BUS301 Study Guide

Site: Saylor Academy
Course: BUS301: Human Resource Management
Book: BUS301 Study Guide
Printed by: Guest user
Date: Tuesday, April 23, 2024, 2:07 PM

Navigating the Study Guide

Study Guide Structure

In this study guide, the sections in each unit (1a., 1b., etc.) are the learning outcomes of that unit. 

Beneath each learning outcome are:

  • questions for you to answer independently;
  • a brief summary of the learning outcome topic;
  • and resources related to the learning outcome. 

At the end of each unit, there is also a list of suggested vocabulary words.


How to Use the Study Guide

  1. Review the entire course by reading the learning outcome summaries and suggested resources.
  2. Test your understanding of the course information by answering questions related to each unit learning outcome and defining and memorizing the vocabulary words at the end of each unit.

By clicking on the gear button on the top right of the screen, you can print the study guide. Then you can make notes, highlight, and underline as you work.

Through reviewing and completing the study guide, you should gain a deeper understanding of each learning outcome in the course and be better prepared for the final exam!

Unit 1: The Nature of Human Resources

1a. Define human resource management

  • Define human resources and human resource management (HRM).
  • Describe the five different roles HRM performs for a company:
    1. facilitator (training);
    2. auditor (policies);
    3. consultant (conflict management);
    4. executive (succession planning, wages, leadership management, organizational redesign);
    5. service (compliance issues).
  • Describe the functions HRM performs according to the HRM cycle:
    1. recruitment;
    2. selection;
    3. induction;
    4. training;
    5. development and appraisal;
    6. termination.
  • 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 follow to hire, train, and compensate their employees. Within a company or organization, the human resource team is often involved in developing the many policies that relate to employees and developing strategies to retain them.

Review these definitions for human resource management in What Is Human Resources?. Watch Human Resource Management to review human resource management roles and the human resource management cycle.


1b. Identify human resource management functions and current trends

  • Define strategic plan.
  • 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, 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 to 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.

Review The Role of Human Resources and Developing and Implementing Strategic HRM Plans.


1c. Explain why human resource professionals have developed into strategic partners within organizations

  • Define a business strategy.
  • Why should the goals of the human resource department align with the overall objectives of the business?
  • What other departments should the human resources department interact with to ensure organizational objectives are met?
  • How does an effective human resource department add financial value to an organization?
  • How does an effective human resource department add non-financial value to an organization?

A business strategy is a long-term plan of action designed to achieve a particular goal, set of goals, or objectives. The HRM team can ensure it is a critical part of the company's overall business strategy by understanding the business cycle, articulating the company's goals, and aligning itself with its overall key strategic objectives.

As with other organizational departments, HRM must prove its value to the overall business strategy. As businesses become more concerned about cutting costs, HRM departments must demonstrate the value they bring by aligning themselves with the company's key business objectives. This begins by understanding the challenges businesses face and finding ways to reduce potential internal and external negative effects.

Review What is StrategyDeveloping and Implementing Strategic HRM Plans, and Today's HRM Challenges.


1d. Explain why strategic human resource management is necessary to attract, recruit, and retain valuable human capital

  • Define human capital.
  • Name some key workplace benefits businesses offer their employees.
  • How do workplace benefits impact the recruiting process?
  • Define a 401(k) plan.
  • Explain some key HRM challenges, such as containing costs, keeping up with technology, and responding appropriately to ethical violations.
  • Name some industries that can prove challenging for HR managers who must maintain a certain number of employees?

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 they can save by limiting the number of benefits they offer 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.

Review What is Human Resources?Compensation and Benefits, and Today's HRM Challenges.


1e. Explain the importance of corporate culture within human resource management, which includes ethics and social responsibility

  • Define corporate culture, workplace ethics, and social responsibility. Explain the relationship between these three concepts.
  • What role should corporate culture, workplace ethics, and social responsibility play in the recruiting process?
  • What role does corporate culture, workplace ethics, and social responsibility play in retaining employees?

Corporate or organizational culture refers to the general beliefs, attitudes, values, and behaviors that a company or organization promotes among its employees. This culture can dictate how the employees dress, act, perform their jobs, and treat their co-workers 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 the organization 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 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, and/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 within the organization. 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 opinion and employee buy-in on the changes, and communicate the new or revised policies to employees. HRM cannot work alone: everything they do must involve all other departments at the organization.

