Engineering Management

ChE-410
Lecture-8
Hafiz Mudaser Ahmad
[email protected]
Department of Chemical Engineering
University of Engineering & Technology Lahore
11/13/2024 21:14:49 1
 Outline
MANAGING HUMAN RESOURCES IN ORGANIZATIONS
• The environmental context of HRM
• Attracting human resources
• Developing human resources
• Maintaining human resources
• Managing workforce diversity
• New challenges in the changing workplace
The Environmental Context of HRM
 Human Resource Management (HRM)
Human Resource Management (HRM) is the set of
organizational activities directed at attracting,
developing, and maintaining an effective workforce.

The vital components of this context are HRM’s

strategic importance and the legal environment of
HRM.
The Strategic Importance of HRM

• Human resources have become important in companies

because of legal stuff, understanding how valuable people
are for making more stuff, and knowing that bad HR can
cost a lot.

• For example, Microsoft is getting rid of jobs in some areas

but hiring for important stuff to grow.
The Strategic Importance of HRM

• If a company doesn't do HRM right, it can waste money on

hiring and firing, have bad pay systems, and get into trouble
with discrimination.
• Big companies often put HR bosses under the main boss and
make plans to match HR with the company's big plans. Even
small companies have HR teams that work with managers to
hire and rate how employees are doing.
• The HR stuff "human capital" to show how much a company
invests in getting, keeping, and motivating good workers.
The Legal Environment of HRM

•A number of laws Equal employment

opportunity
regulate various aspects Compensation and
benefits
of employee–employer
Labor relations
relations, especially in
Occupational safety and
the following areas. health
 Equal Employment Opportunity
Laws Ensuring Fair Treatment in the Workplace
“These laws protect against unfair treatment, ensuring fairness and equal
opportunities for everyone.”
Key Anti-Discrimination Laws:
•Title VII of the Civil Rights Act (1964):
•Prohibits discrimination based on race, gender, age, or disability.
Americans with Disabilities Act (ADA):
•Ensures fairness for individuals with disabilities.
•Requires reasonable accommodations in the workplace.
Employer Responsibilities:
•Fair Treatment of all applicants and employees.
•Encouragement for hiring underrepresented groups.
•Ensuring Equal Opportunities across the organization.
Compensation and Benefits
• Laws regulate pay and benefits at work.
• The Fair Labor Standards Act sets minimum wages and overtime pay
rules.
• The Equal Pay Act ensures equal pay for the same job regardless of
gender.
• Some benefits, like worker's compensation, are mandatory.
• Laws for pension plans and the Family and Medical Leave Act provide
unpaid leave for emergencies.
Labor Rights

• Laws like the Wagner Act let employees vote for unions, making
management negotiate with them.

• The Taft-Hartley Act limits union power and gives more rights to
businesses during union activities.

• These laws ensure a balance between unions and management, allowing

unions to represent employees while businesses make their own
decisions.
Health and Safety

