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BUS301 Study Guide

Unit 1: The Nature of Human Resources

1a. Define Human Resource Management

  • Why is it important to manage human resources effectively?
  • What value does a human resources department provide to an employee?
  • What value does a human resources department provide to an organization?

Human resource management (HRM) describes how businesses and organizations hire, train, and compensate their employees. Within a company or organization, the human resource team is often involved in developing policies that relate to employees and developing strategies to retain them. 

In their capacity as a strategic partner to the organization, HRM performs seven roles, including:

  1. Staffing (hiring employees to meet the needs of an organization)
  2. Development of workplace policies
  3. Compensation and benefits administration
  4. Retention (retaining employees)
  5. Training and development (enhancing employees' knowledge, skills, and abilities)
  6. Dealing with laws affecting employment
  7. Worker protection

Note the progression of human resources from an administrative entity to a strategic partner acting to formulate and monitor policies for the protection and benefit of employees and to meet organizational objectives. 

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1b. Describe the HRM functions and current trends in modern workplaces

  • How is HRM involved in strategic planning for an organization?
  • How has the role of human resource management professionals changed?
  • How does the work of a human resource department impact other departments?

As a field, HRM has undergone many changes during the past few decades, which has made its role even more important for most organizations. In the past, HRM referred to the employees who processed payroll, sent birthday gifts to employees, arranged company outings, and made sure employee forms were filled out correctly. In other words, HRM played an administrative role rather than a strategic or operations planning role.

HRM no longer simply consists of writing policies and procedures and hiring people (an administrative function). Today's HRM also creates organizational strategic plans, which ensure the best people are hired and trained to perform the right job when they are needed most (in the present and when they may be needed to accomplish future objectives).

The HRM strategic plan should address the major objectives the organization wants to achieve and consider how the business will accomplish its long-term goals. The plan should specify the activities HRM will perform to achieve the goals outlined in the strategic plan. This new role is critical to the success of many organizations.

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1c. Explain the importance of strategic HR management for attracting, recruiting, and retaining valuable talent

  • In an organization, what is human capital?
  • Consider the key workplace benefits that businesses offer their employees. How do these benefits affect the recruiting process?
  • What is a major challenge that HRM faces today?

Human capital refers to the people who work for a business, usually one of the organization's most precious resources. In addition to offering competitive pay, employers can provide employees with workplace benefits, such as paid holidays, health and dental insurance, contributions to 401(k) and retirement plans, parental leave, wellness programs, and other incentives to attract and retain valuable employees.

While HRM is charged with attracting the best employees, cost containment can be a major challenge. It can be difficult to predict how much money a company needs to spend to attract and retain the best employees and how much it can save by limiting the number of benefits it offers or restricting the distribution of certain perks. Cost containment is a balancing act: HR managers need to estimate how much they need to offer in their hiring package to attract and retain employees without offering too much to affect the company's profitability.

HR managers must plan to ensure they have the right number of workers in the right place at every point in time. Also, by creating a recruiting and selection process with cost containment in mind, HRM can contribute directly to the company's overall profit margin. Since it is so expensive to recruit, hire, and train new employees – in terms of time and money – HRM should take steps to ensure they hire the right people for the job the first time.

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1d. Describe the elements of corporate culture, including ethics and social responsibility

  • What is the relationship between corporate culture, workplace ethics, and social responsibility?
  • What role should corporate culture, workplace ethics, and social responsibility play in recruiting?
  • What role do corporate culture, workplace ethics, and social responsibility play in retaining employees?

Corporate culture (or organizational culture) refers to the general beliefs, attitudes, values, and behaviors a company or organization promotes among its employees. This culture can dictate how employees dress, act, perform their jobs, and treat their coworkers and customers.

Hiring managers and the people who work at an organization determine corporate culture. By advertising the organization's corporate culture and explaining what it seeks to achieve – on the company website and in its job descriptions – HRM can provide important context for job candidates considering whether they want to work there. Establishing a consistent and positive corporate culture is essential to a successful organization.

A professional code of workplace ethics provides a code of conduct that members of a business or profession create and follow to promote or regulate ethical conduct among their employees, boards of directors, or members. While many of these ethical rules address the specific needs or mission of the organization or business profession, many of the principles cut across all types of professions – business leaders derive their ethical guidance from the same moral principles their community follows.

Most organizations have written policies to ensure everyone exhibits fairness and continuity. HRM, executives, and other organizational managers should be involved in this policy-making process. HR managers should recognize when the company needs to adopt new or additional policies, make changes when the current guidelines no longer work, solicit opinions and employee buy-in, and communicate the new or revised policies to employees. HRM cannot work alone: everything they do must involve all other departments in the organization.

HRM is usually responsible for developing an organization's code of ethics and professional conduct. For example, many companies state employees should not receive gifts from clients or vendors to avoid giving the appearance of a conflict of interest. These gifts might include meals, baseball tickets, or paid travel expenses to attend or present at conferences. These policies define expectations regarding the need to act professionally, such as treating coworkers and customers respectfully and avoiding situations others may regard as sexual harassment.

