienced by
emergency response workers who are putting aside concern
for themselves as they aid victims of a disaster. The General
Accounting Offi ce and Rand Corporation noted that the
health of workers responding to the World Trade Center at-
tacks in 2001 was not suffi ciently addressed. Despite attempts
to learn from the experience, problems occurred again fol-
lowing Hurricane Katrina and the Deepwater Horizon oil spill
in the Gulf of Mexico. In an effort to improve planning for
how to monitor the health and safety of emergency response
workers, NIOSH partnered with other federal agencies
to develop a set of guidelines for protecting these workers.
The guidelines include efforts ahead of emergencies, such as

Safety and Health
Administration (OSHA)
Labor Department
agency responsible
for inspecting employ-
ers, applying safety
and health standards,
and levying fi nes for

OSHA is responsible for inspecting businesses, apply-

ing safety and health standards, and levying fi nes for

violations. OSHA regulations prohibit notifying employ-

ers of inspections in advance.
























































CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 87

health screening and safety training of emergency responders, as well as require-
ments for during and after deployment.21

Although NIOSH publishes numerous standards, it is impossible for regulators to
anticipate all possible hazards that could occur in the workplace. Thus, the general-
duty clause requires employers to be constantly alert for potential sources of harm in
the workplace (as defi ned by the standard of what a reasonably prudent person would
do) and to correct them. Information about hazards can come from employees or
from outside researchers. The union-backed Center for Construction Research and
Training sponsored research into the safety problems related to constructing energy-
effi cient buildings. The study found that workers in “green” construction faced greater
risks of falling and were exposed to new risks from building innovations such as roof-
top gardens and facilities for treating wastewater. Employers need to make these con-
struction sites safer through measures such as better fall protection and more use of

Enforcement of the OSH Act
To enforce the OSH Act, the Occupational Safety and Health Administration conducts
inspections. OSHA compliance offi cers typically arrive at a workplace unannounced;
for obvious reasons, OSHA regulations prohibit notifying employers of inspections
in advance. After presenting credentials, the compliance offi cer tells the employer the
reasons for the inspection and describes, in a general way, the procedures necessary to
conduct the investigation.

An OSHA inspection has four major components. First, the compliance offi cer re-
views the company’s records of deaths, injuries, and illnesses. OSHA requires this kind
of record keeping at all fi rms with 11 or more full- or part-time employees. Next, the
offi cer—typically accompanied by a representative of the employer (and perhaps by
a representative of the employees)—conducts a “walkaround” tour of the employer’s
premises. On this tour, the offi cer notes any conditions that may violate specifi c pub-
lished standards or the less specifi c general-duty clause. The third component of the
inspection, employee interviews, may take place during the tour. At this time, anyone
who is aware of a violation can bring it to the offi cer’s attention. Finally, in a closing
conference, the compliance offi cer discusses the fi ndings with the employer, noting
any violations.

Following an inspection, OSHA gives the employer a reasonable time frame within
which to correct the violations identifi ed. If a violation could cause serious injury or
death, the offi cer may seek a restraining order from a U.S. District Court. The re-
straining order compels the employer to correct the problem immediately. In addition,
if an OSHA violation results in citations, the employer must post each citation in a
prominent place near the location of the violation.

Besides correcting violations identifi ed during the inspection, employers may
have to pay fi nes. These fi nes range from $20,000 for violations that result in
death of an employee to $1,000 for less-serious violations. Other penalties include
criminal charges for falsifying records that are subject to OSHA inspection or
for warning an employer of an OSHA inspection without permission from the
Department of Labor.

Employee Rights and Responsibilities
Although the OSH Act makes employers responsible for protecting workers from
safety and health hazards, employees have responsibilities as well. They have to follow

LO 3-7 Describe the
role of the Occupational
Safety and Health

88 PART 1 The Human Resource Environment

OSHA’s safety rules and regulations governing employee behavior. Employees also
have a duty to report hazardous conditions.

Along with those responsibilities go certain rights. Employees may fi le a complaint
and request an OSHA inspection of the workplace, and their employers may not retali-
ate against them for complaining. Employees also have a right to receive information
about any hazardous chemicals they handle in the course of their jobs. OSHA’s Hazard
Communication Standard and many states’ right-to-know laws require employers
to provide employees with information about the health risks associated with exposure
to substances considered hazardous. State right-to-know laws may be more stringent
than federal standards, so organizations should obtain requirements from their state’s
health and safety agency, as well as from OSHA.

Under OSHA’s Hazard Communication Standard, organizations must have
material safety data sheets (MSDSs) for chemicals that employees are exposed
to. An MSDS is a form that details the hazards associated with a chemical; the
chemical’s producer or importer is responsible for identifying these hazards and
detailing them on the form. Employers must also ensure that all containers of haz-
ardous chemicals are labeled with information about the hazards, and they must
train employees in safe handling of the chemicals. Offi ce workers who encounter a
chemical infrequently (such as a secretary who occasionally changes the toner in a
copier) are not covered by these requirements. In the case of a copy machine, the
Hazard Communication Standard would apply to someone whose job involves
spending a large part of the day servicing or operating such equipment.

Impact of the OSH Act
The OSH Act has unquestionably succeeded in raising the level of awareness of oc-
cupational safety. Yet legislation alone cannot solve all the problems of work site safety.
Indeed, the rate of occupational illnesses more than doubled between 1985 and 1990,
according to the Bureau of Labor Statistics, while the rate of injuries rose by about
8 percent. However, as depicted in Figure 3.7, the combined rate of injuries and ill-
nesses has showed a steady downward trend since then, and illnesses remain a small
share of the total, at around 5%.23 A more troubling trend is an increase in the number
of claims of retaliation against employees who report injuries. The data do not indi-
cate whether more employers are actually retaliating, however, or more employees are
learning that the law forbids retaliation.24

Many industrial accidents are a product of unsafe behaviors, not unsafe working
conditions. Because the act does not directly regulate employee behavior, little behavior
change can be expected unless employees are convinced of the standards’ importance.25

Conforming to the law alone does not necessarily guarantee their employees will
be safe, so many employers go beyond the letter of the law. In the next section we ex-
amine various kinds of employer-initiated safety awareness programs that comply with
OSHA requirements and, in some cases, exceed them.

Employer-Sponsored Safety and Health Programs
Many employers establish safety awareness programs to go beyond mere compliance
with the OSH Act and attempt to instill an emphasis on safety. The “Best Practices”
box provides an example. A safety awareness program has three primary components:
identifying and communicating hazards, reinforcing safe practices, and promoting
safety internationally.

Right-to-Know Laws
State laws that require
employers to provide
employees with informa-
tion about the health
risks associated with
exposure to substances
considered hazardous.

Material Safety Data
Sheets (MSDSs)
Forms on which chemi-
cal manufacturers and
importers identify
the hazards of their

LO 3-8 Discuss ways
employers promote
worker safety and health.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 89

Figure 3.7
Rates of Occupational Injuries and Illnesses







Incidences per 100 Full-Time Workers in Private Industry

200520042003 2006 2007 2008 2009 2010 2011 2012

Injuries and
Injuries and

Note: Data do not include fatal work-related injuries and illnesses.

Source: Bureau of Labor Statistics, “Employer-Reported Workplace Injuries and Illnesses, 2012,” news release, November 7, 2013, http://www.

Identifying and Communicating Job Hazards
Employees, supervisors, and other knowledgeable sources need to sit down and
discuss potential problems related to safety. One method for doing this is the job
hazard analysis technique.26 With this technique, each job is broken down into
basic elements, and each of these is rated for its potential for harm or injury. If
there is agreement that some job element has high hazard potential, the group
isolates the element and considers possible technological or behavior changes to
reduce or eliminate the hazard. This method poses some special challenges for
high-tech companies, where workers may be exposed to materials and conditions
that are not yet well understood. An example is nanotechnology, which involves
applications of extremely tiny products. Masks and other traditional protective
equipment do not necessarily prevent nanoparticles from entering the body, and
their impact on health is not known. Some exposures may be harmless, but re-
searchers are only beginning to learn their impact.27

Another means of isolating unsafe job elements is to study past accidents. The
technic of operations review (TOR) is an analysis method for determining which
specifi c element of a job led to a past accident.28 The fi rst step in a TOR analysis is to
establish the facts surrounding the incident. To accomplish this, all members of the
work group involved in the accident give their initial impressions of what happened.
The group must then, through discussion, come to an agreement on the single, sys-
tematic failure that most likely contributed to the incident, as well as two or three
major secondary factors that contributed to it.

McShane Construction Company combined job analysis with mobile comput-
ing technology when it signed on with Field ID to provide the software for its

Job Hazard Analysis
Safety promotion tech-
nique that involves
breaking down a job into
basic elements, then
rating each element for
its potential for harm or

Technic of Operations
Review (TOR)
Method of promoting
safety by determining
which specifi c element
of a job led to a past


safety inspections. When safety inspectors visit construction sites, they use a mo-
bile device to scan a bar code or read a radio frequency identifi cation (RFID) tag
on each piece of equipment. The code calls up a checklist of safety measures for
that equipment, and the inspector simply checks off or scores the items one by
one. The mobile device then transmits the inspection data to a Field ID database,
where information can easily be retrieved if the company ever needs to study the
cause of an accident.29

To communicate with employees about job hazards, managers should talk directly
with their employees about safety. Memos also are important because the written com-
munication helps establish a “paper trail” that can later document a history of the em-
ployer’s concern regarding the job hazard. Posters, especially if placed near the hazard,
serve as a constant reminder, reinforcing other messages.

Many of Morton Salt’s employees

work in one of the most dangerous

industries: mining. Even so, the com-

pany recently earned a spot on EHS

Today magazine’s list of America’s

safest companies. The honor was

no accident. The company makes

safety one of its sustainability goals

and actively promotes employee in-

volvement in safe practices.

Morton’s safety program in-

volves four main efforts. First, the

company directs employees to

report to a supervisor any “near

misses,” or hazards that could

cause an accident if ignored. Morton

has learned that the more near-miss

reports it receives (and responds

to), the fewer accidents occur, so it

strives for 750 reports each quarter.

The second safety effort is an

annual Safety Day held at each fa-

cility. Production stops so employ-

ees can participate in team building

and safety training exercises, with a

break for lunch hosted by top man-

agers. Third, Morton invites safety

suggestions, which it posts online

and distributes via e-mail. Prizes go

to employees whose ideas are se-

lected as the best.

Finally, the company partici-

pates in OSHA’s Voluntary Protec-

tion Program (VPP). OSHA approves

an application to this program only

if the company has demonstrated

that it has established corporate-

level systems for managing health

and safety, implements them effec-

tively, and uses control processes to

evaluate each facility’s performance

at maintaining worker safety and

health. Many VPP-certifi ed organi-

zations are federal agencies; Morton

was the seventh business to be cer-

tifi ed, and as of this writing, only fi ve

businesses currently participate.

While VPP certifi cation and a

place on EHS Today’s list are cer-

tainly honors to appreciate, the real

accomplishment is the well-being of

Morton’s employees. Morton peri-

odically celebrates this accomplish-

ment with events for employees

whose facilities have passed safety

milestones. For example, the facil-

ity in Grand Saline, Texas, recently

held a banquet to celebrate a mil-

lion work hours without an accident,

and an event in Rittman, Ohio, cel-

ebrated that facility’s achievement

of nine million accident-free hours.


1. How does Morton Salt’s

safety program surpass the

requirements of the OSH Act?

2. How might a human resource

manager at Morton Salt

support the company’s efforts

to promote worker health and


Sources: Morton Salt, “Sustainabil-

ity,”, ac-

cessed April 30, 2014; Occupational

Safety and Health Administration,

“Voluntary Protection Programs: VPP


accessed April 30, 2014; “Morton Salt

Honors Employees,” Grand Saline

(TX) Sun, March 8, 2014, http://www.; “America’s Saf-

est Companies 2013 Protect Workers,

Production and Property,” EHS Today,

November 2013, pp. 35–43; “Mor-

ton Salt Achieves Prestigious OSHA

Award,” Amboy Guardian, October 4,


Morton Salt, “More than Nine Million

Reasons to Celebrate at Morton Salt,”

news release, December 13, 2011,

Morton Salt’s Prize-Winning Safety Program

Best Pract ices

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 91

In communicating risk, managers should recognize that different groups of in-
dividuals may constitute different audiences. Safety trainer Michael Topf often
encounters workplaces where employees speak more than one language. In those
situations, Topf says, it is important to provide bilingual training and signs. But
English skills alone do not guarantee that safety messages will be understood. Su-
pervisors and trainers need to use vocabulary and examples that employees will
understand, and they need to ask for feedback in a culturally appropriate way. For
example, in some cultures, employees will think it is improper to speak up if they
see a problem. It is therefore important for managers to promote many opportu-
nities for communication.30 Human resource managers can support this effort by
providing opportunities for supervisors to learn about the values and communica-
tion styles of the cultures represented at work.

Safety concerns and safety training needs also vary by age group. According to the
Bureau of Labor Statistics, injuries and illnesses requiring time off from work occurred
at the highest rate among workers between the ages of 45 and 54; workers aged 55 to
64 were the next highest group. However, patterns vary according to type of injury.
The Centers for Disease Control and Prevention found the highest rates of falls lead-
ing to a doctor visit occurring among people older than 75, with the next highest rate
being among teenagers. Thus, safety training needs to address the needs of all age
groups. Older workers may have more appreciation of the need for safety, as they have
experienced the impact of wear and tear on their bodies and perhaps have seen people
injured on the job. Younger workers will expect training to be fast-paced and engag-
ing, and if possible, to incorporate technology. One trainer addressed the needs of
multiple generations in a session on fall protection. The group reviewed a few slides of
background information, then engaged in discussions of actual workplace conditions
and planned how to protect workers. Finally, the group tried on the safety equipment
required for their jobs.31

Reinforcing Safe Practices
To ensure safe behaviors, employers should not only defi ne how to work safely
but reinforce the desired behavior. One common technique for reinforcing safe
practices is implementing a safety incentive program to reward workers for their
support of and commitment to safety goals. Such programs start by focusing on
monthly or quarterly goals or by encouraging suggestions for improving safety.
Possible goals might include good housekeeping practices, adherence to safety
rules, and proper use of protective equipment. Later, the program expands to in-
clude more wide-ranging, long-term goals. Typically, the employer distributes
prizes in highly public forums, such as company or department meetings. Surpris-
ingly, one of the most obvious ways to reinforce behavior often does not occur:
when employees report unsafe conditions or behavior, the employer should take
action to correct the problem. This response signals that the organization is seri-
ous when it says it values safety. In a recent survey of employees, most said their
organization had a policy that encouraged reporting safety concerns, but many
said they did not bother because they had come to expect a negative reaction or no
response at all.32

Besides focusing on specifi c jobs, organizations can target particular types of inju-
ries or disabilities, especially those for which employees may be at risk. For example,
Prevent Blindness America estimates that more than 2,000 eye injuries occur every
day in occupational settings.33 Organizations can prevent such injuries through a


Did You Know?

Every year, Liberty Mutual conducts

research it calls the Workplace

Safety Index. In 2011, the most re-

cent year for which data is available,

serious work-related injuries cost

employers more than $55 billion.

The leading cause was overexer-

tion (for example, excessive lifting,

pushing, carrying, or throwing), fol-

lowed by falls on the same level

(rather than from a height, such as

a ladder) and being struck by an ob-

ject or equipment.


Think about your current job,

your most recent job, or the job

you would like to have. Which of

the categories of injuries shown

in the graph are most likely to

occur on that job? (Don’t as-

sume injuries never occur in offi ce


Sources: Liberty Mutual, “2013 Lib-

erty Mutual Workplace Safety Index,”,

accessed April 29, 2014; Langdon

Dement, “Employee Injuries Cost

US Companies in Excess of a Billion

Dollars a Week,” EHS Safety News

America, March 14, 2014, http://; Lib-

erty Mutual Research Institute for

Safety, “Ten Leading Causes of Dis-

abling Workplace Injuries: 2013 Work-

place Safety Index,” From Research to

Reality, Winter 2013–14, pp. 6–7.

Top 10 Causes of Workplace Injuries

420 6 8 10 12 14 16

Roadway incidents3

Falls on same level

Caught in or compressed
by equipment5

Repetitive motion4


Slip or trip without fall


Struck against object

Struck by object

Bodily reaction2

Falls to lower level


10 Leading Causes of Workplace Injuries in 2011

Cost ($ billion)

1 Overexertion involving outside source includes
injuries related to lifting, pushing, pulling,
holding, carrying, or throwing.
2 Other exertions or bodily reactions include
injuries that result from bending, crawling,
reaching, twisting, climbing, stepping,
kneeling, sitting, standing, or walking.

3 Roadway incidents are those involving
a motorized land vehicle.

5 Caught in or compressed by equipment
includes objects as well as equipment.

4 Repetitive motions are those involving

combination of job analysis, written policies, safety training, protective eyewear, re-
wards and sanctions for safe and unsafe behavior, and management support for the
safety effort. Similar practices for preventing other types of injuries are available in
trade publications, through the National Safety Council, and on the website of the
Occupational Safety and Health Administration (

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 93

Promoting Safety Internationally
Given the increasing focus on international management, organizations also need to
consider how to ensure the safety of their employees regardless of the nation in which
they operate. Cultural differences may make this more diffi cult than it seems. For ex-
ample, a study examined the impact of one standardized corporationwide safety policy
on employees in three different countries: the United States, France, and Argentina.
The results of this study indicate that employees in the three countries interpreted the
policy differently because of cultural differences. The individualistic, control-oriented
culture of the United States stressed the role of top management in ensuring safety in a
top-down fashion. However, this policy failed to work in Argentina, where the culture
is more “collectivist” (emphasizing the group). Argentine employees tend to feel that
safety is everyone’s joint concern, so the safety programs needed to be defi ned from the
bottom of the organization up.34

Another challenge in promoting safety internationally is that laws, enforcement
practices, and political climates vary from country to country. With the extensive use
of offshoring, described in Chapter 2, many companies have operations in countries
where labor standards are far less strict than U.S. standards. Managers and employees
in these countries may not think the company is serious about protecting workers’
health and safety. In that case, strong communication and oversight will be necessary if
the company intends to adhere to the ethical principle of valuing its foreign workers’
safety as much as the safety of its U.S. workers.

Overseas experience also can provide insights for improving safety at home as well
as abroad. Liberty Mutual’s Center for Injury Epidemiology (CIE) noticed that dur-
ing harvest season in Vietnam, people who worked both in agricultural and industrial
jobs were injured at far higher rates than those who worked only in one position. The
CIE applied that insight to the U.S. workforce and investigated accident rates among
employees holding two jobs at the same time. The researchers found much higher
accident rates for these workers, both on and off the job. Possible reasons include
that they may be less experienced, under more stress, or more poorly trained than
employees holding one job.35 Given that many employers today are hiring people to
work part-time, they should consider that these workers may try to hold two jobs and
be at greater risk of injury. Training programs and incentives should take that risk into
account—for example, with more fl exible schedules for safety training.



Imagine that your job includes identifying qualifi ed ap-

plicants to fi ll job openings at your company. As you

compare two résumés, you see that the applicants’

experiences are similar, except that one applicant was

working until a month ago, while the other’s last job

ended a year ago. How will you choose between them?

Reports and some research suggest that some com-

panies are more likely to choose the candidate who was

employed until recently. Some job advertisements have

even specifi ed that the company will not consider the

long-term unemployed. Practical thinking may be be-

hind the practice: if you assume that someone who has

been out of work for a long time has been job hunt-

ing, you might suspect that other employers have found

reasons not to hire him or her. It seems effi cient not

to repeat the process of uncovering those problems,

whatever they might be.

In most states, the practice is legal, despite some ef-

forts to pass laws against it. At the same time, however,

94 PART 1 The Human Resource Environment


LO 3-1 Explain how the three branches of government
regulate human resource management.

• The legislative branch develops laws such as those
governing equal employment opportunity and
worker safety and health.

• The executive branch establishes agencies such as
the Equal Employment Opportunity Commission
and Occupational Safety and Health Administra-
tion to enforce the laws by publishing regulations,
fi ling lawsuits, and performing other activities.
The president may also issue executive orders,
such as requirements for federal contractors.

• The judicial branch hears cases related to employ-
ment law and interprets the law.

LO 3-2 Summarize the major federal laws requiring
equal employment opportunity.

• The Civil Rights Acts of 1866 and 1871 grant all
persons equal property rights, contract rights, and
the right to sue in federal court if they have been
deprived of civil rights.

• The Equal Pay Act of 1963 requires equal pay for
men and women who are doing work that is equal
in terms of skill, effort, responsibility, and working

• Title VII of the Civil Rights Act of 1964 prohibits
employment discrimination on the basis of race,
color, religion, sex, or national origin.

• The Age Discrimination in Employment Act pro-
hibits employment discrimination against persons
older than 40.

• The Vocational Rehabilitation Act of 1973 requires
that federal contractors engage in affi rmative ac-
tion in the employment of persons with disabilities.

• The Vietnam Era Veterans’ Readjustment Act of
1974 requires affi rmative action in employment of
veterans who served during the Vietnam War.

• The Pregnancy Discrimination Act of 1978 treats
discrimination based on pregnancy-related condi-
tions as illegal sex discrimination.

• The Americans with Disabilities Act of 1990 re-
quires reasonable accommodations for qualifi ed
workers with disabilities.

• The Civil Rights Act of 1991 provides for com-
pensatory and punitive damages in cases of

• The Uniformed Services Employment and Re-
employment Rights Act of 1994 requires that

it creates conditions that strike many people as unfair

and even cruel to those who are already struggling.

Following the severe recession of a few years ago, the

short-term unemployment rate has returned to levels

experienced before the recession. But for those out of

work for at least 27 weeks, the unemployment rate is

more than twice as high. Working-age men have been

hit disproportionately hard, as job losses were severest

in male-dominated industries, especially in jobs requir-

ing less than a college education. The share of men no

longer even trying to fi nd jobs has been growing, which

has implications for society as a whole.

In response to these concerns, volunteers with the

Society for Human Resource Management have de-

veloped guidelines to encourage hiring policies that do

not discriminate “based solely on their unemployment

status.” The Obama administration urged businesses

to pledge not to discriminate against the unemployed,

and several hundred have signed the pledge, including

Apple, Gap, General Motors, and Walt Disney Company.


1. If an employer’s hiring policies give preference

to those who are already employed, what is the

impact on (1) the company’s performance; (2) work-

ers seeking jobs; and (3) the communities where a

company operates? Based on the impact of these

policies, would you say they are ethical? Why or

why not?

2. Apply the ethical value of fairness to these policies:

is it fair to discriminate against the long-term unem-

ployed? Is it fair not to let employers choose employ-

ees with a track record of holding a job? What hiring

policy best achieves fairness?

Sources: Lisa Guerin, “Discrimination against the Unem-

ployed,” Nolo Legal Topics,, accessed

April 29, 2014; Mark Peters and David Wessel, “More Men in

Prime Working Ages Don’t Have Jobs,” Wall Street Journal,

February 5, 2014,; Kathleen Hennessey,

“CEOs Pledge Not to Discriminate against Long-Term Unem-

ployed,” Los Angeles Times, January 31, 2014, http://articles.; Bill Leonard, “Obama Urges Employers to Hire

the Long-Term Unemployed,” HR News (Society for Human

Resource Management), January 31, 2014, http://www.shrm.

org; Matthew Yglesias, “Statistical Discrimination against the

Long-Term Unemployed,” Slate, April 23, 2013, http://www.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 95

employers reemploy service members who left
jobs to fulfi ll military duties.

• The Genetic Information Nondiscrimination Act
(GINA) of 2008 forbids employers from using ge-
netic information in making decisions related to
the terms, conditions, or privileges of employment.

• Lilly Ledbetter Fair Pay Act of 2009 allows employ-
ees to claim discriminatory compensation within a
set time after receiving a discriminatory paycheck.

LO 3-3 Identify the federal agencies that enforce equal
employment opportunity, and describe the role of each.

• The Equal Employment Opportunity Commis-
sion is responsible for enforcing most of the EEO
laws, including Title VII and the Americans with
Disabilities Act. It investigates and resolves com-
plaints, gathers information, and issues guidelines.

• The Offi ce of Federal Contract Compliance Pro-
cedures is responsible for enforcing executive or-
ders that call for affi rmative action by companies
that do business with the federal government. It
monitors affi rmative-action plans and takes ac-
tion against companies that fail to comply.

LO 3-4 Describe ways employers can avoid illegal discrim-
ination and provide reasonable accommodation.

• Employers can avoid discrimination by avoiding
disparate treatment of job applicants and employ-
ees, as well as policies that result in disparate impact.

• Companies can develop and enforce an EEO pol-
icy coupled with policies and practices that dem-
onstrate a high value placed on diversity.

• Affi rmative action may correct past discrimination,
but quota-based activities can result in charges of
reverse discrimination.

• To provide reasonable accommodation, companies
should recognize needs based on individuals’ reli-
gion or disabilities. Accommodations could include
adjusting schedules or dress codes, making the
workplace more accessible, or restructuring jobs.

LO 3-5 Defi ne sexual harassment, and tell how employ-
ers can eliminate or minimize it.

• Sexual harassment is unwelcome sexual advances
and related behavior that makes submitting to the
conduct a term of employment or the basis for

employment decisions or that interferes with an
individual’s work performance or creates a work en-
vironment that is intimidating, hostile, or offensive.

• Organizations can prevent sexual harassment by
developing a policy that defi nes and forbids it,
training employees to recognize and avoid this
behavior, and providing a means for employees to
complain and be protected.

LO 3-6 Explain employers’ duties under the Occupa-
tional Safety and Health Act.

• Under the Occupational Safety and Health Act,
employers have a general duty to provide employ-
ees a place of employment free from recognized
safety and health hazards.

• They must inform employees about hazardous

• They must maintain and post records of accidents
and illnesses.

• They must comply with NIOSH standards about
specifi c occupational hazards.

LO 3-7 Describe the role of the Occupational Safety and
Health Administration.

• The Occupational Safety and Health Administra-
tion publishes regulations and conducts inspections.

• If OSHA fi nds violations, it discusses them with
the employer and monitors the employer’s re-
sponse in correcting the violation.

LO 3-8 Discuss ways employers promote worker safety
and health.

• Besides complying with OSHA regulations, em-
ployers often establish safety awareness programs
designed to instill an emphasis on safety.

• They may identify and communicate hazards
through the job hazard analysis technique or the
technic of operations review.

• They may adapt communications and training to
the needs of different employees, such as differ-
ences in experience levels or cultural differences
from one country to another.

• Employers may also establish incentive programs
to reward safe behavior.


equal employment opportunity
(EEO), 64

Equal Employment Opportunity
Commission (EEOC), 66

affi rmative action, 68
disability, 69
EEO-1 report, 75

Uniform Guidelines on Employee
Selection Procedures, 75

96 PART 1 The Human Resource Environment


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

Keeping Sprint’s Subcontractors Safe
Recently, a worker on a Sprint communication tower
in North Carolina fell about 200 feet to his death after
unsuccessfully trying to attach his safety harness to the
tower. The same month, in Oregon, a worker at a Sprint

tower was critically injured when the aerial lift he was
in tipped over. A few months after that, a man working
on a Sprint cell network installed on a water tower in
Maryland fell 180 feet and died.


Offi ce of Federal Contract
Compliance Programs
(OFCCP), 75

disparate treatment, 76
bona fi de occupational qualifi cation

(BFOQ), 77
disparate impact, 77

four-fi fths rule, 77
reasonable accommodation, 81
sexual harassment, 82
Occupational Safety and Health

Act (OSH Act), 84
Occupational Safety and Health

Administration (OSHA), 85

right-to-know laws, 88
material safety data sheets

(MSDSs), 88
job hazard analysis technique, 89
technic of operations review

(TOR), 89

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 97

Sadly, those incidents were not isolated but part of
a larger pattern of accidents affecting communication
tower workers. In 2008, after 18 tower workers were
killed in accidents, the Occupational Safety and Health
Administration called this industry the most dangerous
in the United States, because it had the highest rate of
accidents. The industry is small, with only about 10,000
workers. The rate dropped the following year but spiked
again in 2013 as cell phone service providers pushed
hard to upgrade their networks faster than the competi-
tion. Sprint, for example, has been engaged in an ambi-
tious program to upgrade all of its 38,000 towers. Of
the 19 fatal accidents reported to OSHA, 17 involved
towers for mobile-phone networks; 4 of these involved
Sprint sites.

OSHA responded by investigating the accidents
and trying to change what it considers an ineffective ap-
proach to safety in the industry. The agency announced
that as it studies accident data, it will identify which
mobile networks were involved, regardless of whether
the workers were employees or contractors. OSHA is
concerned that because carriers usually line up contrac-
tors to work on their towers, company management is
not invested enough in the workers’ safety. The agency
sent all businesses in the industry a letter indicating
they could be held accountable if they do not insist in
their contracts that workers follow safe procedures. It
also directed businesses to consider safety criteria in
choosing contractors. In addition, OSHA assigned its
employees to inspect all worksites they encounter in-
volving communication towers, because tower work is
too short-term for problems to be caught with random

Initial reports suggest that what pushed aside
concern for safety was the industry’s ambitious drive
to improve networks. Workers reportedly have been
on the job for 12 to 16 hours at a time, rarely taking
a day off to rest. Employees acknowledge that they
are responsible for following safety rules, but some
point out the diffi culty of taking all precautions while

under pressure to work fast. Investigators have found
evidence of poor safety training, improper equipment,
and intense time pressure. OSHA inspections reveal
that workers often are not properly protected from
falling. The National Association of Tower Erectors
(NATE), a trade association, shares OSHA’s concern.
NATE has developed safety guidelines and checklists,
which it encourages its members to use as part of cre-
ating a culture of safety. One NATE member, U.S.
Cellular, has been requiring that all tower contractors
be members of NATE, as a way to ensure they are well
qualifi ed to operate safely.

Sprint insists that safety is a top priority. The
company says it requires contractors to have a written
safety program and put someone in charge of safety at
each worksite. Sprint has stepped up its efforts to en-
sure that workers, even those employed by contractors,
are safe. The company hired PICS Auditing to review
its contractors’ safety performance, including accident
rates, training programs, and the content of their safety

1. What responsibility do you think Sprint has to the

employees of subcontractors working on its com-
munication towers? How well is it meeting that

2. Beyond the steps Sprint says it has taken, what else
could it do to meet or exceed OSHA requirements to
protect worker safety at its communication towers?

Sources: Liz Day, “Feds to Look Harder at Cell Carriers When Tower
Climbers Die,” Frontline, April 1, 2014,; David Mi-
chaels, letter to communication tower industry employers, Occupational
Health and Safety Administration, February 10, 2014, https://www.osha.
gov; Glenn Bischoff, “It’s Been a Tough Year for Tower Safety,” Urgent

Communications, September 19, 2013,; Phil Gold-
stein, “Spike in Cell Tower Worker Deaths Prompts Fresh Concern,” Fierce

Wireless, August 22, 2013,; Ryan Knutson,
“A New Spate of Deaths in the Wireless Industry,” Wall Street Journal,
August 21, 2013,; Occupational Safety and Health
Administration, “Communication Towers,” Safety and Health Topics,

Walmart’s Struggle to Manage Diversity and Safety on a Grand Scale
Walmart drew national attention when it announced an
initiative it calls the Veterans Welcome Home Commit-
ment. Under that policy, any veteran who has been hon-
orably discharged from the U.S. military and applies to
work at Walmart within 12 months of being discharged
is guaranteed a job, assuming he or she passes a drug test
and background check. The company said it expected to
hire more than 100,000 veterans over fi ve years under
the program. Walmart U.S. chief executive Bill Simon

pointed out that this serves a practical as well as patri-
otic purpose: “Veterans have a record of performance
under pressure,” as well as being “quick learners” and
“team players.”

For Walmart, hiring veterans is just one way it lives
out its mission of “Making better possible.” That in-
cludes helping shoppers save money, but also enabling
people to work in a fair and honest environment. The
company teaches four beliefs: service to customers,


98 PART 1 The Human Resource Environment

Company Fails Fair-Employment Test
Companies have to comply with federal as well as state
and local laws. One company that didn’t was Profes-
sional Neurological Services (PNS), which was cited by
the Chicago Commission on Human Relations when it
discriminated against an employee because she is a par-
ent. Chicago is one of a few cities that prohibit this type
of discrimination.

The diffi culties began with employee Dena Lock-
wood as soon as she was interviewing for a sales posi-
tion with PNS. The interviewer noticed that Lockwood

made a reference to her children, and he asked her if
her responsibilities as a parent would “prevent her from
working 70 hours a week.” Lockwood said no, but the
job offer she received suggests that the interviewer had
his doubts. According to Lockwood’s later complaint,
female sales reps without children routinely were paid a
$45,000 base salary plus a 10% commission. Lockwood
was offered $25,000 plus the 10% commission. Lock-
wood negotiated and eventually accepted $45,000 plus
5%, with a promise to increase the commission rate to


respect for individuals, striving for excellence, and act-
ing with integrity. At its headquarters, respect for oth-
ers is expressed in a festive environment at an annual
Cultural World Fair, where employees representing dif-
ferent ethnic backgrounds share food and the arts with
one another. Employees in the corporate offi ces also can
fi nd sympathetic colleagues by joining resource groups
such as UNITY, the African American resource group,
and Pride, a group for lesbian, gay, bisexual, and trans-
gender employees and their allies.

These principles, as well as policies such as hiring
veterans, have a large impact, because Walmart operates
on a massive scale. The company employs 2.2 million
people in more than two dozen countries around the
world. Principles such as valuing diversity affect more
than a million workers in the United States alone. In
the case of hiring veterans, the 20,000 veterans hired per
year is a huge number but account for only about 4%
of Walmart’s new U.S. employees. The disadvantage is
that spreading a value such as equal opportunity is diffi –
cult to do in such a large organization, where many per-
sonnel decisions are made at the individual-store level.

Evidence for the diffi culty comes from the variety
of complaints made to the Equal Employment Op-
portunity Commission, as well as the resulting lawsuits
and settlements. In one recent settlement, Walmart
paid more than $360,000 after store managers failed to
stop an employee from sexually harassing an intellec-
tually disabled coworker for several years. In another,
the company paid $87,500 after a store refused to hire a
brother and sister whose mother previously had charged
the company with sex discrimination. The EEOC
found that the store’s decision was retaliation against
the mother. In yet another case, the EEOC sued Wal-
Mart Stores of Texas for violating the Age Discrimina-
tion in Employment Act for harassing and eventually
fi ring a 54-year-old manager who had requested ac-
commodation for his diabetes. And the agency recently

sued Wal-Mart Stores East when the management of a
Maryland store refused to authorize a saliva drug test
for a job applicant who had end-stage renal disease and
therefore could not take a urine test.

These complaints are a contrast from corporate pol-
icy and publicity. Walmart notes that more than half of
the promotions granted to hourly workers in its stores
go to women. At headquarters, the company recently
announced a 40 percent increase in the number of
women holding top executive positions. For human re-
source managers, the question is how to build on these
successes and help spread fair employment practices
throughout the entire organization.

1. In what ways is Walmart trying to meet legal re-

quirements for equal employment opportunity? In
what ways do its actions exceed legal requirements?

2. What could Walmart’s HR managers do to help the
company improve its performance in complying with
EEO laws?

Sources: Walmart, “Working at Walmart,”,
accessed April 29, 2014; Equal Employment Opportunity Commission
(EEOC), “Wal-Mart to Pay $363,419 to Settle EEOC Sexual Harassment
and Retaliation Suit,” news release, March 25, 2014,;
EEOC, “EEOC Sues Wal-Mart Stores East for Disability Discrimination,”
news release, March 21, 2014,; Kevin McGuinness,
“EEOC Sues Wal-Mart for Age Discrimination,” PlanSponsor, March 12,
2014,; EEOC, “Wal-Mart to Pay $87,500
to Settle EEOC Suit for Unlawful Retaliation,” news release, January 27,
2014,; “Leadership Team Shows Diversity,” MMR,
December 9, 2013, Business Insights: Global,;
Kim Souza, “Wal-Mart’s Home Office Celebrates Diversity,” City Wire,
September 19, 2013,; Saabira Chaudhuri,
“Wal-Mart Unveils Plans to Offer Jobs to Veterans; Boost Domestic
Sourcing by $50 Billion,” Wall Street Journal, January 16, 2013, http://; Christopher Matthews, “Is Walmart’s Buy American/Hire
Veterans Initiative Anything More Than a PR Stunt?” Time, January 15,
2013,; James Dao, “Wal-Mart Plans to Hire Any
Veteran Who Wants a Job,” New York Times, January 14, 2013, http://www.

CHAPTER 3 Providing Equal Employment Opportunity and a Safe Workplace 99

10% when she reached sales of $300,000. She was also
offered fi ve vacation days a year; when she objected, she
was told not to worry.

Lockwood worked hard and eventually reached her
sales goal. Then the company raised the requirement
for the higher commission rate, and the situation took a
turn for the worse. Lockwood’s daughter woke up one
morning with pink-eye, a highly contagious ailment.
Lockwood called in to reschedule a meeting for that
day, but her manager told her not to bother; she was
being fi red. When Lockwood asked why, the manager
said “it just wasn’t working out.”

She went to the Chicago Human Relations Commis-
sion for help. The commission investigated and could
fi nd no evidence of performance-related problems that
would justify her dismissal. Instead, the commission
found that Lockwood was a victim of “blatant” discrim-
ination against employees with children and awarded
her $213,000 plus attorney’s fees—a hefty fi ne for a

company with fewer than 50 employees. PNS stated
that it would appeal the decision.

1. Why do you think “parental discrimination” was the

grounds for this complaint instead of a federally pro-
tected class? Could you make a case for discrimina-
tion on the basis of sex? Why or why not?

2. How could Professional Neurological Services have
avoided this problem?

3. Imagine that the company has called you in to help
it hold down human resources costs, including costs
of lawsuits such as this one. What advice would you
give? How can the company avoid discrimination
and still build an effi cient workforce?

Sources: Courtney Rubin, “Single Mother Wins $200,000 in Job Bias Case,”
Inc., January 25, 2010,; Ameet Sachdev, “She Took a Day
Off to Care for Sick Child, Got Fired,” Chicago Tribune, January 24, 2010,

1. Michael Martinez and Lindy Hall, “Steve Ballmer Now
Owns NBA’s Clippers for Record $2 Billion,” CNN, August
12, 2014,; Ben Bolch, “Donald Sterling
Sanctioned: Adam Silver Moves to Eject Clippers Owner,”
Los Angeles Times, April 29, 2014,;
“Full Transcript of Adam Silver on Donald Sterling Ban,”
USA Today, April 29, 2014,; Ashby
Jones, “NBA’s Decision against Clippers’ Owner: Is It Legal?”
Wall Street Journal, April 29, 2014,

2. Bakke v. Regents of the University of California, 17 F.E.P.C.
1000 (1978).

3. Equal Employment Opportunity Commission, “Understand-
ing Waivers of Discrimination Claims in Employee Severance
Agreements,”, accessed February 14, 2012;
Equal Employment Opportunity Commission, “Age Discrimi-
nation,”, accessed February 14, 2012.

4. Equal Employment Opportunity Commission, “EEOC Sues
Hutchinson Sealing Systems for Age Discrimination,” news
release, January 20, 2012,

5. “Age Shall Not Wither Them,” The Economist, April 9, 2011,

6. Equal Employment Opportunity Commission, “Pregnancy
Discrimination,”, accessed February 14,

7. Equal Employment Opportunity Commission, “Facts about
the Americans with Disabilities Act,” http://www1.eeoc.
gov//eeoc/publications/, accessed March 3, 2010; Equal Em-
ployment Opportunity Commission, “Notice Concerning
the Americans with Disabilities Act (ADA) Amendments Act
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8. Equal Employment Opportunity Commission, “Questions and
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9. Jenell L. S. Wittmer and Leslie Wilson, “Turning Diversity
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10. Melissa Korn, “Race Infl uences How Leaders Are Assessed,”
The Wall Street Journal, January 3, 2012, http://online.wsj.
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11. UAW v. Johnson Controls, Inc., 499 U.S. 187 (1991).
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Changes, Termination Meeting Pay,” HR Magazine, Novem-
ber 2011, pp. 27–8.

13. Anne Fisher, “Checking Out Job Applicants on Facebook?
Better Ask a Lawyer,” Fortune, March 2, 2011, http://manage-

14. Bureau of National Affairs, “HR Pros Believe Gender Pay
Gaps Exist—but What to Do about It?” Report on Salary Sur-
veys, April 2011, pp. 1–8; Joann S. Lublin, “Coaching Urged
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Gap,” Wall Street Journal, March 1, 2011, http://online.wsj.

15. D. Kravitz and J. Platania, “Attitudes and Beliefs about
Affi rmative Action: Effects of Target and of Respondent
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ans, 2013,” news release, March 20, 2014,


100 PART 1 The Human Resource Environment

17. Equal Employment Opportunity Commission, “Imperial Secu-
rity Will Pay $50,000 to Settle EEOC Religious Discrimination
Lawsuit,” news release, November 23, 2011, http://www1.eeoc.
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18. EEOC guideline based on the Civil Rights Act of 1964, Title

19. Dana Mattioli, “More Men Make Harassment Claims,” The
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rassment Charges: EEOC and FEPAs Combined, FY1997–
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20. Burke, “Referrals and Diversity,” p. 28.
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ducting Responder Health Research and Biomonitoring dur-
ing and following Disasters,” NIOSH Science Blog, October
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22. Laura Walter, “‘Green’ Construction Workers May
Face Additional Safety Risks,” EHS Today, November
30, 2011,

23. Bureau of Labor Statistics, “Employer-Reported Workplace
Injuries and Illnesses, 2012,” news release, November 7,

24. James R. Hagerty, “Workplace Injuries Drop, but Claims
of Employer Retaliation Rise,” Wall Street Journal, July 22,

25. J. Roughton, “Managing a Safety Program through Job Haz-
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26. Roughton, “Managing a Safety Program”; “The Basics of Job
Hazard Analysis,” Safety Compliance Letter, September 2013,
Business Insights: Global,

27. Duncan Graham-Rowe, “Is Nanotechnology Safe in the
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Nanomaterials,” NIOSH Science Blog, December 9, 2013,

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force,” Industry Week, December 2011, p. 14.

31. Anthony Geise, “The Barriers to Effective Safety Train-
ing: Finding Training Techniques That Bridge Generation
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32. Phillip Ragain, Ron Ragain, Michael Allen, and Mike Allen,
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“Research Focus: Does Multiple Job Holding Increase Risk
of Injury?” From Research to Reality, Winter 2013–14, pp. 4–5.

Analyzing Work
and Designing Jobs4

As workers master new technology, they are sometimes surprised to find
that old ways of doing business still matter. An example is using the tele-
phone. So much communication has shifted to texting and sending e-mail
that many people who grew up with mobile devices feel uncomfortable
about picking up the phone and talking. Patty Baxter noticed this in the
sales office of her company, Metro Guide Publishing. The room used to be
filled with the chatter of employees asking businesspeople to buy ads, but
they had switched to the more comfortable task of sending out e-mails to
potential clients. However, this new approach didn’t work as well. E-mail was less ef-
fective for building customer relationships, and employees sometimes misinterpreted
prospects’ needs and intentions. Baxter hired a trainer to build her employees’ tele-
phone skills and confidence. She also modified their jobs by providing scripts for
voice messages and adding the requirement that they keep records of the way they
contact each client.

The trainer that Baxter hired for Metro Guide is not alone in noticing that more
employees are uncomfortable with using the phone. A trainer at a utility company re-
cently recalled teaching an employee the technical features of a desktop telephone—
for example, the dial tone and absence of a Send button. But at least as important as
knowing devices’ technical features is skill at using one’s voice, both on and off the
phone. Recent research supports the idea that a person’s tone of voice affects the

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 4-1 Summarize the elements of work fl ow analysis.

LO 4-2 Describe how work fl ow is related to an
organization’s structure.

LO 4-3 Defi ne the elements of a job analysis, and discuss
their signifi cance for human resource management.

LO 4-4 Tell how to obtain information for a job analysis.

LO 4-5 Summarize recent trends in job analysis.

LO 4-6 Describe methods for designing a job so that it
can be done effi ciently.

LO 4-7 Identify approaches to designing a job to make it

LO 4-8 Explain how organizations apply ergonomics to
design safe jobs.

LO 4-8 Discuss how organizations can plan for the
mental demands of a job.

102 PART 1 The Human Resource Environment

impression he or she makes. When subjects are asked to rate people based on record-
ings of their voices, they form negative opinions of people who speak in breathy, rough,
strained, or weak tones. Another habit that creates a negative impression is ending
sentences in a rising voice, as if asking a question. Fortunately for individuals with these
speaking styles, clear and pleasant speech is a skill people can learn.1

Metro Guide Publishing earns money by selling ads to local businesses, so it needs
strong relationships with many different companies. That need gives rise to knowl-
edge of the kinds of skills and work habits employees must provide, such as the ability
to speak and listen well over the phone. Consideration of such elements is at the heart
of analyzing work, whether in a start-up enterprise, a multinational corporation, or a
government agency.