• OSHA makes sure workplaces are safe and free from dangers that can
cause harm. Employers must follow safety rules to prevent accidents
and protect from diseases.
• There have been investigations into cases of severe injuries caused by
repetitive stress in a manufacturing plant where employees handle
heavy machinery for extended hours. Several workers reported chronic
back problems and musculoskeletal issues due to the nature of their
tasks. While safety protocols exist, concerns arose about the ergonomic
design of workstations and the impact on worker health. Authorities are
looking into improving workplace ergonomics to prevent such injuries.
Attracting Human Resources
Human Resource Planning
• The starting point in attracting qualified human resources is
planning. HR planning involves job analysis and forecasting
the demand and supply of labor.
• Job Analysis is a systematic analysis of jobs within an
organization.
• A job analysis is made up of two parts. The job description
lists the duties of a job, the job’s working conditions, and the
tools, materials, and equipment used to perform it. The job
specification lists the skills, abilities, and other credentials
needed to do the job.
Forecasting Human Resource Demand and Supply
• Managers plan for how many people they'll need in the future by
looking at past trends, company plans, and economic changes. They use
sales forecasts and historical data to estimate how many new
employees they'll need. Big companies might use complex methods.
• For example, Walmart once planned to hire a million people, mostly for
growth and to replace leaving workers. They adjusted the plan over time
but ended up hiring close to what they initially projected.
Matching Human Resource Supply and Demand
• Managers balance employee numbers by hiring, retraining, or
transferring staff based on future demand predictions. If there's
a shortage, they might persuade retirees to stay, install better
systems, or recruit externally.
• Temporary workers and flexible staffing help manage
fluctuations. For overstaffing, they might transfer employees, not
replace those leaving, encourage early retirement, or consider
layoffs.
Recruiting Human Resources
Recruiting: Recruiting is about attracting qualified people to apply for open
jobs. Candidates can come from within the company or be hired from
outside.
Internal Recruiting: This method considers current employees for job
openings. Promoting from within boosts morale and reduces turnover. In
unionized companies, there are usually rules about announcing openings to
employees, often done through job postings or recommendations. However,
filling one position internally can create a chain reaction, needing multiple
roles to be refilled.
External Recruiting: This approach seeks candidates from outside the
company. It includes methods like advertising, campus interviews, referrals,
employment agencies, and hiring walk-ins. This brings in fresh talent and
perspectives but may take more time to find the right fit.
Selecting Human Resources
• Hiring selects the most suitable
candidates from the applicant pool.
• The selection process gathers Selection Prediction
information to predict job
performance accurately.
• This information must genuinely
help in forecasting future job
Relevance Validation
success.
• Validation ensures the collected
information effectively predicts job
performance.
Application Blanks: These forms gather essential job-related details from candidates,
aiding initial assessments and interview prep. However, falsification is an issue, with
44% of applications containing false information, which can impact hiring accuracy.
Tests: Job-related tests, such as skills or aptitude assessments, are among the strongest
indicators of future job performance. Consistent administration, standardized scoring,
and validation are crucial to ensure fairness and accuracy in candidate evaluation.
Interviews: Interviews may not always reliably predict job success due to biases.
Training interviewers, structuring questions uniformly, and validating content help
reduce bias and improve consistency, making interviews more effective predictors of
performance.
Assessment Centers: These centers involve multi-day simulations of managerial tasks,
with candidates observed by higher-level managers. When designed well, they provide
a valid and fair approach to selecting managers based on realistic performance
measures.
Other Techniques: Selection methods vary; polygraph tests are declining, while physical
exams, drug tests, and credit checks are increasingly used for roles sensitive to safety
and security, such as those in nuclear power.
Developing Human Resources
Developing Human Resources

• Regardless of how effective a selection system is; however,

most employees need additional training if they are to

grow and develop in their jobs. Evaluating their

performance and providing feedback is also necessary

Training and Development
• In HRM, training usually refers to teaching operational or technical
employees how to do the job for which they were hired.
• Development refers to teaching managers and professionals the skills
needed for both present and future jobs.
• Most organizations provide regular training and development
programs for managers and employees. For example, IBM spends
more than $700 million annually on programs and has a vice
president in charge of employee education. U.S. businesses spend
more than $125 billion annually on training and development
programs away from the workplace.
Assessing Training Needs
Identify Gaps: Start by pinpointing
Identify
specific training needs (e.g., machinery Gaps

operation issues, office performance).