Many corporate leaders recognize that practicing social responsibility, such as by promoting local community events and encouraging environmentally sustainable practices, is popular among their customers and employees and makes good business sense. For example, while the initial investment in high-tech and renewable energy solutions can be high, companies can save money from lower electricity bills, promote goodwill that generates customer loyalty, and create a healthier environment for employees. On a basic level, corporations benefit from having a healthy and productive workforce and a peaceful working environment that is more profitable in the long run.

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1e. Identify key laws and legislation that shape human capital decisions

  • What types of laws must HRM be aware of that impact the workplace?
  • What labor law protects job applicants and employees who are 40 and older?

HRM must be aware of five types of laws that affect the workplace:

  1. discrimination laws;
  2. healthcare requirements;
  3. compensation requirements, such as minimum wage;
  4. worker safety laws; and
  5. labor laws.

Policymakers in many countries have created laws to protect their employees, such as workplace discrimination laws and unsafe working environments. Since the legal and legislative environment for HRM frequently fluctuates, HR managers must be constantly aware of new and upcoming local and national rules, regulations, or policies that could affect their organization. Businesses typically charge their HRM team to communicate any additions or changes to the entire leadership.

For example, regarding healthcare requirements in the United States, legislators can modify the rules that dictate how large employers must offer health insurance to their employees, such as when the Affordable Care Act passed in 2010. Similarly, Congress members may vote on compensation requirements, such as increasing the lowest wage employers can legally pay their workers (the minimum wage). Legislators may also revise the worker safety laws companies must follow to protect the health and safety of their employees, as well as adjust other labor laws, such as those that dictate how employers must allow their employees to create unions, engage in collective bargaining, and strike if necessary.

The U.S. Equal Employment Opportunity Commission (EEOC) is the federal agency the United States Congress created in 1965, whose actions are mandated as part of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, the Rehabilitation Act of 1973, the Americans with Disability Act of 1990 and the ADA Amendments Act of 2008. The EEOC is charged with investigating employment discrimination claims and ensuring the relevant federal agencies enforce the laws prohibiting these practices.

If the EEOC has reason to suspect an employer is responsible for discriminating against its job applicants or employees based on their race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information, it will collect evidence to support a case to legally punish or sue the employer.

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1f. Identify diversity and inclusion strategies and their organizational impact

  • What is the role of diversity in the workplace?
  • How does the focus on multiculturalism go deeper than diversity?
  • How does affirmative action address past discrimination?  
  • What is employee turnover?

Workplace diversity refers to how well the company hires and retains employees of different ages, races, sex, national origin, religious beliefs, and physical abilities. Just as the marketplace has become more diverse due to an increasingly global economy, the ideas and perspectives each individual brings to the workplace can broaden an organization's knowledge base and ability to address different situations and challenges. Studies show that organizations that include employees of various ages, races, and ethnicities are more successful than those that do not.

Multiculturalism goes deeper than diversity and focuses on inclusiveness, understanding, and respect. It also examines inequalities, such as which groups have the power to make societal decisions.

HRM professionals should understand how to motivate employees by creating an inclusive workplace. Employers promote a sense of inclusion among their employees by encouraging diverse individuals to get involved in leadership decision-making. These actions can give employees a sense of belonging, enhance employee satisfaction, and reduce the high cost of employee turnover. HRM is typically responsible for training employees about current and relevant discriminatory work and hiring practices. They are charged with ensuring no laws are broken, such as when individuals create a "hostile work environment" for others.

Affirmative action refers to policies promoting members of groups who have suffered from past discrimination, such as providing access to education and employment opportunities. The key elements of affirmative action include age, disability, race, sex, national origin, and religion.

Employee turnover refers to the number of employees who leave a company during a given period.

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1g. Describe the importance of effective diversity management in the workplace

  • How does an organization benefit from effective diversity management?

In response to criticism of affirmative action, firms increasingly moved from a social justice model to one that recognizes diversity's economic value. Creating a diverse workplace can give organizations a competitive advantage by promoting new ideas and creativity in today's global marketplace. By bringing various perspectives and opinions together, the company benefits from increased innovation, productivity, and employee satisfaction (resulting in decreased employee turnover). In addition, a diverse, inclusive workforce can interact globally with customers and vendors of various cultures.

For these concepts to work, however, management must proactively formulate and enforce policies that reinforce a productive, heterogeneous workforce. Note that it takes more than just changing company logos and "lip service" to effect a truly impactful, diverse workplace.

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Unit 1 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

  • affirmative action
  • compensation requirements
  • corporate culture
  • discrimination laws
  • diversity
  • employee turnover
  • Equal Employment Opportunity Commission (EEOC)
  • healthcare requirements
  • human capital
  • human resource management (HRM)
  • inclusive workplace
  • labor laws
  • minimum wage
  • multiculturalism
  • retention
  • selection
  • social responsibility
  • staffing
  • strategic plan
  • training and development
  • worker safety laws
  • workplace benefits
  • workplace ethics