HRM is usually responsible for developing a code of ethics and professional conduct at the organization. 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 with respect and avoiding situations that others may regard as sexual harassment.

Many corporate leaders recognize that being socially responsible, such as by promoting local community events and encouraging environmentally-sustainable practices, is not only popular among their customers and employees, but these practices also make 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, promoting goodwill that generates customer loyalty, and creating a more healthy 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.

Review What Is Human Resources? and Today's HRM Challenges.


1f. Identify key laws and legislation that shape how human capital decisions should be made

  • Describe the five types of laws HRM must be aware of that affects the workplace:
    1. Discrimination laws;
    2. Healthcare requirements;
    3. Compensation requirements, such as minimum wage;
    4. Worker safety laws;
    5. Labor laws.

Policymakers in many countries have created laws to protect their employees, such as workplace discrimination and unsafe working environments. Since the legal and legislative environment for HRM frequently fluctuates, HR managers need to 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 with communicating any additions or changes to the entire leadership.

For example, in the United States, legislators have recently modified the rules that dictate how large employers must offer health insurance to their employees via the Affordable Care Act passed in 2010. Similarly, Congress members may vote to increase the lowest wage employers can legally pay their workers (the minimum wage), revise the procedures and precautions companies must follow to protect the health and safety of their employees, and 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 that prohibit 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.

Review What Is Human Resources?Introduction to the US Equal Employment Opportunity CommissionOverview of the U.S. Equal Employment Opportunity Commission, and Laws Enforced by the EEOC.


1g. Identify the key elements and contexts of affirmative action, and use the insight to support making informed decisions regarding diversity when managing human capital

  • Define diversity and describe its role in the workplace.
  • Describe the difference between having a diverse and inclusive workplace environment.
  • Define multiculturalism.
  • Define affirmative action.
  • Describe the key elements of affirmative action: age, disability, race, sex, national origin, and religion.
  • Define employee turnover.

Workplace diversity refers to how well the company exhibits various 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 representing a range of ages, races, and ethnicities are more successful than those who do not. Creating a diverse workplace can provide organizations with a competitive advantage by promoting new ideas and creativity in today's global marketplace.

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 decisions in society. HRM professionals should understand how to motivate employees by creating an inclusive workplace.

Employers promote a sense of inclusion among their employees by encouraging a diversity of 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 that promote members of groups who have suffered from past discrimination, such as by providing access to education and employment opportunities.

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

Review The Costs of TurnoverToday's HRM ChallengesIs Affirmative Action a Good Approach Against Discrimination?, Workplace Diversity Strategy, and Best Practices in Achieving Workforce Diversity.


Unit 1 Vocabulary

  • 401(k) plan
  • Age discrimination
  • Affirmative action
  • Appraisal
  • Auditor (policies)
  • Benefits
  • Business strategy
  • Compensation
  • Compliance issues
  • Conflict management
  • Consultant
  • Corporate culture
  • Development
  • Disability discrimination
  • Discrimination law
  • Diversity
  • Executive
  • Facilitator
  • Healthcare requirement
  • Human capital
  • Human resources
  • Human resource management
  • Induction
  • Labor laws
  • Minimum wage
  • National origin discrimination
  • Race discrimination
  • Recruitment
  • Religious discrimination
  • Retention
  • Selection
  • Sex discrimination
  • Social responsibility
  • Staffing
  • Strategic plan
  • Succession planning
  • Termination
  • Training
  • Turnover
  • Worker safety laws
  • Workplace ethics
  • Workplace training

Unit 2: Strategic Human Resource Planning and Staffing

2a. Define strategic human resource planning

  • Explain the difference between personnel management and human resource management.
  • Define cost center.
  • Define the five main areas of HRM according to the Ulrich HR model.
    1. Strategic partner;
    2. Change agent;
    3. Administrative expert and functional expert;
    4. Human capital developer;
    5. Employee advocate.
  • Describe four aspects David Ulrich (1953– ), the American management consultant, recommends HRM consider when creating a strategic plan.
    1. Make it applicable;
    2. Be a strategic partner;
    3. Involve people;
    4. Understand how to use technology.
  • Define SWOT analysis.
  • How can HRM use a SWOT analysis to identify gaps that exist between the HRM and the company's overall strategic plan?
  • Define the following six areas the HRM department should address when conducting a strategic analysis.
  • What role do these HRM responsibilities play in the overall strategic plan of the organization?
    1. Staffing (chapters 4, 5, and 6);
    2. Basic workplace policies (addressed throughout the book);
    3. Compensation and benefits (chapters 6 and 7);
    4. Retention (chapters 7, 9, 10 and 11);
    5. Training and development (chapter 9);
    6. Regulatory issues and worker safety (chapters 12 and 13).