Diagnose Causes: Poor performance
may stem from motivation, equipment, Evaluate
Effectiveness
Diagnose
Causes
supervision, work design, or skill gaps.
Targeted Training: Focus on skill and
knowledge deficiencies.
Set Clear Goals: Define measurable
learning objectives for impactful Set Clear Targeted
training. Goals Training

Evaluate Effectiveness: Plan follow-up

assessments to gauge training success.
 Common Training Methods
Matching Methods to Skills: Different training methods fit various needs. Factual
learning works well with reading, programmed learning, and lectures, while
interpersonal skills benefit from role-playing. Physical skills need hands-on practice,
like on-the-job training.
Web-Based Training: Popular for its flexibility and cost savings, web-based training
allows for easy updates and mixed content. However, it may lack realistic practice and
face-to-face interaction.
Blended Training Approach: Successful companies like Xerox, Ford, and Boeing use a
mix of tests, simulations, and role-playing to train employees effectively, combining
methods for the best outcomes.
Corporate Training Facilities: Some companies create in-house "universities" for
tailored training. For example, McDonald's "Hamburger University" teaches
management trainees customer service and food prep skills.
 Evaluation of Training

Importance of Training Evaluation

Evaluating training programs is essential to measure their effectiveness.
Methods for Evaluation
Common evaluation methods include measuring attitudes and
performance before and after training.
End-of-Training vs. On-the-Job Evaluation
While end-of-training assessments are easy to access, evaluating on-the-
job performance is more valuable.
Maintaining Human Resources
Maintaining Human Resources

• After organizations have attracted and developed an

effective workforce, they must also make every effort to
maintain that workforce. To do so requires effective
Compensation and Benefits as well as career planning.
“Leading the Way” describes how a firm uses compensation
to maintain a strong workforce.
Determining Compensation
• Compensation is the payment given by the organization to its employees in exchange for
their work.
• There are three basic forms of compensation.
• Wages are the hourly compensation paid to operating employees. The minimum hourly
wage paid in the United States today is $ 7.25 (some states have higher minimums).
• Salary refers to compensation paid for total contributions, as opposed to pay based on
hours worked. For example, managers earn an annual salary, usually paid monthly. They
receive a salary regardless of the number of hours they work. Some firms have started
paying all their employees a salary instead of hourly wages. For example, all employees at
Chaparral Steel earn a salary, starting at $30,000 a year for entry-level operating
employees.
• Incentives represent special compensation opportunities that are usually tied to
performance. Sales commissions and bonuses are among the most common incentives.
Wage-Level Decision

Choosing the Wage Level: Companies decide whether to pay

above, at, or below the industry average.
Examples of Different Wage Strategies: Companies like IBM and
Google pay higher wages to attract top talent, while companies
like McDonald's and Walmart pay closer to minimum wage.
Impact of Unemployment on Wages: When there is high
unemployment, wages tend to be lower. With fewer available
workers, wages tend to rise.
Wage Structure Decision