This chapter discusses the analysis and design of work and, in doing so, lays out
some considerations that go into making informed decisions about how to create and
link jobs. The chapter begins with a look at the big-picture issues related to analyzing
work fl ow and organizational structure. The discussion then turns to the more specifi c
issues of analyzing and designing jobs. Traditionally, job analysis has emphasized the
study of existing jobs in order to make decisions such as employee selection, training,
and compensation. In contrast, job design has emphasized making jobs more effi cient
or more motivating. However, as this chapter shows, the two activities are interrelated.

Work Flow in Organizations
Informed decisions about jobs take place in the context of the organization’s overall
work fl ow. Through the process of work fl ow design, managers analyze the tasks
needed to produce a product or service. With this information, they assign these tasks
to specifi c jobs and positions. (A job is a set of related duties. A position is the set of
duties performed by one person. A school has many teaching positions; the person fi ll-
ing each of those positions is performing the job of teacher.) Basing these decisions on
work fl ow design can lead to better results than the more traditional practice of look-
ing at jobs individually.

Work Flow Analysis
Before designing its work fl ow, the organization’s planners need to analyze what work
needs to be done. Figure 4.1 shows the elements of a work fl ow analysis. For each type
of work, such as producing a product line or providing a support service (accounting,
legal support, and so on), the analysis identifi es the output of the process, the activities
involved, and the three categories of inputs (materials and information, equipment,
and human resources).

Outputs are the products of any work unit, say, a department or team. Outputs may
be tangible, as in the case of a restaurant meal or fi nished part. They may be intangible,
such as building security or an answered question about employee benefi ts. In identi-
fying the outputs of particular work units, work fl ow analysis considers both quantity
and quality. Thinking in terms of these outputs gives HRM professionals a clearer view
of how to increase each work unit’s effectiveness.

Work fl ow analysis next considers the work processes used to generate the outputs
identifi ed. Work processes are the activities that a work unit’s members engage in to
produce a given output. They are described in terms of operating procedures for every
task performed by each employee at each stage of the process. Specifying the processes

LO 4-1 Summarize the
elements of work fl ow

Work Flow Design
The process of analyz-
ing the tasks necessary
for the production of a
product or service.

A set of related duties.

The set of duties (job)
performed by a particu-
lar person.

CHAPTER 4 Analyzing Work and Designing Jobs 103

helps HRM professionals design effi cient work systems by clarifying which tasks are
necessary. Knowledge of work processes also can guide staffi ng changes when work is
automated, outsourced, or restructured.

Finally, work fl ow analysis identifi es the inputs required to carry out the work pro-
cesses. As shown in Figure 4.1, inputs fall into three categories: raw inputs (materials
and information), equipment, and human resources (knowledge, skills, and abilities). In
the advertising industry, for example, technology has changed the relative importance
of inputs. The stars of the ad business used to be the creative minds who dreamed up
messages for television ads that would get people talking (and buying). But as consum-
ers turn their attention to digital media, ad agencies need people who understand the
latest in social media and who can not only generate a stream of messages but also can
measure the reactions streaming back from consumers. Data and skill in analyzing data
are today’s hotly demanded inputs for advertising.2 Another way to understand the
importance of identifying inputs is to consider what can go wrong. The “HR Oops!”
box illustrates that if an organization’s outputs fall short of goals, HR managers might
fi nd that the cause is a failure in planning for inputs.

Work Flow Design and an Organization’s Structure
Work fl ow takes place in the context of an organization’s structure. It requires the
cooperation of individuals and groups. Ideally, the organization’s structure brings
together the people who must collaborate to create the desired outputs effi ciently.
The structure may do this in a way that is highly centralized (that is, with authority

LO 4-2 Describe how
work fl ow is related
to an organization’s

Figure 4.1
Developing a Work

Flow Analysis

What materials,
data, and
information are

Raw Inputs

What special
facilities, and
systems are


What tasks are
required in the
production of the


What product,
information, or
service is provided?
How is the output


What knowledge,
skills, and abilities
are needed by
those performing
the tasks?

Human Resources


Work fl ow analysis spells out the

human and other resources needed

for carrying out well-defi ned tasks

that will meet objectives. Success

requires the right people with ac-

cess to resources including equip-

ment and information. However,

research suggests that some of

these inputs may be missing at

many organizations.

In a survey of more than 500 U.S.

workers in different industries, At-

Task, a maker of project management

software, found that large numbers

of workers are struggling to meet ob-

jectives on time—if they even know

what their objectives are. According

to AtTask, 60% of the workers said

they are completely overwhelmed or

barely meeting deadlines.

Responses to other questions in

the survey point to some possible

causes. One-third of the workers

said they are unable to turn in as-

signments on time because some re-

sources they need are not available.

Even more (about 50%) say their

organizations do not have enough

people to get all the necessary tasks

fi nished unless people work over-

time. More than a third of them say

they are only somewhat, a little, or

not clear about desired outputs—

how their work is measured or how

their supervisor defi nes success.


1. What consequences might an

organization expect to result

from the conditions described

by the AtTask survey?

2. How might an organization use

work fl ow analysis to prevent

some of these problems?

Sources: AtTask, “2013 AtTask State

of Work Survey: Executive Summary,”, accessed

May 6, 2014; Dennis McCafferty,

“Projects Suffer from Lack of Staffi ng,

Resources,” CIO Insight, December

19, 2013,;

AtTask, “AtTask Survey: Workers Over-

whelmed by Deadlines Blame Lack of

Focus and Constant Interruptions,”

news release, November 14, 2013,

Workers Often Don’t Have What They Need to Succeed

HR Oops!

concentrated in a few people at the top of the organization) or decentralized (with
authority spread among many people). The organization may group jobs according
to functions (for example, welding, painting, packaging), or it may set up divisions to
focus on products or customer groups.

Although there are an infi nite number of ways to combine the elements of an
organization’s structure, we can make some general observations about structure and
work design. If the structure is strongly based on function, workers tend to have
low authority and to work alone at highly specialized jobs. Jobs that involve team-
work or broad responsibility tend to require a structure based on divisions other than
functions. When the goal is to empower employees, companies then need to set up
structures and jobs that enable broad responsibility, such as jobs that involve em-
ployees in serving a particular group of customers or producing a particular product,
rather than performing a narrowly defi ned function. The organization’s structure also
affects managers’ jobs. Managing a division responsible for a product or customer
group tends to require more experience and cognitive (thinking) ability than manag-
ing a department that handles a particular function. In contrast, managing a func-
tional department requires skill in managing confl icts and aligning employees’ efforts
with higher-level goals, because these employees tend to identify heavily with their
department or profession.3

Work design often emphasizes the analysis and design of jobs, as described in the re-
mainder of this chapter. Although all of these approaches can succeed, each focuses on one
isolated job at a time. These approaches do not necessarily consider how that single job
fi ts into the overall work fl ow or structure of the organization. To use these techniques ef-
fectively, human resource personnel should also understand their organization as a whole.

CHAPTER 4 Analyzing Work and Designing Jobs 105

For example, Procter & Gamble traditionally gives each product division a great deal
of control over its activities. Thus, research and development for a product line was
the responsibility of the division controlling that line. But when consumers responded
to diffi cult economic times by spending less on P&G’s brand-name consumer goods,
each division tightened its research budget to the point that the company overall was
not spending enough to develop new ideas. The company’s top leaders decided to
restructure work by making R&D a corporate-wide function so they could concen-
trate resources on ideas that would have the most impact on the company’s overall

Job Analysis
To achieve high-quality performance, organizations have to understand and match
job requirements and people. This understanding requires job analysis, the process
of getting detailed information about jobs. Analyzing jobs and understanding what is
required to carry out a job provide essential knowledge for staffi ng, training, perfor-
mance appraisal, and many other HR activities. For instance, a supervisor’s evaluation
of an employee’s work should be based on performance relative to job requirements.
In very small organizations, line managers may perform a job analysis, but usually the
work is done by a human resource professional. A large company may have a com-
pensation management department that includes job analysts (also called personnel
analysts). Organizations may also contract with fi rms that provide this service.

Job Descriptions
An essential part of job analysis is the creation of job descriptions. A job description
is a list of the tasks, duties, and responsibilities (TDRs) that a job entails. TDRs are
observable actions. For example, a news photographer’s job requires the jobholder to
use a camera to take photographs. If you were to observe someone in that position for
a day, you would almost certainly see some pictures being taken. When a manager at-
tempts to evaluate job performance, it is most important to have detailed information
about the work performed in the job (that is, the TDRs). This information makes it
possible to determine how well an individual is meeting each job requirement.

A job description typically has the format shown in Figure 4.2. It includes the job
title, a brief description of the TDRs, and a list of the essen-
tial duties with detailed specifi cations of the tasks involved in
carrying out each duty. Although organizations may modify this
format according to their particular needs, all job descriptions
within an organization should follow the same format. This helps
the organization make consistent decisions about such matters as
pay and promotions. It also helps the organization show that it
makes human resource decisions fairly.

Whenever the organization creates a new job, it needs a new
job description. Preparation of a job description begins with
gathering information about the job from people already per-
forming the task, the position’s supervisor, or the managers cre-
ating the position. Based on that information, the writer of the
job description identifi es the essential duties of the job, includ-
ing mental and physical tasks and any methods and resources
required. Job descriptions should then be reviewed periodically

LO 4-3 Defi ne the ele-
ments of a job analysis,
and discuss their sig-
nifi cance for human
resource management.

Job Analysis
The process of getting
detailed information
about jobs.

Job Description
A list of the tasks, du-
ties, and responsibilities
(TDRs) that a particular
job entails.

Careful job analysis makes it possible to defi ne what

a person in a certain position does and what qualifi ca-

tions are needed for the job. Firefi ghters use specifi c

equipment to extinguish fi res, require physical strength

to do their jobs, and must possess the ability to make

decisions under pressure.

106 PART 1 The Human Resource Environment

(say, once a year) and updated if necessary. Performance appraisals can provide a good
opportunity for updating job descriptions, as the employee and supervisor compare
what the employee has been doing against the details of the job description.

Organizations should give each newly hired employee a copy of his or her job
description. This helps the employee to understand what is expected, but it shouldn’t
be presented as limiting the employee’s commitment to quality and customer satisfac-
tion. Ideally, employees will want to go above and beyond the listed duties when the
situation and their abilities call for that. Many job descriptions include the phrase and
other duties as requested as a way to remind employees not to tell their supervisor, “But
that’s not part of my job.”

Job Specifications
Whereas the job description focuses on the activities involved in carrying out a job, a
job specifi cation looks at the qualities or requirements the person performing the
job must possess. It is a list of the knowledge, skills, abilities, and other character-
istics (KSAOs) that an individual must have to perform the job. Knowledge refers to

Job Specifi cation
A list of the knowledge,
skills, abilities, and other
characteristics (KSAOs)
that an individual must
have to perform a par-
ticular job.

Figure 4.2
Sample Job Description

Source: Union Pacifi c,

“Union Pacifi c Careers:

Train Crew,” https://,

accessed May 7, 2014.






When you work on a Union Pacific train crew, you’re working at
the very heart of our railroad. Train crew employees are
responsible for serving our customers by providing the safe,
on-time, and on-plan movement of freight trains.

In this entry-level position, you’ll start as a Switchperson or
Brakeperson, working as on-the-ground traffic control. You
don’t need any previous railroad experience; we provide all
training. These jobs directly lead to becoming a Conductor and
a Locomotive Engineer, where you will have a rare opportunity
to work on board a moving locomotive. The Conductor is
responsible for the train, the freight and the crew. The
Locomotive Engineer actually operates the locomotive.

You will work outdoors in all weather conditions and frequently
at elevations more than 12 feet above the ground. You must
wear personal protective equipment, such as safety glasses
and safety boots. You will frequently carry loads and regularly
step on and off equipment and work from ladders. You will use
and interpret hand signals and sounds, use computers, count
train cars, and follow posted regulations.

You won’t work a standard 40-hour workweek. Train crews are
always on call, even on weekends and holidays. You’ll travel
with our trains, sometimes spending a day or more away from
your home terminal.

CHAPTER 4 Analyzing Work and Designing Jobs 107

factual or procedural information that is necessary for successfully performing a task.
For example, this course is providing you with knowledge in how to manage human
resources. A skill is an individual’s level of profi ciency at performing a particular
task—that is, the capability to perform it well. With knowledge and experience, you
could acquire skill in the task of preparing job specifi cations. Ability, in contrast to
skill, refers to a more general enduring capability that an individual possesses. A per-
son might have the ability to cooperate with others or to write clearly and precisely.
Finally, other characteristics might be personality traits such as someone’s persistence
or motivation to achieve. Some jobs also have legal requirements, such as licensing
or certifi cation. Figure 4.3 is a set of sample job specifi cations for the job description
in Figure 4.2.

In developing job specifi cations, it is important to consider all of the elements of
KSAOs. As with writing a job description, the information can come from a combi-
nation of people performing the job, people supervising or planning for the job, and
trained job analysts. A study by ACT’s Workforce Development Division interviewed
manufacturing supervisors to learn what they do each day and what skills they rely
on. The researchers learned that the supervisors spend much of their day monitoring
their employees to make sure the workplace is safe, product quality is maintained, and
work processes are optimal. Also, they rely heavily on their technical knowledge of
the work processes they supervise.5 Based on this information, job specifi cations for a

Figure 4.3
Sample Job

Specifi cations

Source: Union Pacifi c,

“Union Pacifi c Careers:

Train Crew,” https://,

accessed May 7, 2014.


You must be at least 18 years old. You must speak and read
English because you’ll be asked to follow posted bulletins,
regulations, rule books, timetables, switch lists, etc. You must
pass a reading comprehension test (see sample) to be
considered for an interview.

You must be able to use a computer keyboard, and you must
be able to count and compare numbers. (You might, for
example, be asked to count the cars on a train during

You must have strong vision and hearing, including the ability
to: see and read hand signals from near and far; distinguish
between colors; visually judge the speed and distance of
moving objects; see at night; and recognize changes in sounds.

You must also be physically strong: able to push, pull, lift, and
carry up to 25 pounds frequently; up to 50 pounds occasionally;
and up to 83 pounds infrequently. You’ll need good balance to
regularly step on and off equipment and work from ladders to
perform various tasks. And you must be able to walk, sit, stand,
and stoop comfortably.

You must be able to solve problems quickly and react to
changing conditions on the job.


manufacturing supervisor would include skill in observing how people work, as well as
in-depth knowledge of manufacturing processes and tools.

In contrast to tasks, duties, and responsibilities, KSAOs are characteristics of people
and are not directly observable. They are observable only when individuals are car-
rying out the TDRs of the job—and afterward, if they can show the product of their
labor. Thus, if someone applied for a job as a news photographer, you could not sim-
ply look at the individual to determine whether he or she can spot and take effective
photographs. However, you could draw conclusions later about the person’s skills by
looking at examples of his or her photographs. Similarly, many employers specify edu-
cational requirements. Meeting these requirements is treated as an indication that a
person has some desired level of knowledge and skills.

Accurate information about KSAOs is especially important for making decisions
about who will fi ll a job. A manager attempting to fi ll a position needs information
about the characteristics required and about the characteristics of each applicant.
Interviews and selection decisions should therefore focus on KSAOs. For more guide-
lines on writing KSAOs, see “HR How To.”

Without strong support from human

resource management, organiza-

tions may be tempted to use short-

cuts for defi ning job specifi cations.

They might guess, say, that some-

one who has a business degree and

two years’ experience in a similar

job would be well qualifi ed for an ad-

ministrative position. Hiring experts,

however, have identifi ed some ways

to pinpoint the relevant knowledge,

skills, abilities, and other criteria di-

rectly related to success in a job:

• Rather than assuming education

provides all necessary job skills,

tie specifi cations to the actual

skills needed for successful job

performance. For example, re-

search by the ACT testing orga-

nization found that most people

with a college degree have the

reading and math skills needed

for entry-level jobs in account-

ing and auditing. But fewer than

half have the necessary level of

skill in locating information (for

example, interpreting graphs

and tables). Job specifi cations

should identify these skills, so

companies can test for them.

• Set standards high enough

that candidates who meet the

specifi cations will do more than

just barely complete the work.

Rather, write specifi cations for

an employee who can succeed

in the job. This requires previous

creation of a job description that

defi nes successful performance.

• Use performance data. Espe-

cially when many people in the

organization perform similar

jobs, the company’s perfor-

mance data can become a

treasure trove for identifying the

behaviors and KSAOs associ-

ated with success. Google, for

example, is famous for analyzing

employee performance data on

a company-wide level to see

what kinds of behaviors are as-

sociated with better outcomes.

The company then makes abil-

ity to perform in those effective

ways part of its job specifi ca-

tions. Among other measures,

the company has found that an

applicant’s school grades are

less important than learning

ability and intellectual skills.

Applicants for technical jobs

also must demonstrate skill in

writing software code.


1. Why do you think many

companies include education

level and years of experience

in their job specifi cations?

2. Suppose you are writing job

specifi cations for the position

of production supervisor.

Suggest a few ways to identify

KSAOs for that position.

Sources: Google company website, “How

We Hire,” Careers,

com, accessed May 6, 2014; Thomas L.

Friedman, “How to Get a Job at Google,”

New York Times, February 22, 2014,; Melissa Murer

Corrigan, “Measure Work Readiness for

Tomorrow’s Jobs,” Chief Learning Offi cer,

October 2013, pp. 44–6; Brad Remillard,

“Traditional Job Descriptions Don’t Attract

Top Talent,” Supervision, February 2013,

pp. 6–7.

Identifying Relevant KSAOs

HR How To

CHAPTER 4 Analyzing Work and Designing Jobs 109

Sources of Job Information
Information for analyzing an existing job often comes from incumbents, that is, people
who currently hold that position in the organization. They are a logical source of informa-
tion because they are most acquainted with the details of the job. Incumbents should be
able to provide very accurate information.

A drawback of relying solely on incumbents’ information is that they may have an in-
centive to exaggerate what they do in order to appear more valuable to the organization.
Information from incumbents should therefore be supplemented with information from
observers, such as supervisors, who look for a match between what incumbents are doing
and what they are supposed to do. Research suggests that supervisors may provide the
most accurate estimates of the importance of job duties, while incumbents may be more
accurate in reporting information about the actual time spent performing job tasks and
safety-related risk factors.6 For analyzing skill levels, the best source may be external job
analysts who have more experience rating a wide range of jobs.7

The government also provides background information for analyzing jobs. In
the 1930s, the U.S. Department of Labor created the Dictionary of Occupational Titles
(DOT) as a vehicle for helping the new public employment system link the demand for
skills and the supply of skills in the U.S. workforce. The DOT described over 12,000
jobs, as well as some of the requirements of successful job holders. This system served
the United States well for over 60 years, but it became clear to Labor Department of-
fi cials that jobs in the new economy were so different that the DOT no longer served
its purpose. The Labor Department therefore introduced a new system, called the
Occupational Information Network (O*NET).

Instead of relying on fi xed job titles and narrow task descriptions, the O*NET
uses a common language that generalizes across jobs to describe the abilities,
work styles, work activities, and work context required for 1,000 broadly de-
fi ned occupations. Users can visit O*NET OnLine (http://www.onetonline
.org) to review jobs’ tasks, work styles and
context, and requirements including skills,
training, and experience. ManpowerGroup,
a staffi ng services agency, uses O*NET’s
information on skills to match individuals
more precisely to jobs it has been hired to
fi ll. Piedmont Natural Gas uses O*NET to
conduct job analyses and match job appli-
cants’ skills and preferences to the require-
ments of available positions. The effort
has helped reduce turnover among Pied-
mont’s entry-level workers.8 Furthermore,
although the O*NET was developed to
analyze jobs in the U.S. economy, research
suggests that its ratings tend to be the same
for jobs located in other countries.9

Position Analysis Questionnaire
After gathering information, the job ana-
lyst uses the information to analyze the job.
One of the broadest and best-researched
instruments for analyzing jobs is the

LO 4-4 Tell how to
obtain information for
a job analysis.

O*NET OnLine provides job seekers with detailed descriptions of many broadly

defi ned occupations.

110 PART 1 The Human Resource Environment

Position Analysis Questionnaire (PAQ). This is a standardized job analysis ques-
tionnaire containing 194 items that represent work behaviors, work conditions, and
job characteristics that apply to a wide variety of jobs. The questionnaire organizes
these items into six sections concerning different aspects of the job:
1. Information input—Where and how a worker gets information needed to perform

the job.
2. Mental processes—The reasoning, decision making, planning, and information-

processing activities involved in performing the job.
3. Work output—The physical activities, tools, and devices used by the worker to

perform the job.
4. Relationships with other persons—The relationships with other people required in

performing the job.
5. Job context—The physical and social contexts where the work is performed.
6. Other characteristics—The activities, conditions, and characteristics other than

those previously described that are relevant to the job.
The person analyzing a job determines whether each item on the questionnaire

applies to the job being analyzed. The analyst rates each item on six scales: extent of
use, amount of time, importance to the job, possibility of occurrence, applicability, and
special code (special rating scales used with a particular item). The PAQ headquarters
uses a computer to score the questionnaire and generate a report that describes the
scores on the job dimensions.

Using the PAQ provides an organization with information that helps in comparing
jobs, even when they are dissimilar. The PAQ also has the advantage that it considers
the whole work process, from inputs through outputs. However, the person who fi lls
out the questionnaire must have college-level reading skills, and the PAQ is meant to
be completed only by job analysts trained in this method. In fact, the ratings of job
incumbents tend to be less reliable than ratings by supervisors and trained analysts.10
Also, the descriptions in the PAQ reports are rather abstract, so the reports may not be
useful for writing job descriptions or redesigning jobs.

Fleishman Job Analysis System
To gather information about worker requirements, the Fleishman Job Analysis
System asks subject-matter experts (typically job incumbents) to evaluate a job in
terms of the abilities required to perform the job. The survey is based on 52 catego-
ries of abilities, ranging from written comprehension to deductive reasoning, manual
dexterity, stamina, and originality. The person completing the survey indicates which
point on the scale represents the level of the ability required for performing the job
being analyzed. For example, consider the ability, “written comprehension.” Written
comprehension includes understanding written English words, sentences, and para-
graphs. It is different from oral comprehension (listen and understand spoken Eng-
lish words and sentences) and oral expression (speak English words and sentences so
others can understand). The phrase for the highest point on the seven-point scale is
“requires understanding of complex or detailed information in writing containing un-
usual words and phrases and involves fi ne distinctions in meaning among words.” The
phrase for the lowest point on the scale is “requires written understanding of short,
simple written information containing common words and phrases.”11

When the survey has been completed in all 52 categories, the results provide a
picture of the ability requirements of a job. Such information is especially useful for
employee selection, training, and career development.

Position Analysis
Questionnaire (PAQ)
A standardized job
analysis questionnaire
containing 194 questions
about work behaviors,
work conditions, and job
characteristics that apply
to a wide variety of jobs.

Fleishman Job
Analysis System
Job analysis technique
that asks subject-matter
experts to evaluate a
job in terms of the abili-
ties required to perform
the job.

CHAPTER 4 Analyzing Work and Designing Jobs 111

Analyzing Teamwork
Work design increasingly relies on teams to accomplish an organization’s objectives,
so HR managers often must identify the best ways to handle jobs that are highly inter-
dependent. Just as there are standardized instruments for assessing the nature of a job,
there are standard ways to measure the nature of teams. Three dimensions are most
critical 12:

1. Skill differentiation—The degree to which team members have specialized knowl-
edge or functional capacities.

2. Authority differentiation—The allocation of decision-making authority among in-
dividuals, subgroups, and the team as a whole.

3. Temporal (time) stability—The length of time over which team members must work

Importance of Job Analysis
Job analysis is so important to HR managers that it has been called the building block of
everything that personnel does.13 The fact is that almost every human resource manage-
ment program requires some type of information that is gleaned from job analysis 14:

• Work redesign—Often an organization seeks to redesign work to make it more ef-
fi cient or to improve quality. The redesign requires detailed information about the
existing job(s). In addition, preparing the redesign is similar to analyzing a job that
does not yet exist.

• Human resource planning—As planners analyze human resource needs and how to meet
those needs, they must have accurate information about the levels of skill required in
various jobs, so that they can tell what kinds of human resources will be needed.

• Selection—To identify the most qualifi ed applicants for various positions, decision
makers need to know what tasks the individuals must perform, as well as the neces-
sary knowledge, skills, and abilities.

• Training—Almost every employee hired by an organization will require training.
Any training program requires knowledge of the tasks performed in a job so that
the training is related to the necessary knowledge and skills.

• Performance appraisal—An accurate performance appraisal requires information
about how well each employee is performing in order to reward employees who per-
form well and to improve their performance if it is below standard. Job analysis helps
in identifying the behaviors and the results associated with effective performance.

• Career planning—Matching an individual’s skills and aspirations with career oppor-
tunities requires that those in charge of career planning know the skill requirements
of the various jobs. This allows them to guide individuals into jobs in which they
will succeed and be satisfi ed.

• Job evaluation—The process of job evaluation involves assessing the relative dollar
value of each job to the organization in order to set up fair pay structures. If employ-
ees do not believe pay structures are fair, they will become dissatisfi ed and may quit,
or they will not see much benefi t in striving for promotions. To put dollar values on
jobs, it is necessary to get information about different jobs and compare them.

Job analysis is also important from a legal standpoint. As we saw in Chapter 3,
the government imposes requirements related to equal employment opportunity.
Detailed, accurate, objective job specifi cations help decision makers comply with
these regulations by keeping the focus on tasks and abilities. These documents
also provide evidence of efforts made to engage in fair employment practices. For


example, to enforce the Americans with Disabilities Act, the Equal Employment
Opportunity Commission may look at job descriptions to identify the essential func-
tions of a job and determine whether a disabled person could have performed those
functions with reasonable accommodations. Likewise, lists of duties in different jobs
could be compared to evaluate claims under the Equal Pay Act. However, job de-
scriptions and job specifi cations are not a substitute for fair employment practices.

Besides helping human resource professionals, job analysis helps supervisors and
other managers carry out their duties. Data from job analysis can help managers iden-
tify the types of work in their units, as well as provide information about the work fl ow
process, so that managers can evaluate whether work is done in the most effi cient way.
Job analysis information also supports managers as they make hiring decisions, review
performance, and recommend rewards. For an example of this, see “HRM Social.”

Competency Models
These traditional approaches to job analysis are too limited for some HRM needs,
however. When human resource management is actively engaged in talent management

LO 4-5 Summarize
recent trends in job

Job analysis can support one of

the hot trends in business, called

gamifi cation. To gamify work, or-

ganizations use elements of games

designed to yield better results, and

they apply them to jobs to enable

stronger performance. For example,

they observe how runners and cy-

clists are motivated when they can

share their routes and mileage with

their friends on social media, or how

teams of players collaborate to de-

feat an enemy in an online game.

A “leaderboard” displaying a list of

the top scorers also is a widely used

tool to motivate players to improve

and earn a place on the list.

Employers can easily create a

leader board of top salespeople, ask

employees to post their progress on

a team project, or award badges for

completing training modules. But

when a gamifi cation effort is just a

matter of adding playful features

to the company’s internal website,

employees may ignore it. Well-

planned gamifi cation helps employ-

ees achieve goals that are relevant

to their own and their organization’s

success. This is where job analysis

comes in, by pinpointing what em-

ployees should be accomplishing

and what skills and resources they

need. Gamifi cation works when it

aligns with job requirements and the

learning of relevant skills.

In the United Kingdom, for ex-

ample, the Department of Work

and Pensions (DWP) wanted its

employees to become more ac-

tive in developing useful ideas for

innovation. To gamify this aspect

of employees’ jobs, the company

set up a collaboration site on its

internal network. Employees are

encouraged to submit ideas and

vote on the ideas they think are

most valuable. As ideas earn votes,

they move up a leaderboard, and

the company acts on them. Com-

ing up with an idea that wins votes

is exciting; seeing it move up the

leaderboard is even more motivat-

ing; and of course, seeing it make

a change for the better is the best

prize of all.


1. Suppose you are a human

resource manager at a

company that is going

to gamify the job of its

salespeople. How would job

analysis help you advise the

team on which behaviors to


2. In the same scenario, how

would job analysis help

you advise the team on

which kinds of rewards to


Sources: Brian Burke, “Why Gamifi ca-

tion’s Not a Game,” CIO Journal, May 6,

2014,; Farhad Man-

joo, “High Defi nition: The ‘Gamifi cation’

of the Offi ce Approaches,” Wall Street

Journal, January 12, 2014, http://online.; Meghan M. Biro, “Five Ways

Leaders Win at Gamifi cation Technology,”

Forbes, September 15, 2013, http://www.; Cliff Saran, “A Business Case

for Gameplay at Work,” Computer Weekly,

August 20–26, 2013, pp. 19–22.

With Good Analysis, Work Isn’t Just a Game

HRM Social

CHAPTER 4 Analyzing Work and Designing Jobs 113

as a way to support strategy, organizations need to think beyond skills for particular
jobs. They must identify the capabilities they need to acquire and develop in order to
promote the organization’s success. For this purpose, organizations develop compe-
tency models.

A competency is an area of personal capability that enables employees to per-
form their work successfully.15 For example, success in a job or career path might
require leadership strength, skill in coaching others, and the ability to bring out the
best in each member of a diverse team of employees. A competency model identifi es
and describes all the competencies required for success in a particular occupation or
set of jobs. Organizations may create competency models for occupational groups,
levels of the organization, or even the entire organization. A competency model
might require that all middle managers or all members of the organization be able
to act with integrity, value diversity, and commit themselves to delighting customers.
Table 4.1 shows an example of a competency model for a project manager. The left
side of the table lists competencies required for a project manager (organizational &
planning skills; communications; and fi nancial & quantitative skills). The right side
of the table shows behaviors that might be used to determine a project manager’s
level of profi ciency for each competency. As in these examples, competency models
focus more on how people work, whereas job analysis focuses more on work tasks
and outcomes.

Competency models help HR professionals ensure that all aspects of talent man-
agement are aligned with the organization’s strategy. Looking at the competen-
cies needed for a particular occupational group, department, or the organization
as a whole shows which candidates will be the best to fi ll open positions. Not only
can the organization select those who can carry out a particular job today, but it
can spot those with competencies they can develop further to assume greater re-
sponsibility in the future. Competency models for a career path or for success in

An area of personal ca-
pability that enables em-
ployees to perform their
work successfully.

Table 4.1
Example of Competencies and a Competency Model

Organizational & Planning Skills
Ability to establish priorities on projects and
schedule activities to achieve results.

1—Below Expectations: Unable to perform basic tasks.
2—Meets Expectations: Understands basic principles and performs routine

tasks with reliable results; works with minimal supervision or assistance.
3—Exceeds Expectations: Performs complex and multiple tasks; can coach,

teach, or lead others.
Ability to build credibility and trust through
open and direct communications with internal
and external customers.

1—Below Expectations: Unable to perform basic tasks.
2—Meets Expectations: Understands basic principles and performs routine

tasks with reliable results; works with minimal supervision or assistance.
3—Exceeds Expectations: Performs complex and multiple tasks; can coach,

teach, or lead others.
Financial & Quantitative Skills
Ability to analyze fi nancial information
accurately and set fi nancial goals that have a
positive impact on company’s bottom line and
fi scal objectives.

1—Below Expectations: Unable to perform basic tasks.
2—Meets Expectations: Understands basic principles and performs routine

tasks with reliable results; works with minimal supervision or assistance.
3—Exceeds Expectations: Performs complex and multiple tasks; can coach,

teach, or lead others.

Source: Based on R. J. Mirabile, “Everything You Wanted to Know about Competency Modeling,” Training and Development

(August 1997): pp. 73–77.

114 PART 1 The Human Resource Environment

management show the organization which competencies to emphasize in plans for
development of high-potential employees. And competency models identify the im-
portant capabilities to measure in performance evaluations and to reward with pay
and promotions.

Trends in Job Analysis
As we noted in the earlier discussion of work fl ow analysis, organizations have been
appreciating the need to analyze jobs in the context of the organization’s structure
and strategy. In addition, organizations are recognizing that today’s workplace must
be adaptable and is constantly subject to change. Thus, although we tend to think of
“jobs” as something stable, they actually tend to change and evolve over time. Those
who occupy or manage jobs often make minor adjustments to match personal prefer-
ences or changing conditions.16 Indeed, although errors in job analysis can have many
sources, most inaccuracy is likely to result from job descriptions being outdated. For
this reason, job analysis must not only defi ne jobs when they are created, but also de-
tect changes in jobs as time passes.

With global competitive pressure and economic downturns, one corporate
change that has affected many organizations is downsizing. Research suggests that
successful downsizing efforts almost always entail changes in the nature of jobs,
not just their number. Jobs that have survived the downsizing of the most re-
cent recession tend to have a broader scope of responsibilities coupled with less

These changes in the nature of work and the expanded use of “project-based”
organizational structures require the type of broader understanding that comes from
an analysis of work fl ows. Because the work can change rapidly and it is impossible
to rewrite job descriptions every week, job descriptions and specifi cations need to
be fl exible. At the same time, legal requirements (as discussed in Chapter 3) may
discourage organizations from writing fl exible job descriptions. This means organi-
zations must balance the need for fl exibility with the need for legal documentation.
This presents one of the major challenges to be faced by HRM departments in the
next decade. Many professionals are meeting this challenge with a greater emphasis
on careful job design.

Job Design
Although job analysis, as just described, is important for an understanding of exist-
ing jobs, organizations also must plan for new jobs and periodically consider whether
they should revise existing jobs. When an organization is expanding, supervisors and
human resource professionals must help plan for new or growing work units. When
an organization is trying to improve quality or effi ciency, a review of work units and
processes may require a fresh look at how jobs are designed.

These situations call for job design, the process of defi ning how work will be
performed and what tasks will be required in a given job, or job redesign, a similar
process that involves changing an existing job design. To design jobs effectively,
a person must thoroughly understand the job itself (through job analysis) and its
place in the larger work unit’s work fl ow process (through work fl ow analysis). Hav-
ing a detailed knowledge of the tasks performed in the work unit and in the job, a
manager then has many alternative ways to design a job. As shown in Figure 4.4,
the available approaches emphasize different aspects of the job: the mechanics of

LO 4-6 Describe meth-
ods for designing a job
so that it can be done
effi ciently.

Job Design
The process of defi ning
how work will be per-
formed and what tasks
will be required in a
given job.

CHAPTER 4 Analyzing Work and Designing Jobs 115

doing a job effi ciently, the job’s impact on motivation, the use of safe work prac-
tices, and the mental demands of the job.

Designing Efficient Jobs
If workers perform tasks as effi ciently as possible, not only does the organization bene-
fi t from lower costs and greater output per worker, but workers should be less fatigued.
This point of view has for years formed the basis of classical industrial engineering,
which looks for the simplest way to structure work in order to maximize effi ciency.
Typically, applying industrial engineering to a job reduces the complexity of the work,
making it so simple that almost anyone can be trained quickly and easily to perform
the job. Such jobs tend to be highly specialized and repetitive.

In practice, the scientifi c method traditionally seeks the “one best way” to perform
a job by performing time-and-motion studies to identify the most effi cient movements
for workers to make. Once the engineers have identifi ed the most effi cient sequence
of motions, the organization should select workers based on their ability to do the job,
then train them in the details of the “one best way” to perform that job. The company
also should offer pay structured to motivate workers to do their best. (Chapters 12 and
13 discuss pay and pay structures.) For an example of a company using data analytics
to improve effi ciency, see “Best Practices.”

Industrial engineering provides measurable and practical benefi ts. However, a focus
on effi ciency alone can create jobs that are so simple and repetitive that workers get
bored. Workers performing these jobs may feel their work is meaningless. Hence, most
organizations combine industrial engineering with other approaches to job design.

Designing Jobs That Motivate
Especially when organizations must compete for employees, depend on skilled knowl-
edge workers, or need a workforce that cares about customer satisfaction, a pure focus
on effi ciency will not achieve human resource objectives. Employers also need to en-
sure that workers have a positive attitude toward their jobs so that they show up at
work with enthusiasm, commitment, and creativity. To improve job satisfaction, orga-
nizations need to design jobs that take into account factors that make jobs motivating
and satisfying for employees.

Industrial Engineering
The study of jobs to
fi nd the simplest way to
structure work in order
to maximize effi ciency.

LO 4-7 Identify
approaches to designing
a job to make it

Figure 4.4
Approaches to Job


Design for Mental Capacity
• Filtering information
• Clear displays and
• Memory aids

Design for Motivation
• Job enlargement
• Job enrichment
• Teamwork
• Flexibility


Design for Efficiency
(Industrial Engineering)

Design for Safety and Health


A model that shows how to make jobs more motivating is the Job Characteristics
Model, developed by Richard Hackman and Greg Oldham. This model describes jobs
in terms of fi ve characteristics18:

1. Skill variety—The extent to which a job requires a variety of skills to carry out the
tasks involved.

2. Task identity—The degree to which a job requires completing a “whole” piece of
work from beginning to end (for example, building an entire component or re-
solving a customer’s complaint).

3. Task signifi cance—The extent to which the job has an important impact on the lives
of other people.

4. Autonomy—The degree to which the job allows an individual to make decisions
about the way the work will be carried out.

5. Feedback—The extent to which a person receives clear information about perfor-
mance effectiveness from the work itself.

As shown in Figure 4.5, the more of each of these characteristics a job has, the more
motivating the job will be, according to the Job Characteristics Model. The model
predicts that a person with such a job will be more satisfi ed and will produce more
and better work. An example of such a job is that of senior analyst at Internet Identity
(IID), which combats a kind of online scam known as phishing. Suppose a scam artist

United Parcel Service is the world’s

largest package-shipping company,

so saving a tiny bit of gasoline on

every truck route can generate enor-

mous savings, both in expenses

and in impact on the environment.

For example, reducing each route

by one mile per day for a year can

save the company $50 million.

Thus, effi ciency is a major factor in

work design. UPS keeps improv-

ing its ability to gather, analyze, and

apply data to making every aspect

of package handling use fewer re-

sources. Some of its requirements

are as detailed as requiring drivers

to hook their truck keys over one

fi nger instead of stashing them in a


Recently, the company an-

nounced that it would begin using

a system called Orion (for On-Road

Integrated Optimization and Navi-

gation) for its 55,000 drivers in the

United States. The Orion system

gathers data from customers, ve-

hicles, and drivers’ handheld com-

puters. It analyzes the data—even

times for pickup and delivery when

customers have special requests—

and designs routes for each driver

to use the minimum time and fuel,

driving the minimum distance.

According to UPS, Orion is ex-

pected to save the company more

than 1.5 million gallons of fuel and

eliminate 14,000 metric tons of

carbon dioxide emissions in its

fi rst year. The company hopes that

Orion will eventually do even more

to improve outcomes—for example,

updating routes when accidents

or construction sites cause traffi c


With results like these, it is easy

to see why UPS invested years to

develop the Orion system. The

challenge for managers is to fi nd

drivers who are willing to commit to

a system in which their every turn is

planned by a computer and to keep

those jobs engaging.


1. What benefi ts does UPS

derive from using Orion to help

it make drivers’ work more

effi cient?

2. What challenges does the

system pose for drivers and

their managers?

Sources: Thomas H. Davenport, “Big

Brown Finds Big Money from Big Data,”

Wall Street Journal, April 9, 2014, http://; Richard Waters, “Big

Data Sparks Cultural Changes,” Financial

Times, March 25, 2014, http://www; Mary Schlangenstein, “UPS

Crunches Data to Make Routes More

Effi cient, Save Gas,” Bloomberg News,

October 30, 2013,


Big Data for High Effi ciency at UPS

Best Pract ices

CHAPTER 4 Analyzing Work and Designing Jobs 117

uses the name of a major bank and pretends to represent the bank in messages that ask
its customers to visit a Web page and enter their account number. The bank hires IID
to fi nd where the phony Web pages are hosted and have them taken down; senior ana-
lysts such as Kyle Paris do that detective work. Paris evaluates client requests, analyzes
e-mail, studies computer code to identify suspicious practices, and uses detective skills
to identify website owners. He directly contacts owners, who may be located anywhere
in the world, so he may use a service to translate their conversations. He needs skill
in persuasion, because the people hosting the site usually do not even know about the
scammers’ page and may not see a need to act. Paris also employs people skills to build
relationships with clients and Internet service providers. While skill variety and task
identity make Paris’s work interesting, he especially values his signifi cant role in help-
ing to make the Internet safer for its users.19 In contrast to his experience, employees
in a job that rates low on these characteristics would not fi nd it very motivating.

Applications of the job characteristics approach to job design include job enlarge-
ment, job enrichment, self-managing work teams, fl exible work schedules, and tele-
work. In applying these methods, HR managers should keep in mind that individual
differences among workers will affect how much they are motivated by job character-
istics and able to do their best work.20 For example, someone who thrives in a highly
structured environment might not actually be motivated by autonomy and would be a
better fi t for a job where a supervisor makes most decisions.

Job Enlargement In a job design, job enlargement refers to broadening the
types of tasks performed. The objective of job enlargement is to make jobs less re-
petitive and more interesting. Jobs also become enlarged when organizations add new
goals or ask fewer workers to accomplish work that had been spread among more peo-
ple. In those situations, the challenge is to avoid crossing the line from interesting jobs
into jobs that burn out employees. In Minnesota, school principals have been asked
to stretch beyond their administrative tasks such as staffi ng, budgeting, and ensuring
building security to take responsibility for student success and teacher development.
These goals emphasize the basic purpose that likely drew many principals to careers
in education. However, the new goals require many additional hours to observe and

Job Enlargement
Broadening the types of
tasks performed in a job.

Figure 4.5
Characteristics of a Motivating Job

118 PART 1 The Human Resource Environment

evaluate teachers. Schools that can afford
it are adding behavior specialists and ad-
ministration managers to help principals
keep schools running as they focus on
their new priorities.21

Organizations that use job enlarge-
ment to make jobs more motivational
employ techniques such as job exten-
sion and job rotation. Job extension
is enlarging jobs by combining several
relatively simple jobs to form a job with
a wider range of tasks. An example might
be combining the jobs of receptionist,
typist, and fi le clerk into jobs containing all three kinds of work. This approach to job
enlargement is relatively simple, but if all the tasks are dull, workers will not necessar-
ily be more motivated by the redesigned job.

Job rotation does not actually redesign the jobs themselves, but moves em-
ployees among several different jobs. This approach to job enlargement is common
among production teams. During the course of a week, a team member may carry
out each of the jobs handled by the team. Team members might assemble compo-
nents one day and pack products into cases another day. As with job extension, the
enlarged jobs may still consist of repetitious activities, but with greater variation
among those activities.

Job Enrichment The idea of job enrichment, or empowering workers by
adding more decision-making authority to their jobs, comes from the work of Fred-
erick Herzberg. According to Herzberg’s two-factor theory, individuals are moti-
vated more by the intrinsic aspects of work (for example, the meaningfulness of
a job) than by extrinsic rewards, such as pay. Herzberg identifi ed fi ve factors he
associated with motivating jobs: achievement, recognition, growth, responsibility,
and performance of the entire job. Thus, ways to enrich a manufacturing job might
include giving employees authority to stop production when quality standards are
not being met and having each employee perform several tasks to complete a par-
ticular stage of the process, rather than dividing up the tasks among the employees.
For a salesperson in a store, job enrichment might involve the authority to resolve
customer problems, including the authority to decide whether to issue refunds or
replace merchandise.

In practice, however, it is important to note that not every worker responds posi-
tively to enriched jobs. These jobs are best suited to workers who are fl exible and
responsive to others; for these workers, enriched jobs can dramatically improve

Self-Managing Work Teams Instead of merely enriching individual jobs, some
organizations empower employees by designing work to be done by self-managing
work teams. As described in Chapter 2, these teams have authority for an entire work
process or segment. Team members typically have authority to schedule work, hire
team members, resolve problems related to the team’s performance, and perform other
duties traditionally handled by management. Teamwork can give a job such motivating
characteristics as autonomy, skill variety, and task identity.

Job Extension
Enlarging jobs by com-
bining several relatively
simple jobs to form a
job with a wider range
of tasks.

Job Rotation
Enlarging jobs by moving
employees among sev-
eral different jobs.

Job Enrichment
Empowering workers by
adding more decision-
making authority to jobs.

Nordstrom empowers its employees to resolve

customer problems, which can enhance their job


CHAPTER 4 Analyzing Work and Designing Jobs 119

Because team members’ responsibilities are great, their jobs usually are defi ned
broadly and include sharing of work assignments. Team members may, at one time or
another, perform every duty of the team. The challenge for the organization is to pro-
vide enough training so that the team members can learn the necessary skills. Another
approach, when teams are responsible for particular work processes or customers, is
to assign the team responsibility for the process or customer, then let the team decide
which members will carry out which tasks.