As discussed in Unit 1, in the past, a company's HR or personnel department was simply responsible for hiring and firing employees, responding to grievances and safety concerns, and keeping track of relevant laws, rules and regulations. Today, HRM also plays a significant role in helping a company achieve its strategic goals.

For example, HRM may integrate training programs across the business to promote its overall mission and values, rather than create stand-alone programs to help a small group of employees complete a specific task.

HRM is involved in employee development and contributes to the overall profit objectives of the organization – it is no longer strictly a cost center or department that costs money to operate without contributing cash inflow. HRM is expected to help companies save money by hiring and helping retain the right people for a job and anticipating future growth needs.

According to the Ulrich HR model, HRM should partner with every department of the business, such as by aligning potential and available human capital to fulfill the organization's needs. HRM can be a change agent by anticipating and responding to changes in the outside industry, not simply in terms of its HR function, but by serving the company as a whole.

As an administrative and functional expert, HRM must understand and implement policies, procedures, and processes that relate to the overall strategic plan. As a developer of human capital, HRM helps develop the talent the company will need in the future. As an employee advocate, HRM works on behalf of the employees within the organization.

A SWOT analysis is a strategic planning tool managers use to identify an organization's strengths, weaknesses, opportunities, and threats. HRM can create a SWOT analysis to identify gaps in the company's overall strategic plan. For example, HRM can encourage the company to adopt or continue funding a program that is a departmental strength. It can also recommend revising a policy that is an organizational weakness.

Review HRM vs. Personnel Management. See Table 2.1 for examples of differences between personnel management focus and HRM focus. Also, review Identify Strategic HR Issues and Six Roles HRM Responsibilities Play in Strategic Planning.


2b. Identify why effective planning is vital in human resource management

  • Define organizational life cycle.
  • How do companies benefit when HRM is involved in strategic planning.
  • Define an intended strategy, an emergent strategy, and a realized strategy.

Analysts study how businesses typically progress through an organizational life cycle or phases, such as its introduction, growth, maturity, and decline. Each life cycle stage entails new challenges HRM must recognize and address to ensure their strategic plan is relevant and applicable.

HRM demonstrates its value to the organization when its strategic plan aligns with its goals and objectives. For example, this plan may estimate how many employees the business needs to hire and what skills are needed to accomplish certain goals and objectives. HRM should communicate frequently with other managers and supervisors to ensure their goals and objectives reflect accurate and applicable recruitment and training targets.

Henry Mintzberg (1939– ), a Canadian academic and business management author, discussed the differences among three business concepts: intended strategy, emergent strategy, and realized strategy.

Business managers may need to adjust their strategies to align with their stated plans. Top management, which formulates the intended strategy, may decide not to implement their objectives as they initially conceived. Their realized strategy describes the one that actually gets implemented and is influenced by changing factors, such as competitors, environmental changes. When businesses employ an emergent strategy, the plans that emerge and incorporated into new or revised strategies.

HRM should support the organization by developing relevant strategic plans to help the business meet its goals and objectives.

To create an effective strategy, business leaders need to answer the following four questions:

    1. Where do we compete?
    2. What unique value do we bring to the marketplace?
    3. What resources and capabilities do we use?
    4. How do we sustain our value?

Review Strategic Planning, What is Strategy?, and Video Introduction.


2c. Define and explain how to conduct a job analysis, and discuss the validity of an analysis in support of other key human capital functions

  • Define a job analysis and its purpose.
  • Define job design.
  • Describe the six-step process of writing a job analysis. (see Figure 4.1 below)
  • Explain the difference between task-based job analysis and competency-based or skills-based job analysis. Provide an example of each type of analysis.
  • Define a job description.
  • Describe the four primary components of a job description: Job functionKnowledge, skills, and abilities (KSAs), required education and experience, and physical requirements of the job.