• Companies assess each job's value compared to others to set up a fair

wage structure.
• Ben & Jerry's once had a policy that capped the highest salary at
seven times the lowest.
• Smaller companies rank jobs in straightforward ways, while larger
companies use more detailed methods.
• Companies set wages by combining survey data with job evaluation
results, often grouping jobs of similar value into wage grades for
easier management.
Individual Wage Decisions
Setting Pay Ranges for Employees
Instead of a fixed rate, companies set a pay range for each job, like $10.00 to
$14.40 per hour, with employees earning different rates within this range.
Individual pay rates can be based on:
• Seniority: Starting at $10.00 and increasing by 50 cents every six months.
• Experience: New employees start at $10.00, while experienced ones start
higher.
• Performance: Raises above the starting rate are awarded for good
performance.
Sometimes, companies use a mix of these methods to set pay rates.
Determining Benefits
• Benefits are things of value other than compensation that
the organization provides to its workers. (Benefits are
sometimes called indirect compensation.)
• The average company spends an amount equal to more than
one-third of its cash payroll on employee benefits. Thus, an
average employee who is paid, say, $30,000 per year
averages a bit over $10,000 more per year in benefits.
• Benefits come in several forms. Pay for time not worked
includes sick leave, vacation, holidays, and unemployment
compensation.
• Insurance benefits often include life and health insurance for
employees and their dependents.
• Workers’ compensation is a legally required insurance benefit that
provides medical care and disability income for employees injured on
the job.
• Social Security is a government pension plan to which both
employers and employees contribute.
• Many employers also provide a private pension plan to which they
and their employees contribute.
• Some organizations have instituted cafeteria benefit plans,
whereby basic coverage is provided for all employees, but
employees are then allowed to choose which additional
benefits they want (up to a cost limit based on salary).
• An employee with five children might choose enhanced
medical and dental coverage for dependents, a single
employee might prefer more vacation time, and an older
employee might elect increased pension benefits.
Managing Workforce Diversity
The Meaning of Diversity
• Diversity means that people in a group have differences in
important ways. In business, diversity usually refers to
differences like gender, age, ethnicity, and similar
characteristics.
• For example, the average age of workers in the U.S. is getting
older, and more women are joining the workforce.
The Impact of Diversity
Organizations are becoming more diverse, which brings both benefits and
challenges.
Diversity as a Competitive Advantage
Diverse organizations often perform better, with higher productivity, lower
employee turnover, and a stronger understanding of different markets.
Managing diversity well can attract top talent, encourage new ideas, and
create a positive workplace culture.
Diversity as a Source of Conflict
Diversity can also lead to conflicts, especially if people feel decisions on
hiring, promotions, or firings are based on diversity alone.
Misunderstandings, fears, and personal biases can also create tension in
diverse workplaces.
Managing Diversity in Organizations
Individual Strategies
To manage diversity, individuals can focus on understanding others,
empathizing, accepting different behaviors, and communicating effectively.
Ignoring or avoiding these actions can lead to misunderstandings and
conflicts.
Organizational Approaches
Companies play a big role in managing diversity by creating policies that
show its importance. For example, Avon's employee networks and flexible
rules support diversity, while training programs—like Motorola’s English
classes or Pace Foods’ Spanish translations—help build an inclusive
workplace.
New Challenges in the Changing Workplace
New Challenges in the Changing Workplace

• Human resource managers face several ongoing challenges

in their efforts to keep their organizations staffed with
effective workforces. To complicate matters, new challenges
arise as the economic and social environments of business
change.
Managing Knowledge Workers

• Employees traditionally add value to organizations because

of what they did or because of their experience.

• In the “information age,” however, many employees add

value because of what they know.
The Nature of Knowledge Work
Knowledge workers, like computer scientists and engineers, are crucial
for a company's success. They prefer independence, identify more with
their profession than their employer, and need continuous specialized
training. Companies must invest in their skills even after hiring to stay
competitive and retain these valuable employees.
Knowledge of Worker Management and Labor Markets
Demand for knowledge workers remains high despite economic slumps,
leading firms to constantly adjust salaries to retain them. Companies
face challenges as internal pay growth lags the external market,
prompting extreme measures like high starting salaries and bonuses.
Retaining specialists becomes difficult even with generous incentives, as
they often move to competitors offering lucrative sign-on bonuses.
Contingent and Temporary Workers

• A final contemporary HR issue of note involves the use of

contingent or temporary workers.

• Indeed, recent years have seen an explosion in the use of such

workers by organizations.

• The FBI, for example, routinely employs a cadre of retired agents

in various temporary jobs.
Trends in Contingent and Temporary Employment
More workers are now in non-permanent roles called contingent
work, like contractors or temporary staff, not hired full-time. This
includes part-time workers or those hired through agencies, with
Citigroup using part-time sales agents for client outreach. Around 1
in 50 employed Americans held such positions in 2011.
Managing Contingent and Temporary Workers
HR managers need to plan and integrate temporary workers
effectively, understanding their limitations and advantages. They
should assess the real cost of employing them versus permanent
staff, considering productivity differences. Managers must decide
how to treat temporary workers, like inclusion in events or benefits,
consistently.
Thanks