A study of work teams at a large fi nancial services company found that the right
job design was associated with effective teamwork.23 In particular, when teams are
self-managed and team members are highly involved in decision making, teams are
more productive, employees more satisfi ed, and managers are more pleased with per-
formance. Teams also tend to do better when each team member performs a variety of
tasks and when team members view their effort as signifi cant.

Flexible Work Schedules One way in which an organization can give employ-
ees some say in how their work is structured is to offer fl exible work schedules. De-
pending on the requirements of the organization and the individual jobs, organizations
may be able to be fl exible about when employees work. As introduced in Chapter 2,
types of fl exibility include fl extime and job sharing. Figure 4.6 illustrates alternatives
to the traditional 40-hour workweek.

Flextime is a scheduling policy in which full-time employees may choose starting
and ending times within guidelines specifi ed by the organization. The fl extime policy

A scheduling policy in
which full-time employ-
ees may choose starting
and ending times within
guidelines specifi ed by
the organization.

Figure 4.6
Alternatives to the

8-to-5 Job

Core Time
9:00 AM–3:00 PM

IBM permits a meal
break of up to two
hours so employees
can do personal tasks.

Two lawyers, both
fathers, share the
job of assistant
general counsel
at Timberland.

All employees of
Red Dot Corporation
have the option of
working 10 hours per
day, Monday through


7:00 AM 6:00 PM



Job Sharing

Compressed Workweek









120 PART 1 The Human Resource Environment

may require that employees be at work between certain hours, say, 10:00 am and 3:00 pm.
Employees work additional hours before or after this period in order to work the full
day. One employee might arrive early in the morning in order to leave at 3:00 pm
to pick up children after school. Another employee might be a night owl who prefers
to arrive at 10:00 am and work until 6:00, 7:00, or even later in the evening. A fl extime
policy also may enable workers to adjust a particular day’s hours in order to make time
for doctor’s appointments, children’s activities, hobbies, or volunteer work. A work
schedule that allows time for community and family interests can be extremely moti-
vating for some employees.

Job sharing is a work option in which two part-time employees carry out the
tasks associated with a single job. Such arrangements can enable an organization to
attract or retain valued employees who want more time to attend school or to care
for family members. The job requirements in such an arrangement include the
ability to work cooperatively and coordinate the details of one’s job with another

Although not strictly a form of fl exibility for all individual employees, another
scheduling alternative is the compressed workweek. A compressed workweek is a sched-
ule in which full-time workers complete their weekly hours in fewer than fi ve days.
For example, instead of working eight hours a day for fi ve days, the employees could
complete 40 hours of work in four 10-hour days. This alternative is most common,
but some companies use other alternatives, such as scheduling 80 hours over nine days
(with a three-day weekend every other week) or reducing the workweek from 40 to
38 or 36 hours. Employees may appreciate the extra days available for leisure, family,
or volunteer activities. An organization might even use this schedule to offer a kind of
fl exibility—for example, letting workers vote whether they want a compressed work-
week during the summer months. This type of schedule has a couple of drawbacks,
however. One is that employees may become exhausted on the longer workdays. An-
other is that if the arrangement involves working more than 40 hours during a week,
the Fair Labor Standards Act requires the payment of overtime wages to nonsupervi-
sory employees.

Telework Flexibility can extend to work locations as well as work schedules. Be-
fore the Industrial Revolution, most people worked either close to or inside their own
homes. Mass production technologies changed all this, separating work life from home
life, as people began to travel to centrally located factories and offi ces. Today, however,
skyrocketing prices for offi ce space, combined with drastically reduced prices for por-
table communication and computing devices, seem ready to reverse this trend. The
broad term for doing one’s work away from a centrally located offi ce is telework, or

For employers, advantages of telework include less need for offi ce space and the
ability to offer greater fl exibility to employees who are disabled or need to be avail-
able for children or elderly relatives. The employees using telework arrangements
may have fewer absences from work than employees with similar demands who must
commute to work. Telecommuting can also support a strategy of corporate social re-
sponsibility because these employees do not produce the greenhouse gas emissions
that result from commuting by car. Telework is easiest to implement for people in
managerial, professional, or sales jobs, especially those that involve working and com-
municating on a computer. A telework arrangement is generally diffi cult to set up for
manufacturing workers. The Census Bureau has found telework to be most common

Job Sharing
A work option in which
two part-time employees
carry out the tasks asso-
ciated with a single job.


among management and business professionals, with the fastest growth occurring in
computer, engineering, and science jobs. A Chinese website called Ctrip conducted an
experiment. It invited its call center workers to choose telework and then compared
workers’ results over nine months. Productivity was higher among the workers who
chose to work at home, presumably because they had fewer distractions but also be-
cause they tended to use some of the time saved on commuting to work longer hours.
The company also noted that certain categories of workers, such as those who are
younger, tended to want to be together at the offi ce, rather than teleworking.24

Given the possible benefi ts, it is not surprising that telework has been a rising trend.
In a survey conducted by the Families and Work Institute with the Society for Human
Resource Management, the use of telework grew between 2008 and 2014.25 In fact, as
shown in the “Did You Know?” box, the organization found that occasional telework
is available at two-thirds of companies.

Designing Ergonomic Jobs
The way people use their bodies when they work—whether toting heavy furniture
onto a moving van or sitting quietly before a computer screen—affects their physical
well-being and may affect how well and how long they can work. The study of the

LO 4-8 Explain how
organizations apply
ergonomics to design
safe jobs.

Did You Know?

In a survey by the Families and Work

Institute and the Society for Human

Resource Management, most com-

panies said they provide fl exible

work arrangements. However, the

most common kinds of fl exibility

are limited—letting employees ad-

just their quitting time or control

when they take breaks. Among the

fl exible work schedules and places

discussed in the chapter, telework

on an occasional basis is the most

common option.


What advantages of telework

might make it the most widely

used form of fl exibility?

Sources: Lauren Weber, “Employ-

ers Are Getting More Flexible—Up

to a Point,” Wall Street Journal,

April 29, 2014, http://blogs.wsj

.com; Sarah Halzack, “A Not-

So-Flexible Defi nition of Flexible

Work,” Washington Post, May 1,

2014, http://www.washingtonpost

.com; Kenneth Matos and Ellen

Galinsky, “2014 National Study of

Employers,” Families and Work

Institute and Society for Human

Resource Management, accessed


Occasional Telework Dominates Flexibility Options

Occasional telework

Compressed workweek

Flextime on a daily basis

Regular telework

Job sharing

Flexibility Allowed for at Least Some Employees

1000 20 40 60 800 20

122 PART 1 The Human Resource Environment

interface between individuals’ physiology and the characteristics of the physical work
environment is called ergonomics. The goal of ergonomics is to minimize physical
strain on the worker by structuring the physical work environment around the way
the human body works. Ergonomics therefore focuses on outcomes such as reducing
physical fatigue, aches and pains, and health complaints. Ergonomic research includes
the context in which work takes place, such as the lighting, space, and hours worked.26

Ergonomic job design has been applied in redesigning equipment used in jobs
that are physically demanding. Such redesign is often aimed at reducing the physical
demands of certain jobs so that anyone can perform them. In addition, many inter-
ventions focus on redesigning machines and technology—for instance, adjusting the
height of a computer keyboard to minimize occupational illnesses, such as carpal tun-
nel syndrome. The design of chairs and desks to fi t posture requirements is very im-
portant in many offi ce jobs. One study found that having employees participate in an
ergonomic redesign effort signifi cantly reduced the number and severity of cumulative
trauma disorders (injuries that result from performing the same movement over and
over), lost production time, and restricted-duty days.27

A recent ergonomic challenge comes from the popularity of mobile devices. As
workers fi nd more and more uses for these devices, they are at risk from repetitive-
stress injuries (RSIs). Typing with one’s thumbs to send frequent text messages on a
smartphone can result in infl ammation of the tendons that move the thumbs. Laptop
and notebook computers are handy to carry, but because the screen and keyboard
are attached in a single device, the computer can’t be positioned to the ergonomi-
cally correct standards of screen at eye level and keyboard low enough to type with
arms bent at a 90-degree angle. Heavy users of these devices must therefore trade off
eyestrain against physical strain to wrists, unless they can hook up their device to an
extra, properly positioned keyboard or monitor. Touchscreens pose their own risks.
They are typically part of a fl at device such as a smartphone or tablet computer, and
these are diffi cult to position for optimal viewing and typing. Using vertically oriented
touchscreens causes even more muscle strain than tapping on a screen lying fl at. In
addition, because touchscreens usually lack the tactile feedback of pressing keys on a
keyboard, users tend to strike them with more force than they use on real keys. At-
taching a supplemental keyboard addresses this potential source of strain. When using
mobile devices or any computer, workers can protect themselves by taking frequent
breaks and paying attention to their posture while they work.28

The Occupational Safety and Health Administration has a “four-pronged” strategy
for encouraging ergonomic job design. The fi rst prong is to issue guidelines (rather
than regulations) for specifi c industries. As of 2012, these guidelines have been issued
for the nursing home, grocery store, and poultry-processing industries, and shipyards.
Second, OSHA enforces violations of its requirement that employers have a general
duty to protect workers from hazards, including ergonomic hazards. Third, OSHA
works with industry groups to advise employers in those industries. And fi nally, OSHA
established a National Advisory Committee on Ergonomics to defi ne needs for further
research. You can learn more about OSHA’s guidelines at the agency’s website, www

Designing Jobs That Meet Mental
Capabilities and Limitations
Just as the human body has capabilities and limitations, addressed by ergonomics,
the mind, too, has capabilities and limitations. Besides hiring people with certain

The study of the
interface between in-
dividuals’ physiology
and the characteristics
of the physical work

LO 4-9 Discuss how
organizations can plan
for the mental demands
of a job.

CHAPTER 4 Analyzing Work and Designing Jobs 123

mental skills, organizations can design jobs so that
they can be accurately and safely performed given
the way the brain processes information. Generally,
this means reducing the information-processing re-
quirements of a job. In these simpler jobs, workers
may be less likely to make mistakes or have acci-
dents. Of course, the simpler jobs also may be less
motivating. Research has found that challenging
jobs tend to fatigue and dissatisfy workers when
they feel little control over their situation, lack
social support, and feel motivated mainly to avoid
errors. In contrast, they may enjoy the challenges
of a diffi cult job where they have some control and
social support, especially if they enjoy learning and
are unafraid of making mistakes.29 Because of this
drawback to simplifying jobs, it can be most ben-
efi cial to simplify jobs where employees will most appreciate having the mental de-
mands reduced (as in a job that is extremely challenging) or where the costs of errors
are severe (as in the job of a surgeon or air-traffi c controller).

There are several ways to simplify a job’s mental demands. One is to limit the
amount of information and memorization that the job requires. Organizations can
also provide adequate lighting, easy-to-understand gauges and displays, simple-to-
operate equipment, and clear instructions. For project management, teamwork, and
work done by employees in different locations, organizations may provide software
that helps with tracking progress. Often, employees try to simplify some of the mental
demands of their own jobs by creating checklists, charts, or other aids. Finally, every
job requires some degree of thinking, remembering, and paying attention, so for every
job, organizations need to evaluate whether their employees can handle the job’s men-
tal demands.

Changes in technology sometimes reduce job demands and errors, but in some
cases, technology has made the problem worse. Some employees try to juggle informa-
tion from several sources at once—say, talking on a cell phone while typing, surfi ng
the web for information during a team member’s business presentation, or repeatedly
stopping work on a project to check e-mail or Twitter feeds. In these cases, the cell
phone, handheld computer, and e-mail or tweets are distracting the employees from
their primary task. They may convey important information, but they also break the
employee’s train of thought, reducing performance and increasing the likelihood of
errors. Research by a fi rm called Basex, which specializes in the knowledge economy,
found that a big part of the information overload problem is recovery time, that is,
the time it takes a person’s thinking to switch back from an interruption to the task at
hand. The Basex researchers found that recovery time is from 10 to 20 times the length
of the interruption. For example, after a 30-second pause to check a Twitter feed, the
recovery time could be fi ve minutes or longer.30

Organizations probably can’t design interruption-free jobs, and few employees
would want to isolate themselves entirely from the information and relationships
available online. But employers can design jobs that empower workers to manage their
time—for example, allowing them to schedule blocks of time when they concentrate
on work and do not answer phone calls, e-mails, or text messages. Some employees set
aside one or two periods during the day when they will open their e-mail programs,
read messages, and respond to the messages immediately. As a vice president at United

Technological advances can sometimes increase job demands. Some

employees may be required to juggle information from several sources

at once, which may distract them from their primary job task.



The most popular professional sport in the United States

is football, but the future of the National Football League

(NFL) is uncertain. Behind the doubts about football’s

future is new scientifi c evidence suggesting that inju-

ries sustained by football players are more serious than

had previously been thought. Winning a game requires

aggressive play, including head collisions. Sometimes

the result is a major concussion, known to be serious.

But scientists have observed a link between taking less-

severe hits day in and day out and a condition called

chronic traumatic encephalopathy (CTE). With CTE, the

brain’s repeated contact with the skull causes the for-

mation of abnormal protein tangles. People with CTE

suffer from headaches, memory loss, episodes of anger,

and suicidal tendencies.

A group of players and their families have sued the

NFL for covering up the dangers of concussions in the

past. They say the league formed a committee to in-

vestigate the consequences of these injuries but down-

played the long-term dangers it learned about. The

plaintiffs are seeking a settlement of $5 billion to be paid

out over 25 years. One of the lawyers points out that for

a business earning $9 billion a year, it could be seen as

reasonable to compensate former players who are dis-

abled by brain injuries sustained on the job.

Meanwhile, the NFL has tried modifying players’ jobs

by creating new rules for the game. The rules include

requiring knee pads to reduce knee-to-head collisions

and moving kick-offs up fi ve yards to reduce the num-

ber of returns. Another change is that players will have

fewer full-contact workouts during the preseason. In ad-

dition, when players experience symptoms associated

with concussions, they may not return to play or practice

until they have been cleared by a neurologist who is not

affi liated with their team. These changes may reduce the

injuries to players, but some players are concerned the

changes will make the game less appealing to fans.


1. How do the basic human rights defi ned in Chapter

1—free consent, privacy, freedom of conscience,

freedom of speech, and due process—apply to

professional football players and the safety risks

described here?

2. Will making football players’ jobs safe achieve the

ethical goal of the greatest good for the greatest

number of people? Why or why not? Is there an

ethical level of safety in football?

Sources: William Weinbaum and Steve Delsohn, “Dorsett,

Others Show Signs of CTE,” ESPN Outside the Lines, April

5, 2014,; Joseph Serna, “Study Finds

Chronic Brain Damage in Former NFL Players,” Los Angeles

Times, January 22, 2013,; Paul M.

Barrett, “Pain Point,” Bloomberg Businessweek, January 13,

2013,; Mark Fainaru-Wade,

Jim Avila, and Steve Fainaru, “Doctors: Junior Seau’s Brain

Had CTE,” Outside the Lines, ESPN, January 11, 2013, http://

124 PART 1 The Human Resource Environment

Health Group, Kyle McDowell has autonomy to structure his day to be as effective as
possible. His tactic is to keep mornings free of meetings and other interruptions so he
can spend time focusing on strategic goals.31

Information-processing errors also are greater in situations in which one person
hands off information to another. Such transmission problems have become a major
concern in the fi eld of medicine because critical information is routinely shared among
nurses, doctors, and medical technicians, as well as between hospital employees chang-
ing shifts. Problems during shift changes are especially likely as a result of fatigue
and burnout among employees with stressful jobs.32 A study of handoffs at Yale–New
Haven Hospital found that the information conveyed was often informal, incomplete,
and vague. One-fourth of the studied handoffs led to errors in the care given to pa-
tients afterward. Pediatrician Ted Sectish has conducted a pilot program to improve
information-sharing during handoffs. After he trained young doctors in teamwork, set
up computerized summaries of patients, and established a structure for what informa-
tion to convey, medical errors fell by 40%.33

CHAPTER 4 Analyzing Work and Designing Jobs 125


LO 4-1 Summarize the elements of work fl ow analysis.
• First, the analysis identifi es the amount and qual-

ity of a work unit’s outputs (products, parts of
products, or services).

• Next, the analyst determines the work processes
required to produce the outputs, breaking down
tasks into those performed by each person.

• Finally, the work fl ow analysis identifi es the inputs
used to carry out the processes.

LO 4-2 Describe how work fl ow is related to an organi-
zation’s structure.

• Within an organization, units and individuals
must cooperate to create outputs, and the orga-
nization’s structure brings people together for
this purpose.

• The structure may be centralized or

• People may be grouped according to function or
into divisions focusing on particular products or
customer groups.

• A functional structure is most appropriate for peo-
ple who perform highly specialized jobs and hold
relatively little authority.

• Employee empowerment and teamwork succeed
best in a divisional structure.

LO 4-3 Defi ne the elements of a job analysis, and
discuss their signifi cance for human resource

• Job analysis is the process of getting detailed in-
formation about jobs. It includes preparation of
job descriptions and job specifi cations.

• A job description lists the tasks, duties, and re-
sponsibilities of a job.

• Job specifi cations look at the qualities needed in
a person performing the job. They list the knowl-
edge, skills, abilities, and other characteristics
that are required for successful performance of a

• Job analysis provides a foundation for carrying out
many HRM responsibilities, including work rede-
sign, human resource planning, employee selection
and training, performance appraisal, career plan-
ning, and job evaluation to determine pay scales.

LO 4-4 Tell how to obtain information for a job

• Information for analyzing an existing job often
comes from incumbents and their supervisors.

• The Labor Department publishes general back-
ground information about jobs in the Dictionary of

Occupational Titles and Occupational Information
Network (O*NET).

• Job analysts, employees, and managers may
complete a Position Analysis Questionnaire or
fi ll out a survey for the Fleishman Job Analysis

• In the case of teamwork, there are standard ways
to measure the nature of teams, such as looking
at three critical dimensions: skill differentiation,
authority differentiation, and temporal (time)

LO 4-5 Summarize recent trends in job analysis.
• To broaden traditional approaches to job

analysis in support of talent management, or-
ganizations develop competency models. A
competency model identifi es and describes all
the competencies, or personal capabilities, re-
quired for success in a particular occupation or
set of jobs.

• Because today’s workplace requires a high de-
gree of adaptability, job tasks and requirements
are subject to constant change. For example, as
some organizations downsize, they are defi ning
jobs more broadly, with less supervision of those

• Organizations are also adopting project-
based structures and teamwork, which also re-
quire fl exibility and the ability to handle broad

LO 4-6 Describe methods for designing a job so that it
can be done effi ciently.

• The basic technique for designing effi cient
jobs is industrial engineering, which looks for
the simplest way to structure work to maximize
effi ciency.

• Through methods such as time-and-motion stud-
ies, the industrial engineer creates jobs that are
relatively simple and typically repetitive.

• These jobs may bore workers because they are so

LO 4-7 Identify approaches to designing a job to make it

• According to the Job Characteristics Model, jobs
are more motivating if they have greater skill vari-
ety, task identity, task signifi cance, autonomy, and
feedback about performance effectiveness.

• Ways to create such jobs include job enlargement
(through job extension or job rotation) and job

126 PART 1 The Human Resource Environment

• Self-managing work teams also offer greater skill
variety and task identity.

• Flexible work schedules and telework offer greater

LO 4-8 Explain how organizations apply ergonomics to
design safe jobs.

• The goal of ergonomics is to minimize physical
strain on the worker by structuring the physical
work environment around the way the human
body works.

• Ergonomic design may involve (1) modifying
equipment to reduce the physical demands of per-
forming certain jobs or (2) redesigning the jobs
themselves to reduce strain.

• Ergonomic design may target work practices as-
sociated with injuries.

LO 4-9 Discuss how organizations can plan for the men-
tal demands of a job.

• Employers may seek to reduce mental as well as
physical strain.

• The job design may limit the amount of informa-
tion and memorization involved.

• Adequate lighting, easy-to-read gauges and displays,
simple-to-operate equipment, and clear instructions
also can minimize mental strain.

• Computer software can simplify jobs—for ex-
ample, by performing calculations or fi ltering out
spam from important e-mail.

• Organizations can select employees with the
necessary abilities to handle a job’s mental


work fl ow design, 102
job, 102
position, 102
job analysis, 105
job description, 105
job specifi cation, 106

Position Analysis Questionnaire
(PAQ), 110

Fleishman Job Analysis System, 110
competency, 113
job design, 114
industrial engineering, 115
job enlargement, 117

job extension, 118
job rotation, 118
job enrichment, 118
fl extime, 119
job sharing, 120
ergonomics, 122


1. Assume you are the manager of a fast-food res-
taurant. What are the outputs of your work unit?
What are the activities required to produce those
outputs? What are the inputs? (LO 4-1)

2. Based on Question 1, consider the cashier’s job in
the restaurant. What are the outputs, activities, and
inputs for that job? (LO 4-1)

3. Consider the “job” of college student. Perform a
job analysis on this job. What tasks are required in
the job? What knowledge, skills, and abilities are
necessary to perform those tasks? Prepare a job de-
scription based on your analysis. (LO 4-3)

4. Discuss how the following trends are changing
the skill requirements for managerial jobs in the
United States. (LO 4-5)

a. Increasing use of social media
b. Increasing international competition
c. Increasing work-family confl icts

5. Suppose you have taken a job as a trainer in a large
bank that has created competency models for all
its positions. How could the competency models
help you succeed in your career at the bank? How
could the competency models help you develop the
bank’s employees? (LO 4-5)

6. Consider the job of a customer service representative
who fi elds telephone calls from customers of a retailer
that sells online and through catalogs. What measures
can an employer take to design this job to make it ef-
fi cient? What might be some drawbacks or challenges
of designing this job for effi ciency? (LO 4-6)

7. How might the job in Question 6 be designed to
make it more motivating? How well would these
considerations apply to the cashier’s job in Question
2? (LO 4-7)

8. What ergonomic considerations might apply to
each of the following jobs? For each job, what kinds

CHAPTER 4 Analyzing Work and Designing Jobs 127

of costs would result from addressing ergonomics?
What costs might result from failing to address er-
gonomics? (LO 4-8)

a. A computer programmer.
b. A UPS delivery person.
c. A child care worker.
9. Modern electronics have eliminated the need

for a store’s cashiers to calculate change due on
a purchase. How does this development modify
the job description for a cashier? If you were
a store manager, how would it affect the skills

and qualities of job candidates you would want
to hire? Does this change in mental processing
requirements affect what you would expect from
a cashier? How? (LO 4-9)

10. Consider a job you hold now or have held recently.
Would you want this job to be redesigned to place
more emphasis on effi ciency, motivation, ergonom-
ics, or mental processing? What changes would you
want, and why? (Or why do you not want the job to
be redesigned?) (LO 4-9)

How Google Searches for the Right Job Requirements
Each year, around 2.5 million people apply to work
at Google—about 60 résumés for every current
employee. What makes the company so attractive?
Google is famous for perks such as free food and on-
site recreation, but these are just the most obvious
signs of a philosophy of valuing employees. Google’s
leaders are committed to designing jobs that are
highly motivating—partly to do what is right but also
to unleash creativity.

Decisions about job design, like other decisions at
Google, are driven by data. The company conducts
frequent surveys to measure whether employees are
satisfi ed with a variety of personnel decisions, such
as how compensation is structured or how they feel
about a new workspace. It shares the results with
employees and uses attitude and performance mea-
sures to identify decisions associated with high

Jobs at Google are motivating for several reasons.
First, the company defi nes its mission in exciting
terms. Software engineers, for example, do not just
create programs or systems; they help “develop the
next-generation technologies that change how mil-
lions interact.” Employees have great control over
their time: they can negotiate work hours with their
supervisor or take breaks to work out, get a mas-
sage, or take a nap whenever they need to recharge.
Every employee may devote up to 20 percent of each
workweek to a project he or she chooses, within or
beyond the employee’s job description. Google also
offers fl exibility related to the differences in how
people do their best thinking and working. It creates
workspaces for diversity, with areas to meet and talk
as well as areas for quiet concentration and spaces for
exercise. To support hiring of people who thrive with
fl exibility, job specifi cations include versatility, strong

ambition, problem-solving skills, and ability to work
on teams.

When Google applies data to managers’ jobs, it looks
for the behaviors associated with motivated workers.
Job descriptions may be as specifi c as detailing actions
to take on an employee’s fi rst day. These actions, ac-
cording to Laszlo Bock, the head of People Operations
at Google, are associated with 15 percent greater pro-
ductivity months later.

Google applies its concern for employee well-being to
ergonomics. The main concern in an offi ce setting is that
hours behind a desk can be unhealthy. The health risks in-
crease further when employees are snacking and gaining
weight. Here, as in other areas, solutions focus on choices,
with the company nudging employees toward healthy op-
tions. While all snacks are free, the healthiest options are
displayed most prominently. For ergonomics, employees
may choose adjustable sit-stand desks or treadmill desks,
so they can spend time out of their chairs.

1. What elements of motivating jobs has Google put

into place, according to this description? Name a
few other elements that might be appropriate at

2. What are the ergonomic challenges of jobs at
Google? How does the company give workers fl ex-
ibility in meeting those challenges?

Sources: Google company website, “Software Engineering,” Careers, http://, accessed May 7, 2014; Christopher Coleman, as told
to Venessa Wong, “How to Create a Workplace People Never Want to
Leave,” Bloomberg Businessweek, April 11, 2013, http://www.businessweek.
com; Mark C. Crowley, “Not a Happy Accident: How Google Deliber-
ately Designs Workplace Satisfaction,” Fast Company, March 21, 2013,; James B. Stewart, “Looking for a Lesson
in Google’s Perks,” New York Times, March 15, 2013, http://www.nytimes.
com; John Blackstone, “Inside Google’s Workplaces, from Perks to Nap
Pods,” CBS News, January 22, 2013,


128 PART 1 The Human Resource Environment

Amazon’s Warehouse Jobs: Good or Grueling Work?
As the economy slowly recovers, one concern is that
many jobs being created are not “good” jobs—that is,
they offer low pay and little prospect for career ad-
vancement. However, online retailer Amazon is add-
ing jobs it says are good. With sales steadily increasing,
Amazon keeps adding distribution centers to store, sort,
and ship merchandise. In each new distribution center,
it needs employees. Recently, the company announced
it would add 5,000 full-time employees to fi ll orders in
its distribution centers.

Amazon said these fulfi llment jobs are “not your
typical warehouse jobs,” with the difference being the
scale of operations. A typical Amazon fulfi llment cen-
ter occupies a million square feet. The job description
includes operating a forklift and moving heavy boxes to
pick, pack, and ship orders. Job specifi cations include
the ability to put in 12-hour days of walking, bending,
and reaching in a facility where temperatures may range
between 60 and 90 degrees. Applicants also must be at
least 18 years old, have a high school diploma or the
equivalent, and be able to read directions in English.

In exchange for hard work, Amazon says it pays
30 percent more than the average worker earns in a
retail store. With the average retail wage near $10 per
hour, that puts Amazon’s pay at about $13 per hour. In
addition, full-time employees receive health insurance,
a retirement savings plan, shares of the company’s stock,
and tuition reimbursement up to $3,000 per year.

While working in an Amazon warehouse might pay
more than working in the warehouse behind a brick-
and-mortar store, managers realize that the strenuous
work may not seem like a good job to everyone who
tries it. The company therefore has borrowed an idea
from Zappos, a business it acquired: it will pay fulfi ll-
ment center employees to quit. An employee who

decides within the fi rst year that he or she doesn’t want
to stay at Amazon will receive $2,000 in severance pay.
The amount increases by a thousand dollars a year until
the fourth year, when employees who quit will receive
$5,000. The goal of the program, which has the slogan
“Please Don’t Take This Offer,” is to ensure that all em-
ployees are satisfi ed and committed to their work.

It also may be a way for Amazon to address com-
plaints expressed by some workers in its distribution
centers. For example, some employees have fi led com-
plaints with the federal government that high tempera-
tures have created unsafe conditions and contributed to
injuries resulting in trips to the hospital. Amazon could
benefi t if employees who fi nd the working conditions
too diffi cult choose to take the severance pay or sign
up for tuition reimbursement to learn another kind of

1. Based on the information provided, write a simple

work fl ow analysis listing the inputs, activities, and
outputs of an Amazon distribution center.

2. Suppose Amazon hired you as a consultant to help
it minimize the cost of severance pay to fulfi llment
center workers. Suggest a few ways Amazon might
consider improving the design of the jobs.

Sources: Mike Davis, “Amazon Warehouse Accepting Applications for Ful-
fi llment Positions,” Times of Trenton (NJ), April 22, 2014, http://blog; “Would You Take $5,000 to Quit Your Job? Amazon Banks on It,”
AirTalk, April 14, 2014,; Kim Peterson, “Why Amazon
Pays Employees $5,000 to Quit,” CBS News, April 11, 2014, http://www; Shannon Mullen, “Is a Job at Amazon a ‘Good Job’?”
Marketplace, July 29, 2013,; Amazon company
website, “Amazon Creates More than 5,000 New Full-Time Jobs across
Growing U.S. Fulfi llment Network; Hiring Starts Now,” news release,
July 29, 2013,


Inclusivity Defines BraunAbility’s Products and Its Jobs
Ralph Braun built his company out of his creativity in
meeting his own personal needs. Growing up in rural
Indiana, Braun had diffi culty climbing stairs, and doctors
diagnosed him with spinal muscular atrophy. At age 14,
Braun needed a wheelchair to get around. He was disap-
pointed but developed his mechanical aptitude, honed by
years of helping his uncles fi x motorcycles and race cars,
and used it to build himself a battery-powered scooter.
With the scooter, Braun was able to navigate his way

around a job at an automotive supply factory, where co-
workers would ask him to build something similar for
their family members and acquaintances. Later, for better
transportation to and from the job, Braun fi gured out how
to convert a Dodge van with a lift so he could enter the
van on his scooter and drive it from there. Again, people
saw the van and asked for something similar. Eventually,
Braun took all his earnings from scooters and van con-
versions and started Save-A-Step Manufacturing, later


CHAPTER 4 Analyzing Work and Designing Jobs 129

named BraunAbility, which has become the world’s largest
maker of wheelchair-accessible vans and wheelchair lifts.

The passion and purposefulness of the company’s
founder are refl ected in the structure of BraunAbility’s
jobs and work. Recruiting is inclusive, with an especially
great appreciation for the potential of disabled work-
ers. Cyndi Garnett, the company’s director of human
resources, notes that a person with a disability has to go
through life solving accessibility problems creatively, so
that person is likely to have become a great innovator.
Wherever possible, work schedules are tailored to em-
ployees’ needs. Many employees have fl exible schedules,
working their choice of eight hours between 7:00 a.m.
and 6:00 p.m. Some employees telecommute full-time or
part-time. Even production workers, who must coordi-
nate their tasks as vans move from one work station to
the next, have fl exibility to negotiate arrangements that
work for them as a group. They told the company that
they wanted just a couple of short breaks during the day
instead of a long lunch break, so they could leave earlier.
BraunAbility went along with the idea.

As you might expect from a company founded by
a creative man, innovation is valued over hierarchy at
BraunAbility. Garnett says, “If anyone has an idea, that
person is listened to.” For example, an employee sug-
gested that, rather than going through the process of
safely disposing of leftover paint, workers use it to paint
the vehicle fl oors under the carpet, for a little additional

protection of the vehicle. The company readily adopted
the suggestion.

Along with feeling respected, workers at BraunAbil-
ity feel their work matters to society. In Garnett’s words,
because the company’s vans make it possible to travel
independently, employees “know that they’re changing
the lives of people with disabilities with every product
that goes out the door.”

1. In what ways is work at BraunAbility motivating?

What other features of motivating work might
BraunAbility be able to offer its employees?

2. What place would effi cient job design have in a
company like BraunAbility? How could BraunAbil-
ity improve job effi ciency in a way that is consistent
with the company’s emphasis on inclusiveness and
fl exibility?

3. Imagine that you work with the HR director at
BraunAbility, and she has asked you to suggest some
ways to reinforce employees’ sense that their jobs
have an important positive impact on others. What
would you suggest?

Sources: Company website,, accessed May 14, 2014;
“Collaboration, Inclusion Help Create That ‘Small-Town’ Feeling,” white
paper,, January 18, 2010,; “How I Did It:
Ralph Braun of BraunAbility,” Inc., December 1, 2009,;
“BraunAbility Launches EntervanXT to Accommodate Needs of Taller
Wheelchair and Scooter Users,” Marketing Weekly News, October 10, 2009,
Business & Company Resource Center,

1. Anita Hofschneider, “Bosses Say ‘Pick Up the Phone,’” The
Wall Street Journal, August 27, 2013,;
Sue Shellenbarger, “Is This How You Really Talk?” The Wall
Street Journal, April 23, 2013,

2. Suzanne Vranica, “Old-School Ad Execs Sweat as Data
Geeks Flex Muscle,” The Wall Street Journal, August 4, 2013,

3. J. R. Hollenbeck, H. Moon, A. Ellis, et al., “Structural Con-
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External and Internal Person-Team Fit,” Journal of Applied
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Hierarchy,” Bloomberg Businessweek, January 14, 2013, p. 74.

4. J. E. Ellis, “At P&G, the Innovation Well Runs Dry,”
Bloomberg Businessweek, September 12, 2012, pp. 24–6.

5. Oliver W. Cummings, “What Do Manufacturing Supervisors
Really Do on the Job?” Industry Week, February 2010, p. 53.

6. A. O’Reilly, “Skill Requirements: Supervisor- Subordinate
Confl ict,” Personnel Psychology 26 (1973), pp. 75–80; J. Hazel,
J. Madden, and R. Christal, “Agreement between Worker-
Supervisor Descriptions of the Worker’s Job,” Journal of
Industrial Psychology 2 (1964), pp. 71–9; A. K. Weyman, “Inves-
tigating the Infl uence of Organizational Role on Perceptions

of Risk in Deep Coal Mines,” Journal of Applied Psychology 88
(2003), pp. 404–12.

7. L. E. Baranowski and L. E. Anderson, “Examining Rater Source
Variation in Work Behavior to KSA Linkages,” Personnel Psy-
chology 58 (2005), pp. 1041–54.

8. National Center for O*NET Development, “O*NET Prod-
ucts at Work,” Spring 2011,

9. P. J. Taylor, W. D. Li, K. Shi, and W. C. Borman, “The Trans-
portability of Job Information across Countries,” Personnel Psy-
chology 61 (2008), pp. 69–111.

10. PAQ Newsletter, August 1989; E. C. Dierdorff and M. A. Wilson,
“A Meta-analysis of Job Analysis Reliability,” Journal of Applied
Psychology 88 (2003), pp. 635–46.

11. E. Fleishman and M. Reilly, Handbook of Human Abilities
(Palo Alto, CA: Consulting Psychologists Press, 1992);
E. Fleishman and M. Mumford, “Evaluating Classifi ca-
tions of Job Behavior: A Construct Validation of the Ability
Requirements Scales,” Personnel Psychology 44(1991): 523–75.

12. J. R. Hollenbeck, B. Beersma, and M. E. Schouten, “Beyond
Team Types and Taxonomies: A Dimensional Scaling Ap-
proach for Team Description,” Academy of Management Re-
view 37 (2012): 82–108.


130 PART 1 The Human Resource Environment

13. W. Cascio, Applied Psychology in Personnel Management, 4th ed.
(Englewood Cliffs, NJ: Prentice Hall, 1991).

14. P. Wright and K. Wexley, “How to Choose the Kind of Job
Analysis You Really Need,” Personnel, May 1985, pp. 51–5.

15. M. Campion, A. Fink, B. Ruggeberg, L. Carr,
G. Phillips, and R. Odman, “Doing Competencies Well: Best
Practices in Competency Modeling,” Personnel Psychology 64
(2011): 225–262; R. A. Noe, Employee Training and Development,
5e (New York: McGraw-Hill Irwin, 2010); J. Shippmann,
R. Ash, M. Battista, L. Carr, L. Eyde, B. Hesketh,
J. Kehow, K. Pearlman, and J. Sanchez, “The Practice of
Competency Modeling,” Personnel Psychology 53 (2000): 703–
740; A. Lucia and R. Lepsinger, The Art and Science of Compe-
tency Models (San Francisco: Jossey-Bass, 1999).

16. M. K. Lindell, C. S. Clause, C. J. Brandt, and
R. S. Landis, “Relationship between Organizational Context
and Job Analysis Ratings,” Journal of Applied Psychology 83
(1998), pp. 769–76.

17. D. S. DeRue, J. R. Hollenbeck, M. D. Johnson,
D. R. Ilgen, and D. K. Jundt, “How Different Team Downsiz-
ing Approaches Infl uence Team-Level Adaptation and Perfor-
mance,” Academy of Management Journal 51 (2008), pp. 182–96;
Anne Kadet, “‘Superjobs’: Why You Work More, Enjoy It
Less,” The Wall Street Journal, May 8, 2011, http://online

18. R. Hackman and G. Oldham, Work Redesign ( Boston: Addison-
Wesley, 1980).

19. Rachel King, “A Day in the Life of an Internet Hall Monitor,”
The Wall Street Journal, April 28, 2014,

20. M. R. Barrick, M. K. Mount, and N. Li, “The Theory of
Purposeful Work Behavior: The Role of Personality, Higher-
Order Goals, and Job Characteristics,” Academy of Manage-
ment Review 38 (2013): 132–53.

21. Alleen Brown, “Twin Cities Principals See Expanding Job
Descriptions and Longer Work Hours,” Twin Cities (MN)
Daily Planet, October 30, 2011,

22. F. W. Bond, P. E. Flaxman, and D. Bunce, “The Infl uence of
Psychological Flexibility on Work Redesign: Mediated Mod-
eration of a Work Reorganization Intervention,” Journal of
Applied Psychology 93 (2008), pp. 645–54.

23. M. A. Campion, G. J. Medsker, and A. C. Higgs, “Relations
between Work Group Characteristics and Effectiveness: Im-
plications for Designing Effective Work Groups,” Personnel
Psychology 46 (1993), pp. 823–50.

24. Scott Berinato, “To Raise Productivity, Let More Employ-
ees Work from Home,” Harvard Business Review, January–
February 2014, pp. 28–9; Neil Shah, “Nearly One in Ten
Employees Works from Home,” The Wall Street Journal,
March 5, 2013,

25. Lauren Weber, “Employers Are Getting More Flexible—Up
to a Point,” The Wall Street Journal, April 29, 2014, http://; Kenneth Matos and Ellen Galinsky, “2014
National Study of Employers,” Families and Work Institute
and Society for Human Resource Management, accessed at

26. See, for example, S. Sonnentag and F. R. H. Zijistra, “Job
Characteristics and Off-the-Job Activities as Predictors of
Need for Recovery, Well-Being, and Fatigue,” Journal of Ap-
plied Psychology 91 (2006), pp. 330–50.

27. D. May and C. Schwoerer, “Employee Health by Design:
Using Employee Involvement Teams in Ergonomic Job Re-
design,” Personnel Psychology 47 (1994), pp. 861–86.

28. Franklin Tessler, “The Hidden Danger of Touch-
screens,”, January 11, 2012, Busi-
ness & Company Resource Center, http://galenet

29. N. W. Van Yperen and M. Hagerdoorn, “Do High Job De-
mands Increase Intrinsic Motivation or Fatigue or Both? The
Role of Job Support and Social Control,” Academy of Manage-
ment Journal 46 (2003), pp. 339–48; N. W. Van Yperen and
O. Janssen, “Fatigued and Dissatisfi ed or Fatigued but Sat-
isfi ed? Goal Orientations and Responses to High Job De-
mands,” Academy of Management Journal 45 (2002), pp.

30. Jonathan Spira, “Information Overload: None Are Immune,”
Information Management, September/October 2011, p. 32.

31. Alina Dizik, “For Some Executives, Doing Less Means Get-
ting More Done,” The Wall Street Journal, April 27, 2014,

32. L. E. LaBlanc, J. J. Hox, W. B. Schaufell, T. W. Taris, and M.
C. W. Peters, “Take Care! The Evaluation of a Team-Based
Burnout Intervention Program for Oncology Health Care
Providers,” Journal of Applied Psychology 92 (2007), pp. 213–27.

33. Darshak Sanghavi, “The Last of the All-Nighters,”
The New York Times Magazine, August 7, 2011, Busi-
ness & Company Resource Center, http://galenet


Planning for and Recruiting Human Resources


Selecting Employees and Placing Them in


Training Employees


Developing Employees for Future Success

Acquiring, Training, and
Developing Human Resources









PART 2 Acquiring, Training, and Developing Human Resources

When you interview for a job, you know you should make a good first impression,
so you dress appropriately, shake hands, and make eye contact. Employers, too,
care about making a good first impression. That was at the top of Lars Schmidt’s
mind when he joined National Public Radio as its director of talent acquisition.
He explored the careers section of NPR’s website and realized it was not exactly
displaying the best of the organization. While NPR was innovating in the media
industry, its website had gone stale—no video, no social media, and a format
that did not display well on mobile devices. In a day when people first go online
for information, including information about jobs, Schmidt knew that the site was
unacceptable. Under Schmidt’s direction, NPR updated the site with a better design,
links to NPR’s presence on social media, and clips of employees telling about NPR’s
creative culture.

Schmidt also made changes to help NPR reach out to today’s mobile genera-
tion. He set up a career-related Twitter handle, @nprjobs, for tweets related to job
openings and what life is like for the organization’s employees. Employees use the
hashtag #nprlife when they share thoughts or photos of their work-related activi-
ties. Schmidt hopes people interested in radio will follow NPR and develop a posi-
tive image of the organization. Evidence suggests that the social-media presence is
a plus. For example, one year when NPR had fewer students than usual applying for
internships, NPR sent out a tweet that the application deadline would be extended.

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 5-1 Discuss how to plan for human resources needed
to carry out the organization’s strategy.

LO 5-2 Determine the labor demand for workers in
various job categories.

LO 5-3 Summarize the advantages and disadvantages
of ways to eliminate a labor surplus and avoid a
labor shortage.

LO 5-4 Describe recruitment policies organizations use to
make job vacancies more attractive.

LO 5-5 List and compare sources of job applicants.

LO 5-6 Describe the recruiter’s role in the recruitment
process, including limits and opportunities.

Planning for and Recruiting
Human Resources5

CHAPTER 5 Planning for and Recruiting Human Resources 133

Following that one short message, the organization received 140 additional applica-
tions yielding 15 qualified new interns. Similarly, it filled a digital-news position when
an already-employed worker noticed a tweet about the job and then began following
NPR employees on Twitter and Tumblr. This worker liked what she saw of the individu-
als and NPR’s culture, so she applied and was hired.1

As this example shows, technology trends have created new opportunities for link-
ing workers and employers. At the same time, changing technological and economic
conditions can pose challenges. The explosion in the use of social media and mobile
technology has meant stiff competition for workers who understand these technolo-
gies. When customer demand rises (or falls), organizations may need more (or fewer)
employees. When the labor market changes—say, when more people go to college or
when a sizable share of the population retires—the supply of qualifi ed workers may
grow, shrink, or change in nature. To prepare for and respond to these challenges, or-
ganizations engage in human resource planning—defi ned in Chapter 1 as identifying the
numbers and types of employees the organization will require to meet its objectives.

This chapter describes how organizations carry out human resource planning. In
the fi rst part of the chapter, we lay out the steps that go into developing and imple-
menting a human resource plan. Throughout each section, we focus especially on re-
cent trends and practices, including downsizing, employing temporary workers, and
outsourcing. The remainder of the chapter explores the process of recruiting. We de-
scribe the process by which organizations look for people to fi ll job vacancies and the
usual sources of job candidates. Finally, we discuss the role of recruiters.

The Process of Human Resource Planning
Organizations should carry out human resource planning so as to meet business objec-
tives and gain an advantage over competitors. To do this, organizations need a clear
idea of the strengths and weaknesses of their existing internal labor force. They also
must know what they want to be doing in the future—what size they want the organi-
zation to be, what products and services it should be producing, and so on. This knowl-
edge helps them defi ne the number and kinds of employees they will need. Human
resource planning compares the present state of the organization with its goals for the
future, then identifi es what changes it must make in its human resources to meet those
goals. The changes may include downsizing, training existing employees in new skills,
or hiring new employees.

These activities give a general view of HR planning. They take place in the human
resource planning process shown in Figure 5.1. The process consists of three stages:
forecasting, goal setting and strategic planning, and program implementation and
evaluation. Each of these steps is important, but a recent survey found differences in
how well organizations carry out the steps. In particular, most organizations are active
in forecasting, but high-performing businesses are much more likely than others to do
the work of tying human resource planning to the company’s strategy.2

The fi rst step in human resource planning is forecasting, as shown in the top por-
tion of Figure 5.1. In personnel forecasting, the HR professional tries to determine
the supply of and demand for various types of human resources. The primary goal is
to predict which areas of the organization will experience labor shortages or

LO 5-1 Discuss how
to plan for human re-
sources needed to carry
out the organization’s

The attempts to deter-
mine the supply of and
demand for various types
of human resources to
predict areas within the
organization where there
will be labor shortages
or surpluses.