Job analysis describes the formal process of determining the tasks people perform in their jobs and the capabilities needed to perform the job well. HR can use the data the analysis generates to create relevant job descriptions and job specifications.

Job descriptions typically outline the following attributes of successful potential candidates:

  1. Job functions or tasks an employee will be required to perform. For example, working with specific computer software programs, presenting at conferences, negotiating contracts with clients and vendors, or selling products to potential customers;
  2. Knowledge, skills, and abilities (KSAs) refer to the expertise a job candidate should have to perform the job-in-question well, such as knowledge about certain regulations or procedures, specific skill-based talents, capabilities, or personal attributes;
  3. Required educational background and experience typically refers to specific academic degrees or licensed credentials the candidate should have earned, or relevant tasks they have performed during previous work assignments; and
  4. Physical requirements refer to the physical motor-based functions the job candidate will be required to perform, such as the ability to lift a certain weight, stand for long periods of time, work at a computer desk, or see or hear certain things.

Job specifications discuss the skills and abilities an employee must have to perform their job effectively. A list of job specifications is usually included in the job description.

Job design refers to the process managers undergo to revise or modify a job description or job function to make it more effective. For example, managers may realign the employee's responsibilities or tasks to accommodate new technologies and industry innovations.


Process for Writing the Job Analysis

A task-based job analysis focuses on the tasks, duties, and responsibilities performed in a certain job. Tasks refer to work activities composed of motions, whereas duties are composed of several tasks an individual performs. Examples of task-based analysis might include compiling information to prepare reports in specific computer programs, driving a forklift, or answering phone calls.

Competency- or skills-based job analyses focus on how individuals use their knowledge, skills, and abilities on the job. Examples of this type of analysis might include using data analysis tools, working within teams, or creating a visual presentation.

Review The Recruitment Process and Writing a Job Description.


2d. Describe how to effectively manage human capital and properly assess knowledge, skills, and abilities to find valuable resources (people)

  • What is the primary purpose for including KSAs (knowledge, skills, and abilities) in a job description?
  • Explain the differences between knowledge, skills, and abilities. Provide examples of each.

Employers identify the "right" human capital they need to hire by assessing and defining all of the jobs the organization should have to perform most efficiently. A proper job analysis of all of the organization's roles helps hiring managers to identify the most effective traits of those who work in specific positions. They need to recognize that individuals may need to complement their co-workers' knowledge, skills, and abilities (KSAs), so the entire team has what it needs to complete its work in the best way possible.

These traits reflect the KSAs and other characteristics required to perform a job. For example, an employee's success may hinge on their capacity to learn on-the-job, accept constructive criticism, and to remain calm and work well during stressful situations.

The U.S. Office of Personnel Management defines knowledge as the body of information applied directly to the performance of a function. Skill is an observable competence to perform a learned psychomotor act. Ability is the competence to perform an observable behavior that results in an observable product. Together, KSAs describe attributes required to perform a job and are generally demonstrated through qualifying service, education, or training.

Note that while the U.S. federal government commonly uses the term "KSAs" in its job descriptions, other employers may use similar words to connote personal characteristics, competencies, and proficiencies.

Some employers assign relative values or weights to each KSA by designating some qualifications as "mandatory (M)", "desirable (D)", "required", or "preferred". When they refer to certain KSAs as desirable or preferred, they suggest they are open to considering other factors when making their hiring decision, such as equivalent work experience or other competencies. The employer could signal they are open to training job candidates to perform these desirable or preferred skills they lack, but not necessarily.

  • Why does Dan Springer compare a firm's employees with income statements and balance sheets?
  • How does this concept relate to managing human capital to attract, motivate, and retain good performers?

In the video "Protecting Human Capital", Dan Springer says HRM should think about employees as assets. When businesses do not treat their valuable assets properly, the entire company suffers. Disgruntled and unproductive employees reduce the productivity of the entire business, frequently sow discontent among others, and can quit the firm altogether. Hiring and training replacements can be extremely costly and time-consuming.

Rather than focus on short-term objectives that may cause top employees to burnout or become overwhelmed, HRM should look for ways to boost motivation, provide proper training to help employees succeed, and retain good employees to help the business achieve its long-term goals.

Review Protecting Human Capital and The Recruitment Process.


Unit 2 Vocabulary

  • Administrative expert
  • Change agent
  • Competency-based job analysis
  • Cost center
  • Emergent strategy
  • Employee advocate
  • Functional expert
  • Human capital developer
  • Human resource management (HRM) strategic plan
  • Human resources (HR) plan
  • Intended strategy
  • Job analysis
  • Job description
  • Job design
  • KSAs
  • Organizational life cycle
  • Personnel management
  • Realized strategy
  • Retention
  • Skills-based job analysis
  • Staffing
  • Strategic analysis
  • Strategic partner
  • Strategic plan
  • SWOT analysis
  • Task-based job analysis

Unit 3: Recruitment and Selection

3a. Explain how to develop a personnel plan

  • Define a personnel plan and explain why it is important to ensure the firm's human capital needs are met.
  • Describe the six parts of the HRM plan:
    1. Determine human resource needs
    2. Determine the recruiting strategy
    3. Select employees
    4. Develop training
    5. Determine compensation
    6. Appraise performance

Personnel planning refers to the decision-making process businesses undergo to decide which positions they should fill – immediately and in the future – and how they will hire the employees they need to fill any vacancies. This planning stage is the first step to defining the recruitment and selection process to ensure the company has the appropriate number and right kind of employees.

Review Developing and Implementing Strategic HRM Plans.


3b. Develop strategies for recruiting, selecting, on-boarding, and retaining valuable human capital

  • Describe three primary types of recruiters: executive search firm, temporary recruitment or staffing firm, and corporate recruiter.
  • Define and contrast validity and reliability in terms of evaluating and choosing selection tools for hiring new employees.
  • Explain how recruiters can incorporate at least three forms of social media into their employee recruitment efforts.
  • Define special/specific interest group (SIG).
  • What is an employee referral program (ERP)?
  • What are the goals of employee orientation and on-boarding?
  • Discuss the advantages and disadvantages of employee leasing.
  • Define five laws that impact many aspects of human capital management.
    1. Bonafide Occupational Qualification (BFOQ)
    2. Disparate Impact
    3. Equal Employment Opportunity (EEO)
    4. Immigration Reform and Control Act (IRCA)
    5. Patriot Act

Validity refers to the underlying construct of a measurement, or whether it measures what it purports to measure. Three main types of validity include content, construct, and criterion validity.

Reliability refers to whether a researcher can obtain the same measurement or result time after time or is repeatable. For example, will the recruitment and selection processes a company uses work every time they need to hire someone, or just once?

Figure 4.5: Overview of the Steps to the Recruitment Process describes the evolving sequence of steps – from staffing plans to the selection process.

Overview of the Steps to the Recruitment Process

Figure 4.5 Overview of the Steps to the Recruitment Process

For example, many companies successfully use employee referral programs (ERFs) to recruit new employees by asking current employees to recommend job applicants. The referrals' quality is generally high and is often an important part of the overall HRM strategic plan and recruitment strategy.

Recruiting through social media (such as via Twitter, LinkedIn, and Facebook) tends to attract passive candidates who were not actively looking to switch jobs. HRM is challenged to present the candidate with an accurate picture of the job and determine whether this candidate is passionate about the work.

Special or specific interest groups (SIGs) follow a specific profession or area of interest, such as women in project management. SIGs may require membership and may have areas for job posting or discussion boards.


Advantages and Disadvantages of Recruiting Methods

Recruitment Method



Outside recruiters, executive search firms, and temporary employment agencies

ᐧ Can be time-saving.

ᐧ Expensive.

ᐧ Less control choosing final candidates to be interviewed.

Campus recruiting and educational institutions

ᐧ Can hire people to grow with the organization.

ᐧ Plentiful source of talent.

ᐧ Time-consuming.

ᐧ Only appropriate for certain types of experience levels.

ᐧ Only appropriate for certain types of experience levels.

Professional organizations and associations

ᐧ Industry-specific.

ᐧ Networking.

ᐧ May require a fee for ad placement.

ᐧ May be time-consuming to network.