134 PART 2 Acquiring, Training, and Developing Human Resources

Forecasting supply and demand can use statistical methods or judgment. Statisti-
cal methods capture historic trends in a company’s demand for labor. Under the right
conditions, these methods predict demand and supply more precisely than a human
forecaster can using subjective judgment. But many important events in the labor
market have no precedent. When such events occur, statistical methods are of little
use. To prepare for these situations, the organization must rely on the subjective judg-
ments of experts. Pooling their “best guesses” is an important source of ideas about
the future.

Forecasting the Demand for Labor Usually, an organization forecasts de-
mand for specifi c job categories or skill areas. After identifying the relevant job catego-
ries or skills, the planner investigates the likely demand for each. The planner must
forecast whether the need for people with the necessary skills and experience will in-
crease or decrease. There are several ways of making such forecasts.

At the most sophisticated level, an organization might use trend analysis, con-
structing and applying statistical models that predict labor demand for the next year,
given relatively objective statistics from the previous year. These statistics are called
leading indicators—objective measures that accurately predict future labor demand.
They might include measures of the economy (such as sales or inventory levels), ac-
tions of competitors, changes in technology, and trends in the composition of the
workforce and overall population. For example, ranchers feed corn to their cattle, so
an increase in corn prices will cause an increase in the price of beef and a reduction in
demand, reducing the need for workers in slaughterhouses. Thus, when a severe
drought in 2012 caused corn prices to spike, Cargill forecast a reduction in the need
for workers in its beef-processing operations the following year. The company closed
a processing plant in Plainview, Texas, ahead of the reduced demand, so it did not have
to pay idle workers there.3

Statistical planning models are useful when there is a long, stable history that
can be used to reliably detect relationships among variables. However, these models

LO 5-2 Determine
the labor demand for
workers in various job

Trend Analysis
Constructing and apply-
ing statistical models
that predict labor de-
mand for the next year,
given relatively objective
statistics from the previ-
ous year.

Leading Indicators
Objective measures that
accurately predict future
labor demand.

Forecasts of labor
surplus or shortage

Goal setting and
strategic planning

Program implementation
and evaluation

Forecasts of
labor demand

Forecasts of
labor supply

Figure 5.1
Overview of the Human

Resource Planning


CHAPTER 5 Planning for and Recruiting Human Resources 135

almost always have to be complemented with sub-
jective judgments of experts. There are simply too
many “once-in-a-lifetime” changes to consider, and
statistical models cannot capture them.

Determining Labor Supply Once a company
has forecast the demand for labor, it needs an indi-
cation of the fi rm’s labor supply. Determining the
internal labor supply calls for a detailed analysis of
how many people are currently in various job cat-
egories or have specifi c skills within the organization.
The planner then modifi es this analysis to refl ect
changes expected in the near future as a result of re-
tirements, promotions, transfers, voluntary turnover,
and terminations.

One type of statistical procedure that can be used for
this purpose is the analysis of a transitional matrix.
This is a chart that lists job categories held in one pe-
riod and shows the proportion of employees in each of those job categories in a future
period. It answers two questions: “Where did people who were in each job category go?”
and “Where did people now in each job category come from?” Table 5.1 is an example of
a transitional matrix.

This example lists job categories for an auto parts manufacturer. The jobs listed
at the left were held in 2011; the numbers at the right show what happened to the
people in 2014. The numbers represent proportions. For example, .95 means 95% of
the people represented by a row in the matrix. The column headings under 2014 refer
to the row numbers. The fi rst row is sales managers, so the numbers under column
(1) represent people who became sales managers. Reading across the fi rst row, we see
that 95 of the people who were sales managers in 2011 are still sales managers in 2014.
The other 5% correspond to position (8), “Not in organization,” meaning the 5% of
employees who are not still sales managers have left the organization. In the second
row are sales representatives. Of those who were sales reps in 2011, 5% were promoted
to sales manager, 60% are still sales reps, and 35% have left the organization. In row
(3), half (50%) of sales apprentices are still in that job, but 20% are now sales reps and
30% have left the organization. This pattern of jobs shows a career path from sales ap-
prentice to sales representative to sales manager. Of course, not everyone is promoted,
and some of the people leave instead.

Transitional Matrix
A chart that lists job
categories held in one
period and shows the
proportion of employees
in each of those job
categories in a future

As the average age of many workers in skilled trades grows, the com-

ing demand for workers in many trades is expected to outstrip supply

in the United States. There is a potential for employers in some areas

to experience a labor shortage because of this. How can HR prepare

for this reality? What should be done now to avoid the shortage?

Table 5.1
Transitional Matrix:
Example for an Auto Parts


2011 (1) (2) (3) (4) (5) (6) (7) (8)
(1) Sales manager .95 .05
(2) Sales representative .05 .60 .35
(3) Sales apprentice .20 .50 .30
(4) Assistant plant manager .90 .05 .05
(5) Production manager .10 .75 .15
(6) Production assembler .10 .80 .10
(7) Clerical .70 .30
(8) Not in organization .00 .20 .50 .00 .10 .20 .30

136 PART 2 Acquiring, Training, and Developing Human Resources

Reading down the columns provides another kind of information: the sources of
employees holding the positions in 2014. In the fi rst column, we see that most sales
managers (95%) held that same job three years earlier. The other 5% were promoted
from sales representative positions. Skipping over to column (3), half the sales ap-
prentices on the payroll in 2014 held the same job three years before, and the other
half were hired from outside the organization. This suggests that the organization fi lls
sales manager positions primarily through promotions, so planning for this job would
focus on preparing sales representatives. In contrast, planning to meet the organiza-
tion’s needs for sales apprentices would emphasize recruitment and selection of new

Matrices such as this one are extremely useful for charting historical trends in
the company’s supply of labor. More important, if conditions remain somewhat
constant, they can also be used to plan for the future. For example, if we believe that
we are going to have a surplus of labor in the production assembler job category
in the next three years, we can plan to avoid layoffs. Still, historical data may not
always reliably indicate future trends. Planners need to combine statistical forecasts
of labor supply with expert judgments. For example, managers in the organization
may see that a new training program will likely increase the number of employees
qualifi ed for new openings. Forecasts of labor supply also should take into account
the organization’s pool of skills. Many organizations include inventories of em-
ployees’ skills in an HR database. When the organization forecasts that it will need
new skills in the future, planners can consult the database to see how many existing
employees have those skills.

Besides looking at the labor supply within the organization, the planner should
examine trends in the external labor market. The planner should keep abreast of labor
market forecasts, including the size of the labor market, the unemployment rate, and
the kinds of people who will be in the labor market. For example, we saw in Chapter 2
that the U.S. labor market is aging and that immigration is an important source of new
workers. Important sources of data on the external labor market include the Occupa-
tional Outlook Quarterly and the Monthly Labor Review, published by the Labor Depart-
ment’s Bureau of Labor Statistics. Details and news releases are available at the website
of the Bureau of Labor Statistics (

Determining Labor Surplus or Shortage Based on the forecasts for labor
demand and supply, the planner can compare the fi gures to determine whether there
will be a shortage or surplus of labor for each job category. Determining expected
shortages and surpluses allows the organization to plan how to address these

Goal Setting and Strategic Planning
The second step in human resource planning is goal setting and strategic planning, as
shown in the middle of Figure 5.1. The purpose of setting specifi c numerical goals is
to focus attention on the problem and provide a basis for measuring the organization’s
success in addressing labor shortages and surpluses. The goals should come directly
from the analysis of labor supply and demand. They should include a specifi c fi gure in-
dicating what should happen with the job category or skill area and a specifi c timetable
for when the results should be achieved.

For each goal, the organization must choose one or more human resource strate-
gies. A variety of strategies is available for handling expected shortages and surpluses

LO 5-3 Summarize
the advantages and
disadvantages of ways
to eliminate a labor
surplus and avoid a
labor shortage.

CHAPTER 5 Planning for and Recruiting Human Resources 137

of labor. The top of Table 5.2 shows major options for reducing an expected labor sur-
plus, and the bottom of the table lists options for avoiding an expected labor shortage.

This planning stage is critical. The options differ widely in their expense, speed, and
effectiveness. Options for reducing a labor surplus cause differing amounts
of human suffering. The options for avoiding a labor shortage differ in
terms of how easily the organization can undo the change if it no longer
faces a labor shortage. For example, an organization probably would not
want to handle every expected labor shortage by hiring new employees.
The process is relatively slow and involves expenses to fi nd and train new
employees. Also, if the shortage becomes a surplus, the organization will
have to consider laying off some of the employees. Layoffs involve an-
other set of expenses, such as severance pay, and they are costly in terms of
human suffering.

Another consideration in choosing an HR strategy is whether the em-
ployees needed will contribute directly to the organization’s success. Orga-
nizations are most likely to benefi t from hiring and retaining employees
who provide a core competency—that is, a set of knowledge and skills
that make the organization superior to competitors and create value for
customers. At a store, for example, core competencies include choosing
merchandise that shoppers want and providing shoppers with excellent ser-
vice. For other work that is not a core competency—say, cleaning the store
and providing security—the organization may benefi t from using HR strat-
egies other than hiring full-time employees.

Organizations try to anticipate labor surpluses far enough ahead that
they can freeze hiring and let natural attrition (people leaving on their own)
reduce the labor force. Unfortunately for many workers, organizations

Core Competency
A set of knowledge and
skills that make the
organization superior to
competitors and create
value for customers.

Table 5.2
HR Strategies for
Addressing a Labor
Shortage or Surplus


Downsizing Fast High
Pay reductions Fast High
Demotions Fast High
Transfers Fast Moderate
Work sharing Fast Moderate
Hiring freeze Slow Low
Natural attrition Slow Low
Early retirement Slow Low
Retraining Slow Low


Overtime Fast High
Temporary employees Fast High
Outsourcing Fast High
Retrained transfers Slow High
Turnover reductions Slow Moderate
New external hires Slow Low
Technological innovation Slow Low

Cold Stone Creamery employees give

their company the competitive advantage

with their “entertainment factor.” The

company is known to seek out employees

who like to perform and then “audition”

rather than interview potential employees.

138 PART 2 Acquiring, Training, and Developing Human Resources

often stay competitive in a fast-changing environment by responding to a labor surplus
with downsizing, which delivers fast results. The impact is painful for those who lose
jobs, as well as those left behind to carry on without them. To handle a labor shortage,
organizations typically hire temporary employees or use outsourcing. Because down-
sizing, using temporary employees, and outsourcing are most common, we will look at
each of these in greater detail in the following sections.

Downsizing As we discussed in Chapter 2, downsizing is the planned elimina-
tion of large numbers of personnel with the goal of enhancing the organization’s com-
petitiveness. The primary reason organizations engage in downsizing is to promote
future competitiveness. According to surveys, they do this by meeting four objectives:

1. Reducing costs—Labor is a large part of a company’s total costs, so downsizing is an
attractive place to start cutting costs.

2. Replacing labor with technology—Closing outdated factories, automating, or intro-
ducing other technological changes reduces the need for labor. Often, the labor
savings outweigh the cost of the new technology.

3. Mergers and acquisitions—When organizations combine, they often need less bu-
reaucratic overhead, so they lay off managers and some professional staff members.

4. Moving to more economical locations—Some organizations move from one area of the
United States to another, especially from the Northeast and Midwest to the South
and the mountain regions of the West. For example, managers looking for ways to
cut costs at H. J. Heinz observed that the facility in Pocatello, Idaho, was no longer
mainly processing locally grown potatoes. Rather, in response to shifting consumer
demands, it was making products for which 70% of the ingredients came from east of
the Mississippi (traveling 1,000 miles or so) and other ingredients were from Denver
(almost 600 miles away). Heinz decided to close the Idaho facility and have its Ohio
factory handle the production of all frozen foods, because Ohio is more centrally
located for both ingredients and customers.4 Other moves have shifted jobs to other
countries, including Mexico, India, and China, where wages are lower.

Although downsizing has an immediate effect on costs, much of the evidence sug-
gests that it hurts long-term organizational effectiveness. This is especially true for
certain kinds of companies, such as those that emphasize research and development
and where employees have extensive contact with customers.5 The negative effect of
downsizing was especially high among fi rms that engaged in high-involvement work
practices, such as the use of teams and performance-related pay incentives. As a result,
the more a company tries to compete through its human resources, the more layoffs
hurt productivity.6

Why do so many downsizing efforts fail to meet expectations? There seem to be
several reasons. First, although the initial cost savings give a temporary boost to prof-
its, the long-term effects of an improperly managed downsizing effort can be nega-
tive. Downsizing leads to a loss of talent, and it often disrupts the social networks
through which people are creative and fl exible.7 Unless the downsizing is managed
well, employees feel confused, demoralized, and even less willing to stay with the or-
ganization. Organizations may not take (or even know) the steps that can counter
these reactions—for example, demonstrating how they are treating employees fairly,
building confi dence in the company’s plans for a stronger future, and showing the
organization’s commitment to behaving responsibly with regard to all its stakeholders,
including employees, customers, and the community.8 The “HR Oops!” box illustrates
consequences of not taking those steps.

The planned elimination
of large numbers of per-
sonnel with the goal of
enhancing the organiza-
tion’s competitiveness.


Also, many companies wind up rehiring. Downsizing campaigns often eliminate
people who turn out to be irreplaceable. In one survey, 80% of the fi rms that had
downsized later replaced some of the very people they had laid off. In one Fortune
100 fi rm, a bookkeeper making $9 an hour was let go. Later, the company realized she
knew many things about the company that no one else knew, so she was hired back as
a consultant—for $42 an hour.9 However, recent trends in employment suggest that
companies will not rehire employees for many of the jobs eliminated when they re-
structure, introduce automation, or move work to lower-cost regions.10

Finally, downsizing efforts often fail because employees who survive the purge be-
come self-absorbed and afraid to take risks. Motivation drops because any hope of
future promotions—or any future—with the company dies. Many employees start
looking for other employment opportunities. The negative publicity associated with
a downsizing campaign can also hurt the company’s image in the labor market, so it is
harder to recruit employees later.

Many problems with downsizing can be reduced with better planning. Instead of
slashing jobs across the board, successful downsizing makes surgical strategic cuts that
improve the company’s competitive position, and management addresses the prob-
lem of employees becoming demoralized. During the housing boom of the previous
decade, landscaping companies struggled to fi nd enough talented, motivated work-
ers, especially at the supervisory level. When bust followed boom, well-managed

Getting lean improves an organiza-

tion’s effi ciency and makes it stron-

ger for the long haul. But some

organizations are so desperate to

cut costs that they don’t just get

lean, they starve themselves of im-

portant human resources.

Some shoppers and business

observers think that’s what Walmart

did during the most recent reces-

sion. Since 2008, the start of the

recession, the company increased

the number of stores by 13% but re-

duced its workforce by 1.4%. While

cuts at headquarters could account

for some of the difference between

these percentages, it’s likely that the

impact includes stores trying to op-

erate with fewer employees.

Customers have observed less

help available and longer checkout

lines. They also complain that over-

whelmed employees are unable to

keep shelves stocked with merchan-

dise. Walmart’s offi cial response is

that the percentage of items in stock

has actually improved. However,

reporters have cited examples of

employees saying that the merchan-

dise indeed has been delivered to

the store, but they don’t have time

to move it to the shelves. And in

the American Customer Satisfac-

tion Index, a survey of consumer

opinions about major corporations,

Walmart recently was the lowest-

ranked brand of department or dis-

count store—the sixth year it was

last or tied for last.

One employee said she was

told her store was not allowed to

schedule more worker-hours un-

less it had higher sales. Is this an

example of a company that staffs

effi ciently or one that is starving it-

self of human resources? Sales at

Walmart have been falling, though

profi ts have held steady. Spending

less for human resources is one way

to limit costs and maintain profi ts

when sales decline. But if custom-

ers are leaving to fi nd better service

elsewhere, the company could be

setting up a downward spiral.


1. What pros and cons of

downsizing do you think apply

to this example?

2. Besides reducing the

workforce in its stores, how

else could a retailer like

Walmart respond to a decline

in demand?

Sources: Michael Calia, “Wal-Mart Of-

fers Weak Outlook; U.S. Sales Keep

Falling,” The Wall Street Journal,

May 15, 2014,;

Bill Saporito, “The Trouble Lurking on

Walmart’s Empty Shelves,” Time, April 9,

2013,; Renee

Dudley, “Walmart Faces the Cost of

Cost-Cutting: Empty Shelves,” Bloom-

berg Businessweek, March 28, 2013,

Trimming More Than Just Fat

HR Oops!

140 PART 2 Acquiring, Training, and Developing Human Resources

landscapers used downsizing as an opportunity to improve quality. Bill Davids of
Clarence Davids & Co. was one landscaping manager who selected the least produc-
tive employees for layoffs. He then rallied the remaining employees to focus on how to
operate more effi ciently and keep the business afl oat during lean times. Davids told a
reporter, “Once [employees] see you’re serious and several people have exited, you get
the buy-in pretty quick.”11 In fact, for good workers, it can be motivating to be part of
a higher-quality, if smaller, team.

Reducing Hours Given the limitations of downsizing, many organizations are
more carefully considering other avenues for eliminating a labor surplus. Among the
alternatives listed in Table 5.2, one that is seen as a way to spread the burden more
fairly is cutting work hours, generally with a corresponding reduction in pay. Besides
the thought that this is a more equitable way to weather a slump in demand, compa-
nies choose a reduction in work hours because it is less costly than layoffs requiring
severance pay, and it is easier to restore the work hours than to hire new employees
after a downsizing effort. When plastics manufacturer Saint-Gobain in Bristol, Rhode
Island, experienced a business slowdown, it did not lay off any workers but cut many
workers’ hours by 40%. The state stepped in and contributed 70% of the lost wages
in exchange for the workers’ continued employment—less than it would have paid in
unemployment compensation. This kind of “work share” program, which helps em-
ployers keep experienced employees, has been popular in Europe but is fairly new to
the United States.12

Early-Retirement Programs Another popular way to reduce a labor surplus is
with an early-retirement program. As we discussed in Chapter 2, the average age of the
U.S. workforce is increasing. But even though many baby boomers are reaching tra-
ditional retirement age, indications are that this group has no intention of leaving the
workforce soon.13 Reasons include improved health of older people, jobs becoming
less physically demanding, concerns about the long-term viability of Social Security
and pensions, the recent drop in the value of older workers’ retirement assets (espe-
cially stock funds and home values), and laws against age discrimination. Under the
pressures associated with an aging labor force, many employers try to encourage older
workers to leave voluntarily by offering a variety of early-retirement incentives. The
more lucrative of these programs succeed by some measures. Research suggests that
these programs encourage lower-performing older workers to retire.14 Sometimes
they work so well that too many workers retire.

Many organizations are moving from early-retirement programs to phased-
retirement programs. In a phased-retirement program, the organization can continue
to  enjoy the experience of older workers while reducing the number of hours that
these employees work, as well as the cost of those employees. This option also can give
older employees the economic and psychological benefi ts of easing into retirement,
rather than being thrust entirely into a new way of life.15

Employing Temporary and Contract Workers While downsizing has been
a popular way to reduce a labor surplus, the most widespread methods for eliminating
a labor shortage are hiring temporary and contract workers and outsourcing work.
Employers may arrange to hire a temporary worker through an agency that specializes
in linking employers with people who have the necessary skills. The employer pays
the agency, which in turn pays the temporary worker. Employers also may contract
directly with individuals, often professionals, to provide a particular service.

CHAPTER 5 Planning for and Recruiting Human Resources 141

To use this source of labor effectively, employers need to overcome some disad-
vantages. In particular, temporary and contract workers may not be as committed
to the organization, so if they work directly with customers, that attitude may spill
over and affect customer loyalty. Therefore, many organizations try to use permanent
employees in key jobs and use temporary and contract workers in ways that clearly
supplement—and do not potentially replace—the permanent employees.16

Temporary Workers As we saw in Chapter 2, the federal government estimated that
organizations are using over a million temporary workers. Temporary employment is
popular with employers because it gives them fl exibility they need to operate effi ciently
when demand for their products changes rapidly. If an employer believes a higher level of
demand will persist, it often can hire the temps as permanent workers. Siemens contracts
with a temporary employment agency to provide production and warehouse workers for
its Rail Systems Division in Sacramento. If Siemens determines a long-term need for ad-
ditional workers, it selects high-performing temporary employees to put on its payroll.17

In addition to fl exibility, temporary employment offers lower costs. Using temporary
workers frees the employer from many administrative tasks and fi nancial burdens associ-
ated with being the “employer of record.” The cost of employee benefi ts, including health
care, pension, life insurance, workers’ compensation, and unemployment insurance, can
account for 40% of payroll expenses for permanent employees. Assuming the agency pays
for these benefi ts, a company using temporary workers may save money even if it pays the
agency a higher rate for that worker than the usual wage paid to a permanent employee.

Agencies that provide temporary employees also may handle some of the tasks as-
sociated with hiring. Small companies that cannot afford their own testing programs
often get employees who have been tested by a temporary agency. Many temporary
agencies also train employees before sending them to employers. This reduces em-
ployers’ training costs and eases the transition for the temporary worker and employer.

Finally, temporary workers may offer value not available from permanent employ-
ees. Because the temporary worker has little experience at the employer’s organiza-
tion, this person brings an objective point of view to the organization’s problems and
procedures. Also, a temporary worker may have a great deal of experience in other
organizations that can be applied to the current assignment.

To obtain these benefi ts, organizations need to overcome the disadvantages associ-
ated with temporary workers. For example, tension can develop between temporary
and permanent employees. Employers can minimize resentment and ensure that all
workers feel valued by not bringing in temporary or contract workers immediately
after downsizing and by hiring temporary workers from agencies that provide benefi ts.
In addition, employers must avoid the legal pitfalls associated with temporary employ-
ees and contract workers, as described in “HR How To.”

Employee or Contractor? Besides using a temporary employment agency, a com-
pany can obtain workers for limited assignments by entering into contracts with them.
If the person providing the services is an independent contractor, rather than an em-
ployee, the company does not pay employee benefi ts, such as health insurance and
vacations. As with using temporary employees, the savings can be signifi cant, even if
the contractor works at a higher rate of pay.

This strategy carries risks, however. If the person providing the service is a contrac-
tor and not an employee, the company is not supposed to directly supervise the worker.
The company can tell the contractor what criteria the fi nished assignment should
meet but not, for example, where or what hours to work. This distinction is signifi cant,
because under federal law, if the company treats the contractor as an employee, the


company has certain legal obligations, described in Part 4, related to matters such as
overtime pay and withholding taxes.

When an organization wants to consider using independent contractors as a way to
expand its labor force temporarily, human resource professionals can help by alerting the
company to the need to verify that the arrangement will meet the legal requirements. A
good place to start is with the advice to small businesses at the Internal Revenue Service
website (; search for “independent contractor” to fi nd links to information
and guidance. In addition, the organization may need to obtain professional legal advice.

Outsourcing Instead of using a temporary or contract employee to fi ll a single
job, an organization might want a broader set of services. Contracting with another

When a company lands a big order,

needs to catch up on administrative

work, or isn’t sure demand will con-

tinue at present levels, contingent

workers look like the ideal solution.

The company can hire workers from

a temp agency or negotiate con-

tracts for short-term projects, and

when the project ends or demand

falls, the company doesn’t have to

fi gure out what to do with the work-

ers. In addition, the company may

be able to save money because it

doesn’t have to provide employee

benefi ts or withhold taxes from con-

tract workers’ pay.

However, it is not up to the com-

pany to decide whether its workers

are really independent contractors.

The Internal Revenue Service has

guidelines for what constitutes an

employee and an independent con-

tractor. Here are some tips for how

to classify workers:

• Companies can specify what

they want a contractor to ac-

complish. But if the employer

tells the workers how to do the

work and controls the workers’

activities, then the workers are

employees, not independent


• Providing the workers with sup-

plies or tools and reimbursing

the workers for the expenses

associated with their work tend

to be signs that the workers are


• Providing the workers with ben-

efi ts such as insurance and paid

vacation time is a sign that the

workers are employees. Usu-

ally, temporary workers receive

these benefi ts from an agency

that employs them, not from the

company that pays the agency

for the workers’ services.

• If a company hires workers from

a temp agency to do work for

a long period of time, directly

controls what these workers do,

and uses them to perform key

roles, the government may see

the company as an employer

or “joint employer” with the

temp agency. A company that

is a joint employer has to fol-

low labor laws, including those

against discrimination (see

Chapter 3) and legal require-

ments for pay (see Chapter 12).

• If a company is not sure whether

its workers are employees or in-

dependent contractors, it should

get professional advice. Compa-

nies and workers may ask the IRS

to decide. The way to do this

is to fi le a Form SS-8 requesting a

determination from the IRS.

The form is available at the IRS

website (


1. Suppose a small company

does not want the headaches

of administering benefi ts

programs, so it hires its

workers from a temp agency

and keeps them on for several

years. Would you expect the

IRS to agree that these are not

employees? Why or why not?

2. Suppose you work in the HR

department of a company

that wants to hire production

workers as independent

contractors. What advice

would you give management

about this idea?

Sources: Internal Revenue Service, “In-

dependent Contractor vs. Employee,”

Tax Topic 762, last updated March 20,

2014,; Internal Revenue

Service, “Independent Contractor (Self-

Employed) or Employee?” last updated

November 5, 2013,;

“Hiring Temporary Employees,” Entrepre-

neur, February 25, 2013, http://www

Using Temporary Employees and Contractors

HR How To

CHAPTER 5 Planning for and Recruiting Human Resources 143

organization to perform a broad set of services is called outsourcing. Organizations
use outsourcing as a way to operate more effi ciently and save money. They choose
outsourcing fi rms that promise to deliver the same or better quality at a lower cost.
One reason they can do this is that the outside company specializes in the service and
can benefi t from economies of scale (the economic principle that producing some-
thing in large volume tends to cost less for each additional unit than producing in
small volume). This effi ciency is often the attraction for outsourcing human resource
functions such as payroll. Costs also are lower when the outsourcing fi rm is located in
a part of the world where wages are relatively low. The labor forces of countries such
as China, India, Jamaica, and those in Eastern Europe have been creating an abundant
supply of labor for unskilled and low-skilled work.

The fi rst uses of outsourcing emphasized manufacturing and routine tasks.
However, technological advances in computer networks and transmission have
speeded up the outsourcing process and have helped it spread beyond manufactur-
ing areas and low-skilled jobs. For example, newspapers outsource ad creation to
Outsourcing USA, a small business in Dallas, Pennsylvania. At Outsourcing USA,
employees design advertisements for print, web, and mobile editions of their cli-
ents’ newspapers. The company offers low costs by specializing in a niche market,
focusing relentlessly on effi ciency, and hiring recent graduates. Careful supervi-
sion and a one-month training program ensure that Outsourcing USA delivers
quality work.18

Using outsourcing may be a necessary way to operate as effi ciently as competitors,
but it does pose challenges. Quality-control problems, security violations, and poor cus-
tomer service have sometimes wiped out the cost savings attributed to lower wages. To
ensure success with an outsourcing strategy, companies should follow these guidelines:

• Learn about what the provider can do for the company, not just the costs. Make
sure the company has the necessary skills, including an environment that can meet
standards for clear communication, on-time shipping, contract enforcement, fair
labor practices, and environmental protection. Outsourcing USA fi nds that its cli-
ents prefer buying ad production services from a local company rather than going
overseas for potentially lower prices. The Pennsylvania company can offer news-
papers in the region faster communications (by being in the same time zone) and
greater familiarity with the nuances of American English.19

• Do not offshore any work that is proprietary or requires tight security.20

• Start small and monitor the work closely, especially in the beginning, when prob-
lems are most likely. Indiana’s experience offers a cautionary tale with its attempt
to outsource the processing of welfare benefi ts to IBM. While IBM could offer
expertise in developing a website and managing the data, it soon became apparent
that the company was unfamiliar with some of the challenges of serving the poor.
IBM had expected most recipients to sign up online, but most phoned or came into
state welfare offi ces because they were unable to use the Internet or simply more
accustomed to handling matters face-to-face. Callers were on hold for hours, and
processing fell far behind. Indiana ended up changing the arrangement so that state
employees work with clients while IBM handles the back end of the system.21

• Look for opportunities to outsource work in areas that promote growth, for example,
by partnering with experts who can help the organization tap new markets. Mans-
fi eld Sales Partners offers this type of advantage to companies that have a limited
sales force or want to test a new market. Such companies can use Mansfi eld’s team of
experienced salespeople to introduce their products in markets around the world.22

Contracting with another
organization to perform a
broad set of services.

144 PART 2 Acquiring, Training, and Developing Human Resources

Overtime and Expanded Hours Organizations facing a labor shortage
may be reluctant to hire employees, even temporary workers, or to commit to an
outsourcing arrangement. Especially if the organization expects the shortage to
be temporary, it may prefer an arrangement that is simpler and less costly. Under
some conditions, these organizations may try to garner more hours from the exist-
ing labor force, asking them to go from part-time to full-time status or to work

A major downside of overtime is that the employer must pay nonmanagement em-
ployees one-and-a-half times their normal wages for work done overtime. Even so,
employers see overtime pay as preferable to the costs of hiring and training new em-
ployees. The preference is especially strong if the organization doubts that the current
higher level of demand for its products will last long.

For a short time at least, many workers appreciate the added compensation for
working overtime. Over extended periods, however, employees feel stress and frustra-
tion from working long hours. Overtime therefore is best suited for short-term labor

Implementing and Evaluating the HR Plan
For whatever HR strategies are selected, the fi nal stage of human resource planning
involves implementing the strategies and evaluating the outcomes. This stage is rep-
resented by the bottom part of Figure 5.1. When implementing the HR strategy, the
organization must hold some individual accountable for achieving the goals. That per-
son also must have the authority and resources needed to accomplish those goals. It is
also important that this person issue regular progress reports, so the organization can
be sure that all activities occur on schedule and that the early results are as expected.
The “Did You Know?” box reports some of the major challenges managers face during
the implementation of an HR plan.

Implementation that ties planning and recruiting to the organization’s strategy
and to its efforts to develop employees becomes a complete program of talent man-
agement. Today’s computer systems have made talent management more practical.
Companies can tap into databases and use analytic tools to keep track of which skills
and knowledge they need, which needs have already been fi lled, which employees are
developing experiences to help them meet future needs, and which sources of talent
have met talent needs most effi ciently. For example, large warehouses are using labor
management systems to staff their facilities in the most effi cient way. If the system
detects a surge of orders to be picked, it can help managers reassign workers to keep
up with the highest-priority tasks and delay low-priority work. The systems also can
forecast the number of positions needed to get work done on time. Furthermore, labor
management systems are useful for other HR decisions, such as work design and per-
formance measurement.23

In evaluating the results, the most obvious step is checking whether the organiza-
tion has succeeded in avoiding labor shortages or surpluses. Along with measuring
these numbers, the evaluation should identify which parts of the planning process
contributed to success or failure. For example, consider a company where meeting
human resource needs requires that employees continually learn new skills. If there
is a gap between needed skills and current skill levels, the evaluation should consider
whether the problem lies with failure to forecast the needed skills or with imple-
mentation. Are employees signing up for training, and is the right kind of training


Applying HR Planning to Affirmative Action
As we discussed in Chapter 3, many organizations have a human resource strategy that
includes affi rmative action to manage diversity or meet government requirements.
Meeting affi rmative-action goals requires that employers carry out an additional level
of human resource planning aimed at those goals. In other words, besides looking at its
overall workforce and needs, the organization looks at the representation of subgroups
in its labor force—for example, the proportion of women and minorities.

Affi rmative-action plans forecast and monitor the proportion of employees who are
members of various protected groups (typically, women and racial or ethnic minori-
ties). The planning looks at the representation of these employees in the organization’s
job categories and career tracks. The planner can compare the proportion of employ-
ees who are in each group with the proportion each group represents in the labor
market. For example, the organization might note that in a labor market that is 25%
Hispanic, 60% of its customer service personnel are Hispanic. This type of compari-
son is called a workforce utilization review. The organization can use this process
to determine whether there is any subgroup whose proportion in the relevant labor
market differs substantially from the proportion in the job category.

If the workforce utilization review indicates that some group—for example,
African Americans—makes up 35% of the relevant labor market for a job category

Workforce Utilization
A comparison of the
proportion of employees
in protected groups with
the proportion that each
group represents in the
relevant labor market.

Did You Know?

In a survey of more than 700 small

business owners, the main hiring

challenge was simply fi nding the

right people. More than four out

of ten said fi nding qualifi ed work-

ers is their biggest hiring-related

challenge. Almost one-fourth said

their biggest challenge is fi nding

employees who are a good fi t with

their company’s culture.


Suppose a new local restaurant has

brought you in to advise on how it can

gain a competitive advantage over

other restaurants in the community.

Applying the results of this survey,

what would you suggest the restau-

rant’s management focus on doing


Sources: Vistage, “Small Business CEO

Survey,” April 2014, http://www.vistage-; Rhonda Colvin, “April Sur-

vey Results: Many Small-Firms Expect

to Hire,” The Wall Street Journal, April

30, 2014,; Vistage,

“WSJ/Vistage Small Business CEO Sur-

vey,” Vistage press center, https://www., accessed May 15, 2014.

The Biggest Hiring Challenges Involve Recruiting

Biggest Challenge in Hiring

Finding qualified workers

Finding employees who fit
Determining whether to hire based
on forecasts
Competing with larger companies

Ensuring training pays off

Other challenges





4% 2%

146 PART 2 Acquiring, Training, and Developing Human Resources

but that this same group constitutes only 5% of the employees actually in the job
category at the organization, this is evidence of underutilization. That situation
could result from problems in selection or from problems in internal movement
(promotions or other movement along a career path). One way to diagnose the situ-
ation would be to use transitional matrices, such as the matrix shown in Table 5.1
earlier in this chapter.

The steps in a workforce utilization review are identical to the steps in the HR
planning process that were shown in Figure 5.1. The organization must assess current
utilization patterns, then forecast how they are likely to change in the near future. If
these analyses suggest the organization is underutilizing certain groups and if forecasts
suggest this pattern is likely to continue, the organization may need to set goals and
timetables for changing. The planning process may identify new strategies for recruit-
ment or selection. The organization carries out these HR strategies and evaluates their

Recruiting Human Resources
As the fi rst part of this chapter shows, it is diffi cult to always predict exactly how
many (if any) new employees the organization will have to hire in a given year in a
given job category. The role of human resource recruitment is to build a supply of
potential new hires that the organization can draw on if the need arises. In human
resource management, recruiting consists of any practice or activity carried on by
the organization with the primary purpose of identifying and attracting potential
employees.24 It thus creates a buffer between planning and the actual selection of
new employees (the topic of the next chapter). The goals of recruiting (encourag-
ing qualifi ed people to apply for jobs) and selection (deciding which candidates
would be the best fi t) are different enough that they are most effective when per-
formed separately, rather than combined as in a job interview that also involves
selling candidates on the company.25

Because of differences in companies’ strategies, they may assign different de-
grees of importance to recruiting.26 In general, however, all companies have to
make decisions in three areas of recruiting: personnel policies, recruitment sources,
and the characteristics and behavior of the recruiter. As shown in Figure 5.2, these

LO 5-4 Describe recruit-
ment policies organi-
zations use to make
job vacancies more

Any activity carried on
by the organization with
the primary purpose of
identifying and attracting
potential employees.

Figure 5.2
Three Aspects of


Job Choice

Recruitment Influences



traits and




CHAPTER 5 Planning for and Recruiting Human Resources 147

aspects of recruiting have different effects on whom the organization ultimately
hires. Personnel policies infl uence the characteristics of the positions to be fi lled.
Recruitment sources infl uence the kinds of job applicants an organization reaches.
And the nature and behavior of the recruiter affect the characteristics of both the
vacancies and the applicants. Ultimately, an applicant’s decision to accept a job
offer—and the organization’s decision to make the offer—depend on the match
between vacancy characteristics and applicant characteristics.

The remainder of this chapter explores these three aspects of recruiting: personnel
policies, recruitment sources, and recruiter traits and behaviors.

Personnel Policies
An organization’s personnel policies are its decisions about how it will carry out human
resource management, including how it will fi ll job vacancies. These policies infl uence
the nature of the positions that are vacant. According to the research on recruitment,
it is clear that characteristics of the vacancy are more important than recruiters or
recruiting sources for predicting job choice. Several personnel policies are especially
relevant to recruitment:

• Internal versus external recruiting—Organizations with policies to “promote from
within” try to fi ll upper-level vacancies by recruiting candidates internally—that
is, fi nding candidates who already work for the organization. Opportunities for ad-
vancement make a job more attractive to applicants and employees. Decisions about
internal versus external recruiting affect the nature of jobs, recruitment sources, and
the nature of applicants, as we will describe later in the chapter.

• Lead-the-market pay strategies—Pay is an important job characteristic for almost
all applicants. Organizations have a recruiting advantage if their policy is to take
a “lead-the-market” approach to pay—that is, pay more than the current market
wages for a job. Higher pay can also make up for a job’s less desirable features, such
as working on a night shift or in dangerous conditions. Organizations that compete
for applicants based on pay may use bonuses, stock options, and other forms of pay
besides wages and salaries. Chapters 12 and 13 will take a closer look at these and
other decisions about pay.

• Employment-at-will policies—Within the laws of the state where they are operating,
employers have latitude to set polices about their rights in an employment relation-
ship. A widespread policy follows the principle of employment at will, which holds
that if there is no specifi c employment contract saying otherwise, the employer or
employee may end an employment relationship at any time. An alternative is to estab-
lish extensive due-process policies, which formally lay out the steps an employee
may take to appeal an employer’s decision to terminate that employee. An organiza-
tion’s lawyers may advise the company to ensure that all recruitment documents say
the employment is “at will” to protect the company from lawsuits about wrongful
charge. Management must decide how to weigh any legal advantages against the im-
pact on recruitment. Job applicants are more attracted to organizations with due-
process policies, which imply greater job security and concern for protecting
employees, than to organizations with employment-at-will policies.27

• Image advertising—Besides advertising specifi c job openings, as discussed in the
next section, organizations may advertise themselves as a good place to work
in general. Advertising designed to create a generally favorable impression of
the organization is called image advertising. Image advertising is particularly

Employment at Will
Employment principle
that if there is no specifi c
employment contract
saying otherwise, the
employer or employee
may end an employment
relationship at any time,
regardless of cause.

Due-Process Policies
Policies that formally
lay out the steps an
employee may take to
appeal the employer’s
decision to terminate
that employee.

148 PART 2 Acquiring, Training, and Developing Human Resources

important for organizations in highly competitive labor markets that perceive
themselves as having a bad image.28 Research suggests that the image of an orga-
nization’s brand—for example, innovative, dynamic, or fun— infl uences the degree
to which a person feels attracted to the organization.29 This attraction is especially
true if the person’s own traits seem to match those of the organization. Also, job
applicants seem to be particularly sensitive to issues of diversity and inclusion in
image advertising, so organizations should ensure that their image advertisements
refl ect the broad nature of the labor market from which they intend to recruit.30

Recruitment Sources
Another critical element of an organization’s recruitment strategy is its decisions about
where to look for applicants. The total labor market is enormous and spread over the
entire globe. As a practical matter, an organization will draw from a small fraction of
that total market. The methods the organization chooses for communicating its labor
needs and the audiences it targets will determine the size and nature of the labor mar-
ket the organization taps to fi ll its vacant positions.31 A person who responds to a job
advertisement on the Internet is likely to be different from a person responding to a
sign hanging outside a factory. Each of the major sources from which organizations
draw recruits has advantages and disadvantages. For an example of a company that
weighs these carefully, see the “Best Practices” box.

Internal Sources
As we discussed with regard to personnel policies, an organization may emphasize in-
ternal or external sources of job applicants. Internal sources are employees who cur-
rently hold other positions in the organization. Organizations recruit existing
employees through job posting, or communicating information about the vacancy on
company bulletin boards, in employee publications, on corporate intranets, and any-
where else the organization communicates with employees. Managers also may iden-
tify candidates to recommend for vacancies. Policies that emphasize promotions and
even lateral moves to achieve broader career experience can give applicants a favorable
impression of the organization’s jobs. The use of internal sources also affects what
kinds of people the organization recruits.

For the employer, relying on internal sources offers several advantages.32 First, it
generates applicants who are well known to the organization. In addition, these ap-
plicants are relatively knowledgeable about the organization’s vacancies, which min-
imizes the possibility they will have unrealistic expectations about the job. Finally,
fi lling vacancies through internal recruiting is generally cheaper and faster than look-
ing outside the organization.

One company that has benefi ted from a strong internal hiring system is Inter-
continental Hotels Group. Intercontinental has been opening about one new hotel
every day. These expansion plans are driving a need for hundreds of thousands of
new employees, but the company wants to fi ll as many positions as possible from
inside the organization. Internal recruiting supports the organization’s strategy of
staffi ng with people who are so dedicated to the brand that this attitude shows up in
exceptional customer service. People already working at the company are most likely
to have developed the desired level of commitment. To match employees with open
positions, the company runs a Careers Week twice a year. During Careers Week, In-
tercontinental encourages its employees to create a profi le in the company’s online

LO 5-5 List and
compare sources of
job applicants.

Job Posting
The process of com-
municating information
about a job vacancy on
company bulletin boards,
in employee publica-
tions, on corporate
intranets, and anywhere
else the organization
communicates with


talent management system. So far, 5,000 employees in 89 countries have created
profi les that include preferences for the locations and functions in which they would
like to work. When Intercontinental has an opening, it can easily search the profi les
to fi nd candidates who might be interested and well qualifi ed. Using the talent man-
agement system, Intercontinental is fi lling 84% of general manager positions and
26% of corporate jobs with current employees. The initiative has lowered recruiting
costs, increased employee loyalty, and boosted productivity and profi tability.33

External Sources
Despite the advantages of internal recruitment, organizations often have good reasons
to recruit externally.34 For entry-level positions and perhaps for specialized upper-level
positions, the organization has no internal recruits from which to draw. Also, bringing
in outsiders may expose the organization to new ideas or new ways of doing business.
An organization that uses only internal recruitment can wind up with a workforce
whose members all think alike and therefore may be poorly suited to innovation.35

In providing its clients with hard-to-

fi nd skills, Advanced Technology

Services (ATS) helps them with a

recruiting problem—and also has

to tackle the problem itself. Based

in Peoria, Illinois, ATS provides ma-

chinery repair and maintenance

services to clients’ factories. Cli-

ents can focus on designing, mak-

ing, and selling products, while ATS

keeps the factories humming.

This service is valuable because

skilled and reliable machinists and

maintenance technicians have be-

come hard to fi nd. The offshor-

ing trend of the past few decades

scared many young people away

from manufacturing careers, and

people with math and technical

skills were urged to pursue college

degrees instead of vocational train-

ing. Many of the skilled workers who

remain are nearing retirement. Man-

ufacturers complain they cannot

fi nd qualifi ed workers and lack the

resources to train employees who

might learn the necessary skills.

Instead, addressing that need for

labor is the main focus of ATS. The

company fi lls its demand for labor

by recruiting from several sources.

First, the company is committed to

hiring military veterans. The com-

pany fi nds many who have done

mechanical and maintenance work

and who have good self-discipline.

These qualities enable them to learn

the skills for maintaining particular

kinds of civilian machinery.

ATS also watches for factory

closings. When these operations

shut down, ATS recruiters move in

with an opportunity to apply. This

effort can provide experienced


Finally, ATS collaborates with

high schools and community col-

leges where it operates. It identifi es

needed skills, such as the ability to

use computer controls, and it en-

courages the schools to teach these

skills. When it fi nds candidates with

technical interests and factory ex-

perience but without the specifi c

skills needed, it brings them aboard

at an entry level and connects them

to training at area schools.

This combination of recruit-

ing methods is positioning ATS for

growth at a time when manufactur-

ers are moving operations back to

the United States.


1. How does ATS’s approach to

recruitment make it valuable to

its clients?

2. Why is it important for ATS

to recruit and train young

workers instead of only hiring

experienced employees from

factories that are closing?

Sources: Advanced Technology Ser-

vices website, http://www.advancedtech

.com, accessed May 15, 2014; James

R. Hagerty, “Skilled Worker Supplier

Fuels U.S. Manufacturing Revival,”

The Wall Street Journal, May 13, 2014,; Amit Chowdhry,

“Peoria Based Advanced Technology

Services Helps Improve Manufacturing

Productivity,” Forbes, August 21, 2013,

Sources of Talent for Advanced Technology Services

Best Pract ices

150 PART 2 Acquiring, Training, and Developing Human Resources

And fi nally, companies that are able to grow during a slow economy can gain a com-
petitive edge by hiring the best talent when other organizations are forced to avoid
hiring, freeze pay increases, or even lay off talented people. So organizations often
recruit through direct applicants and referrals, advertisements, employment agencies,
schools, and websites. Figure 5.3 shows which of these sources are used most among
large companies surveyed.