Website or Internet recruiting

ᐧ Diversity-friendly.

ᐧ Low cost.

ᐧ Quick.

ᐧ Could be too broad.

ᐧ Be prepared to deal with hundreds of résumés.

Social media

ᐧ Inexpensive.

ᐧ Time-consuming.

ᐧ Overwhelming response rate.


ᐧ Access to specific target markets of candidates.

ᐧ Can be expensive.

ᐧ May not be the right target market.

SIG (special/specific interest groups)

ᐧ Industry-specific.

ᐧ Research required for specific SIGS tied to jobs.


ᐧ Higher quality people.

ᐧ Retention.

ᐧ Concern for lack of diversity.

ᐧ Nepotism.

Unsolicited résumés and applications

ᐧ Inexpensive, especially with time-saving keyword résumé search software.

ᐧ Time-consuming.

Traditional classified advertisements (print and web-based)

ᐧ Can target a specific audience.

ᐧ Can be expensive.

Employee leasing

ᐧ For smaller organizations may mean the leasing company administers compensation and benefits.

ᐧ Can be a good alternative to temporary employment if the job is permanent.

ᐧ Possible costs.

ᐧ Less control of who interviews for the position.

Public employment agencies

ᐧ May recruit a more diverse workforce

ᐧ No cost to the employer.

ᐧ 2,300 points of service nationwide.

ᐧ May receive many résumés, which can be time-consuming to process.

Labor unions

ᐧ Access to specialized skills.

ᐧ May not apply to some jobs or industries

ᐧ Builds relationship with the union


Most companies provide informal and formal orientation programs that typically inundate recruits with paperwork to sign and explanations about benefits. On the other hand, a strategic onboarding process should be comprehensive and involve other employees and managers. The process should help employees assimilate to company policies and workflow processes to become fully acquainted with the business' culture. Inattention to this step can lead to misunderstandings, employee dissatisfaction, lost productivity, and higher turnover rates.

This table describes the advantages and disadvantages of various recruiting methods, such as executive search firms, employee leasing, and social media. Employee leasing refers to businesses that "rent" employees from a management company because they do not want to manage or keep track of payroll and other HR costs and responsibilities.

These employment laws in the United States impacts many aspects of human capital management. HRM must address them in virtually every step of the recruitment and selection process.

Bonafide occupational qualification (BFOQ) is a quality or attribute that is reasonably necessary to the normal operation of the business, and that can be used when considering applicants. BFOQs are exceptions to the normal laws about discrimination in hiring. An example of a BFOQ exception is a mandatory retirement for airline pilots at a certain age due to safety concerns.

Disparate impact occurs when an organization discriminates through the use of a process that affects a protected group as a whole, rather than consciously intending to discriminate. For example, requiring written tests for hiring, promotions, etc. that do not relate directly to the job.

Equal Employment Opportunity (EEO) laws ensure that discrimination does not occur in the workplace. Businesses must post these laws at a visible location for employees and include them on job announcements. The U.S. Equal Employment Opportunity Commission (EEOC) is the federal agency that administers and enforces civil rights laws against workplace discrimination.

The Immigration Reform and Control Act (IRCA) requires all employers to determine an employee's eligibility to work in the United States. The reporting form is called an I-9 and is the documentation employers must complete and keep on file for a specified time.

The Patriot Act allows the government to access data that would previously have been considered private, such as an employee's records, work voicemails, and emails, without the company's consent. The U.S. Congress enacted this law in response to the Sept. 11, 2001 terrorist attacks against the United States.

Review these resources:


Unit 3 Vocabulary

  • Bonafide Occupational Qualification (BFOQ)
  • Corporate recruiter
  • Disparate impact
  • Employee leasing
  • Employee orientation
  • Employee referral program (ERP)
  • Equal Employment Opportunity (EEO)
  • Executive search firm
  • Immigration Reform and Control Act (IRCA)
  • On-boarding
  • Passive candidates
  • Patriot Act
  • Personnel plan
  • Recruitment
  • Reliability testing
  • Selection
  • SIG (special/specific interest group)
  • Social media recruitment
  • Staffing firm
  • Temporary recruitment firm
  • Validity testing

Unit 4: Training and Development/Career Planning

4a. Create strategies to support the training and development of human capital

  • Define employee training and development.
  • Describe the four steps that generally occur for effective employee training: employee orientation, in-house training, mentoring, external training.
  • What are the goals of employee orientation?
  • Describe three examples of in-house training.
  • Describe an example of external training.
  • Define soft skills training.
  • Define job shadowing.
  • Describe three criteria for choosing mentors?
  • Describe the goals of the U.S. Occupational Safety and Health Administration (OSHA).
  • Describe the considerations for developing a training program.
  • Describe the four levels of Kirkpatrick's Training Evaluation Model.