Direct Applicants and Referrals Even without a formal effort to reach job
applicants, an organization may hear from candidates through direct applicants
and referrals. Direct applicants are people who apply for a vacancy without
prompting from the organization. Referrals are people who apply because some-
one in the organization prompted them to do so. According to the survey results
shown in Figure  5.3, the largest share (roughly one-fourth) of new employees
hired by large companies came from referrals, and almost as many (23.4%) came
from direct applications made at the careers section of the employer’s website.36
These two sources of recruits share some characteristics that make them excellent
pools from which to draw.

Direct Applicants
People who apply for
a vacancy without
prompting from the

People who apply for a
vacancy because some-
one in the organization
prompted them to do so.

Figure 5.3
External Recruiting


Source: Based on Gerry

Crispin and Mark Mehler,

“Sources of Hire 2013:

Perception Is Reality,”

CareerXroads, March

2013, http://www

50 10 15 20 25 30



Hiring temporary/contract workers

Career fairs

Print ads

Social media

Third-party recruiters

Rehiring former employees

College recruiting

Recruiter-initiated contacts

Company careers website

Job boards



Percentage of Employees Hired

CHAPTER 5 Planning for and Recruiting Human Resources 151

One advantage is that many direct applicants are to some extent already “sold” on
the organization. Most have done some research and concluded there is enough fi t be-
tween themselves and the vacant position to warrant submitting an application, a pro-
cess called self-selection, which, when it works, eases the pressure on the organization’s
recruiting and selection systems. A form of aided self-selection occurs with referrals.
Many job seekers look to friends, relatives, and acquaintances to help fi nd employ-
ment. Using these social networks not only helps the job seeker but also simplifi es
recruitment for employers.37 Current employees (who are familiar with the vacancy as
well as the person they are referring) decide that there is a fi t between the person and
the vacancy, so they convince the person to apply for the job.

An additional benefi t of using such sources is that it costs much less than formal
recruiting efforts. Considering these combined benefi ts, referrals and direct applica-
tions are among the best sources of new hires. Some employers offer current employees
fi nancial incentives for referring applicants who are hired and perform acceptably on
the job (for example, if they stay 180 days). Others, including the accounting fi rm Ernst
& Young, have set goals to increase the percentage of new employees who result from
referrals; Ernst & Young’s target is 50%. In support of that goal, applicants referred
by employees move through Ernst & Young’s selection process faster, partly because
designated HR employees give their applications special attention. Ernst & Young’s
preference for referrals is data-driven: employees who were referred have a track record
of superior performance, longer employment, and a shorter time to get up to speed.38

The major downside of referrals is that they limit the likelihood of exposing the orga-
nization to fresh viewpoints. People tend to refer others who are like themselves. Further-
more, sometimes referrals contribute to hiring practices that are or that appear unfair, an
example being nepotism, or the hiring of relatives. Employees may resent the hiring and
rapid promotion of “the boss’s son” or “the boss’s daughter,” or even the boss’s friend.

Electronic Recruiting Few employers can fi ll all their vacant positions through
direct applications and referrals, so most need to advertise openings. Most often today,
that means posting information online. Online recruiting generally involves post-
ing career information at company websites to address people who are interested in
the particular company and posting paid advertisements at career services to attract
people who are searching for jobs. Job boards such as Monster and CareerBuilder
are widely used, but they can generate an unmanageable fl ood of applications from
unqualifi ed workers. Ads on a company’s careers
web page, in contrast, may generate too little
notice, especially at a company that is not large
or famous. Employers therefore may advertise
on an industry or professional group’s website, or
they may select specialized niche boards, such
as’s job listings for information tech-
nology professionals. In addition, companies are
increasingly fi nding candidates through social
media, as described in “HRM Social.”

On any of these sites, employers are compet-
ing for attention amid the fl ood of online infor-
mation. Research by The Ladders, a jobs website,
found that workers spend less than a minute and
a half reading a job ad before deciding whether
to apply. In that context, gaining the interest of

The practice of hiring

Career pages on corporate websites have become the second most

common source of job applicants after personal referrals.


qualifi ed workers requires straightforward, simple job descriptions that highlight what
is meaningful about the position. For example, in an ad for health care workers, So-
dexo USA says these employees have “a tremendous impact on patient satisfaction.”39

Most large companies and many smaller ones make career information available
at their websites. To make that information easier to fi nd, they may register a domain
name with a “.jobs” extension, such as for a link to informa-
tion about careers at Starbucks and for information about careers
at AT&T. To be an effective recruiting tool, corporate career information should
move beyond generalities, offering descriptions of open positions and an easy way
to submit a résumé. One of the best features of this kind of electronic recruiting is
the ability to target and attract job candidates whose values match the organization’s
values and whose skills match the job requirements.40 Candidates also appreciate an
e-mail response that the company has received the résumé—especially a response
that gives a timetable about further communications from the company.

Listing job openings online is an

easy way to let potential employ-

ees know about positions. But the

ease of searching and responding

to the ads means companies have

been swamped with hundreds or

thousands of résumés, often from

individuals without the necessary

qualifi cations. Employers therefore

are trying to maintain more control

over the search process.

Many are turning to social media.

Most often they use the career-

focused LinkedIn network. LinkedIn

profi les emphasize work experience,

skills, and interests. The site hosts

discussion groups related to particu-

lar careers and industries. Employers

can post job openings addressed to

members of selected groups. Also, by

joining the groups, they can read com-

ments and identify participants who

offer valuable ideas. Using an app

created by software company Taleo,

LinkedIn members can enter their pro-

fi le data on job applications and give

recruiters access to their profi les.

Employers often go beyond

LinkedIn’s free services and buy the

site’s “talent solutions” for human re-

source management. These products

include the Recruiter tool, which can

search member profi les to identify in-

dividuals with desired characteristics.

For selected candidates, recruiters

can send e-mail and invite them to

connect and get better acquainted.

The Recruiter tool also uses speci-

fi ed characteristics to suggest can-

didates to recruiters. Other tools

can organize recruiters’ information

and plans. Organizations also may

create a career page on LinkedIn to

describe themselves using keywords

candidates might use, highlight job

listings, and tailor messages accord-

ing to visitors’ own profi les.

Most basically, of course, recruit-

ers can use their own contacts on

social-networking sites. Recruiters

should be active wherever candi-

dates are active, whether on Linked-

In, Facebook, Twitter, or industry or

professional networks. They can

ask their own contacts to suggest

people to fi ll key openings. Linked-

In is popular because it offers such

a variety of ways to identify, learn

about, and interact with potential

candidates. Recruiters for Klarna, an

online payments company in Swe-

den, are encouraged to use LinkedIn

because of members’ detailed résu-

més and the site’s large membership

(more than 230 million), including

people who are not actively search-

ing for a job but might be a perfect

fi t. According to Linked-In’s data,

about 60% of members are not ac-

tively looking but would be open to

considering an offer.


1. Based on this description,

what are some advantages of

fi nding a candidate with social

media rather than posting jobs

on the company’s website?

2. Based on this description,

would you want to post

a profi le for yourself on

LinkedIn? Why or why not?

Sources: LinkedIn, “Recruiting Solutions

on LinkedIn,” http://business.linkedin.

com, accessed May 15, 2014; Rachel King,

“LinkedIn Revamps Recruiter Tools as It

Approaches ‘Mobile Moment,’” ZDNet, April

10, 2014,; Sarah

Halzack, “How LinkedIn Has Changed

the Way You Might Get Your Next Job,”

Washington Post, August 4, 2013, http://; Evelyn M.

Rusli, “LinkedIn: The Ugly Duckling of So-

cial Media,” The Wall Street Journal, Febru-

ary 27, 2013,

Social Networks Can Also Be Career Networks

HRM Social

CHAPTER 5 Planning for and Recruiting Human Resources 153

Accepting applications at the company website is not so successful for smaller and
less well-known organizations because fewer people are likely to visit the website.
These organizations may get better results by going to the websites that are set up to
attract job seekers, such as Monster, Yahoo HotJobs, and CareerBuilder, which attract
a vast array of applicants. At these sites, job seekers submit standardized résumés. Em-
ployers can search the site’s database for résumés that include specifi ed key terms, and
they can also submit information about their job opportunities, so that job seekers can
search that information by key term. With both employers and job seekers submitting
information to and conducting searches on them, these sites offer an effi cient way to
fi nd matches between job seekers and job vacancies. However, a drawback is that the
big job websites can provide too many leads of inferior quality because they are so
huge and serve all job seekers and employers, not a select segment.

Because of this limitation of the large websites, smaller, more tailored websites
called “niche boards” focus on certain industries, occupations, or geographic areas., for example, is a site devoted to, as the name implies, the tele-
communications industry., a companion site to CIO Magazine, specializes in
openings for chief information offi cers.

Advertisements in Newspapers and Magazines Although computer
search tools have made electronic job listings the most popular way to advertise a job
opening, some recruiters still follow the traditional route and advertise open positions
in newspapers or magazines. When the goal is to fi nd people who know the local
community, advertising in a local newspaper can reach that audience. Similarly, when
the goal is to fi nd people in a specialized fi eld, advertising in a trade, professional, or
industry publication can reach the right subset of job candidates.

Advertising can be expensive, so it is especially important that the ads be well
written. The person designing a job advertisement needs to answer two questions:

What do we need to say?
To whom do we need to say it?

With respect to the fi rst question, an ad should give readers enough information to
evaluate the job and its requirements, so they can make a well-informed judgment about
their qualifi cations. Providing enough information may require long advertisements,
which cost more. The employer should evaluate the additional costs against the costs
of providing too little information: Vague ads generate a huge number of applicants,
including many who are not reasonably qualifi ed or would not accept the job if they
learned more about it. Reviewing all these applications to eliminate unsuitable applicants
is expensive. In practice, the people who write job advertisements tend to overstate the
skills and experience required, perhaps generating too few qualifi ed candidates.

Specifying whom to reach with the message helps the advertiser decide where to
place the ad. Ads placed in the classifi ed section of local newspapers are relatively inex-
pensive yet reach many people in a specifi c geographic area who are currently looking
for work (or at least interested enough to be reading the classifi eds). On the downside,
this medium offers little ability to target skill levels. Typically, many of the people read-
ing classifi ed ads are either over- or underqualifi ed for the position. Also, people who
are not looking for work rarely read the classifi eds. These people may include candidates
the organization could lure from their current employers. For reaching a specifi c part of
the labor market, including certain skill levels and more people who are employed, the
organization may get better results from advertising in professional or industry journals.
Some employers also advertise on television— particularly cable television.41

154 PART 2 Acquiring, Training, and Developing Human Resources

Public Employment Agencies The Social Security Act of 1935 requires that
everyone receiving unemployment compensation be registered with a local state em-
ployment offi ce. These state employment offi ces work with the U.S. Employment Ser-
vice (USES) to try to ensure that unemployed individuals eventually get off state aid
and back on employer payrolls. To accomplish this, agencies collect information from
the unemployed people about their skills and experience.

Employers can register their job vacancies with their local state employment offi ce,
and the agency will try to fi nd someone suitable, using its computerized inventory
of local unemployed individuals. The agency refers candidates to the employer at no
charge. The organization can interview or test them to see if they are suitable for its
vacancies. Besides offering access to job candidates at low cost, public employment
agencies can be a useful resource for meeting certain diversity objectives. Laws often
mandate that the agencies maintain specialized “desks” for minorities, disabled indi-
viduals, and war veterans. Employers that feel they currently are underutilizing any
of these subgroups of the labor force may fi nd the agencies to be an excellent source.

Government-run employment agencies also may partner with nonprofi t groups to
meet the needs of a community. In California’s Alameda and Contra Costa Counties,
several agencies have cooperated to form EastBay Works. This organization is dedi-
cated to bringing together employers and workers in the two counties. EastBay Works
offers a variety of recruiting tools at its website. Employers can post job openings, re-
search the local labor market, and set up a search tool to identify candidates who have
skills the employer is looking for. Job seekers can visit the site to hunt for jobs, set up a
search tool that fi nds jobs related to the skills in their profi le, assess their existing skills,
and arrange for training in skills that employers want.42

Private Employment Agencies In contrast to public employment agencies,
which primarily serve the blue-collar labor market, private employment agencies pro-
vide much the same service for the white-collar labor market. Workers interested in
fi nding a job can sign up with a private employment agency whether or not they are
currently unemployed. Another difference between the two types of agencies is that
private agencies charge the employers for providing referrals. Therefore, using a pri-
vate employment agency is more expensive than using a public agency, but the private
agency is a more suitable source for certain kinds of applicants.

For managers or professionals, an employer may use the services of a type of private
agency called an executive search fi rm (ESF). People often call these agencies “head-
hunters” because, unlike other employment agencies, they fi nd new jobs for people
almost exclusively already employed. For job candidates, dealing with executive search
fi rms can be sensitive. Typically, executives do not want to advertise their availability,
because it could trigger a negative reaction from their current employer. ESFs serve as
a buffer, providing confi dentiality between the employer and the recruit. That benefi t
may give an employer access to candidates it cannot recruit in other, more direct ways.
The advantages of using a private fi rm are most evident in recruiting top executives.
For middle-management jobs, the trend is for companies to hire their own recruiters
to tap social media and other business networks.43

Colleges and Universities Most colleges and universities have placement ser-
vices that seek to help their graduates obtain employment. On-campus interviewing is
the most important source of recruits for entry-level professional and managerial vacan-
cies. Organizations tend to focus especially on colleges that have strong reputations in
areas for which they have critical needs—say, chemical engineering or public accounting.
Bain & Co., a consulting fi rm, recruits on about 15 U.S. campuses each year and may

CHAPTER 5 Planning for and Recruiting Human Resources 155

hire up to 40 students at one school for positions and interns and
full-time employees. It chooses schools to visit based on their size,
reputation, and whether it has succeeded in fi nding good employ-
ees at the school in the past.44

Many employers have found that successfully competing for the
best students requires more than just signing up prospective gradu-
ates for interview slots. One of the best ways to establish a stron-
ger presence on a campus is with a college internship program.
Internship programs give an organization early access to potential
applicants and let the organization assess their capabilities directly.
Internships also give applicants fi rsthand experience with the em-
ployer, so both parties can make well-informed choices about fi t
when it comes time to consider long-term commitment.45 Google
calls internships “one of the primary ways we fi nd full-time hires.”
In a recent year, the company hired 1,000 engineering interns.46

Another way of increasing the employer’s presence on campus is to participate in
university job fairs. In general, a job fair is an event where many employers gather for a
short time to meet large numbers of potential job applicants. Although job fairs can be
held anywhere (such as at a hotel or convention center), campuses are ideal locations
because of the many well-educated, yet unemployed, individuals who are there. Job
fairs are an inexpensive means of generating an on-campus presence. They can even
provide one-on-one dialogue with potential recruits—dialogue that would be impos-
sible through less interactive media, such as newspaper ads.

Evaluating the Quality of a Source
In general, there are few rules that say what recruitment source is best for a given job
vacancy. Therefore, it is wise for employers to monitor the quality of all their recruit-
ment sources. One way to do this is to develop and compare yield ratios for each
source.47 A yield ratio expresses the percentage of applicants who successfully move
from one stage of the recruitment and selection process to the next. For example, the
organization could fi nd the number of candidates interviewed as a percentage of the
total number of résumés generated by a given source (that is, number of interviews
divided by number of résumés). A high yield ratio (large percentage) means that the
source is an effective way to fi nd candidates to interview. By comparing the yield ratios
of different recruitment sources, HR professionals can determine which source is the
best or most effi cient for the type of vacancy.

Another measure of recruitment success is the cost per hire. To compute this
amount, fi nd the cost of using a particular recruitment source for a particular type of
vacancy. Then divide that cost by the number of people hired to fi ll that type of va-
cancy. A low cost per hire means that the recruitment source is effi cient; it delivers
qualifi ed candidates at minimal cost.

To see how HR professionals use these measures, look at the examples in
Table  5.3. This table shows the results for a hypothetical organization that used
six kinds of recruitment sources to fi ll a number of vacancies. For each recruit-
ment source, the table shows four yield ratios and the cost per hire. To fi ll these
jobs, the best two sources of recruits were local universities and employee re-
ferral programs. Online job board ads generated the largest number of recruits
(7,000 résumés). However, only 350 were judged acceptable, of which a little more
than half accepted employment offers, for a cumulative yield ratio of 200/7,000,
or 3%. Recruiting at renowned universities generated highly qualifi ed applicants,

Yield Ratio
A ratio that expresses the
percentage of applicants
who successfully move
from one stage of the
recruitment and selection
process to the next.

Cost per Hire
The total amount of
money spent to fi ll a job
vacancy. The number is
computed by fi nding the
cost of using a particular
recruitment source and
dividing that cost by
the number of people
hired to fi ll that type of

One of the best ways for a company to establish a

stronger presence on a campus is with a college intern-

ship program. Embassy Suites is one company that

participates in such a program. How does this benefi t

the company and the students at the same time?

156 PART 2 Acquiring, Training, and Developing Human Resources

but relatively few of them ultimately accepted positions with the organization.
Executive search fi rms produced the highest cumulative yield ratio. These gen-
erated only 20 applicants, but all of them accepted interview offers, most were
judged acceptable, and 79% of these acceptable candidates took jobs with the or-
ganization. However, notice the cost per hire. The executive search fi rms charged
$90,000 for fi nding these 15 employees, resulting in the largest cost per hire.
In contrast, local universities provided modest yield ratios at the lowest cost per
hire. Employee referrals provided excellent yield ratios at a slightly higher cost.

The cost per hire is not simply related to the type of recruiting method. These costs
also tend to vary by industry and organization size. A recent survey found that the me-
dian cost per hire at companies with more than 10,000 employees was $1,949; small
companies paid far more for each hire, a median of $3,665. One reason for this dif-
ference is that small companies have fewer recruiters in-house, so they are likelier to
hire outsiders at a higher cost. Comparing industries, manufacturers paid the highest
cost per hire, because fi nding individuals with knowledge of the relevant equipment or
software is more diffi cult than fi nding employees with standard kinds of certifi cation,
as in the case of nurses.48 At any employer, however, recruiters’ challenge is to identify
the particular methods that will yield the best candidates as effi ciently as possible.

Recruiter Traits and Behaviors
As we showed in Figure 5.2, the third infl uence on recruitment outcomes is the re-
cruiter, including this person’s characteristics and the way he or she behaves. The
recruiter affects the nature of both the job vacancy and the applicants generated. How-
ever, the recruiter often becomes involved late in the recruitment process. In many
cases, by the time a recruiter meets some applicants, they have already made up their
minds about what they desire in a job, what the vacant job has to offer, and their likeli-
hood of receiving a job offer.49

LO 5-6 Describe the
recruiter’s role in the
recruitment process,
including limits and

Table 5.3
Results of a Hypothetical Recruiting Effort









Résumés generated 200 400 50 500 7,000 20
Interview offers

175 100 45 400 500 20

Yield ratio 87% 25% 90% 80% 7% 100%
Applicants judged

100 95 40 50 350 19

Yield ratio 57% 95% 89% 12% 70% 95%
Accept employment

90 10 35 25 200 15

Yield ratio 90% 11% 88% 50% 57% 79%
Cumulative yield ratio 90/200 10/400 35/50 25/500 200/7,000 15/20

45% 3% 70% 5% 3% 75%
Cost $30,000 $50,000 $15,000 $20,000 $5,000 $90,000
Cost per hire $333 $5,000 $428 $800 $25 $6,000

CHAPTER 5 Planning for and Recruiting Human Resources 157

Many applicants approach the recruiter with some skepticism. Knowing it is the recruit-
er’s job to sell them on a vacancy, some applicants discount what the recruiter says in light
of what they have heard from other sources, such as friends, magazine articles, and profes-
sors. When candidates are already familiar with the company through knowing about its
products, the recruiter’s impact is especially weak.50 For these and other reasons, recruiters’
characteristics and behaviors seem to have limited impact on applicants’ job choices.

Characteristics of the Recruiter
Most organizations must choose whether their recruiters are specialists in human re-
sources or are experts at particular jobs (that is, those who currently hold the same kinds
of jobs or supervise people who hold the jobs). According to some studies, applicants
perceive HR specialists as less credible and are less attracted to jobs when recruiters are
HR specialists.51 The evidence does not completely discount a positive role for person-
nel specialists in recruiting. It does indicate, however, that these specialists need to take
extra steps to ensure that applicants perceive them as knowledgeable and credible.

In general, applicants respond positively to recruiters whom they perceive as warm
and informative. “Warm” means the recruiter seems to care about the applicant and
to be enthusiastic about the applicant’s potential to contribute to the organization.
“Informative” means the recruiter provides the kind of information the applicant is
seeking. The evidence of impact of other characteristics of recruiters—including their
age, sex, and race—is complex and inconsistent.52

Behavior of the Recruiter
Recruiters affect results not only by providing plenty of information, but by providing
the right kind of information. Perhaps the most-researched aspect of recruiting is the
level of realism in the recruiter’s message. Because the recruiter’s job is to attract candi-
dates, recruiters may feel pressure to exaggerate the positive qualities of the vacancy and
to downplay its negative qualities. Applicants are highly sensitive to negative informa-
tion. The highest-quality applicants may be less willing to pursue jobs when this type
of information comes out.53 But if the recruiter goes too far in a positive direction, the
candidate can be misled and lured into taking a job that has been misrepresented. Then
unmet expectations can contribute to a high turnover rate. When recruiters describe
jobs unrealistically, people who take those jobs may come to believe that the employer
is deceitful.54

Many studies have looked at how well realistic job previews—background informa-
tion about jobs’ positive and negative qualities—can get around this problem and help
organizations minimize turnover among new employees. On the whole, the research sug-
gests that realistic job previews have a weak and inconsistent effect on turnover.55 Al-
though realistic job previews have only a weak association with reduced turnover, the cost
of the effort is low, and they are relatively easy to implement. Consequently, employers
should consider using them as a way to reduce turnover among new hires.56

Finally, for affecting whether people choose to take a job, but even more so, whether
they stick with a job, the recruiter seems less important than an organization’s person-
nel policies that directly affect the job’s features (pay, security, advancement opportuni-
ties, and so on).

Enhancing the Recruiter’s Impact
Nevertheless, although recruiters are probably not the most important infl uence
on people’s job choices, this does not mean recruiters cannot have an impact. Most

Realistic Job Preview
Background information
about a job’s positive
and negative qualities.

158 PART 2 Acquiring, Training, and Developing Human Resources

recruiters receive little training.57 If we were to determine what does matter to job
candidates, perhaps recruiters could be trained in those areas.

Researchers have tried to fi nd the conditions in which recruiters do make a differ-
ence. Such research suggests that an organization can take several steps to increase the
positive impact that recruiters have on job candidates:

• Recruiters should provide timely feedback. Applicants dislike delays in feedback.
They may draw negative conclusions about the organization (for starters, that the
organization doesn’t care about their application).

• Recruiters should avoid offensive behavior. They should avoid behaving in ways that
might convey the wrong impression about the organization.58 Figure 5.4 quotes

Figure 5.4
Recruits Who Were Offended by Recruiters


In the high-tech industry, recruiting is a war for talent

as companies compete for the best engineers and pro-

grammers. Presumably, anyone good enough to get

hired by Apple or Google would be an asset for another

company, so one strategy is to recruit at those and other

big-name companies by contacting employees directly

and seeing what it would take to lure them away. The

aim of this strategy is to get the best people at the ex-

pense of competitors, which presumably are left with

the second best.

Competing for already-employed workers imposes

high costs on employers. They have to pay employ-

ees so generously that they would not consider leav-

ing. When recruiting, they have to make even more

generous offers. And if many employers are using this

recruiting tactic, companies are constantly scrambling

to replace workers “stolen” or “poached” by other


Evidence has surfaced that some of the most

prominent high-tech fi rms, including Google, Apple,

Intel, and Adobe Systems, may have tried to put a

stop to this expensive competition for talent. Corre-

spondence among some executives and HR employ-

ees refers to informal agreements not to recruit one

another’s employees. At some companies, includ-

ing Facebook and Palm, however, there is evidence

that executives have refused to participate in these


The possibility of no-poaching agreements came to

light because employees complained the practice was

suppressing competition in the labor market. What

employers were thinking of as poaching employees,

these employees viewed as a chance to seek the best

employment opportunities. In response to their al-

legations, the Justice Department fi led a civil lawsuit

against several companies, saying they illegally col-

luded to restrict the free movement of labor and to fi x

wages. The companies settled by agreeing not to re-

strict recruiting or hiring in the future, while not admit-

ting to any past wrongdoing. More recently, a group of

64,000 engineers fi led an antitrust lawsuit. The parties

reached a settlement for about $300 million, which if

approved, will give each engineer several thousand

dollars after the lawyers are paid.


1. What has been the fi nancial incentive for high-

tech companies to agree not to recruit from one

another? If the arrangements had not been chal-

lenged in court, would you consider them ethical?

Why or why not?

2. Given that the Justice Department has seen

these arrangements as possibly violating anti-

trust laws, what would be the most ethical way to

decide whether to recruit employees from other


Sources: David Streitfeld, “Tech Giants Settle Antitrust Hir-

ing Suit,” The New York Times, April 24, 2014, http://www.; Jeff Elder, “Silicon Valley Tech Giants Discussed

Hiring, Say Documents,” The Wall Street Journal, April 20,

2014,; S. Lynch, “Google and Apple

Are Safe from Anti-Poaching Laws, but Not for Long,” Silicon

Valley Business Journal Online, April 5, 2013; M. Wohsten,

“Gentlemen’s Agreements,” Lansing State Journal, January

29, 2012, p. 13A.

CHAPTER 5 Planning for and Recruiting Human Resources 159

applicants who felt they had extremely bad experiences with recruiters. Their state-
ments provide examples of behaviors to avoid.

• The organization can recruit with teams rather than individual recruiters. Appli-
cants view job experts as more credible than HR specialists, and a team can include
both kinds of recruiters. HR specialists on the team provide knowledge about com-
pany policies and procedures.

Through such positive behavior, recruiters can give organizations a better chance
of competing for talented human resources. In the next chapter, we will describe how
an organization selects the candidates who best meet its needs.


LO 5-1 Discuss how to plan for human resources needed
to carry out the organization’s strategy.

• The fi rst step in human resource planning is per-
sonnel forecasting. Through trend analysis and
good judgment, the planner tries to determine
the supply of and demand for various human

• Based on whether a surplus or a shortage is ex-
pected, the planner sets goals and creates a strat-
egy for achieving those goals.

• The organization then implements its HR strat-
egy and evaluates the results.

LO 5-2 Determine the labor demand for workers in vari-
ous job categories.

• The planner can look at leading indicators, assum-
ing trends will continue in the future.

• Multiple regression can convert several leading in-
dicators into a single prediction of labor needs.

• Analysis of a transitional matrix can help the plan-
ner identify which job categories can be fi lled in-
ternally and where high turnover is likely.

LO 5-3 Summarize the advantages and disadvantages
of ways to eliminate a labor surplus and avoid a labor

• To reduce a surplus, downsizing, pay reductions,
and demotions deliver fast results but at a high
cost in human suffering that may hurt surviv-
ing employees’ motivation and future recruiting.
Also, the organization may lose some of its best

• Transferring employees and requiring them to
share work are also fast methods, and the conse-
quences in human suffering are less severe.

• A hiring freeze or natural attrition is slow to take
effect but avoids the pain of layoffs.

• Early-retirement packages may unfortunately in-
duce the best employees to leave and may be slow
to implement; however, they, too, are less painful
than layoffs.

• Retraining can improve the organization’s overall
pool of human resources and maintain high mo-
rale, but it is relatively slow and costly.

• To avoid a labor shortage, requiring overtime is
the easiest and fastest strategy, which can easily be
changed if conditions change. However, overtime
may exhaust workers and can hurt morale.

• Using temporary employees and outsourcing do
not build an in-house pool of talent, but they
quickly and easily modify staffi ng levels.

• Transferring and retraining employees require
investment of time and money, but can enhance
the quality of the organization’s human resources;
however, this may backfi re if a labor surplus

• Hiring new employees is slow and expensive, but
strengthens the organization if labor needs are ex-
pected to expand for the long term. Hiring is dif-
fi cult to reverse if conditions change.

• Using technology as a substitute for labor can be
slow to implement and costly, but it may improve
the organization’s long-term performance. New
technology also is diffi cult to reverse.

LO 5-4 Describe recruitment policies organizations use
to make job vacancies more attractive.

• Internal recruiting (promotions from within)
generally makes job vacancies more attractive be-
cause candidates see opportunities for growth and

• Lead-the-market pay strategies make jobs eco-
nomically desirable.

• Due-process policies signal that employers are
concerned about employee rights.

• Image advertising can give candidates the impres-
sion that the organization is a good place to work.

LO 5-5 List and compare sources of job applicants.
• Internal sources, promoted through job postings,

generate applicants who are familiar to the orga-
nization and motivate other employees by demon-
strating opportunities for advancement. However,
internal sources are usually insuffi cient for all of
an organization’s labor needs.

• Direct applicants and referrals tend to be inex-
pensive and to generate applicants who have self-
selected; this source risks charges of unfairness,
especially in cases of nepotism.

• Electronic recruiting gives organizations access to
a global labor market, tends to be inexpensive, and
allows convenient searching of databases.

• Newspaper and magazine advertising reaches a
wide audience and may generate many applica-
tions, although many are likely to be unsuitable.

• Public employment agencies are inexpensive and
typically have screened applicants.

• Private employment agencies charge fees but may
provide many services.

• Another inexpensive channel is schools and col-
leges, which may give the employer access to top-
notch entrants to the labor market.

160 PART 2 Acquiring, Training, and Developing Human Resources

LO 5-6 Describe the recruiter’s role in the recruitment
process, including limits and opportunities.

• Through their behavior and other characteristics,
recruiters infl uence the nature of the job vacancy
and the kinds of applicants generated.

• Applicants tend to perceive job experts as more
credible than recruiters who are HR specialists.

• Applicants tend to react more favorably to recruit-
ers who are warm and informative.

• Recruiters should not mislead candidates. Realis-
tic job previews have only a weak association with
reduced turnover, but given their low cost and ease
of implementation, employers should consider
using them.

• Recruiters can improve their impact by providing
timely feedback, avoiding behavior that contrib-
utes to a negative impression of the organization,
and teaming up with job experts.

CHAPTER 5 Planning for and Recruiting Human Resources 161


forecasting, 133
trend analysis, 134
leading indicators, 134
transitional matrix, 135
core competency, 137
downsizing, 138

outsourcing, 143
workforce utilization review, 145
recruiting, 146
employment at will, 147
due-process policies, 147
job posting, 148

direct applicants, 150
referrals, 150
nepotism, 151
yield ratio, 155
cost per hire, 155
realistic job preview, 157


1. Suppose an organization expects a labor shortage
to develop in key job areas over the next few years.
Recommend general responses the organization
could make in each of the following areas: (LO 5-1)

a. Recruitment
b. Training
c. Compensation (pay and employee benefits)
2. Review the sample transitional matrix shown in

Table 5.1. What jobs experience the greatest turn-
over (employees leaving the organization)? How
might an organization with this combination of
jobs reduce the turnover? (LO 5-2)

3. In the same transitional matrix, which jobs seem
to rely the most on internal recruitment? Which
seem to rely most on external recruitment? Why?
(LO 5-2)

4. Why do organizations combine statistical and
judgmental forecasts of labor demand, rather than
relying on statistics or judgment alone? Give an ex-
ample of a situation in which each type of forecast
would be inaccurate. (LO 5-3)

5. Some organizations have detailed affi rmative-ac-
tion plans, complete with goals and timetables, for
women and minorities, yet have no formal human
resource plan for the organization as a whole. Why
might this be the case? What does this practice

suggest about the role of human resource manage-
ment in these organizations? (LO 5-1)

6. Give an example of a personnel policy that would
help attract a larger pool of job candidates. Give
an example of a personnel policy that would likely
reduce the pool of candidates. Would you expect
these policies to infl uence the quality as well as the
number of applicants? Why or why not? (LO 5-4)

7. Discuss the relative merits of internal versus exter-
nal recruitment. Give an example of a situation in
which each of these approaches might be particu-
larly effective. (LO 5-4)

8. List the jobs you have held. How were you re-
cruited for each of these? From the organization’s
perspective, what were some pros and cons of re-
cruiting you through these methods? (LO 5-4)

9. Recruiting people for jobs that require international
assignments is increasingly important for many orga-
nizations. Where might an organization go to recruit
people interested in such assignments? (LO 5-5)

10. A large share of HR professionals have rated
e-cruiting as their best source of new talent. What
qualities of electronic recruiting do you think con-
tribute to this opinion? (LO 5-5)

11. How can organizations improve the effectiveness
of their recruiters? (LO 5-6)

162 PART 2 Acquiring, Training, and Developing Human Resources

SAP’s Inclusive Approach to Recruiting
Headquartered in Germany, SAP makes software that
businesses use to keep the enterprise running smoothly
and effi ciently. Its 65,000 employees work in more than
130 countries. Given that the company sells complex
business systems rather than famous consumer prod-
ucts, recruiting includes educating workers about the

SAP’s recruiting strategy is based on the idea that its
human resources are a source of competitive advantage.
Co-CEO Bill McDermott has said SAP is constantly
recruiting “young, brilliant minds” and training people,
because “sustainability is much more than natural re-
sources. It’s also people resources.” SAP cultivates the
image of a leader in innovation. The careers page of its
website says, “We respect the individuality of our em-
ployees,” and represents this with a transparent process
linking each applicant to any relevant openings. Candi-
dates also may set up a “job agent” to send notifi cations
of new openings meeting specifi ed criteria, read “Advice
Bytes” stories from employees, and sign up to follow
SAP on Twitter.

Where SAP’s idea of sustainable human resources
really stands out, however, is in an initiative to recruit
workers with autism. These workers have trouble fi nd-
ing jobs because they struggle with social tasks like in-
terviewing and networking. For SAP, however, hiring
people with autism is not just a matter of accommodat-
ing people with disabilities, but one of identifying an
often-overlooked group of workers who bring value to
the table. The autism spectrum includes a wide range
of conditions from high functioning to severe, and
some individuals are not only able to work but gifted
in some areas. For example, their thinking patterns may
be highly structured, and they may pay careful attention

to details. For some jobs, such as writing manuals and
debugging software, these ways of thinking are exactly
what SAP needs. The company therefore has a target
that by 2020, up to 1% of its workforce will be employ-
ees with autism.

SAP tested its recruitment of workers with autism in
Germany and India; based on the pilot program’s suc-
cess, it rolled out the effort to Ireland, Canada, and the
United States. A Danish training and consulting fi rm
called Specialisterne screens candidates. Those who
pass the screening are referred to SAP. After SAP se-
lects employees, it provides adaptation training to help
them adjust to working on teams, and it assigns them to
a mentor. In exchange for this extra effort, the company
sees a competitive advantage. Luisa Delgado, a member
of SAP’s executive board, put it this way: “Only by em-
ploying people who think differently and spark innova-
tion will SAP be prepared to handle the challenges of
the 21st century.”

1. What recruiting methods described here support

SAP’s need for talented workers who help the com-
pany innovate?

2. Suggest a few other recruiting methods that would
help SAP remain a strong, innovative company.

Sources: SAP careers page,, accessed May 15,
2014; Shirley S. Wang, “How Autism Can Help You Land a Job,” The Wall

Street Journal, March 27, 2014,; Rob Preston, “SAP
CEO Envisions Younger, Greener, Cloudier Company,” InformationWeek,
November 25, 2013,; Katie Moisse,
“Tech Giant Sees ‘Competitive Advantage’ in Autistic Workforce,” ABC

News, May 22, 2013,; Dave Smith, “SAP Recruits
Autism Employees to ‘Spark Innovation,’” International Business Times, May
22, 2013,


Boeing’s High-Flying Approach to HR Planning and Recruitment
As the world’s biggest aerospace company, Boeing is well
acquainted with the industry’s major human resource
challenge: identifying, attracting, and keeping enough
skilled workers. Across manufacturing, the demand for
engineers is intense, but it is especially so in aerospace.
Engineers fl ocked to aerospace companies during the
space race, but more recently, Internet companies are
the main attraction. Consequently, the average age for
aeronautical engineers is 47, compared with 42 for U.S.
workers overall. In other words, many are approaching
retirement. Compounding the problem, Boeing is in the

defense business, so it faces legal limits on the number
of non-U.S. citizens it may hire.

To meet the challenge, Boeing has dedicated years
to establishing a systematic approach to talent manage-
ment linked to strategy. The system begins with the
establishment of priorities. HR executives talk to busi-
ness leaders about anticipated workforce needs. They
divide the workforce into segments and identify which
are most critical to success and where the current skills
of the workforce do not meet those critical needs. They
use predictive models to forecast business trends and


CHAPTER 5 Planning for and Recruiting Human Resources 163

workforce demographics. They analyze all this informa-
tion to identify the changes needed to fi ll in the gaps in
Boeing’s workforce. Then, to apply the results of this
analysis, Boeing’s HR team plans how to make the nec-
essary changes through a combination of three tactics:
promotions within the company, transfers of employ-
ees into positions where they can be developed to meet
future needs, and recruitment of employees outside

A key aspect of recruitment is reaching out to entry-
level engineers on college and university campuses.
Boeing has intensifi ed these efforts and is matching
other companies’ practice of making job offers earlier
during students’ senior years. During recruitment, stu-
dents interview with several different managers and tour
company facilities, so they understand the company
and its culture and opportunities. Then, to ensure that
the reality of working for Boeing lives up to the image
portrayed during recruitment, Boeing has a workforce
development program that plans career growth oppor-
tunities as carefully as the company plans hiring.

Recruiting efforts alone cannot meet Boeing’s
needs unless schools are preparing individuals for
technology-related jobs. Therefore, Boeing also enters

into partnerships with schools. As analysis of workforce
needs uncovers important emerging skills, Boeing helps
school leaders plan how to teach those skills. Support-
ing university research projects bolsters the company’s
innovative image on campus. Boeing has also set up a
Higher Education Integration Board, which identifi es
needs for continuing education, evaluates the quality of
employees hired from specifi c schools, and sets strategy
for future recruiting and research efforts.

1. To meet labor shortages within the company, Boe-

ing starts with promotions and transfers. What ad-
vantages might it experience from fi lling positions
with current employees?

2. Besides the external recruitment sources described
here, what other sources would you recommend for
Boeing? Why?

Sources: Claire Zillman, “America’s Defense Industry Is Going Gray,” For-

tune, November 14, 2013,;
PricewaterhouseCoopers, “The Right Stuff,” Keyword, July 2013, http://; Kathleen Koster, “Talent Management: Establishing
a Flight Plan,” Employee Benefi t News, April 1, 2013, Business Insights:
Global,; Agence France-Presse, “Boeing and
Airbus ‘Fight like Hell,’ for Aerospace Engineers,” Industry Week, June 26,

For Personal Financial Advisors, a Small Staffing Plan with a Big Impact
Robert J. Reed has been a fi nancial planner since 1978
and received his Certifi ed Financial Planner designation
in 1981. In 1999, he hired Lucy Banquer, a former legal
secretary, to work as his assistant and the only employee
at his fi rm, Personal Financial Advisors LLC in Coving-
ton, Louisiana. At that point, human resource planning
wasn’t on Reed’s radar at all.

But around 2005, Reed began to act on a desire to
have a more complete plan for his fi rm’s growth. He
determined that he wanted the business to grow from
about $400,000 in annual revenues to become a million-
dollar fi rm by 2012. That was a realistic goal, but not
one he could achieve with only the support of Banquer.
Although Banquer does an excellent job of fi elding cli-
ent phone calls and answering questions, Reed needed to
bring in more fi nancial expertise to serve more clients.

Typically, a fi nancial-planning fi rm like Reed’s ex-
pands by hiring an entry-level adviser to handle rou-
tine tasks while learning on the job until he or she can
take on clients independently. But Reed didn’t simply
take the usual path; he considered what role he wanted
for himself in his fi rm as it grew. Reed realized that the
part he excelled at and loved most was managing the
investments, not the presentations to clients, and that

he wanted the fi rm to grow in a way that would free
more time for him to spend with his family, not expand
his hours to supervise others. As Reed defi ned the scope
of his own desired job, he clarifi ed what he wanted from
his next employee: a Certifi ed Financial Planner who
had experience plus an interest in all the planning and
advising tasks except investment management.

With that strategy in mind, Reed began the search
for another planner to work with him. After about eight
months of recruiting, Reed met Lauren Gadkowski,
who was running her own advisory fi rm in Boston, but
preparing to relocate to Baton Rouge to be with her
future husband, Lee Lindsay. Reed wanted his new fi –
nancial planner to operate independently, so he agreed
to the idea of her offi ce being in Baton Rouge, about a
45-minute drive from his, and he let her determine how
often she would need to visit the Covington offi ce.

Reed stuck to his plan: Lauren Lindsay quickly
began working with Reed’s larger clients and introduced
herself as their main contact with the fi rm. After sit-
ting in on a few meetings to satisfy himself that he had
made a good hiring decision, Reed shifted his efforts
to managing the investments. About 10% of the clients
indicated they would prefer to maintain their working


164 PART 2 Acquiring, Training, and Developing Human Resources

relationship with Reed. Lindsay took over the remain-
ing 90% as well as the new clients she has brought into
the fi rm since joining it.

Reed’s decision to focus on investment management
has paid off for Personal Financial Advisors, giving the
fi rm better-than-average performance on its invest-
ments even as revenues have climbed. And with Lindsay
on board to handle client contact, Reed became able to
follow the more traditional path to further growth by
hiring an associate fi nancial planner, David Hutchinson,
in 2008. In contrast to Lindsay, Hutchinson is still pre-
paring to become a Certifi ed Financial Planner, but he
has an educational background in fi nancial planning and
experience as an investment broker.

1. Is a company ever too small for the need to engage in

human resource planning? Why or why not? Discuss

whether you think Robert Reed planned his hiring
strategy at an appropriate time in the fi rm’s growth.

2. Using Table  5.2, review the options for avoiding a
labor shortage, and discuss how well the options be-
sides new hires could have worked for Reed to reach
his goals for growth. As you do so, consider qualities
of a fi nancial-planning business that might be rel-
evant (for example, direct client contact and the need
for confi dentiality).

3. Suppose that when Reed was seeking to hire a cer-
tifi ed fi nancial planner, he asked you for advice on
where to recruit this person. Which sources would
you suggest, and why?

Sources: Angie Herbers, “Letting Go,” Investment Advisor, June 2009, pp. 96–97;
Personal Financial Advisors, “Why Choose Us?” corporate website, http://, accessed May 21, 2014.

1. Andrew Lapin, “NPR Talent Leader Schmidt Leaves to
Start Recruiting Company,”, December 19, 2013,; Bureau of National Affairs, “To
Improve Recruiting, Jazz Up Job Sites and Get Employees
Involved,” HR Focus, December 2013, pp. 13–14; Sarah Hal-
zack, “For Nonprofi t NPR, Social Media Is ‘a Great Equal-
izer’ When It Comes to Hiring,” Washington Post, January 6,

2. Bureau of National Affairs, “Firm Says High-Performing
Employers Do It Differently,” Report on Salary Surveys, July
2013, pp. 13–14.

3. M. Phillips and S. Singh, “High Corn Prices Ripple through
Economy,” Businessweek, February 4, 2013, pp. 13–14.

4. Annie Gasparro, “Tightfi sted New Owners Put Heinz on
Diet,” Wall Street Journal, February 10, 2014, http://online.

5. J. P. Guthrie, “Dumb and Dumber: The Impact of Downsizing
on Firm Performance as Moderated by Industry Conditions,”
Organization Science 19 (2008), pp. 108–23; “Lay Off the Lay-
offs,” Newsweek, February 4, 2010, http://www.thedailybeast

6. C. D. Zatzick and R. D. Iverson, “High-Involvement Manage-
ment and Workforce Reduction: Competitive Advantage or
Disadvantage?” Academy of Management Journal 49 (2006),
pp. 999–1015.

7. P. P. Shaw, “Network Destruction: The Structural Implica-
tions of Downsizing,” Academy of Management Journal 43
(2000), pp. 101–12.

8. Brenda Kowske, Kyle Lundby, and Rena Rasch, “Turning
‘Survive’ into ‘Thrive’: Managing Survivor Engagement in
a Downsized Organization,” People & Strategy 32, no. (4),
(2009), pp. 48–56.

9. W. F. Cascio, “Downsizing: What Do We Know? What Have
We Learned?” Academy of Management Executive 7 (1993), pp.

10. Hagerty, “U.S. Factories Buck Decline”; Scott Kirsner, “The
Tech Bust: 10 Years After,” Boston Globe, February 20, 2011,; Bill Saporito and Deirdre Van Dyk,
“Where the Jobs Are,” Time, January 17, 2011, EBSCOhost,; Erik Brynjolfsson and Andrew
McAfee, “Jobs, Productivity and the Great Decoupling,” The
New York Times, December 11, 2012,

11. Dan Jacobs, “Lessons from the Recession,” Landscape Man-
agement, June 2011, pp. S21–S23.

12. L. Woellert, “Half the Hours, Most of the Pay,” Bloomberg
Businessweek, January 31, 2013, pp. 23–24.

13. CareerBuilder, “Retirement May Be a Thing of the Past, New
CareerBuilder Survey Finds,” news release, February 16, 2012,

14. S. Kim and D. Feldman, “Healthy, Wealthy, or Wise: Pre-
dicting Actual Acceptances of Early Retirement Incentives
at Three Points in Time,” Personnel Psychology 51 (1998), pp.

15. Donna Rosato, “Ease Your Way into Retirement,” Money,
February 2012, EBSCOhost,

16. S. A. Johnson and B. E. Ashforth, “Externalization of
Employment in a Service Environment: The Role of
Organizational and Customer Identifi cation,” Journal of
Organizational Behavior 29 (2008), pp. 287–309; M. Vidal
and L. M. Tigges, “Temporary Employment and Strategic
Staffi ng in the Manufacturing Sector,” Industrial Relations 48
(2009), pp. 55–72.

17. “Where Do You Find New Talent?” Mass Transit, September/
October 2011, pp. 102–103.

18. Tim Sohn, “Don’t Go It Alone,” Editor & Publisher, April 2011,

19. Ibid.
20. A. Tiwana, “Does Firm Modularity Complement Ignorance?

A Field Study of Software Outsourcing Alliances,” Strategic
Management Journal 29 (2008), pp. 1241–52.


CHAPTER 5 Planning for and Recruiting Human Resources 165

21. Joel Schectman, “Indiana Says It Is Recovering from Failed
Experiment in IT Outsourcing,” The Wall Street Journal,
March 7, 2013,

22. Mansfi eld Sales Partners, “Sales Outsourcing: Expand Rap-
idly into New Markets,” http://www .mansfi, ac-
cessed March 3, 2012.

23. Bridget McCrea, “LMS: Optimizing the Human Supply
Chain,” Modern Materials Handling, April 2013, pp. 48–50.

24. A. E. Barber, Recruiting Employees (Thousand Oaks, CA: Sage,

25. C. K. Stevens, “Antecedents of Interview Interactions, Inter-
viewers’ Ratings, and Applicants’ Reactions,” Personnel Psy-
chology 51 (1998), pp. 55–85; A. E. Barber, J. R. Hollenbeck,
S. L. Tower, and J. M. Phillips, “The Effects of Interview
Focus on Recruitment Effectiveness: A Field Experiment,”
Journal of Applied Psychology 79 (1994), pp. 886–96; D. S.
Chapman and D. I. Zweig, “Developing a Nomological
Network for Interview Structure: Antecedents and Con-
sequences of the Structured Selection Interview,” Personnel
Psychology 58 (2005), pp. 673–702.

26. J. D. Olian and S. L. Rynes, “Organizational Staffi ng: Inte-
grating Practice with Strategy,” Industrial Relations 23 (1984),
pp. 170–83.

27. M. Leonard, “Challenges to the Termination-
at-Will Doctrine,” Personnel Administrator 28 (1983), pp. 49–56;
C. Schowerer and B. Rosen, “Effects of Employment-at-Will
Policies and Compensation Policies on Corporate Image and
Job Pursuit Intentions,” Journal of Applied Psychology 74 (1989),
pp. 653–56.

28. S. L. Rynes and A. E. Barber, “Applicant Attraction Strate-
gies: An Organizational Perspective,” Academy of Management
Review 15 (1990), pp. 286–310; J. A. Breaugh, Recruitment:
Science and Practice (Boston: PWS-Kent, 1992), p. 34.

29. J. E. Slaughter, M. J. Zickar, S. Highhouse, and D. C. Mohr,
“Personality Trait Inferences about Organizations: Develop-
ment of a Measure and Assessment of Construct Validity,”
Journal of Applied Psychology 89 (2004), pp. 85–103; D. S. Chap-
man, K. L. Uggerslev, S. A. Carroll, K. A. Piasentin, and D. A.
Jones, “Applicant Attraction to Organizations and Job Choice:
A Meta-analytic Review of the Correlates of Recruiting Out-
comes,” Journal of Applied Psychology 90 (2005), pp. 928–44.
For a contrasting view, see Mark Ritson, “Employer Branding
Can Do Real Harm so Stop It,” Marketing Week, July 11, 2013,

30. D. R. Avery, “Reactions to Diversity in Recruitment
Advertising—Are Differences in Black and White?” Journal
of Applied Psychology 88 (2003), pp. 672–79.

31. M. A. Conrad and S. D. Ashworth, “Recruiting Source Effec-
tiveness: A Meta-Analysis and Re-examination of Two Rival
Hypotheses,” paper presented at the annual meeting of the
Society of Industrial/Organizational Psychology, Chicago,

32. Breaugh, Recruitment.
33. Taleo Corporation, “Intercontinental Hotels Group Mobi-

lizes Internal Talent with Taleo in Biggest Ever Recruitment
Drive,” news release, February 6, 2012,

34. Breaugh, Recruitment, pp. 113–14.
35. R. S. Schuler and S. E. Jackson, “Linking Competitive Strate-

gies with Human Resource Management Practices,” Academy
of Management Executive 1 (1987), pp. 207–19.

36. Gerry Crispin and Mark Mehler, “Sources of Hire 2013: Per-
ception Is Reality,” CareerXroads, March 2013, http://www.

37. C. R. Wanberg, R. Kanfer, and J. T. Banas, “Predictors and
Outcomes of Networking Intensity among Job Seekers,”
Journal of Applied Psychology 85 (2000), pp. 491–503.

38. Nelson D. Schwartz, “In Hiring, a Friend in Need Is a Pros-
pect, Indeed,” The New York Times, January 27, 2013, http://

39. Lauren Weber, “Help Wanted—on Writing Job Descrip-
tions,” Wall Street Journal, October 2, 2013, http://online.wsj.

40. B. Dineen and R. A. Noe, “Effects of Customization on Ap-
plicant Decisions and Applicant Pool Characteristics in a
Web-Based Recruiting Context,” Journal of Applied Psychology
94 (2009), pp. 224–34.

41. Breaugh, Recruitment, p. 87.
42. EastBay Works, “What Is EastBay Works?” http://www., accessed March 3, 2012.
43. Carol Hymowitz and Jeff Green, “Executive Headhunters

Squeezed by In-House Recruiters,” Bloomberg Businessweek,
January 17, 2013,

44. Melissa Korn, “Companies Size Up Options at Small
Schools,” The Wall Street Journal, March 1, 2012, http://

45. Hao Zhao and Robert C. Liden, “Internship: A Recruitment
and Selection Perspective,” Journal of Applied Psychology 96
(2011): 221–229.

46. Jessica E. Vascellaro, “Interns Are Largest Target in Battle for
Tech Talent,” The Wall Street Journal, December 22, 2011,

47. R. Hawk, The Recruitment Function (New York: American
Management Association, 1967).

48. Lauren Weber, “For Smaller Firms, Recruiting Costs Add
Up,” The Wall Street Journal, November 28, 2011, http://on-

49. C. K. Stevens, “Effects of Preinterview Beliefs on Applicants’
Reactions to Campus Interviews,” Academy of Management
Journal 40 (1997), pp. 947–66.

50. C. Collins, “The Interactive Effects of Recruitment Practices
and Product Awareness on Job Seekers’ Employer Knowledge
and Application Behaviors,” Journal of Applied Psychology 92
(2007), pp. 180–90.

51. M. S. Taylor and T. J. Bergman, “Organizational Recruitment
Activities and Applicants’ Reactions at Different Stages of the
Recruitment Process,” Personnel Psychology 40 (1984), pp. 261–
85; C. D. Fisher, D. R. Ilgen, and W. D. Hoyer, “Source Cred-
ibility, Information Favorability, and Job Offer Acceptance,”
Academy of Management Journal 22 (1979), pp. 94–103.

52. L. M. Graves and G. N. Powell, “The Effect of Sex Similarity
on Recruiters’ Evaluation of Actual Applicants: A Test of the
Similarity-Attraction Paradigm,” Personnel Psychology 48 (1995),
pp. 85–98.

53. R. D. Tretz and T. A. Judge, “Realistic Job Previews: A Test
of the Adverse Self-Selection Hypothesis,” Journal of Applied
Psychology 83 (1998), pp. 330–37.

54. P. Hom, R. W. Griffeth, L. E. Palich, and J. S. Bracker, “An
Exploratory Investigation into Theoretical Mechanisms
Underlying Realistic Job Previews,” Personnel Psychology 51
(1998), pp. 421–51.

166 PART 2 Acquiring, Training, and Developing Human Resources

55. G. M. McEvoy and W. F. Cascio, “Strategies for Reducing
Employee Turnover: A Meta-Analysis,” Journal of Applied Psy-
chology 70 (1985), pp. 342–53; S. L. Premack and J. P. Wanous,
“A Meta- Analysis of Realistic Job Preview Experiments,”
Journal of Applied Psychology 70 (1985), pp. 706–19.

56. D. R. Earnest, D. G. Allen, and R. S. Landis, “Mecha-
nisms Linking Realistic Job Previews with Turnover: A

Meta-Analytic Path Analysis,” Personnel Psychology 64 (2011),
pp. 865–897.

57. R. W. Walters, “It’s Time We Become Pros,” Journal of College
Placement 12 (1985), pp. 30–33.

58. S. L. Rynes, R. D. Bretz, and B. Gerhart, “The Importance
of Recruitment in Job Choice: A Different Way of Looking,”
Personnel Psychology 44 (1991), pp. 487–522.

Selecting Employees
and Placing Them in Jobs6

With all the references to U.S. service members as “heroes” and the calls
to “support our troops,” you might expect that employers would be lining
up to hire veterans. Indeed, the U.S. Chamber of Commerce, an associa-
tion of businesses, has created a Hiring Our Heroes program offering job
fairs and workshops to veterans, and many individual companies make
a point of recruiting veterans. Even so, the unemployment rate among
post–9/11 veterans persists at several percentage points above the rate
for the overall U.S. workforce.

What is keeping companies from hiring more veterans? Survey evidence suggests
that one hurdle is employers’ fears about injuries such as post-traumatic stress dis-
order (PTSD). Some—incorrectly—worry that individuals with PTSD will be unable to
function in the workplace or that accommodating this disability will be expensive. Some
employers also operate on the assumption that the experience of following orders in
the military has made veterans uncreative, even though military service more typically
requires people to be resourceful and solve problems quickly in a variety of challenging
situations. A third challenge is that the tasks performed by a service member may seem
unrelated to any civilian jobs. It is usually up to veterans to figure out how to translate
their experiences and accomplishments into general terms a civilian employer can ap-
preciate. To help veterans overcome these hurdles, the U.S. Army’s Warrior Transi-
tion Command recently partnered with the Society for Human Resource Management
and recruiting firm Orion International to create educational resources for employers.

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 6-1 Identify the elements of the selection process.

LO 6-2 Defi ne ways to measure the success of a
selection method.

LO 6-3 Summarize the government’s requirements for
employee selection.

LO 6-4 Compare the common methods used for selecting
human resources.

LO 6-5 Describe major types of employment tests.

LO 6-6 Discuss how to conduct effective interviews.

LO 6-7 Explain how employers carry out the process of
making a selection decision.

168 PART 2 Acquiring, Training, and Developing Human Resources

Their message is that employers who select qualified veterans will gain workers with an
impressive work ethic, self-discipline, and ability to perform under pressure.1

Hiring decisions are about fi nding the people who will be a good fi t with the job
and the organization. Any organization that appreciates the competitive edge provided
by good people must take the utmost care in choosing its members. The organization’s
decisions about selecting personnel are central to its ability to survive, adapt, and grow.
Selection decisions become especially critical when organizations face tight labor mar-
kets or must compete for talent with other organizations in the same industry. If a
competitor keeps getting the best applicants, the remaining companies must make do
with who is left.

This chapter will familiarize you with ways to minimize errors in employee selec-
tion and placement. The chapter starts by describing the selection process and how to
evaluate possible methods for carrying out that process. It then takes an in-depth look
at the most widely used methods: applications and résumés, employment tests, and
interviews. The chapter ends by describing the process by which organizations arrive
at a fi nal selection decision.

Selection Process
Through personnel selection, organizations make decisions about who will or will
not be allowed to join the organization. Selection begins with the candidates identifi ed
through recruitment and with attempts to reduce their number to the individuals best
qualifi ed to perform the available jobs. At the end of the process, the selected individu-
als are placed in jobs with the organization.

The process of selecting employees varies considerably from organization to or-
ganization and from job to job. At most organizations, however, selection includes
the steps illustrated in Figure 6.1. First, a human resource professional reviews the
applications received to see which meet the basic requirements of the job. For can-
didates who meet the basic requirements, the organization administers tests and re-
views work samples to rate the candidates’ abilities. Those with the best abilities
are invited to the organization for one or more interviews. Often, supervisors and
team members are involved in this stage of the process. By this point, the decision
makers are beginning to form opinions about which candidates are most desirable.
For the top few candidates, the organization should check references and conduct
background checks to verify that the organization’s information is correct. Then

LO 6-1 Identify the ele-
ments of the selection

Personnel Selection
The process through
which organizations
make decisions about
who will or will not
be allowed to join the

Figure 6.1
Steps in the Selection Process

CHAPTER 6 Selecting Employees and Placing Them in Jobs 169

supervisors, teams, and other decision makers select a person to receive a job offer.
In some cases, the candidate may negotiate with the organization regarding salary,
benefi ts, and the like. If the candidate accepts the job, the organization places him or
her in that job.

Nowadays, the ease of applying online coupled with the high unemployment rates
of the past few years have made this processing overwhelming for many recruiters.
A simple job posting online could generate hundreds of résumés in one day. Many
employers are coping by automating much of the selection process with an applicant-
tracking system. Typically, the system starts by receiving the data provided in elec-
tronically submitted résumés and matching it against the company’s selection criteria.
The system might fi nd that half the résumés lack necessary keywords, so it sends those
applicants a polite “no thank you” e-mail. The applications that survive the automated
screening go to a hiring manager, often ranked by how well they meet preset criteria.
The manager reviews these applications and selects candidates to contact for a tele-
phone or face-to-face interview and/or testing.

Critics point out that these automated systems may arbitrarily reject highly
qualifi ed people who submit a creatively worded résumé rather than simply mim-
icking the wording of the job posting. Moreover, a recent study by the Talent
Board suggests that rejected job applicants have the potential to hurt a company’s
bottom line. More than 8% of the study’s participants said that their job rejection
would affect their relationship as customers with the company, the sentiment being
“if I’m not good enough to work here I probably don’t want to be a customer.”
Nevertheless, automated systems can make the application process more effi cient
by speeding up the steps and perhaps allowing applicants to check the status of
their applications.2

How does an organization decide which of these steps to use and in what order?
Some organizations simply repeat a selection process that is familiar. If members
of the organization underwent job interviews, they conduct job interviews, asking
familiar questions. However, what organizations should do is to create a selection
process in support of its job descriptions. In Chapter 3, we explained that a job
description identifi es the knowledge, skills, abilities, and other characteristics re-
quired for successfully performing a job. The selection process should be set up
in such a way that it lets the organization identify people who have the necessary
KSAOs. In Winston-Salem, North Carolina, a mortgage company called BB&T
bases its growth strategy on excellent customer service. BB&T hires customer-
focused loan offi cers by seeking a combination of cultural fi t with the organi-
zation and skill in “relationship selling” (selling that builds
long-term customer relationships by identifying and meeting
customers’ needs). First, the BB&T recruiter and hiring man-
ager assess cultural fi t by talking to candidates about how they
work with customers. If candidates focus on their earnings or
express little interest in customers’ well-being, BB&T screens
them out no matter how skillful they are at closing a deal.
Candidates with the necessary attitude are invited to continue
with an assessment of their technical skills. Candidates who
pass both steps of the initial screening are invited to inter-
view with branch managers. If all the interviewers agree that
the candidate is a good fi t, BB&T makes an offer. This care-
ful approach to hiring has built a workforce characterized by
exceptionally high productivity and low turnover.3

For employees who work directly with customers, com-

panies should create a selection process that measures

employees’ interest in customers and their ability to

interact in a positive way.

170 PART 2 Acquiring, Training, and Developing Human Resources

This kind of strategic approach to selection requires ways to measure the effective-
ness of selection tools. From science, we have basic standards for this:

• The method provides reliable information.
• The method provides valid information.
• The information can be generalized to apply to the candidates.
• The method offers high utility (practical value).
• The selection criteria are legal.

The reliability of a type of measurement indicates how free that measurement is from
random error.4 A reliable measurement therefore generates consistent results. Assum-
ing that a person’s intelligence is fairly stable over time, a reliable test of intelligence
should generate consistent results if the same person takes the test several times. Or-
ganizations that construct intelligence tests should be able to provide (and explain)
information about the reliability of their tests.

Usually, this information involves statistics such as correlation coeffi cients. These sta-
tistics measure the degree to which two sets of numbers are related. A higher cor-
relation coeffi cient signifi es a stronger relationship. At one extreme, a correlation
coeffi cient of 1.0 means a perfect positive relationship—as one set of numbers goes
up, so does the other. If you took the same vision test three days in a row, those scores
would probably have nearly a perfect correlation. At the other extreme, a correlation
of 21.0 means a perfect negative correlation—when one set of numbers goes up, the
other goes down. In the middle, a correlation of 0 means there is no correlation at
all. For example, the correlation (or relationship) between weather and intelligence
would be at or near 0. A reliable test would be one for which scores by the same person
(or people with similar attributes) have a correlation close to 1.0.

Reliability answers one important question—whether you are measuring some-
thing accurately—but ignores another question that is as important: Are you measur-
ing something that matters? Think about how this applies at companies that try to
identify workers who will fi t in well with the company’s culture. Often these com-
panies depend on teamwork, social networking, and creativity, and they expect those
behaviors to prevail when workers get along well and share similar values. However,
efforts to seek cultural fi t often translate into favoring the most likable candidates—for
example, those who make eye contact, display an interest in others, and tell engaging
stories.5 This approach not only raises questions of reliability—for example, whether
making eye contact in a job interview is a reliable measure of a person’s behavior on the
job over time—it also raises questions about the extent to which being likable really
translates into effective teamwork and creative problem solving. Perhaps the prickly
member of the team will be the one who opens up a new and valuable line of thinking.
As in this example, employers need to consider both the reliability of their selection
methods and their validity, defi ned next.

For a selection measure, validity describes the extent to which performance on the
measure (such as a test score) is related to what the measure is designed to assess (such
as job performance). Although we can reliably measure such characteristics as weight
and height, these measurements do not provide much information about how a person
will perform most kinds of jobs. Thus, for most jobs height and weight provide little

LO 6-2 Defi ne ways to
measure the success of
a selection method.

The extent to which a
measurement is free
from random error.

The extent to which per-
formance on a measure
(such as a test score)
is related to what the
measure is designed
to assess (such as job

CHAPTER 6 Selecting Employees and Placing Them in Jobs 171

validity as selection criteria. One way to determine whether a measure is valid is to
compare many people’s scores on that measure with their job performance. For ex-
ample, suppose people who score above 60 words per minute on a keyboarding test
consistently get high marks for their performance in data-entry jobs. This observation
suggests the keyboarding test is valid for predicting success in that job.

As with reliability, information about the validity of selection methods often uses
correlation coeffi cients. A strong positive (or negative) correlation between a measure
and job performance means the measure should be a valid basis for selecting (or re-
jecting) a candidate. This information is important not only because it helps organi-
zations identify the best employees, but also because organizations can demonstrate
fair employment practices by showing that their selection process is valid. The federal
government’s Uniform Guidelines on Employee Selection Procedures accept three ways of
measuring validity: criterion-related, content, and construct validity.

Criterion-Related Validity The fi rst category, criterion-related validity, is a
measure of validity based on showing a substantial correlation between test scores and
job performance scores. In the example in Figure 6.2, a company compares two
measures—an intelligence test and college grade point average—with performance as
sales representative. In the left graph, which shows the relationship between the intel-
ligence test scores and job performance, the points for the 20 sales reps fall near the
45-degree line. The correlation coeffi cient is near .90 (for a perfect 1.0, all the points
would be on the 45-degree line). In the graph at the right, the points are scattered
more widely. The correlation between college GPA and sales reps’ performance is
much lower. In this hypothetical example, the intelligence test is more valid than GPA
for predicting success at this job.

Two kinds of research are possible for arriving at criterion-related validity:

1. Predictive validation—This research uses the test scores of all applicants and
looks for a relationship between the scores and future performance. The

A measure of validity
based on showing a
substantial correlation
between test scores and
job performance scores.

Predictive Validation
Research that uses the
test scores of all ap-
plicants and looks for a
relationship between the
scores and future perfor-
mance of the applicants
who were hired.

Figure 6.2
Criterion-Related Measurements of a Student’s Aptitude

172 PART 2 Acquiring, Training, and Developing Human Resources

researcher administers the tests, waits a set period of time, and then measures the
performance of the applicants who were hired.

2. Concurrent validation—This type of research administers a test to people who
currently hold a job, then compares their scores to existing measures of job per-
formance. If the people who score highest on the test also do better on the job, the
test is assumed to be valid.

Predictive validation is more time consuming and diffi cult, but it is the best mea-
sure of validity. Job applicants tend to be more motivated to do well on the tests, and
their performance on the tests is not infl uenced by their fi rsthand experience with the
job. Also, the group studied is more likely to include people who perform poorly on
the test—a necessary ingredient to accurately validate a test.6

Content and Construct Validity Another way to show validity is to establish
content validity—that is, consistency between the test items or problems and the kinds
of situations or problems that occur on the job. A test that is “content valid” exposes the
job applicant to situations that are likely to occur on the job. It tests whether the applicant
has the knowledge, skills, or ability to handle such situations. In the case of a company
using tests for selecting a construction superintendent, tests with content validity included
organizing a random list of subcontractors into the order they would appear at a con-
struction site and entering a shed to identify construction errors that had intentionally
been made for testing purposes.7 More commonly today, employers use computer role-
playing games in which software is created to include situations that occur on the job. The
game measures how the candidate reacts to the situations, and then it computes a score
based on how closely the candidate’s responses match those of an ideal employee.8

The usual basis for deciding that a test has content validity is through expert judgment.
Experts can rate the test items according to whether they mirror essential functions of
the job. Because establishing validity is based on the experts’ subjective judgments, con-
tent validity is most suitable for measuring behavior that is concrete and observable.

For tests that measure abstract qualities such as intelligence or leadership ability,
establishment of validity may have to rely on construct validity. This involves estab-
lishing that tests really do measure intelligence, leadership ability, or other such “con-
structs,” as well as showing that mastery of this construct is associated with successful
performance of the job. For example, if you could show that a test measures something
called “mechanical ability,” and that people with superior mechanical ability perform
well as assemblers, then the test has construct validity for the assembler job. Tests that
measure a construct usually measure a combination of behaviors thought to be associ-
ated with the construct.

Ability to Generalize
Along with validity in general, we need to know whether a selection method is valid in
the context in which the organization wants to use it. A generalizable method applies
not only to the conditions in which the method was originally developed—job,
organization, people, time period, and so on. It also applies to other organizations,
jobs, applicants, and so on. In other words, is a selection method that was valid in one
context also valid in other contexts?

Researchers have studied whether tests of intelligence and thinking skills (called cog-
nitive ability) can be generalized. The research has supported the idea that these tests are
generalizable across many jobs. However, as jobs become more complex, the validity of
many of these tests increases. In other words, they are most valid for complex jobs.9

Concurrent Validation
Research that consists
of administering a test
to people who currently
hold a job, then com-
paring their scores to
existing measures of job

Content Validity
Consistency between the
test items or problems
and the kinds of situa-
tions or problems that
occur on the job.

Construct Validity
Consistency between a
high score on a test and
high level of a construct
such as intelligence or
leadership ability, as well
as between mastery of
this construct and suc-
cessful performance of
the job.

Valid in other contexts
beyond the context in
which the selection
method was developed.


Practical Value
Not only should selection methods such as tests and interview responses accurately pre-
dict how well individuals will perform, but they should also produce information that
actually benefi ts the organization. Being valid, reliable, and generalizable adds value to a
method. Another consideration is the cost of using the selection method. Selection pro-
cedures such as testing and interviewing cost money. They should cost signifi cantly less
than the benefi ts of hiring the new employees. Methods that provide economic value
greater than the cost of using them are said to have utility.

The choice of a selection method may differ according to the job being fi lled.
If the job involves providing a product or service of high value to the organiza-
tion, it is worthwhile to spend more to fi nd a top performer. At a company where
salespeople are responsible for closing million-dollar deals, the company will be
willing to invest more in selection decisions. At a fast-food restaurant, such an in-
vestment will not be worthwhile; the employer will prefer faster, simpler ways to
select workers who ring up orders, prepare food, and keep the facility clean. Still,
as the “Did You Know?” box illustrates, careless selection decisions are costly in
any kind of organization.

The extent to which
something provides eco-
nomic value greater than
its cost.

Did You Know?

Almost two-thirds (66%) of U.S. em-

ployers surveyed by CareerBuilder

said their company had experienced

negative consequences as a result

of selecting someone who was not

a good fi t or did not perform the job

well. Of these respondents, 27%

said a poor hiring decision had cost

their company more than $50,000.

When asked to identify the types of

consequences, respondents in the

United States most often said pro-

ductivity suffered.


Do the results of this survey indicate

that U.S. companies should spend

up to $50,000 to select an employee

for every vacant position? Why or

why not?

Sources: Rachel Gillett, “Infographic:

How Much a Bad Hire Will Actually Cost

You,” Fast Company, April 8, 2014,; Adecco,

“Hiring Mistakes, the Cost of a Bad

Hire,” AdeccoUSA blog, June 10, 2013,; Career-

Builder, “More Than Half of Companies

in the Top Ten World Economies Have

Been Affected by a Bad Hire, according

to a CareerBuilder Survey,” news re-

lease, May 8, 2013, http://www.careeer

Selection Decisions Affect the Bottom Line

Lost productivity

Lower morale

Expense of recruiting,
training replacement

Worsened client relations

Lower sales

Consequences of a Bad Hire

Percentage of U.S. Respondents
400 10 20 30






0 10

174 PART 2 Acquiring, Training, and Developing Human Resources

Legal Standards for Selection
As we discussed in Chapter 3, the U.S. government imposes legal limits on selection
decisions. The government requires that the selection process be conducted in a way
that avoids discrimination and provides access to employees with disabilities. The laws
described in Chapter 3 have many applications to the selection process:

• The Civil Rights Act of 1991 and the Age Discrimination in Employment Act of
1967 place requirements on the choice of selection methods. An employer that uses
a neutral-appearing selection method that damages a protected group is obligated
to show that there is a business necessity for using that method. For example, if an
organization uses a test that eliminates many candidates from minority groups, the
organization must show that the test is valid for predicting performance of that job.
In this context, good performance does not include “customer preference” or “brand
image” as a justifi cation for adverse impact. As we saw in Chapter 3, the courts may
view a discriminatory pattern of hiring as evidence that the company is engaged in
illegal discrimination.

• The Civil Rights Act of 1991 also prohibits preferential treatment in favor of minor-
ity groups. In the case of an organization using a test that tends to reject members of
minority groups, the organization may not simply adjust minority applicants’ scores
upward. Such practices can create an environment that is demotivating to all em-
ployees and can lead to government sanctions. In Buffalo, New York, minority fi re-
fi ghters scored poorly on civil service exams, so the city let its list of candidates for
promotion expire rather than promote only white fi refi ghters. White fi refi ghters
who had been on the list fi led a lawsuit claiming they were discriminated against,
and they won back pay, benefi ts, and damages for emotional distress. Their attor-
ney said the situation had created morale problems among fi refi ghters who saw the
discriminatory treatment as unfair.10

• Equal employment opportunity laws affect the kinds of information an organization
may gather on application forms and in interviews. As summarized in Table 6.1, the
organization may not ask questions that gather information about a person’s pro-
tected status, even indirectly. For example, requesting the dates a person attended
high school and college could indirectly gather information about an applicant’s age.

• The Americans with Disabilities Act (ADA) of 1991 requires employers to make
“reasonable accommodation” to disabled individuals and restricts many kinds of
questions during the selection process. Under the ADA, preemployment questions
may not investigate disabilities, but must focus on job performance. An interviewer
may ask, “Can you meet the attendance requirements for this job?” but may not
ask, “How many days did you miss work last year because you were sick?” Also, the
employer may not, in making hiring decisions, use employment physical exams or
other tests that could reveal a psychological or physical disability.

Along with equal employment opportunity, organizations must be concerned about
candidates’ privacy rights. The information gathered during the selection process may
include information that employees consider confi dential. Confi dentiality is a par-
ticular concern when job applicants provide information online. Employers should
collect data only at secure websites, and they may have to be understanding if online
applicants are reluctant to provide data such as Social Security numbers, which hack-
ers could use for identity theft. For some jobs, background checks look at candidates’
credit history. The Fair Credit Reporting Act requires employers to obtain a candi-
date’s consent before using a third party to check the candidate’s credit history or

LO 6-3 Summarize the
government’s require-
ments for employee

CHAPTER 6 Selecting Employees and Placing Them in Jobs 175

references. If the employer then decides to take an adverse action (such as not hiring)
based on the report, the employer must give the applicant a copy of the report and
summary of the applicant’s rights before taking the action.

Another legal requirement is that employers hiring people to work in the United
States must ensure that anyone they hire is eligible for employment in this country.
Under the Immigration Reform and Control Act of 1986, employers must verify
and maintain records on the legal rights of applicants to work in the United States.
They do this by having applicants fi ll out the U.S. Citizenship and Immigration Ser-
vices’ Form I-9 and present documents showing their identity and eligibility to work.
Employers must complete their portion of each Form I-9, check the applicant’s docu-
ments, and retain the Form I-9 for at least three years. Employers may (and in some
cases must) also use the federal government’s electronic system for verifying eligibility
to work. To use the system, called E-Verify, employers go online (
e-verify) to submit information on the applicant’s I-9. The system compares it against
information in databases of the Social Security Administration and Department of
Homeland Security. It then notifi es the employer of the candidate’s eligibility, usually

Immigration Reform
and Control Act of 1986
Federal law requiring
employers to verify and
maintain records on
applicants’ legal rights
to work in the United

What is your full name?
Have you ever worked under a different name?
[Ask all candidates.]

What was your maiden name?
What’s the nationality of your name?

If you are hired, can you show proof of age (to
meet a legal age requirement)?

How old are you?
How would you feel about working for someone
younger than you?

Will you need any reasonable accommodation
for this hiring process?
Are you able to perform this job, with or without
reasonable accommodation?

What is your height? Your weight?
Do you have any disabilities?
Have you been seriously ill?
Please provide a photograph of yourself.

Are you fl uent in [language needed for job]?
[Statement that employment is subject
to verifi cation of applicant’s identity and
employment eligibility under immigration laws]

What is your ancestry? Are you a citizen of the
United States? Where were you born? How did
you learn to speak that language?

What schools have you attended? What degrees
have you earned? What was your major?

Is that school affi liated with [religious group]?
When did you attend high school? [to learn
applicant’s age]

Can you meet the requirements of the work
schedule? [Ask all candidates.]

What is your religion? What religious holidays do
you observe?

Can you meet the job requirement to travel
overnight several times a month?

What is your marital status? Would you like to be
addressed as Mrs., Ms., or Miss? Do you have any

Have you ever been convicted of a crime? Have you ever been arrested?
What organizations or groups do you belong
to that you consider relevant to being able to
perform this job?

What organizations or groups do you belong to?

Note: This table provides examples and is not intended as a complete listing of permissible and impermis-

sible questions. The examples are based on federal requirements; state laws vary and may affect these


Sources: Equal Employment Opportunity Commission, “Pre-employment Inquiries (General),” Prohibited

Employment Policies/Practices,, accessed May 20, 2014; Louise Kursmark, “Keep

the Interview Legal,” Monster Resource Center: Recruiting and Hiring Advice,,

accessed May 20, 2014; Lisa Guerin, “Illegal Interview Questions,” Nolo Legal Topics: Employment Law,, accessed May 20, 2014.

Table 6.1
Permissible and
Impermissible Questions
for Applications and

176 PART 2 Acquiring, Training, and Developing Human Resources

within 24 hours. At the same time, assuming a person is eligible to work under the Im-
migration Reform and Control Act, the law prohibits the employer from discriminating
against the person on the basis of national origin or citizenship status.

An important principle of selection is to combine several sources of information
about candidates, rather than relying solely on interviews or a single type of testing.
The sources should be chosen carefully to relate to the characteristics identifi ed in
the job description. When organizations do this, they are increasing the validity of
the decision criteria. They are more likely to make hiring decisions that are fair and
unbiased. They also are more likely to choose the best candidates.

Job Applications and Résumés
Nearly all employers gather background information on applicants at the begin-
ning of the selection process. The usual ways of gathering background informa-
tion are by asking applicants to fi ll out application forms and provide résumés.
Organizations also verify the information by checking references and conducting
background checks.

Asking job candidates to provide background information is inexpensive. The or-
ganization can get reasonably accurate information by combining applications and
résumés with background checks and well-designed interviews.11 A major challenge
with applications and résumés is the sheer volume of work they generate for the orga-
nization. Human resource departments often are swamped with far more résumés than
they can carefully review.

Application Forms
Asking each applicant to fi ll out an employment application is a low-cost way to gather
basic data from many applicants. It also ensures that the organization has certain stan-
dard categories of information, such as mailing address and employment history, from
each. Figure 6.3 is an example of an application form.

Employers can buy general-purpose application forms from an offi ce supply store,
or they can create their own forms to meet unique needs. Either way, employment ap-
plications include areas for applicants to provide several types of information:

• Contact information—The applicant’s name, address, phone number, and e-mail

• Work experience—Companies the applicant worked for, job titles, and dates of

• Educational background—High school, college, and universities attended and
degree(s) awarded.

• Applicant’s signature—Signature following a statement that the applicant has pro-
vided true and complete information.

The application form may include other areas for the applicant to provide additional
information, such as specifi c work experiences, technical skills, or memberships in pro-
fessional or trade groups. Also, including the date on an application is useful for keeping
up-to-date records of job applicants. The application form should not request informa-
tion that could violate equal employment opportunity standards. For example, questions
about an applicant’s race, marital status, or number of children would be inappropriate.

By reviewing application forms, HR personnel can identify which candidates
meet minimum requirements for education and experience. They may be able to rank

LO 6-4 Compare the
common methods used
for selecting human































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178 PART 2 Acquiring, Training, and Developing Human Resources

applicants—for example, giving applicants with 10 years of experi-
ence a higher ranking than applicants with 2 years of experience.
In this way, the applications enable the organization to narrow the
pool of candidates to a number it can afford to test and interview.

The usual way that applicants introduce themselves to a poten-
tial employer is to submit a résumé. An obvious drawback of this
information source is that applicants control the content of the
information as well as the way it is presented. This type of infor-
mation is therefore biased in favor of the applicant and (although
this is unethical) may not even be accurate. However, résumés
are an inexpensive way to gather information and provide em-

ployers with a starting point. Organizations typically use résumés as a basis for decid-
ing which candidates to investigate further.

As with employment applications, an HR staff member reviews the résumés to
identify candidates meeting such basic requirements as educational background, re-
lated work performed, and types of equipment the person has used. Because résumés
are created by the job applicants (or the applicants have at least approved résumés
created by someone they hire), they also may provide some insight into how candi-
dates communicate and present themselves. Employers tend to decide against ap-
plicants whose résumés are unclear, sloppy, or full of mistakes. On the positive side,
résumés may enable applicants to highlight accomplishments that might not show up
in the format of an employment application. In a recent trend, applicants can even
include a link to an online portfolio of work samples; however, few employers have
made checking those portfolios part of the selection process. Some are too pressed for
time, while many lack the capability in their HR software or are concerned they will
see information, such as photos, that will raise fair-employment concerns.12 Review
of résumés is most valid when the content of the résumés is evaluated in terms of the
elements of a job description.

Application forms often ask that applicants provide the names of several references.
Applicants provide the names and phone numbers of former employers or others who
can vouch for their abilities and past job performance. In some situations, the applicant
may provide letters of reference written by those people. It is then up to the organiza-
tion to have someone contact the references to gather information or verify the ac-
curacy of the information provided by the applicant.

As you might expect, references are not an unbiased source of information. Most
applicants are careful to choose references who will say something positive. In addi-
tion, former employers and others may be afraid that if they express negative opinions,
they will be sued. Equally problematic from the standpoint of getting useful informa-
tion is that some candidates fail to list people who can speak about their work history.
On occasion, references barely know the candidate or know him or her only in a social
context. A hiring manager in a government offi ce even saw his own name listed as a
reference for a candidate the manager had never met. In that case, the visibly uncom-
fortable worker offered the manager an unconvincing explanation, so the references at
least tested the candidate’s honesty (and he did not get hired).13

An HR staff member typically reviews résumés from

job applicants to identify candidates who meet basic

job requirements, such as education and related work


CHAPTER 6 Selecting Employees and Placing Them in Jobs 179

Usually the organization checks references after it has determined that the appli-
cant is a fi nalist for the job. Contacting references for all applicants would be time
consuming, and it does pose some burden on the people contacted. Part of that burden
is the risk of giving information that is seen as too negative or too positive. If the per-
son who is a reference gives negative information, there is a chance the candidate will
claim defamation, meaning the person damaged the applicant’s reputation by making
statements that cannot be proved truthful.14 At the other extreme, if the person gives
a glowing statement about a candidate, and the new employer later learns of misdeeds
such as sexual misconduct or workplace violence, the new employer might sue the
former employer for misrepresentation.15

Because such situations occasionally arise, often with much publicity, people who
give references tend to give as little information as possible. Most organizations have
policies that the human resource department will handle all requests for references
and that they will only verify employment dates and sometimes the employee’s fi nal
salary. In organizations without such a policy, HR professionals should be careful—
and train managers to be careful—to stick to observable, job-related behaviors and to
avoid broad opinions that may be misinterpreted. In spite of these drawbacks of refer-
ences, the risks of not learning about signifi cant problems in a candidate’s past out-
weigh the possibility of getting only a little information. Potential employers should
check references. In general, the results of this effort will be most valid if the employer
contacts many references (if possible, going beyond the list of names provided by the
applicant), speaks with them directly by phone, and listens carefully for clues such as
tone of voice.16

Background Checks
A background check is a way to verify that applicants are as they represent them-
selves to be. Unfortunately, not all candidates are open and honest. Liz Crawford,
who is responsible for hiring employees at Factory VFX, has seen some notable
attempts to deceive her. One candidate handed her a résumé including employ-
ment experience at a company Crawford knows well. When she commented on
this, the candidate gave her a different résumé and tried to explain that the fi rst one
was a “wish résumé” of positions she wished she had held. Another candidate an-
nounced at his interview that he had been recommended by a Factory VFX artist.
At the end of the interview, Crawford picked up the phone and dialed the artist so
they could greet one another—and the embarrassed candidate admitted he didn’t
actually know the artist.17 In light of incidents such as these, it’s no wonder that
many hiring managers are interested in using social media to check employees’
backgrounds (see “HRM Social”).

Besides checking employment references, many employers also conduct crimi-
nal background checks. Some positions are so sensitive that the law may even limit
hiring a person with certain kinds of convictions: for example, a person convicted
of domestic violence may not hold positions that involve shipping fi rearms. The
use of criminal background checks is a sensitive issue in the United States, how-
ever, especially since crackdowns on crime have resulted in many arrests. An addi-
tional concern is the disparate impact of considering criminal history. Men are far
more likely to have a criminal record than women, and arrests and convictions are
far more common among African Americans than whites. The Equal Employment
Opportunity Commission has published guidelines that employers who check
criminal histories do so consistently; that is, they should conduct the same type


of background check for all candidates and apply the same standards for acting on
the information. However, the EEOC also recommends that employers review the
particular details of each situation, including the seriousness of each offense, the
amount of time that has passed since conviction or completion of sentence, and the
crime’s relevance to the job the candidate is applying for.18

Another type of background check that has recently drawn greater scrutiny is the
use of credit checks. Employers in certain situations, such as processes that involve
handling money, are concerned that employees with credit problems will behave less
honestly. To avoid hiring such employees, these employers conduct a background
check. Also, some employers see good credit as an indicator that a person is respon-
sible. But in a time of high unemployment and many home foreclosures, some people
see this type of investigation as unfair to people who are desperately trying to fi nd
work: the worse their fi nancial situation, the harder the job search becomes. Under

Searching for a job candidate’s

name online is so easy that it seems

like an obvious way to check the

person’s background. Public infor-

mation could show, for example,

whether the person really is vice

president of marketing at XYZ Cor-

poration or has done something that

could later embarrass the employer.

Indeed, research indicates that

employers are interested. A survey

by CareerBuilder found that 39%

use social media to research can-

didates, and a survey by recruiting

fi rm Challenger, Grey and Christmas

found even greater use: 22% said

they always review social media,

and another 38% said they some-

times do so.

Employers need to proceed with

caution, however. A particular con-

cern is to avoid discrimination, yet

the very nature of social media en-

courages sharing the kinds of infor-

mation related to being a member

of a protected group. For example,

photos and descriptions of activi-

ties can tell or suggest a person’s

age, race, sex, religion, marital

status, and disabilities. Employers

can try to avoid discrimination by

postponing their search of social

media until after they have identifi ed

a candidate they want to hire, after

which they use social media to rule

out specifi c problems.

An even safer way to use so-

cial media is to involve someone

who is not the decision maker. The

company can use a designated HR

employee or contract with a service

that specializes in screening job

candidates. The service uses crite-

ria from the employer—for example,

screening out candidates who show

evidence of using illegal drugs, en-

gaging in hate speech, or misrep-

resenting qualifi cations. It gathers

information about the candidate and

reports to the employer only the job-

related information gathered. Before

using a service such as this or con-

ducting any background check, em-

ployers should obtain permission

from the candidate.

Finally, a few companies have

sought greater insight than what is

available publicly by asking can-

didates for their passwords, so

the employer can look at a candi-

date’s private information. Experts

advise against this practice, which

is invasive, probably violates the

media sites’ terms of use, violates

some states’ laws, and is likely to

alienate many good candidates.


1. How well does searching social

media fulfi ll the requirements of

providing reliable, valid, high-

utility, and legal information for

selection decisions?

2. What would show up in a

search of public information

about your name? How do

you try to represent yourself


Sources: Catey Hill, “Your Boss Doesn’t

Care about Your Facebook, Twitter Pro-

fi les,” MarketWatch, May 19, 2014, http://; Rebecca Weiss,

“Social Media’s Impact on Hiring, Manage-

ment and Discipline: What Every Employer

Needs to Know,” Lexology, September 2,


CareerBuilder, “More Employers Finding

Reasons Not to Hire Candidates on Social

Media, Finds CareerBuilder Survey,” news

release, June 27, 2013, http://www; Steve Bates, “Use So-

cial Media Smartly When Hiring,” Society

for Human Resource Management, HR

Topics and Strategy, March 19, 2013,

Using Social Media as a Background Check

HRM Social

CHAPTER 6 Selecting Employees and Placing Them in Jobs 181

federal law, conducting a credit check is legal if the person consents, but some states
ban or are considering bans on the practice.

Employment Tests and Work Samples
When the organization has identifi ed candidates whose applications or résumés indi-
cate they meet basic requirements, the organization continues the selection process
with this narrower pool of candidates. Often, the next step is to gather objective data
through one or more employment tests. These tests fall into two broad categories:

1. Aptitude tests assess how well a person can learn or acquire skills and abilities.
In the realm of employment testing, the best-known aptitude test is the General
Aptitude Test Battery (GATB), used by the U.S. Employment Service.

2. Achievement tests measure a person’s existing knowledge and skills. For ex-
ample, government agencies conduct civil service examinations to see whether
applicants are qualifi ed to perform certain jobs.

Before using any test, organizations should investigate the test’s validity and
reliability. Besides asking the testing service to provide this information, it is wise
to consult more impartial sources of information, such as the ones identifi ed in
Table 6.2.

Physical Ability Tests
Physical strength and endurance play less of a role in the modern workplace than in
the past, thanks to the use of automation and modern technology. Even so, many jobs
still require certain physical abilities or psychomotor abilities (those connecting brain
and body, as in the case of eye-hand coordination). When these abilities are essential
to job performance or avoidance of injury, the organization may use physical ability
tests. These evaluate one or more of the following areas of physical ability: muscular
tension, muscular power, muscular endurance, cardiovascular endurance, fl exibility,
balance, and coordination.19

Although these tests can accurately predict success at certain kinds of jobs, they also
tend to exclude women and people with disabilities. As a result, use of physical ability
tests can make the organization vulnerable to charges of discrimination. It is therefore
important to be certain that the abilities tested for really are essential to job perfor-
mance or that the absence of these abilities really does create a safety hazard. See “Best
Practices” for an example of an organization that does this.

LO 6-5 Describe major
types of employment

Aptitude Tests
Tests that assess how
well a person can learn
or acquire skills and

Achievement Tests
Tests that measure a
person’s existing knowl-
edge and skills.

Mental Measurements Yearbook Descriptions and reviews of tests that are
commercially available

Principles for the Validation and Use of Personnel
Selection Procedures (Society for Industrial and
Organizational Psychology)

Guide to help organizations evaluate tests

Standards for Educational and Psychological
Tests (American Psychological Association)

Description of standards for testing programs

Tests: A Comprehensive Reference for
Assessments in Psychology, Education, and

Descriptions of thousands of tests

Test Critiques Reviews of tests, written by professionals
in the fi eld

Table 6.2
Sources of Information
about Employment Tests


Cognitive Ability Tests
Although fewer jobs require muscle power today, brainpower is essential for most jobs.
Organizations therefore benefi t from people who have strong mental abilities. Cogni-
tive ability tests—sometimes called “intelligence tests”—are designed to measure
such mental abilities as verbal skills (skill in using written and spoken language), quan-
titative skills (skill in working with numbers), and reasoning ability (skill in thinking
through the answer to a problem). Many jobs require all of these cognitive skills, so
employers often get valid information from general tests. Many reliable tests are com-
mercially available. The tests are especially valid for complex jobs and for those requir-
ing adaptability in changing circumstances.20 Employers should, however, be sure tests
are administered with security measures to prevent cheating. This is especially an issue
with electronic standardized tests, as there is a demand for test takers to share test
questions and answers.21

The evidence of validity, coupled with the relatively low cost of these tests, makes
them appealing, except for one problem: concern about legal issues. These concerns
arise from a historical pattern in which use of the tests has had an adverse impact
on African Americans. Some organizations responded with race norming, establishing

Cognitive Ability Tests
Tests designed to
measure such mental
abilities as verbal skills,
quantitative skills, and
reasoning ability.

If you visit a hospital and observe

the activities there, you will see

many employees engaged in physi-

cal activities—perhaps lifting pa-

tients, pushing carts loaded with

meals, reaching for supplies, or

moving swiftly but safely down the

halls to respond to an emergency.

Hiring decisions for these em-

ployees need to take into account

whether they can safely carry out

job-related activities (with or without


St. Joseph Health, based in Ir-

vine, California, has taken a thor-

ough and objective approach to

meeting the challenge. The regional

health system’s 24,000 employees

serve patients in California, Texas,

and New Mexico. The faith-based

(Catholic) organization expects its

employees to demonstrate the val-

ues of dignity, service, excellence,

and justice. In the case of hiring de-

cisions, this includes fairly match-

ing people to jobs they can perform

well. That requires clearly defi ning

job functions and tests that dem-

onstrate the ability to perform those


At St. Joseph Health, this effort

began several years ago with a pro-

cess of developing job function de-

scriptions for 1,200 positions. With

the help of experienced consultants

advised by medical and legal ex-

perts, the organization identifi ed

appropriate test requirements for

these functions. For example, ap-

plicants to be security guards must

demonstrate the strength to restrain

a suspect or run up several fl ights

of stairs carrying a load as heavy as

fi refi ghting gear.

St. Joseph Health uses these

requirements and tests not only to

make better hiring decisions but

also to help injured employees as-

sess their need for job accommo-

dations and ability to return to their

regular jobs. Since using the ob-

jective measurements, the health

system has seen greater morale

among supervisors and employees,

as well as less time off for recovery

from injuries.


1. Based on the information

given, how well do the physical

ability tests for St. Joseph

Health meet the criteria of

validity and utility (practical


2. How can St. Joseph

Health ensure that it uses

physical ability tests in a

nondiscriminatory manner?

Sources: DSI Work Solutions, “DSI

Job Function Matching Method and

Outcome,” http://www.dsiworksolu-, accessed May 21, 2014; St.

Joseph Health, “Fact Sheet,” January

2014,; Roberto Ce-

niceros, “Employers Put Job Seekers’

Physical Ability to the Test,” Business

Insurance, June 17, 2013, Business In-

sights: Global,

St. Joseph Health Matches Physical Abilities to Job Requirements

Best Pract ices

CHAPTER 6 Selecting Employees and Placing Them in Jobs 183

different norms for hiring members of different racial groups. Race norming poses
its own problems, not the least of which is the negative reputation it bestows on the
minority employees selected using a lower standard. In addition, the Civil Rights Act
of 1991 forbids the use of race or sex norming. As a result, organizations that want to
base selection decisions on cognitive ability must make diffi cult decisions about how to
measure this ability while avoiding legal problems. One possibility is a concept called
banding. This concept treats a range of scores as being similar, as when an instructor
gives the grade of A to any student whose average test score is at least 90. All applicants
within a range of scores, or band, are treated as having the same score. Then within the
set of “tied” scores, employers give preference to underrepresented groups. This is a
controversial practice, and some have questioned its legality.22

Job Performance Tests and Work Samples
Many kinds of jobs require candidates who excel at performing specialized tasks, such
as operating a certain machine, handling phone calls from customers, or designing
advertising materials. To evaluate candidates for such jobs, the organization may ad-
minister tests of the necessary skills. Sometimes the candidates take tests that involve a
sample of work, or they may show existing samples of their work. Testing may involve
a simulated work environment, a diffi cult team project, or a complex computer pro-
gramming puzzle.23 Examples of job performance tests include tests of keyboarding
speed and in-basket tests. An in-basket test measures the ability to juggle a variety of
demands, as in a manager’s job. The candidate is presented with simulated memos
and phone messages describing the kinds of problems that confront a person in the
job. The candidate has to decide how to respond to these messages and in what order.
Examples of jobs for which candidates provide work samples include graphic designers
and writers.

Tests for selecting managers may take the form of an assessment center—a
wide variety of specifi c selection programs that use multiple selection methods to
rate applicants or job incumbents on their management potential. An assessment
center typically includes in-basket tests, tests of more general abilities, and person-
ality tests. Combining several assessment methods increases the validity of this

Job performance tests have the advantage of giving applicants a chance to show
what they can do, which leads them to feel that the evaluation was fair.24 The tests also
are job specifi c—that is, tailored to the kind of work done in a specifi c job. So they
have a high level of validity, especially when combined with cognitive ability tests and
a highly structured interview.25 This advantage can become a disadvantage, however, if
the organization wants to generalize the results of a test for one job to candidates for
other jobs. The tests are more appropriate for identifying candidates who are generally
able to solve the problems associated with a job, rather than for identifying which par-
ticular skills or traits the individual possesses.26 Developing different tests for different
jobs can become expensive. One way to save money is to prepare computerized tests
that can be delivered online to various locations.

Personality Inventories
In some situations, employers may also want to know about candidates’ personali-
ties. For example, one way that psychologists think about personality is in terms of
the “Big Five” traits: extroversion, adjustment, agreeableness, conscientiousness, and

Assessment Center
A wide variety of specifi c
selection programs that
use multiple selection
methods to rate appli-
cants or job incumbents
on their management

184 PART 2 Acquiring, Training, and Developing Human Resources

inquisitiveness (explained in Table 6.3). There is evidence that people who score high
on conscientiousness tend to excel at work, especially when they also have high cog-
nitive ability.27 For people-related jobs like sales and management, extroversion and
agreeableness also seem to be associated with success.28 Strong social skills help con-
scientious people ensure that they get positive recognition for their hard work.29 How-
ever, high scores are less than ideal for some traits in some situations. For example, the
best performers often score in the middle of the range on emotional stability. In other
words, an employee can be either too nervous or too calm to do the best work.30

The usual way to identify a candidate’s personality traits is to administer one of the
personality tests that are commercially available. The employer pays for the use of the
test, and the organization that owns the test then scores the responses and provides
a report about the test taker’s personality. An organization that provides such tests
should be able to discuss the test’s validity and reliability. Assuming the tests are valid
for the organization’s jobs, they have advantages. Administering commercially avail-
able personality tests is simple, and these tests have generally not violated equal op-
portunity employment requirements.31 On the downside, compared with intelligence
tests, people are better at “faking” their answers to a personality test to score higher on

1. Extroversion Sociable, gregarious, assertive, talkative, expressive
2. Adjustment Emotionally stable, nondepressed, secure, content
3. Agreeableness Courteous, trusting, good-natured, tolerant, cooperative, forgiving
4. Conscientiousness Dependable, organized, persevering, thorough, achievement-oriented
5. Inquisitiveness Curious, imaginative, artistically sensitive, broad-minded, playful

Table 6.3
Five Major Personality
Dimensions Measured by
Personality Inventories

To test tech workers’ programming and problem-solving skills, Google sponsors contests called Code Jams at

locations around the world. The winners gain fame as well as visibility with Google recruiters. The Code Jams also

cement Google’s reputation for hiring the best thinkers and offering them exciting challenges.

CHAPTER 6 Selecting Employees and Placing Them in Jobs 185

desirable traits.32 For example, people tend to score higher on conscientiousness when
fi lling out job-related personality tests than when participating in research projects.33
Ways to address this problem include using trained interviewers rather than surveys,
collecting information about the applicant from several sources, and letting applicants
know that several sources will be used.34

One trend in favor of personality tests is organizations’ greater use of teamwork,
where personality confl icts can be a signifi cant problem. Traits such as agreeableness
and conscientiousness have been associated with effective teamwork.35 In addition, an
organization might try to select team members with similar traits and values in order
to promote a strong culture where people work together harmoniously, or they instead
might look for a diversity of personalities and values as a way to promote debate and

Honesty Tests and Drug Tests
No matter what employees’ personalities may be like, organizations want employees
to be honest and to behave safely. Some organizations are satisfi ed to assess these
qualities based on judgments from reference checks and interviews. Others investigate
these characteristics more directly through the use of honesty tests and drug tests.

The most famous kind of honesty test is the polygraph, the so-called lie detector
test. However, in 1988 the passage of the Polygraph Act banned the use of poly-
graphs for screening job candidates. As a result, testing services have developed
paper-and-pencil honesty (or integrity) tests. Generally these tests ask applicants di-
rectly about their attitudes toward theft and their own experiences with theft. Much
of the research into the validity of these tests has been conducted by the testing
companies, which tend to fi nd stronger correlations. However, evidence suggests
that honesty tests do have some ability to predict such behavior as theft of the em-
ployer’s property.36

As concerns about substance abuse have grown during recent decades, so has the
use of drug testing. As a measure of a person’s exposure to drugs, chemical testing has
high reliability and validity. However, these tests are controversial for several reasons.
Some people are concerned that they invade individuals’ privacy. Others object from a
legal perspective. When all applicants or employees are subject to testing, whether or
not they have shown evidence of drug use, the tests might be an unreasonable search
and seizure or a violation of due process. Taking urine and blood samples involves
invasive procedures, and accusing someone of drug use is a serious matter. On the
positive side, a recent analysis of hiring data suggests that drug tests may provide a
correction for discriminatory employment decisions. In states that adopted laws en-
couraging drug testing, hiring trends for white males were unchanged, but the hiring
of black men increased. That change did not occur in states where laws were unfavor-
able to drug testing. Although the study did not prove (or disprove) discrimination, it
does show an infl uence that is helpful to black males.37

Employers considering the use of drug tests should ensure that their drug-testing
programs conform to some general rules38:

• Administer the tests systematically to all applicants for the same job.
• Use drug testing for jobs that involve safety hazards.
• Have a report of the results sent to the applicant, along with information about how

to appeal the results and be retested if appropriate.
• Respect applicants’ privacy by conducting tests in an environment that is not intru-

sive and keeping results confi dential.

186 PART 2 Acquiring, Training, and Developing Human Resources

Even at an organization with these best practices, employers have to keep in mind
that drug testing will not uncover all problems with impairment. One recent con-
cern is that much drug abuse today involves legal prescription painkillers rather than
substances traditionally tested for. Routine testing for prescription drugs (or possibly
even marijuana in states that have legalized medical marijuana) is diffi cult because the
employer has to be careful not to discriminate on the basis of disabilities.

Medical Examinations
Especially for physically demanding jobs, organizations may wish to conduct medical
examinations to see that the applicant can meet the job’s requirements. Employers
may also wish to establish an employee’s physical condition at the beginning of
employment, so that there is a basis for measuring whether the employee has suf-
fered a work-related disability later on. At the same time, as described in Chapter 3,
organizations may not discriminate against individuals with disabilities who could
perform a job with reasonable accommodations. Likewise, they may not use a mea-
sure of size or strength that discriminates against women, unless those require-
ments are valid in predicting the ability to perform a job. Furthermore, to protect
candidates’ privacy, medical exams must be related to job requirements and may
not be given until the candidate has received a job offer. Therefore, organiza-
tions must be careful in how they use medical examinations. Many organizations
make selection decisions fi rst and then conduct the exams to confi rm that the em-
ployee can handle the job with any reasonable accommodations required. Limiting
the use of medical exams in this way also holds down the cost of what tends to be
an expensive process.

Supervisors and team members most often get involved in the selection process at the
stage of employment interviews. These interviews bring together job applicants and rep-
resentatives of the employer to obtain information and evaluate the applicant’s qualifi ca-
tions. While the applicant is providing information, he or she is also forming opinions
about what it is like to work for the organization. Most organizations use interviewing as
part of the selection process. In fact, this method is used more than any other.

Interviewing Techniques
Interview techniques include choices about the type of questions to ask and the num-
ber of people who conduct the interview. Several question types are possible:

• In a nondirective interview, the interviewer has great discretion in choosing
questions. The candidate’s reply to one question may suggest other questions to ask.
Nondirective interviews typically include open-ended questions about the candi-
date’s strengths, weaknesses, career goals, and work experience. Because these inter-
views give the interviewer wide latitude, their reliability is not great, and some
interviewers ask questions that are not valid or even legal.

•  A structured interview establishes a set of questions for the interviewer to ask.
Ideally, the questions are related to job requirements and cover relevant knowledge,
skills, and experiences. The interviewer is supposed to avoid asking questions that
are not on the list. Although interviewers may object to being restricted, the results
may be more valid and reliable than with a nondirective interview.

LO 6-6 Discuss how
to conduct effective

Nondirective Interview
A selection interview in
which the interviewer
has great discretion in
choosing questions to
ask each candidate.

Structured Interview
A selection interview that
consists of a predeter-
mined set of questions
for the interviewer to ask.

CHAPTER 6 Selecting Employees and Placing Them in Jobs 187

•  A situational interview is a structured interview in which
the interviewer describes a situation likely to arise on the job
and asks the candidate what he or she would do in that situa-
tion. This type of interview may have high validity in predict-
ing job performance.39

•  A behavior description interview (BDI) is a structured
interview in which the interviewer asks the candidate to
describe how he or she handled a type of situation in the past.
Questions about candidates’ actual experiences tend to have
the highest validity.40

The common setup for either a nondirected or structured inter-
view is for an individual (an HR professional or the supervisor for
the vacant position) to interview each candidate face to face. How-
ever, variations on this approach are possible. In a panel interview,
several members of the organization meet to interview each candi-
date. A panel interview gives the candidate a chance to meet more people and see how
people interact in that organization. It provides the organization with the judgments of
more than one person, to reduce the effect of personal biases in selection decisions. Panel
interviews can be especially appropriate in organizations that use teamwork. At the other
extreme, some organizations conduct interviews without any interviewers; they use a com-
puterized interviewing process. The candidate sits at a computer and enters replies to the
questions presented by the computer. Such a format eliminates a lot of personal bias—
along with the opportunity to see how people interact. Therefore, computer interviews are
useful for gathering objective data, rather than assessing people skills.

For suggestions on how to apply these techniques to conduct effective job inter-
views, see “HR How To.”

Advantages and Disadvantages of Interviewing
The wide use of interviewing is not surprising. People naturally want to see prospective
employees fi rsthand. As we noted in Chapter 1, the top qualities that employers seek in
new hires include communication skills and interpersonal skills. Talking face to face can
provide evidence of these skills. Interviews can give insights into candidates’ personalities
and interpersonal styles. They are more valid, however, when they focus on job knowledge
and skill. Interviews also provide a means to check the accuracy of information on the ap-
plicant’s résumé or job application. Asking applicants to elaborate about their experiences
and offer details reduces the likelihood of a candidate being able to invent a work history.41

Despite these benefi ts, interviewing is not necessarily the most accurate basis for
making a selection decision. Research has shown that interviews can be unreliable,
low in validity,42 and biased against a number of different groups.43 Interviews are
also costly. They require that at least one person devote time to interviewing each
candidate, and the applicants typically have to be brought to one geographic location.
Interviews are also subjective, so they place the organization at greater risk of discrimi-
nation complaints by applicants who were not hired, especially if those individuals
were asked questions not entirely related to the job. The Supreme Court has held that
subjective selection methods like interviews must be validated, using methods that
provide criterion-related or content validation.44

Organizations can avoid some of these pitfalls.45 Human resource staff should keep
the interviews narrow, structured, and standardized. The interview should focus on

Situational Interview
A structured interview
in which the interviewer
describes a situation
likely to arise on the job,
then asks the candidate
what he or she would do
in that situation.

Behavior Description
Interview (BDI)
A structured interview
in which the interviewer
asks the candidate to
describe how he or she
handled a type of situa-
tion in the past.

Panel Interview
Selection interview in
which several members
of the organization
meet to interview each

When interviewing candidates, it’s valid to ask about

willingness to travel if that is part of the job. Interview-

ers might ask questions about previous business travel

experiences and/or how interviewees handled situa-

tions requiring fl exibility and self-motivation (qualities

that would be an asset in someone who is traveling

alone and solving business problems on the road).


accomplishing a few goals, so that at the end of the interview, the organization has
ratings on several observable measures, such as ability to express ideas. The interview
should not try to measure abilities and skills—for example, intelligence—that tests
can measure better. As noted earlier, situational interviews are especially effective
for doing this. Organizations can prevent problems related to subjectivity by train-
ing interviewers and using more than one person to conduct interviews. Training
typically includes focusing on the recording of observable facts, rather than on
making subjective judgments, as well as developing interviewers’ awareness of
their biases.46 Using a structured system for taking notes or scoring responses may
help limit subjectivity and help the interviewer remember and justify an evaluation
later.47 Finally, to address costs of interviewing, many organizations videotape inter-
views and send the tapes (rather than the applicants) from department to department.

Amazon addresses subjectivity by bringing together multiple interviewer perspec-
tives. Candidates for jobs at headquarters typically undergo a series of phone and in-
person interviews with several Amazon employees. Interviewers include “bar raisers,”
who are not HR professionals but employees in any area of the company who have
demonstrated interviewing skills. A bar raiser is assigned to interview candidates who

Interviewing job candidates is time

consuming, and unfortunately, many

companies waste that time with

highly subjective, unplanned inter-

views that fail to reveal much rel-

evant information. Here are some

ideas for making the most of the

interview process:

• Plan questions ahead of time,

based on a job analysis. Be sure

the questions are related to the

competencies and behaviors re-

lated to successful performance

of the job. To keep interviews

to a reasonable length, prepare

about four to six questions for

a half-hour interview or eight

to 12 questions for a one-hour


• Ask the same specifi c questions

in every interview to fi ll a given

position. If the interview ques-

tions are consistent, candidates’

responses will be easier to


• Although every interview should

cover the same questions, be

fl exible enough to gather com-

plete and accurate information.

If a candidate’s response is un-

clear or incomplete, ask follow-

up questions.

• Ask candidates to provide spe-

cifi c examples of job-related

activities and accomplishments,

rather than generalize. For ex-

ample, “Tell me about a time

when you handled a customer

who was upset” will yield better

information than “Tell me more

about your current job.”

• Take notes during the interview.

Not only does it provide informa-

tion for later review, but it sets a

professional tone and shows the

candidate that you are paying


• Avoid distractions and interrup-

tions. Phone calls can wait until

after the interview. Interviewers

should demonstrate the same

respect they expect to receive

from job candidates.


1. Imagine that you have been

asked to interview candidates

to work as cashiers in a store.

You will meet with them at a

table in a conference room.

What should you bring to the


2. Your friend suggests that the

easiest approach to your task

would be to simply say, “Tell

me about yourself” and then

ask, “Why should we hire

you?” and let the candidates

do the rest. How would you

improve on this idea?

Sources: Alaina Brandenburger, “Hiring:

Easy Tips for Conducting an Effective In-

terview,” CBS Denver, February 17, 2014,; Chad Brooks,

“Seven Tips for Conducting an Effective

Job Interview,” Fox Small Business Center,

October 2, 2013,; Lauren Weber, “Now Hir-

ing? Tips for Conducting Interviews,” The

Wall Street Journal, December 4, 2012,

Interviewing Job Candidates Effectively

HR How To

CHAPTER 6 Selecting Employees and Placing Them in Jobs 189

will work in a department other than the bar raiser’s; the idea is that he or she will
think of issues that others have missed. This approach to interviewing assumes that the
various perspectives on each candidate will result in a more objective selection and that
the chosen candidate will succeed in more than one position at Amazon.48

Preparing to Interview
Organizations can reap the greatest benefi ts from interviewing if they prepare carefully.
A well-planned interview should be standardized, comfortable for the participants, and
focused on the job and the organization. The interviewer should have a quiet place in
which to conduct interviews without interruption. This person should be trained in how
to ask objective questions, what subject matter to avoid, and how to detect and handle
his or her own personal biases or other distractions in order to fairly evaluate candidates.

The interviewer should have enough documents to conduct a complete interview.
These should include a list of the questions to be asked in a structured interview, with
plenty of space for recording the responses. When the questions are prepared, it is also
helpful to determine how the answers will be scored. For example, if questions ask
how interviewees would handle certain situations, consider what responses are best in
terms of meeting job requirements. If the job requires someone who motivates oth-
ers, then a response that shows motivating behavior would receive a higher score. The
interviewer also should have a copy of the interviewee’s employment application and
résumé to review before the interview and refer to during the interview. If possible, the
interviewer should also have printed information about the organization and the job.
Near the beginning of the interview, it is a good idea to go over the job specifi cations,
organizational policies, and so on, so that the interviewee has a clearer understanding
of the organization’s needs.

The interviewer should schedule enough time to review the job requirements, dis-
cuss the interview questions, and give the interviewee a chance to ask questions. To
close, the interviewer should thank the candidate for coming and provide information
about what to expect—for example, that the organization will contact a few fi nalists
within the next two weeks or that a decision will be made by the end of the week.

Selection Decisions
After reviewing applications, scoring tests, conducting interviews, and checking refer-
ences, the organization needs to make decisions about which candidates to place in
which jobs. In practice, most organizations fi nd more than one qualifi ed candidate
to fi ll an open position. The selection decision typically combines ranking based on
objective criteria along with subjective judgments about which candidate will make the
greatest contribution.

How Organizations Select Employees
The selection decision should not be a simple matter of whom the supervisor likes best
or which candidate will take the lowest offer. Also, observing confi dence in job can-
didates does not necessarily mean they are competent. Rather, the people making the
selection should look for the best fi t between candidate and position. In general, the
person’s performance will result from a combination of ability and motivation. Often,
the selection is a choice among a few people who possess the basic qualifi cations. The
decision makers therefore have to decide which of those people have the best combina-
tion of ability and motivation to fi t in the position and in the organization as a whole.

LO 6-7 Explain how
employers carry out the
process of making a se-
lection decision.


The usual process for arriving at a selection decision is to gradually narrow the pool
of candidates for each job. This approach, called the multiple-hurdle model, is based
on a process such as the one shown earlier in Figure 6.1. Each stage of the process is a
hurdle, and candidates who overcome a hurdle continue to the next stage of the pro-
cess. For example, the organization reviews applications and/or résumés of all candi-
dates, conducts some tests on those who meet minimum requirements, conducts initial
interviews with those who had the highest test scores, follows up with additional inter-
views or testing, and then selects a candidate from the few who survived this process.
Another, more expensive alternative is to take most applicants through all steps of the
process and then to review all the scores to fi nd the most desirable candidates. With
this alternative, decision makers may use a compensatory model, in which a very
high score on one type of assessment can make up for a low score on another. Think
about how each of those two models would apply if you encountered the candidates
described in the “HR Oops!” feature.

Whether the organization uses a multiple-hurdle model or conducts the same assess-
ments on all candidates, the decision maker or makers need criteria for choosing among
qualifi ed candidates. An obvious strategy is to select the candidates who score highest
on tests and interviews. However, employee performance depends on motivation as well
as ability. It is possible that a candidate who scores very high on an ability test might be

Multiple-Hurdle Model
Process of arriving at
a selection decision by
eliminating some can-
didates at each stage of
the selection process.

Compensatory Model
Process of arriving at
a selection decision in
which a very high score
on one type of assess-
ment can make up for a
low score on another.

When managers or HR profession-

als select candidates to interview,

they are trying to fi nd the best match

among candidates with basic quali-

fi cations. Sometimes, unfortunately,

what happens in an interview sig-

nals a troubling lack of motivation

or business sense. For example,

interviewers are unimpressed with

someone who arrives at an inter-

view after making no effort to learn

anything about the company or pre-

pare any questions to ask.

Sometimes candidates’ behav-

ior demonstrates such poor moti-

vation and lack of judgment that it

resembles a bad comedy routine.

Interviewers have complained of

candidates checking Facebook or

wearing headphones during an in-

terview; one even took a phone call

about a job at another company.

Some make odd statements: one

told an interviewer she had taken

“too much Valium” beforehand, and

another said his personal hero was


Some memorable incidents re-

ported by interviewers are down-

right frightening. One applicant had

a car accident—hitting the employ-

er’s building. Another tried making a

secret recording of the interview. And

a third applicant, responding to an in-

terviewer’s prompt to “impress me,”

lit the interviewer’s newspaper on fi re.


1. With a multiple-hurdle

model, interviewing typically

comes late in the selection

process. Based on what you

know about the steps in the

process, why do you think

the candidates described

here made it past the earlier

hurdles? (For example, might

they have other qualifi cations,

or might there be problems

with the process?)

2. In the compensatory model,

a high score on one type of

assessment can make up

for a low score on another.

Assuming the candidates

described here had low scores

on their interviews, can you

think of a situation in which

a high score on some other

measure would make these

candidates the best choice for

a position? Explain.

Sources: Ryan Caldbeck, “These Five

Interview Blunders Will Probably Kill

Your Job Prospects,” Entrepreneur,

March 14, 2014, http://www.entre-; Adam Auriemma, “Fire,

Valium, Dentures: Job Interviews Gone

Wild,” The Wall Street Journal, January

16, 2014,;

CareerBuilder, “Employers Share Most

Memorable Interview Blunders,” news

release, January 16, 2014, http://www.

Interview Alarm Bells

HR Oops!



Over the past several years, hospitals in nearly a dozen

states have announced that they will no longer hire

workers who smoke. Rather than merely forbidding em-

ployees from smoking at work, they make abstinence

from smoking a requirement for selection. Some en-

force the policy by relying on candidates to tell the truth;

others use drug tests.

Reasons given in favor of the decision emphasize eco-

nomic considerations. For example, when the University

of Pennsylvania Health System announced its decision

to stop hiring smokers, it claimed that employees who

smoke cost the employer an average of $3,391 per year

in additional health care costs. It also noted that taking

breaks to smoke can be disruptive. Beyond the costs,

the health system pointed out that the smell of smoke

on employees’ clothing can be unpleasant for patients

and co-workers. Beyond the hospital’s reasoning, others

have measured higher costs of employing workers who

smoke, for reasons such as greater absenteeism or

poorer health while on the job. From a purely economic

standpoint, an employer might have to pay more to get

enough workers if it hires only nonsmokers, but if these

workers are less expensive in other ways, the employer

can still be ahead in terms of costs.

CHAPTER 6 Selecting Employees and Placing Them in Jobs 191

“overqualifi ed”—that is, the employee might be bored by the job the organization needs
to fi ll, and a less-able employee might actually be a better fi t. Similarly, a highly motivated
person might learn some kinds of jobs very quickly, potentially outperforming someone
who has the necessary skills. Furthermore, some organizations have policies of develop-
ing employees for career paths in the organization. Such organizations might place less
emphasis on the skills needed for a particular job and more emphasis on hiring candidates
who share the organization’s values, show that they have the people skills to work with
others in the organization, and are able to learn the skills needed for advancement.

Finally, organizations have choices about who will make the decision. Usually a
supervisor makes the fi nal decision, often alone. This person may couple knowledge of
the job with a judgment about who will fi t in best with others in the department. The
decision could also be made by a human resource professional using standardized, ob-
jective criteria. Especially in organizations that use teamwork, selection decisions may
be made by a work team or other panel of decision makers.

Communicating the Decision
The human resource department is often responsible for notifying applicants about
the results of the selection process. When a candidate has been selected, the organiza-
tion should communicate the offer to the candidate. The offer should include the job
responsibilities, work schedule, rate of pay, starting date, and other relevant details. If
placement in a job requires that the applicant pass a physical examination, the offer
should state that contingency. The person communicating the offer should also indi-
cate a date by which the candidate should reply with an acceptance or rejection of the
offer. For some jobs, such as management and professional positions, the candidate
and organization may negotiate pay, benefi ts, and work arrangements before they ar-
rive at a fi nal employment agreement.

The person who communicates this decision should keep accurate records of who
was contacted, when, and for which position, as well as of the candidate’s reply. The
HR department and the supervisor also should be in close communication about
the job offer. When an applicant accepts a job offer, the HR department must notify
the supervisor so that he or she can be prepared for the new employee’s arrival.

Some people have criticized these no-smoker poli-

cies as unfair. Critics point out that other off-work be-

havior also can drive up health costs. They say job

requirements can specify the same breaks for all em-

ployees, regardless of whether they will use the breaks

for smoking. They suggest that it would be more ethical

for hospitals to consider hiring smokers and offer sup-

port to those who are trying to quit. Another criticism is

that if smokers have trouble fi nding jobs, they might be

inclined to lie about it and therefore be less likely to get

help quitting. A related concern is whether the policy

of refusing to hire individuals is too drastic, compared

with other measures such as requiring smokers to pay

a greater share of health insurance benefi ts or offering

them a lower wage.


1. Who is affected by a hospital’s decision not to hire

smokers? Discuss whether this decision achieves

the greatest good for the greatest number of


2. How well does this policy meet the standard of

being fair and equitable? Explain.

Sources: Mark Pauly, “Refusing to Hire Workers Who Smoke:

An Economic Perspective,” Knowledge@Wharton, August 8,

2013,; Dave Warner,

“Pennsylvania Hospitals’ Ban on Hiring Smokers Prompts De-

bate,” Reuters, June 28, 2013,; Arthur

Caplan, “Barring Smokers from Hospital Jobs Unfair,” CNN

.com, March 1, 2013,


LO 6-1 Identify the elements of the selection process.
• Selection typically begins with a review of candi-

dates’ employment applications and résumés.
• The organization administers tests to candidates

who meet basic requirements.
• Qualifi ed candidates undergo one or more

• Organizations check references and conduct back-

ground checks to verify the accuracy of informa-
tion provided by candidates.

• A candidate is selected to fi ll each vacant position.
• Candidates who accept offers are placed in the po-

sitions for which they were selected.

LO 6-2 Defi ne ways to measure the success of a selection

• One criterion is reliability, meaning free from ran-
dom error, so that measurements are consistent.

• A selection method should also be valid, meaning
that performance on the measure (such as a test
score) is related to what the measure is designed
to assess (such as job performance).

• Criterion-related validity shows a correlation be-
tween test scores and job performance scores.

• Content validity shows consistency between the
test items or problems and the kinds of situations
or problems that occur on the job.

• Construct validity establishes that the test actually
measures a specifi ed construct, such as intelligence
or leadership ability, which is presumed to be as-
sociated with success on the job.

• A selection method also should be generalizable,
or applicable to more than one specifi c situation.

• Each selection method should have utility, mean-
ing it provides economic value greater than its cost.

• Selection methods should meet the legal require-
ments for employment decisions.

LO 6-3 Summarize the government’s requirements for
employee selection.

• The selection process must be conducted in a way
that avoids discrimination and provides access to
persons with disabilities.

• Selection methods must be valid for job perfor-
mance, and scores may not be adjusted to discrim-
inate against or give preference to any group.

• Questions may not gather information about a
person’s membership in a protected class, such as
race, sex, or religion, nor may the employer inves-
tigate a person’s disability status.

• Employers must respect candidates’ privacy rights
and ensure that they keep personal information
confi dential.

• Employers must obtain consent before conducting
background checks and notify candidates about
adverse decisions made as a result of background

LO 6-4 Compare the common methods used for select-
ing human resources.

• Nearly all organizations gather information
through employment applications and résumés.
These methods are inexpensive, and an application
form standardizes basic information received from
all applicants. The information is not necessarily
reliable, because each applicant provides the infor-
mation. These methods are most valid when evalu-
ated in terms of the criteria in a job description.

• References and background checks help verify the
accuracy of applicant-provided information.

192 PART 2 Acquiring, Training, and Developing Human Resources

• Employment tests and work samples are more ob-
jective. To be legal, any test must measure abilities
that actually are associated with successful job per-
formance. Employment tests range from general
to specifi c. General-purpose tests are relatively
inexpensive and simple to administer. Tests should
be selected to be related to successful job perfor-
mance and avoid charges of discrimination.

• Interviews are widely used to obtain information
about a candidate’s interpersonal and communica-
tion skills and to gather more detailed informa-
tion about a candidate’s background. Structured
interviews are more valid than unstructured ones.
Situational interviews provide greater validity
than general questions. Interviews are costly and
may introduce bias into the selection process. Or-
ganizations can minimize the drawbacks through
preparation and training.

LO 6-5 Describe major types of employment tests.
• Physical ability tests measure strength, endurance,

psychomotor abilities, and other physical abilities.
They can be accurate but can discriminate and are
not always job related.

• Cognitive ability tests, or intelligence tests, tend
to be valid, especially for complex jobs and those
requiring adaptability. They are a relatively low-
cost way to predict job performance but have been
challenged as discriminatory.

• Job performance tests tend to be valid but are not
always generalizable. Using a wide variety of job
performance tests can be expensive.

• Personality tests measure personality traits such
as extroversion and adjustment. Research supports
their validity for appropriate job situations, espe-
cially for individuals who score high on conscien-
tiousness, extroversion, and agreeableness. These
tests are relatively simple to administer and gener-
ally meet legal requirements.

• Organizations may use paper-and-pencil honesty
tests, which can predict certain behaviors, includ-
ing employee theft. Organizations may not use
polygraphs to screen job candidates.

• Organizations may also administer drug tests (if
all candidates are tested and drug use can be an
on-the-job safety hazard).

• Passing a medical examination may be a condi-
tion of employment, but to avoid discrimination
against persons with disabilities, organizations
usually administer a medical exam only after mak-
ing a job offer.

LO 6-6 Discuss how to conduct effective interviews.
• Interviews should be narrow, structured, and

• Interviewers should identify job requirements

and create a list of questions related to the

• Interviewers should be trained to recognize
their own personal biases and conduct objective

• Panel interviews can reduce problems related to
interviewer bias.

• Interviewers should put candidates at ease in
a comfortable place that is free of distractions.
Questions should ask for descriptions of relevant
experiences and job-related behaviors.

• The interviewers also should be prepared to provide
information about the job and the organization.

LO 6-7 Explain how employers carry out the process of
making a selection decision.

• The organization should focus on the objective of
fi nding the person who will be the best fi t with the
job and organization. This includes an assessment
of ability and motivation.

• Decision makers may use a multiple-hurdle model
in which each stage of the selection process elimi-
nates some of the candidates from consideration
at the following stages. At the fi nal stage, only a
few candidates remain, and the selection decision
determines which candidate is the best fi t.

• An alternative is a compensatory model, in which
all candidates are evaluated with all methods. A
candidate who scores poorly with one method
may be selected if he or she scores very high on
another measure.


personnel selection, 168
reliability, 170
validity, 170
criterion-related validity, 171
predictive validation, 171

concurrent validation, 172
content validity, 172
construct validity, 172
generalizable, 172
utility, 173

Immigration Reform and Control
Act of 1986, 175

aptitude tests, 181
achievement tests, 181
cognitive ability tests, 182

CHAPTER 6 Selecting Employees and Placing Them in Jobs 193

assessment center, 183
nondirective interview, 186
structured interview, 186

situational interview, 187
behavior description interview

(BDI), 187

panel interview, 187
multiple-hurdle model, 190
compensatory model, 190


1. What activities are involved in the selection pro-
cess? Think of the last time you were hired for a
job. Which of those activities were used in selecting
you? Should the organization that hired you have
used other methods as well? (LO 6-1)

2. Why should the selection process be adapted to fi t
the organization’s job descriptions? (LO 6-1)

3. Choose two of the selection methods identifi ed in
this chapter. Describe how you can compare them
in terms of reliability, validity, ability to generalize,
utility, and compliance with the law. (LO 6-2)

4. Why does predictive validation provide better in-
formation than concurrent validation? Why is this
type of validation more diffi cult? (LO 6-2)

5. How do U.S. laws affect organizations’ use of each
of the employment tests? Interviews? (LO 6-3)

6. Suppose your organization needs to hire several
computer programmers, and you are reviewing ré-
sumés you obtained from an online service. What
kinds of information will you want to gather from
the “work experience” portion of these résumés?
What kinds of information will you want to gather
from the “education” portion of these résumés?
What methods would you use for verifying or ex-
ploring this information? Why would you use those
methods? (LO 6-4)

7. For each of the following jobs, select the two kinds
of tests you think would be most important to in-
clude in the selection process. Explain why you
chose those tests. (LO 6-5)

a. City bus driver
b. Insurance salesperson

c. Member of a team that sells complex high-tech
equipment to manufacturers

d. Member of a team that makes a component of
the equipment in (c)

8. Suppose you are a human resource professional at
a large retail chain. You want to improve the com-
pany’s hiring process by creating standard designs
for interviews, so that every time someone is in-
terviewed for a particular job category, that person
answers the same questions. You also want to make
sure the questions asked are relevant to the job and
maintain equal employment opportunity. Think of
three questions to include in interviews for each of
the following jobs. For each question, state why you
think it should be included. (LO 6-6)

a. Cashier at one of the company’s stores
b. Buyer of the stores’ teen clothing line
c. Accounts payable clerk at company headquarters

9. How can organizations improve the quality of
their interviewing so that interviews provide valid
information? (LO 6-6)

10. Some organizations set up a selection process that
is long and complex. In some people’s opinion,
this kind of selection process not only is more
valid but also has symbolic value. What can the
use of a long, complex selection process symbol-
ize to job seekers? How do you think this would
affect the organization’s ability to attract the best
employees? (LO 6-7)

How Gild Aims to Create Golden Opportunities for Underappreciated Workers
No matter how hard employers try to provide equal op-
portunity, total fairness is diffi cult. For example, com-
panies that rely on referrals or recruiting at top-ranked
schools exclude great workers who did not graduate
from the right school or don’t know a current employee.
Luca Bonmassar and Sheeroy Desai looked at this
problem and saw opportunity: big data can objectively

identify who possesses specifi c skills in high-demand
fi elds. So Bonmassar and Desai founded Gild, a San
Francisco–based company, and hired Vivienne Ming
as its chief scientist. Ming is deeply interested in Gild’s
mission because she has experienced the assumptions
that many humans make. Ming, who holds a doctorate
in psychology and computational neuroscience, grew up


194 PART 2 Acquiring, Training, and Developing Human Resources

as a male and underwent gender transition as an adult.
When she began living as a woman, changes occurred
in the way she was treated—for example, students asked
her fewer math-related questions. She sees data as a way
to reduce “wasted talent” by limiting bias in employ-
ment decisions.

Gild looks for publicly available data about computer
programmers. It analyzes the data to create algorithms
that identify the best programmers. For millions of com-
puter programmers, it compiles hundreds of variables
such as the quality of computer code the individual has
written and posted for public use, the number of times
someone uses the code, productivity measures for paid
projects, the language used in discussing technical issues
on discussion boards, and popularity ratings for online
advice. Its algorithm computes a score of each person’s
skill. Employers can use the score in conjunction with
other measures to make hiring decisions. Eventually,
Gild hopes to create algorithms for other jobs, such as
website designer, fi nancial analyst, or graphic designer.

Gild has used its algorithm in its own selection de-
cisions. The company identifi ed the highest-scoring
job candidate in Southern California—the owner of a
T-shirt business who became fed up with high school,
dropped out, taught himself to run a business and
write code for its website, and became active on web-
sites where computer programmers trade ideas. Gild
interviewed him and hired him for his programming
brilliance, acknowledging that it is a challenge for this
independent-minded individual to thrive in a corporate

This example points to the main critique of Gild’s
business. Even if the algorithm accurately measures
technical skills, those are not the only requirements for
success. A person also has to function well within the

Nevertheless, Ming believes that by expanding the
use of big data, Gild is doing good. It creates oppor-
tunities for people to advance based on talent. Ming
even believes that similar analytics can identify talent
in children so that high-potential but underprivileged
children can be paired with mentors, creating opportu-
nities in communities where there had previously been
little hope.

1. Review the criteria for a successful selection

method: reliable, valid, generalizable, practical, and
legal. Evaluate how Gild’s algorithm addresses or
should address these criteria.

2. Recommend how an employer could use interviews
along with Gild’s scoring method to arrive at fair
hiring decisions.

Sources: Tom Foremski, “Gild Says Its Algorithms Could Be Used to Lift
People Out of Poverty,” ZDNet, April 11, 2014,;
Don Peck, “They’re Watching You at Work,” Atlantic, December 2013,; “Algorithm Finds Top Programmers, No
Resume Required,” Here and Now, May 21, 2013, http://hereandnow; Matt Richtel, “How Big Data Is Playing Recruiter for Special-
ized Workers,” The New York Times, April 27, 2013, http://www.nytimes
.com; Mohana Ravindranath, “Facebook, Amazon Recruiting Programmers
Based on Social ‘Footprint,’” Washington Post, December 14, 2012, http://

Hiring for an Oil Boom
North Dakota is experiencing an oil boom as drilling
companies apply fracking technology and horizontal
drilling to the Bakken shale formation in the state’s west-
ern region. The state has surpassed Alaska as the second
largest oil producer behind only Texas. Its unemploy-
ment rate is under 3%, and in the town of Williston—the
fastest-growing small U.S. city—it is below 1%. North
Dakota offi cials recently said 25,000 jobs remain unfi lled.

Those vacancies are at the more than 150 oil and
gas operators operating in North Dakota, the hundreds
of subcontractors providing them with labor, and the
services businesses growing to meet demand. The state
forecasts a peak of about 60,000 drilling jobs, which by
2025 will fall to 50,000 positions needed for longer-
term oil production. Another 20,000 jobs are indirectly
related to drilling—for example, the restaurant, retail,
and health care jobs needed for a growing community.

Given that just about everyone who wants a job is al-
ready working, employers are struggling to fi ll vacancies.
One solution is to lure talent from other states, but many
workers are leery of North Dakota’s harsh climate, and
even those who come discover that housing is scarce and
expensive. Furthermore, employees may not stay with a
company long. Turnover is high as workers jump from
job to job, improving their earnings with each move.

In this environment, employers use a variety of
tactics. To limit turnover, they may study résumés for
signs that employees are not job hopping. Some com-
panies relax their job specifi cations. One company, for
example, recruited a receptionist to be an HR worker,
though she had no experience in the fi eld. Others pro-
mote workers to management positions without train-
ing them for the responsibility. In contrast, for the
high-paying jobs at gas and oil companies, employers


CHAPTER 6 Selecting Employees and Placing Them in Jobs 195

screen out inexperienced applicants and select those
who have worked in the fi eld, often with subcontrac-
tors. Truck drivers, another high-growth occupation,
must hold a commercial license. Mechanics servicing
wells need clean driving records and technical skills.

Employers must weigh the need to meet qualifi –
cations against the need to convince even marginally
qualifi ed workers to take (and keep) the job. While job
candidates need to sell themselves to employers, com-
panies need to sell themselves to the workers. Some of
them buy or build housing for their workers, or they
pay a housing allowance because rents in the area are
so high. They offer generous pay packages, such as $17
for an entry-level job at Walmart or a signing bonus
to work in a restaurant. Unfortunately, attracting pay-
focused employees means company workers are likely
to be attracted to slightly higher wages somewhere else,
once they gain a little job experience.

1. How could an employer’s interviewing methods

help the company address the challenges of hiring
during a boom when unemployment rates are near

2. If you were advising a North Dakota company
about its selection process, would you advise it to
relax its selection criteria during the oil boom?
Why or why not?

Sources: Associated Press, “North Dakota Desperate for Workers to Fill
Empty Jobs,” AOL Jobs, March 18, 2014,; Ashe Schow,
“Another Hiring Surge in North Dakota Thanks to Shale Oil,” Washington

Examiner, December 31, 2013,;
Jessica Holdman, “Oil Service Companies on Hiring Blitz,” Bismarck (ND)

Tribune, December 26, 2013,; Dori Meinert,
“Hiring Frenzy,” HR Magazine, June 1, 2013, http://www.shrm/org.

196 PART 2 Acquiring, Training, and Developing Human Resources

Kinaxis Chooses Sales Reps with Personality
Kinaxis is a software company headquartered in
Ottawa, Ontario, that sells to clients around the
world. Its specialty is software for supply chain
management—all the processes and relationships
through which companies obtain supplies as needed
and get their products to customers on time and at
minimal cost. This is a sophisticated type of prod-
uct, tailored to a company’s specifi c needs. There-
fore, Kinaxis depends on salespeople who understand
how businesses work, who listen carefully to identify
needs, and who provide excellent customer service to
maintain long-term business relationships.

Recently, Bob Dolan, vice president for sales at
Kinaxis, needed to hire a sales team to serve clients in
North America. The company had just one salesperson
serving the continent, and Dolan wanted to add four
more. He received about 100 résumés and wanted to
select from these. He started by reviewing the résumés
against job requirements and selected 20 candidates for
a fi rst round of interviews. The interview process helped
Dolan cut the list of candidates in half, so he needed
another way to narrow his options.

Dolan decided his next step would be personality
testing. He hired a fi rm called Opus Productivity Solu-
tions to administer a test called PDP ProScan to the
remaining 10 candidates. In addition, Dolan himself
took the test and had his current sales rep do the same.
The existing salesperson was doing an excellent job, so
the results of his test could help Dolan and Opus pin-
point the characteristics of someone likely to succeed in
sales at Kinaxis. Based an analysis of all the results, Opus

created a benchmark of traits associated with success in
the job.

Representatives from Opus also discussed the test
results with each candidate, giving each one a chance to
disagree with the scores. No one did. Dolan observed
that all the candidates scored high in assertiveness and
extroversion—not surprising for people in sales. In ad-
dition, two of them scored above the benchmark in con-
formity and below the benchmark in dominance. Those
results suggested to Dolan that these candidates might
be so eager to please that they would be quick to give in
to whatever customers requested—a pattern that could
become costly for the company. Dolan eliminated those
two candidates.

That meant Dolan still had eight candidates to
fi ll four positions. He asked each one to give him
the names of major accounts he or she had signed up
in the previous two years. Four candidates were able to
come up with three or four large clients. Those were the
candidates Dolan hired.

Since then, Dolan says his experience with personal-
ity testing has only reinforced his belief that this selec-
tion method helps Kinaxis identify the best candidates.
For example, one sales rep had scored low on “pace,”
indicating that the individual might lack the patience
needed for the slow cycles required to close a sale of a
complex software system. Dolan hoped the issue could
be overcome if he provided enough coaching, but in
fact, the sales rep sometimes behaved impatiently, an-
noying prospects. After three years of trying to help him
grow into the job, Dolan laid him off.


CHAPTER 6 Selecting Employees and Placing Them in Jobs 197

The company’s commitment to careful selection is
expressed on its website: “As a growing and determined
company, we’re always looking for people eager to push
the limits each day of what’s possible.” Kinaxis was re-
cently named one of Canada’s top employers for young

1. What selection methods did Bob Dolan use for hir-

ing salespeople? Did he go about using these meth-
ods in the best order? What, if anything, would you
change about the order of the methods used?

2. What were the advantages to Kinaxis of using per-
sonality tests to help select sales representatives?
What were the disadvantages?

3. Given the information gathered from the selection
methods, what process did Dolan use to make his
selection decision? What improvements can you rec-
ommend to this process for decisions to hire sales
reps in the future?

Sources: Susan Greco, “Personality Testing for Sales Recruits,” Inc., March
1, 2009,; Kinaxis Web site, Corporate Overview and Careers
pages,, accessed May 27, 2014.

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CHAPTER 6 Selecting Employees and Placing Them in Jobs 199

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39. M. A. McDaniel, F. P. Morgeson, E. G. Finnegan, M. A.
Campion, and E. P. Braver man, “Use of Situational Judg-
ment Tests to Predict Job Performance: A Clarifi cation of
the Literature,” Journal of Applied Psychology 86 (2001), pp.
730–40; J. Clavenger, G. M. Perreira, D. Weichmann, N.
Schmitt, and V. S. Harvey, “Incremental Validity of Situ-
ational Judgment Tests,” Journal of Applied Psychology 86
(2001), pp. 410–17.

40. M. A. Campion, J. E. Campion, and J. P. Hudson, “Structured
Interviewing: A Note of Incremental Validity and Alternative
Question Types,” Journal of Applied Psychology 79 (1994), pp.
998–1002; E. D. Pulakos and N. Schmitt, “Experience-Based
and Situational Interview Questions: Studies of Validity,”
Personnel Psychology 48 (1995), pp. 289–308; A. P. J. Ellis, B. J.
West, A. M. Ryan, and R. P. DeShon, “The Use of Impression
Management Tactics in Structured Interviews: A Function of
Question Type?” Journal of Applied Psychology 87 (2002), pp.

41. N. Schmitt, F. L. Oswald, B. H. Kim, M. A. Gillespie, L. J.
Ramsey, and T. Y Yoo, “The Impact of Elaboration on So-
cially Desirable Responding and the Validity of Biodata Mea-
sures,” Journal of Applied Psychology 88 (2003), pp. 979–88; N.
Schmitt and C. Kunce, “The Effects of Required Elabora-
tion of Answers to Biodata Questions,” Personnel Psychology 55
(2002), pp. 569–87.

42. Hunter and Hunter, “Validity and Utility of Alternative Pre-
dictors of Job Performance.”

43. R. Pingitore, B. L. Dugoni, R. S. Tindale, and B. Spring, “Bias
against Overweight Job Applicants in a Simulated Interview,”
Journal of Applied Psychology 79 (1994), pp. 184–90.

44. Watson v. Fort Worth Bank and Trust, 108 Supreme Court
2791 (1988).

45. M. A. McDaniel, D. L. Whetzel, F. L. Schmidt, and S. D. Mau-
rer, “The Validity of Employment Interviews: A Comprehen-
sive Review and Meta-Analysis,” Journal of Applied Psychology 79
(1994), pp. 599–616; A. I. Huffcutt and W. A. Arthur, “Hunter
and Hunter (1984) Revisited: Interview Validity for Entry-
Level Jobs,” Journal of Applied Psychology 79 (1994), pp. 184–90.

46. Y. Ganzach, A. N. Kluger, and N. Klayman, “Making Deci-
sions from an Interview: Expert Measurement and Mechani-
cal Combination,” Personnel Psychology 53 (2000), pp. 1–21;
G. Stasser and W. Titus, “Effects of Information Load and
Percentage of Shared Information on the Dissemination of
Unshared Information during Group Discussion,” Journal of
Personality and Social Psychology 53 (1987), pp. 81–93.

47. C. H. Middendorf and T. H. Macan, “Note-Taking in
the Interview: Effects on Recall and Judgments,” Jour-
nal of Applied Psychology 87 (2002), pp. 293–303; K. G.
Melchers, N. Lienhardt, M. Von Aartburg, and M. Klein
mann, “Is More Structure Really Better? A Comparison of
Frame of Reference Training and Descriptively Anchored
Rating Scales to Improve Interviewers’ Rating Quality,” Per-
sonnel Psychology 64 (2011), pp. 53–87.

48. Greg Bensinger, “Amazon’s Current Employees Raise the
Bar for New Hires,” The Wall Street Journal, January 7, 2014,

Training Employees7

If you listen to or read the comments of employers, you will often hear about a
“skills shortage,” especially in manufacturing and high-tech jobs. This worry might
seem strange in light of persistently high unemployment, but many companies re-
port difficulty in finding qualified people to fill all their open positions. However,
some business experts and even some employers criticize companies for having
unrealistic expectations. Employers today are apt to look for workers who have
already performed the job requirements elsewhere; in the past, companies were
more likely to hire hardworking, intelligent individuals and train them to perform the
duties of the job. In the words of Grainger CEO James Ryan, some companies have
been “on the sidelines” when it comes to training. They need to “get off the bench”
and “take some responsibility in investing in training and education.”1

One company not loafing on the sidelines is Microsoft. An assessment of sales
representatives’ performance showed they had excellent technical knowledge of the
company’s products but had difficulty discussing solutions with Microsoft’s business
customers. Instead of complaining about a skills gap, Microsoft set up a training pro-
gram called Pitch Perfect. The program includes online courses that teach skills in
identifying customers’ needs and showing how Microsoft can meet those needs. Sales-
people also pair up for role-playing exercises, which are customized for each group,
and they receive coaching from trained Microsoft managers. Thousands of Microsoft
sales reps have participated in Pitch Perfect, and they say their communication skills
have improved—a result that should translate directly into higher sales.2

What Do I Need to Know?
After reading this chapter, you should be able to:

LO 7-1 Discuss how to link training programs to
organizational needs.

LO 7-2 Explain how to assess the need for training.

LO 7-3 Explain how to assess employees’ readiness for

LO 7-4 Describe how to plan an effective training

LO 7-5 Compare widely used training methods.

LO 7-6 Summarize how to implement a successful
training program.

LO 7-7 Evaluate the success of a training program.

LO 7-8 Describe training methods for employee
orientation and diversity management.

CHAPTER 7 Training Employees 201

So that sales employees can contribute better to the company’s growth strategy,
Microsoft provides them with the right kind of training. Training consists of an or-
ganization’s planned efforts to help employees acquire job-related knowledge, skills,
abilities, and behaviors, with the goal of applying these on the job. A training pro-
gram may range from formal classes to one-on-one mentoring, and it may take place
on the job or at remote locations. No matter what its form, training can benefi t the
organization when it is linked to organizational needs and when it motivates

This chapter describes how to plan and carry out an effective training program. We
begin by discussing how to develop effective training in the context of the organiza-
tion’s strategy. Next, we discuss how organizations assess employees’ training needs.
We then review training methods and the process of evaluating a training program.
The chapter concludes by discussing some special applications of training: orientation
of new employees and the management of diversity.

Training Linked to Organizational Needs
The nature of the modern business environment makes training more important
today than it ever has been. Rapid change, especially in the area of technology, re-
quires that employees continually learn new skills. The new psychological contract,
described in Chapter 2, has created the expectation that employees invest in their
own career development, which requires learning opportunities. Growing reliance
on teamwork creates a demand for the ability to solve
problems in teams, an ability that often requires formal
training. Finally, the diversity of the U.S. population,
coupled with the globalization of business, requires that
employees be able to work well with people who are dif-
ferent from them. Successful organizations often take
the lead in developing this ability.

With training so essential in modern organizations, it
is important to provide training that is effective. An effec-
tive training program actually teaches what it is designed
to teach, and it teaches skills and behaviors that will help
the organization achieve its goals. To achieve those goals,
HR professionals approach training through instruc-
tional design—a process of systematically developing
training to meet specifi ed needs.3

A complete instructional design process includes
the steps shown in Figure 7.1. It begins with an assess-
ment of the needs for training—what the organization
requires that its people learn. Next, the organization
ensures that employees are ready for training in terms
of their attitudes, motivation, basic skills, and work en-
vironment. The third step is to plan the training pro-
gram, including the program’s objectives, instructors,
and methods. The organization then implements the
program. Finally, evaluating the results of the training
provides feedback for planning future training pro-
grams. For an example of a company that effectively
uses this process, see the “Best Practices” box.

An organization’s
planned efforts to help
employees acquire job-
related knowledge, skills,
abilities, and behaviors,
with the goal of applying
these on the job.

LO 7-1 Discuss how to
link training programs to
organizational needs.

Instructional Design
A process of systemati-
cally developing training
to meet specifi ed needs.

Figure 7.1
Stages of Instructional



To carry out this process more effi ciently and effectively, a growing number of
organizations are using a learning management system (LMS), a computer ap-
plication that automates the administration, development, and delivery of a com-
pany’s training programs.4 Managers and employees can use the LMS to identify
training needs and enroll in courses. LMSs can make training programs more
widely available and help companies reduce travel and other costs by providing
online training. Administrative tools let managers track course enrollments and
program completion. The system can be linked to the organization’s performance
management system to plan for and manage training needs, training outcomes, and
associated rewards together.

Learning Management
System (LMS)
A computer applica-
tion that automates the
administration, develop-
ment, and delivery of
training programs.

ConAgra Foods has a strategic

goal to be the fastest-growing

food company (in terms of sales

and profi ts) by 2017. The com-

pany, whose brands include Chef

Boyardee, Healthy Choice, and

Hunt’s, has been acquiring other

businesses, helping it grow to more

than 25,000 employees. HR manag-

ers on ConAgra’s Enterprise Learn-

ing team realized they would need a

strategy to ensure that the company

has the skills needed to support

further growth. So ConAgra devel-

oped a strategy for sharing training

resources among local facilities to

meet each employee’s individual

training needs.

In the sales function, for ex-

ample, ConAgra has a goal that

all of its salespeople will know

their product line and customers

so well they can serve as trusted

advisers. This requires that sales-

people understand fi nancial data,

specifi cally how sales of their

products contribute to ConAgra’s

profi ts. The Enterprise Learning

team pinpointed the required skills

and knowledge, using that infor-

mation as the basis for creating a

three-stage training program. The

fi rst stage is a set of simulations,

videos, and reading materials

to support classroom training in

basic business principles. Next,

fi ve sales teams (about 100 partic-

ipants each) gathered for two-day

workshops at which they applied

the basic principles, engaging in

role-plays to practice what they

were learning. To sustain what

was learned, managers in the fi nal

stage of training set goals for the

salespeople and monitored their

performance. Since the training,

the Enterprise Learning team has

measured a substantial improve-

ment in profi ts among the trained


Other training programs target

management. For the fi rst layer

of management, front-line super-

visors, ConAgra established the

Foundations of Leadership pro-

gram. This program addresses

how to become a leader of individ-

uals and teams—skills a front-line

supervisor may not yet have prac-

ticed. The goal for Foundations

of Leadership is that supervisors

will understand what is involved in

being a leader at ConAgra Foods

so their groups can deliver bet-

ter results. Surveys of employ-

ees provide feedback used for

additional training and efforts to

sustain what supervisors have

learned. The Enterprise Learning

team also measured lower aver-

age turnover of employees whose

supervisors participated in Foun-

dations of Leadership, saving an

estimated $116,100 for every class

of 28 supervisors trained. Another

program, called Managing Talent

for Results, used a board game to

teach 500 managers how to im-

prove business results by choosing

the best people to fi ll positions as

needs open up.


1. What were the training

objectives for salespeople?

How did ConAgra measure the

results of training them?

2. Why was there a need to train

fi rst-line supervisors? What

results of that training program

did ConAgra observe?

Sources: ConAgra Foods, careers page,,

accessed May 29, 2014; “2013 Chief

Learning Offi cer Learning in Practice

Awards,” Chief Learning Offi cer, De-

cember 2013, pp. 33–53; Kris Zilliox,

“Strategies for Success,” Training, No-

vember 2013,;

Lorri Freifeld, “ConAgra Foods Activates

Sales GMs,” Training, April 1, 2013,

A Strategic Approach to Learning at ConAgra Foods

Best Pract ices

CHAPTER 7 Training Employees 203

Needs Assessment
Instructional design logically should begin with a needs assessment, the process of
evaluating the organization, individual employees, and employees’ tasks to determine
what kinds of training, if any, are necessary. As this defi nition indicates, the needs as-
sessment answers questions in three broad areas5:

1. Organization—What is the context in which training will occur?
2. Person—Who needs training?
3. Task—What subjects should the training cover?

The answers to these questions provide the basis for planning an effective training program.
A variety of conditions may prompt an organization to conduct a needs assessment.

Management may observe that some employees lack basic skills or are performing
poorly. Decisions to produce new products, apply new technology, or design new jobs
should prompt a needs assessment because these changes tend to require new skills.
The decision to conduct a needs assessment also may be prompted by outside forces,
such as customer requests or legal requirements.

The outcome of the needs assessment is a set of decisions about how to address the
issues that prompted the needs assessment. These decisions do not necessarily include
a training program, because some issues should be resolved through methods other
than training. For example, suppose a company uses delivery trucks to transport anes-
thetic gases to medical facilities, and a driver of one of these trucks mistakenly hooks
up the supply line of a mild anesthetic from the truck to the hospital’s oxygen sys-
tem, contaminating the hospital’s oxygen supply. This performance problem prompts
a needs assessment. Whether or not the hospital decides to provide more training will
depend partly on the reasons the driver erred. The driver may have hooked up the sup-
ply lines incorrectly because of a lack of knowledge about the appropriate line hookup,
anger over a request for a pay raise being denied, or mislabeled valves for connecting
the supply lines. Out of these three possibilities, only the lack of knowledge can be
corrected through training. Other outcomes of a needs assessment might include plans
for better rewards to improve motivation, better hiring decisions, and better safety

The remainder of this chapter discusses needs assessment and then what the or-
ganization should do when assessment indicates a need for training. The possibilities
for action include offering existing training programs to more employees; buying or
developing new training programs; and improving existing training programs. Before
we consider the available training options, let’s examine the elements of the needs as-
sessment in more detail.

Organization Analysis
Usually, the needs assessment begins with the organization analysis. This is a pro-
cess for determining the appropriateness of training by evaluating the characteristics
of the organization. The organization analysis looks at training needs in light of the
organization’s strategy, resources available for training, and management’s support for
training activities.

Training needs will vary depending on whether the organization’s strategy is
based on growing or shrinking its personnel, whether it is seeking to serve a broad
customer base or focusing on the specifi c needs of a narrow market segment, and
various other strategic scenarios. An organization that concentrates on serving a
niche market may need to continually update its workforce on a specialized skills

LO 7-2 Explain how
to assess the need for

Needs Assessment
The process of evaluat-
ing the organization,
individual employees,
and employees’ tasks
to determine what kinds
of training, if any, are

Organization Analysis
A process for determin-
ing the appropriateness
of training by evaluating
the characteristics of the

204 PART 2 Acquiring, Training, and Developing Human Resources

set. A company that is cutting costs with a downsizing strategy may need to train
employees who will be laid off in job search skills. The employees who remain
following the downsizing may need cross-training so that they can handle a wider
variety of responsibilities.

Anyone planning a training program must consider whether the organization has
the budget, time, and expertise for training. For example, if the company is installing
computer-based manufacturing equipment in one of its plants, it can ensure that it has
the necessary computer-literate employees in one of three ways. If it has the techni-
cal experts on its staff, they can train the employees affected by the change. Or the
company may use testing to determine which of its employees are already computer
literate and then replace or reassign employees who lack the necessary skills. The third
choice is to purchase training from an outside individual or organization.

Even if training fi ts the organization’s strategy and budget, it can be viable only if
the organization is willing to support the investment in training. Managers increase
the success of training when they support it through such actions as helping trainees
see how they can use their newly learned knowledge, skills, and behaviors on the job.6
Conversely, the managers will be most likely to support training if the people planning
it can show that it will solve a signifi cant problem or result in a signifi cant improve-
ment, relative to its cost. Managers appreciate training proposals with specifi c goals,
timetables, budgets, and methods for measuring success.

Person Analysis
Following the organizational assessment, needs assessment turns to the remaining
areas of analysis: person and task. The person analysis is a process for determining

Person Analysis
A process of determining
individuals’ needs and
readiness for training.

Pfi zer employees go through a representative training phase which teaches them about different Pfi zer products

and how to market them. Success at a drug company such as Pfi zer depends on the frequent introduction of new

medicines and the expertise of sales representatives who tell health care professionals about those products.

CHAPTER 7 Training Employees 205

individuals’ needs and readiness for training. It involves answering several

• Do performance defi ciencies result from a lack of knowledge, skill, or ability? (If so,
training is appropriate; if not, other solutions are more relevant.)

• Who needs training?
• Are these employees ready for training?

The answers to these questions help the manager identify whether training is ap-
propriate and which employees need training. In certain situations, such as the intro-
duction of a new technology or service, all employees may need training. However,
when needs assessment is conducted in response to a performance problem, training
is not always the best solution.

The person analysis is therefore critical when training is considered in response
to a performance problem. In assessing the need for training, the manager should
identify all the variables that can infl uence performance. The primary variables are the
person’s ability and skills, his or her attitudes and motivation, the organization’s input
(including clear directions, necessary resources, and freedom from interference and
distractions), performance feedback (including praise and performance standards), and
positive consequences to motivate good performance. Of these variables, only ability
and skills can be affected by training. Therefore, before planning a training program,
it is important to be sure that any performance problem results from a defi ciency in
knowledge and skills. Otherwise, training dollars will be wasted, because the training
is unlikely to have much effect on performance.

The person analysis also should determine whether employees are ready to un-
dergo training. In other words, the employees to receive training not only should
require additional knowledge and skill, but must be willing and able to learn. (After
our discussion of the needs assessment, we will explore the topic of employee readiness
in greater detail.)

Task Analysis
The third area of needs assessment is task analysis, the process of identifying the
tasks, knowledge, skills, and behaviors that training should emphasize. Usually, task
analysis is conducted along with person analysis. Understanding shortcomings in per-
formance usually requires knowledge about the tasks and work environment as well as
the employee.

To carry out the task analysis, the HR professional looks at the conditions in
which tasks are performed. These conditions include the equipment and environ-
ment of the job, time constraints (for example, deadlines), safety considerations,
and performance standards. These observations form the basis for a description
of work activities, or the tasks required by the person’s job. For a selected job, the
analyst interviews employees and their supervisors to prepare a list of tasks per-
formed in that job. Then the analyst validates the list by showing it to employees,
supervisors, and other subject-matter experts and asking them to complete a ques-
tionnaire about the importance, frequency, and diffi culty of the tasks. For each task
listed, the subject-matter expert uses a sliding scale (for example, 0 5 task never
performed to 5 5 task often performed) to rate the task’s importance, frequency,
and diffi culty.7

The information from these questionnaires is the basis for determining which
tasks will be the focus of the training. The person or committee conducting the needs

Task Analysis
The process of identify-
ing and analyzing tasks
to be trained for.

206 PART 2 Acquiring, Training, and Developing Human Resources

assessment must decide what levels of importance, frequency, and diffi culty signal a
need for training. Logically, training is most needed for tasks that are important, fre-
quent, and at least moderately diffi cult. For each of these tasks, the analysts must iden-
tify the knowledge, skills, and abilities required to perform the task. This information
usually comes from interviews with subject-matter experts, such as employees who
currently hold the job.

Readiness for Training
Effective training requires not only a program that addresses real needs, but also a
condition of employee readiness. Readiness for training is a combination of em-
ployee characteristics and positive work environment that permit training. It exists
when employees are able and eager to learn and when their organizations encourage

Employee Readiness Characteristics
To be ready to learn, employees need basic learning skills, especially cognitive ability,
which includes being able to use written and spoken language, solve math problems,
and use logic to solve problems. Ideally, the selection process identifi ed job candidates
with enough cognitive ability to handle not only the requirements for doing a job, but
also the training associated with that job. However, recent forecasts of the skill levels
of the U.S. workforce indicate that many companies will have to work with employees
who lack basic skills.8 For example, they may have to provide literacy training or access
to classes teaching math skills before some employees can participate in job-related

Employees learn more from training programs when they are highly motivated to
learn—that is, when they really want to learn the content of the training program.9
Employees tend to feel this way if they believe they are able to learn, see potential
benefi ts from the training program, are aware of their need to learn, see a fi t between
the training and their career goals, and have the basic skills needed for participating
in the program. Managers can infl uence a ready attitude in a variety of ways—for
example, by providing feedback that encourages employees, establishing rewards for
learning, and communicating with employees about the organization’s career paths
and future needs.

Work Environment
Readiness for training also depends on two broad characteristics of the work environ-
ment: situational constraints and social support.10 Situational constraints are the limits
on training’s effectiveness that arise from the situation or the conditions within the
organization. Constraints can include a lack of money for training, lack of time for
training or practicing, and failure to provide proper tools and materials for learning or
applying the lessons of training. Conversely, trainees are likely to apply what they learn
if the organization gives them opportunities to use their new skills and if it rewards
them for doing so.11

Social support refers to the ways the organization’s people encourage training, in-
cluding giving trainees praise and encouraging words, sharing information about
participating in training programs, and expressing positive attitudes toward the orga-
nization’s training programs. Table 7.1 summarizes some ways in which managers can
support training.

LO 7-3 Explain how
to assess employees’
readiness for training.

Readiness for Training
A combination of em-
ployee characteristics
and positive work en-
vironment that permit

CHAPTER 7 Training Employees 207

Support can also come from employees’ peers. Readiness for training is greater in an
organization where employees share knowledge, encourage one another to learn, and
have a positive attitude about carrying the extra load when co-workers are attending
classes. Employers foster such attitudes and behavior when they reward learning.

Planning the Training Program
Decisions about training are often the responsibility of a specialist in the organiza-
tion’s training or human resources department. When the needs assessment indicates a
need for training and employees are ready to learn, the person responsible for training
should plan a training program that directly relates to the needs identifi ed. Planning
begins with establishing objectives for the training program. Based on those objec-
tives, the planner decides who will provide the training, what topics the training will
cover, what training methods to use, and how to evaluate the training.

Objectives of the Program
Formally establishing objectives for the training program has several benefi ts. First,
a training program based on clear objectives will be more focused and more likely
to succeed. In addition, when trainers know the objectives, they can communicate
them to the employees participating in the program. Employees learn best when they
know what the training is supposed to accomplish. Finally, down the road, establishing
objectives provides a basis for measuring whether the program succeeded, as we will
discuss later in this chapter.

Effective training objectives have several characteristics:

• They include a statement of what the employee is expected to do, the quality or
level of performance that is acceptable, and the conditions under which the em-
ployee is to apply what he or she learned (for instance, physical conditions, mental
stresses, or equipment failure).12

• They include performance standards that are measurable.
• They identify the resources needed to carry out the desired performance or out-

come. Successful training requires employees to learn but also employers to provide
the necessary resources.

A related issue at the outset is who will participate in the training program. Some
training programs are developed for all employees of the organization or all members

LO 7-4 Describe how to
plan an effective training

Understand the content of the training.
Know how training relates to what you need employees to do.
In performance appraisals, evaluate employees on how they apply training to their jobs.
Support employees’ use of training when they return to work.
Ensure that employees have the equipment and technology needed to use training.
Prior to training, discuss with employees how they plan to use training.
Recognize newly trained employees who use training content.
Give employees release time from their work to attend training.
Explain to employees why they have been asked to attend training.
Give employees feedback related to skills or behavior they are trying to develop.
If possible, be a trainer.

Sources: Based on A. Rossett, “That Was a Great Class, but . . .” Training and Development, July 1977,

p. 21; R. Bates, “Managers as Transfer Agents,” In E. Hotiton III and T. Baldwin (eds.), Improving Learning

Transfer in Organizations (San Francisco: Jossey-Bass, 2003): pp. 243–270.

Table 7.1
What Managers Should Do
to Support Training


of a team. Other training programs identify individuals who lack desirable skills or
have potential to be promoted, then provide training in the areas of need that are
identifi ed for the particular employees. When deciding whom to include in train-
ing, the organization has to avoid illegal discrimination. The organization should
not—intentionally or unintentionally—exclude members of protected groups, such
as women, minorities, and older employees. During the training, all participants
should receive equal treatment, such as equal opportunities for practice. In addition,
the training program should provide reasonable accommodation for trainees with
disabilities. The kinds of accommodations that are appropriate will vary according to
the type of training and type of disability. One employee might need an interpreter,
whereas another might need to have classroom instruction provided in a location ac-
cessible to wheelchairs.

In-House or Contracted Out?
An organization can provide an effective training program, even if it lacks expertise
in training. As shown in the “Did You Know?” box, many organizations use outside
experts to develop and instruct training courses. Many companies and consultants pro-
vide training services to organizations. Community colleges often work with employ-
ers to train employees in a variety of skills.

To select a training service, an organization can mail several vendors a request for
proposal (RFP), which is a document outlining the type of service needed, the type and
number of references needed, the number of employees to be trained, the date by
which the training is to be completed, and the date by which proposals should be re-
ceived. A complete RFP also indicates funding for the project and the process by which
the organization will determine its level of satisfaction. Putting together a request for

Did You Know?

A recent survey of U.S.-based

corporations found that over half

outsourced at least some of the

instruction of training courses. Al-

most half used contractors to oper-

ate or host a learning management

system, and 45% used contractors

to develop at least some of their

custom content. In terms of spend-

ing, an average of 8% of com-

panies’ training budgets went to



Suppose you need to train offi ce

workers on how to use social media

without risking your company’s

reputation or data security.

What are some advantages of

company employees developing

the course content? What are

some advantages of using a fi rm

that specializes in training about

information technology?

Source: “2013 Training Industry

Report,” Training, November/December

2013, pp. 22–35.

Many Companies Outsource Training Tasks

Development of custom

Operation/hosting of
learning management system


Percentage of Companies Outsourcing Task

200 10 30 5040 60

CHAPTER 7 Training Employees 209

proposal is time consuming but worthwhile because it helps the organization clarify its
objectives, compare vendors, and measure results.

Vendors that believe they are able to provide the services outlined in the RFP sub-
mit proposals that provide the types of information requested. The organization re-
views the proposals to eliminate any vendors that do not meet requirements and to
compare the vendors that do qualify. They check references and select a candidate,
based on the proposal and the vendor’s answers to questions about its experience, work
samples, and evidence that its training programs meet objectives.

The cost of purchasing training from a contractor can vary substantially. In general,
it is much costlier to purchase specialized training that is tailored to the organization’s
unique requirements than to participate in a seminar or training course that teaches
general skills or knowledge. Preparing a specialized training program can require a
signifi cant investment of time for material the consultant won’t be able to sell to other
clients. Not surprisingly then, companies reduced the amount they spent for outsourc-
ing during the recent recession and have tended to maintain or further cut spending
on outside training products and services.13

Even in organizations that send employees to outside training programs, someone
in the organization may be responsible for coordinating the overall training pro-
gram. Called training administration, this is typically the responsibility of a human
resources professional. Training administration includes activities before, during, and
after training sessions.

Choice of Training Methods
Whether the organization prepares its own training programs or buys training from
other organizations, it is important to verify that the content of the training relates
directly to the training objectives. Relevance to the organization’s needs and objectives
ensures that training money is well spent. Tying training content closely to objectives
also improves trainees’ learning, because it increases the likelihood that the training
will be meaningful and helpful.

After deciding on the goals and content of the training program, planners must
decide how the training will be conducted. As we will describe in the next section, a
wide variety of methods is available. Training methods fall into the broad categories
described in Table 7.2: presentation, hands-on, and group-building methods.

Presentation methods: trainees
receive information provided by

Lectures, workbooks, video
clips, podcasts, websites

Conveying facts or
comparing alternatives

Hands-on methods: trainees
are actively involved in trying
out skills

On-the-job training, simulations,
role-plays, computer games

Teaching specifi c skills;
showing how skills are
related to job or how to
handle interpersonal issues

Group-building methods:
trainees share ideas and
experiences, build group
identities, learn about
interpersonal relationships and
the group

Group discussions, experiential
programs, team training

Establishing teams or
work groups; managing
performance of teams or
work groups

Table 7.2
Categories of Training

210 PART 2 Acquiring, Training, and Developing Human Resources

Training programs may use these methods alone or in combination. In general, the
methods used should be suitable for the course content and the learning abilities of the
participants. The following section explores the options in greater detail.

Training Methods
A wide variety of methods is available for conducting training. Figure 7.2 shows the per-
centage of training hours delivered to employees by each of several methods: instruc-
tor-led classrooms, online self-study, virtual classrooms, social media, mobile devices,
and combinations of these methods. Although the share of instruction provided online
is growing, classroom training remains the most popular of these methods.14

Classroom Instruction
At school, we tend to associate learning with classroom instruction, and that type of
training is most widely used in the workplace, too. Classroom instruction typically
involves a trainer lecturing a group. Trainers often supplement lectures with slides,
discussions, case studies, question-and-answer sessions, and role playing. Actively
involving trainees enhances learning.

When the course objectives call for presenting information on a specifi c topic
to many trainees, classroom instruction is one of the least expensive and least time-
consuming ways to accomplish that goal. Learning will be more effective if trainers
enhance lectures with job-related examples and opportunities for hands-on learning.

Modern technology has expanded the notion of the classroom to classes of trainees
scattered in various locations. With distance learning, trainees at different locations attend
programs online, using their computers to view lectures, participate in discussions, and
share documents. Technology applications in distance learning may include videoconfer-
encing, e-mail, instant messaging, document-sharing software, and web cameras. When
Steelcase was ready to begin selling its Node chair, a fl exible classroom chair with a swivel
seat, storage for backpacks, and a customizable work surface, it needed to show its global
sales force how adaptable it was to today’s classrooms and teaching methods. Steelcase

LO 7-5 Compare widely
used training methods.

Figure 7.2
Use of Instructional


Source: “2013 Training

Industry Report,” Train-

ing, November/December

2013, pp. 22–35.

10 20 30 40 5000

Virtual classroom/webcast

Social network

Mobile only

Online or computer-based

Blended (combination of methods)

Instructor-led classroom

Percentage of Total Training Hours











CHAPTER 7 Training Employees 211

also had to deliver the training fast, so that the sales reps would be prepared before schools
were making their annual purchases for the next academic year. The solution was a virtual
classroom, which allowed trainees to see the chair as well as hear the training.15

Distance learning provides many of the benefi ts of classroom training without the
cost and time of travel to a shared classroom. The major disadvantage of distance
learning is that interaction between the trainer and audience may be limited. To over-
come this hurdle, distance learning usually provides a communications link between
trainees and trainer. Also, on-site instructors or facilitators should be available to an-
swer questions and moderate question-and-answer sessions.

Audiovisual Training
Presentation methods need not require trainees to attend a class. Trainees can also
work independently, using course material in workbooks, on DVDs, or on the Internet.
Audiovisual techniques such as overhead transparencies, PowerPoint or other presen-
tation software, and video or audio clips can also supplement classroom instruction.

With modern technology, audiovisual materials can easily be made available on a va-
riety of devices, from desktop computers to the tiny screens of smartphones and MP3
players. Today’s mobile devices can display charts, play audio podcasts, and link to video
clips. The DoubleTree by Hilton in Bloomington, Illinois, has placed two iPads loaded
with training material at its front desk so employees can use them to complete training
programs during slow periods. DoubleTree’s training lessons are available in a choice of
English or Spanish.16 The “HR How To” box offers ideas for effectively delivering train-
ing on iPads and other mobile devices.

Users of audiovisual training often have some control over the presentation. They can
review material and may be able to slow down or speed up the lesson. Videos can show
situations and equipment that cannot be easily demonstrated in a classroom. Another
advantage of audiovisual presentations is that they give trainees a consistent presenta-
tion, not affected by an individual trainer’s goals and skills. The problems associated with
these methods may include their trying to present too much material, poorly written
dialogue, overuse of features such as humor or music, and drama that distracts from the
key points. A well-written and carefully produced video can overcome these problems.

Computer-Based Training
Although almost all organizations use classroom training, new technologies are gain-
ing in popularity as technology improves and becomes cheaper. With computer-based
training, participants receive course materials and instruction distributed over the
Internet or on CD-ROM. Often, these materials are interactive, so participants can
answer questions and try out techniques, with course materials adjusted according to
participants’ responses. Online training programs may allow trainees to submit ques-
tions via e-mail and to participate in online discussions. Multimedia capabilities enable
computers to provide sounds, images, and video presentations, along with text.

Computer-based training is generally less expensive than putting an instructor in a
classroom of trainees. The low cost to deliver information gives the company fl exibil-
ity in scheduling training so that it can fi t around work requirements. Training can be
delivered in smaller doses so material is easier to remember. Trainees often appreciate
the multimedia capabilities, which appeal to several senses, and the chance to learn
from experts anywhere in the world. Finally, it is easier to customize computer-based
training for individual learners.


Current applications of computer-based training can extend its benefi ts:

• E-learning involves receiving training via the Internet or the organization’s intranet,
typically through some combination of web-based training modules, distance learn-
ing, and virtual classrooms. E-learning uses electronic networks for delivering and
sharing information, and it offers tools and information for helping trainees improve
performance. Training programs may include links to other online information re-
sources and to trainees and experts for collaboration on problem solving. The e-
learning system may also process enrollments, test and evaluate participants, and
monitor progress. Quicken Loans uses e-learning to motivate employees to learn
from their peers’ best practices in customer service. It created an online contest called
“Quicken’s Got Talent.” Employees who serve customers over the phone can submit
recordings of calls they handled well. Trainers pick one submission per day to post on
the game. Employees listen to the recordings and rate their co-worker’s performance
on a scale of 1 to 5. Each month the employee who submitted the top-scoring call
receives a prize worth up to $200; winners of the monthly round are eligible for a
competition with a $1,000 prize. The e-learning program tracks participation and
creates a library of best-practices clips that are available for future learning.17

Receiving training via the
Internet or the organiza-
tion’s intranet.

Nowadays, workers are already

using—or would like to use—a vari-

ety of mobile devices, such as smart-

phones and tablet computers. These

devices have the potential to deliver

effective training. The following tips

can help trainers ensure that mobile

learning (m-learning) is well prepared

and tailored to users’ needs and the

company’s objectives:

• Learn what devices employees

are already using. Also fi nd out

what devices your company’s

information technology policy al-

lows employees to use for work.

Some companies allow employ-

ees to load company data onto

personal devices; others require

that employees use company-

provided hardware and software.

• Train employees to use the de-

vices on which the training will

be provided. Even if employees

are using a device to make

phone calls or play games, they

might not know how to use the

company’s learning applications.

• Train a few employees in m-

learning. Let them be the cham-

pions for the new system and

perhaps train their co-workers in

how to use the system or coach

a co-worker who is struggling.

• If the content covers more than

trainees will easily use and re-

member at once, provide tools

that make the content easy to

search for the relevant subject


• Incorporate analytic tools such

as Google Analytics into training

software and use it to keep track

of how many people are using

the content, what hardware and

operating system the trainees

use, and how long they interact

with the training material. This

information will provide valuable

feedback for improving the m-

learning program.

• Test training content on all the

kinds of devices the trainees

will use. Make sure it works

as intended on each kind of

hardware and with the type of

network connection that will be

available to trainees.


1. Suppose your company

creates an m-learning

program, but the analytics tool

shows that employees almost

never open the content. Which

of the tips listed here might the

trainers have overlooked?

2. Suppose your company’s

plan is to provide training

on whatever mobile devices

employees already bring to

work. Which of the guidelines

listed will be more diffi cult

because of this plan?

Sources: Nick Floro, “Thinking Mobile

First,” Training, November 2013, www.; John Coné, “Look Be-

fore You Leap into Mobile Learning,” T+D,

June 2013, pp. 40–45; Barry Jass, “Take

the Mobile Learning Plunge,” T+D, Febru-

ary 2013, pp. 29–31.

Developing Training Content for Mobile Devices

HR How To

CHAPTER 7 Training Employees 213

• Electronic performance support systems (EPSSs) are computer applications
that provide access to skills training, information, and expert advice when a problem
occurs on the job.18 Employees needing guidance can use the EPSS to look up the
particular information they need, such as detailed instructions on how to perform
an unfamiliar task. Using an EPSS is faster and more relevant than attending classes,
even classes offered online. These advantages of an EPSS make it especially appro-
priate for mobile learning. Xerox, for example, makes performance support videos
available on employees’ mobile devices. Employees can easily search the learning
database to fi nd the relevant content.19

The best e-learning combines the advantages of the Internet with the principles of a
good learning environment. It takes advantage of the web’s dynamic nature and ability
to use many positive learning features, including hyperlinks to other training sites and
content, control by the trainee, and ability for trainees to collaborate.

On-the-Job Training
Although people often associate training with classrooms, much learning occurs while
employees are performing their jobs. On-the-job training (OJT) refers to training
methods in which a person with job experience and skill guides trainees in practicing
job skills at the workplace. This type of training takes various forms, including appren-
ticeships and internships.

An apprenticeship is a work-study training method that teaches job skills through
a combination of structured on-the-job training and classroom training. The OJT com-
ponent of an apprenticeship involves the apprentice assisting a certifi ed tradesperson (a
journeyman) at the work site. Typically, the classroom training is provided by local trade
schools, high schools, and community colleges. Government requirements for an ap-
prenticeship program vary by occupation, but programs generally range from one to six
years. Requirements may be based on a minimum amount of time (often at least 2,000
hours of on-the-job learning), mastery of specifi ed skills following classroom or online
instruction plus on-the-job learning, or some combination of the two measures.20 Some
apprenticeship programs are sponsored by individual companies, others by employee
unions. As shown in the left column of Table 7.3, most apprenticeship programs are in
the skilled trades, such as plumbing, carpentry, and electrical work.

For trainees, a major advantage of apprenticeship is the ability to earn an income
while learning a trade. In addition, training through an apprenticeship is usually effec-
tive because it involves hands-on learning and extensive practice. Some employers are
concerned that an apprenticeship program will require working with a union or that
employees who receive such training will leave for a better job. However, unionization
is not strongly associated with employer-paid training in most industries, and when
an employer provides apprenticeships, employees may in fact feel greater loyalty.21

Electronic Performance
Support System (EPSS)
Computer application
that provides access to
skills training, informa-
tion, and expert advice
as needed.

On-the-Job Training
Training methods in
which a person with
job experience and skill
guides trainees in prac-
ticing job skills at the

A work-study training
method that teaches job
skills through a com-
bination of on-the-job
training and classroom

Bricklayer Accountant
Carpenter Doctor
Electrician Journalist
Plumber Lawyer
Nursing assistant Nurse

Table 7.3
Typical Jobs for
Apprentices and Interns

214 PART 2 Acquiring, Training, and Developing Human Resources

Volkswagen partnered with the Tennessee Technology Center of Chattanooga State
Community College to create an apprenticeship program in automotive mechatronics.
In this three-year program, apprentices receive classroom instruction and on-the-job
training in machining, electricity, pneumatics, robotics, automation, programmable
logic controls, and computer numeric controls. Volkswagen pays the apprentices for
their on-the-job training time, and in return it acquires a workforce with hard-to-fi nd
skills in fi xing problems in an automated manufacturing facility.22

An internship is on-the-job learning sponsored by an educational institution as a
component of an academic program. The sponsoring school works with local employ-
ers to place students in positions where they can gain experience related to their area
of study. Ernst & Young hires interns to prepare them for possible permanent jobs as
consultants and accountants if they demonstrate they can lead a project and work with
a diverse team. Whirlpool hires interns to test their skills as it prepares them for posi-
tions in sales, technology, and human resource management.23 Many internships pre-
pare students for professions such as those listed in the right column of Table 7.3.

To be effective, OJT programs should include several characteristics:

• The organization should issue a policy statement describing the purpose of OJT
and emphasizing the organization’s support for it.

• The organization should specify who is accountable for conducting OJT. This ac-
countability should be included in the relevant job descriptions.

• The organization should review OJT practices at companies in similar industries.
• Managers and peers should be trained in OJT principles.
• Employees who conduct OJT should have access to lesson plans, checklists, proce-

dure manuals, training manuals, learning contracts, and progress report forms.
• Before conducting OJT with an employee, the organization should assess the em-

ployee’s level of basic skills.24

A simulation is a training method that represents a real-life situation, with trainees
making decisions resulting in outcomes that mirror what would happen on the job.
Simulations enable trainees to see the impact of their decisions in an artifi cial, risk-free
environment. They are used for teaching production and process skills as well as man-
agement and interpersonal skills. Simulations used in training include call centers
stocked with phones and reference materials, as well as mockups of houses used for
training cable installers. Airlines purchasing Boeing’s latest-model passenger jet, the
787 Dreamliner, are using simulators to train the pilots who will fl y it. Although the
787 fl ight deck is designed with the same layout as the familiar 777, it has a new feature
called the head-up display (HUD). When fl ying conditions are poor, this small see-
through screen drops down in pilots’ line of vision to provide information to help
them navigate. Pilots need to practice with the simulator until they are accustomed to
landing the jet while using the HUD.25

Simulators must have elements identical to those found in the work environment.
The simulator needs to respond exactly as equipment would under the conditions and
response given by the trainee. For this reason, simulators are expensive to develop and
need constant updating as new information about the work environment becomes
available. Still, they are an excellent training method when the risks of a mistake on the
job are great. Trainees do not have to be afraid of the impact of wrong decisions when
using the simulator, as they would be with on-the-job training. Also, trainees tend

On-the-job learning
sponsored by an edu-
cational institution as a
component of an aca-
demic program.

A training method that
represents a real-life
situation, with trainees
making decisions result-
ing in outcomes that
mirror what would hap-
pen on the job.

CHAPTER 7 Training Employees 215

to be enthusiastic about this type of
learning and to learn quickly, and
the lessons are generally related very
closely to job performance. Given
these benefi ts, this training method
is likely to become more widespread
as its development costs fall into a
range more companies can afford.26

When simulations are conducted
online, trainees often participate by
creating avatars, or computer depic-
tions of themselves, which they ma-
nipulate onscreen to play roles as
workers or other participants in a job-
related situation. Another way to en-
hance the simulation experience is to
use virtual reality, a computer-based
technology that provides an interac-
tive, three-dimensional learning expe-
rience. Using specialized equipment
or viewing the virtual model on a computer screen, trainees move through the simulated
environment and interact with its components. Devices relay information from the envi-
ronment to the trainees’ senses. For example, audio interfaces, gloves that provide a sense
of touch, treadmills, or motion platforms create a realistic but artifi cial environment.
Devices also communicate information about the trainee’s movements to a computer.

Virtual reality is a pra