Employee training and development are processes businesses use to help employees develop their personal and organizational skills, knowledge and abilities, and overall job performance.

Four steps that generally occur for effective employee training include:

  1. HRM often creates employee orientation programs to welcome new employees. Two goals of orientation include explaining company policies and describing how their position fits within the organization.
  2. HRM may create in-house training programs to clarify company policies related to customer service, ethics, management, sexual harassment, and other issues. Quality training is an example of in-house training that helps employees prevent, detect, and eliminate inefficiencies and non-quality items.
  3. HRM may facilitate mentoring programs to help new employees feel welcome and learn from someone who knows the business, department, and ways to address or circumvent on-the-job challenges. Managers choose mentors based on their experience, willingness, and personality.
  4. HRM may make external training programs available to employees to enhance job-related learning and help develop management and leadership skills. For example, HRM may encourage an employee to take college courses or enroll in off-site seminars to enhance management potential or develop new job-related skills.

HRM creates various types of training opportunities, such as technical, quality, soft skills training, to develop a "holistic" employee.

Technical training teaches employees about the job's technological aspects, such as how to use relevant computer systems.

Skills training refers to proficiencies employees need, such as using the phone system or performing specific tasks to provide customer assistance.

Soft skills training refers to personality traits, such as communication, personal habits, and social graces that characterize relationships with co-workers and clients. For example, how to improve communication, become better listeners, and interact with customers in specific circumstances.

Job shadowing is a training method that places an employee who wants to learn or develop certain skills with a skilled employee who serves in a mentoring capacity. An apprenticeship is an example of this type of training.

Vestibule training is a method of on-the-job teaching that creates a simulated work experience for trainees. This training type often takes place in the company's classrooms, conference rooms, where orientations, safety, quality performance, and some skills-based training are delivered.

Safety training ensures employees are protected from injuries from work-related accidents. The U.S. Occupational Safety and Health Administration (OSHA) is the federal agency charged with enforcement of safety and health regulation. OSHA provides external and in-house training on OSHA standards. OSHA is discussed in more detail in Unit 7.

A needs assessment addresses the kind of training needed and allows HRM to set learning objectives to measure whether goals were met at the end of the training.

HRM should consider learning styles because individual employees acquire and process information differently. For example, a visual learner may require graphics, pictures, figures. An auditory learner will appreciate listening to a lecture or to someone explaining how to do something. A kinesthetic learner tends to learn by doing rather than listening or watching someone do the task. A successful training program will include various types of information delivery to appeal to the learning styles of the audience.

The delivery mode is the method used to present the training. Table 8.1: Types of Training and Delivery describes several delivery methods, such as on-the-job coaching, mentoring, brown bag lunch, web-based training, job shadowing, job swapping, and vestibule training, and the type of training suggested for each method.

The budget will determine the training a business can afford to offer. HRM should tabulate the indirect costs of planning, preparation, and employee time spent away from their job, in addition to direct costs (supplies and services), when calculating the total cost of the training.

Delivery style refers to various ways HRM appeals to the different learning styles of the trainees. For example, ice breakers, breakout discussions, role-playing, and interactive media can make the training more engaging for employees with various learning styles.

HRM should align its delivery method to its audience to make the training most relevant. For example, planners might consider the types of departments the employees work in, how long they have worked at the company, whether the group includes a diversity of job titles to determine focused and appropriate training.

Content refers to the information HRM needs to convey to employees in the best sequence. After HRM has determined the training's learning goals and objectives, it can formulate relevant topics and choose information it needs to present to support each topic. HRM should choose appropriate learning techniques to deliver the training, such as demonstrations, online courses, expert speakers, group discussions, slide presentations and visual aids, online post-event discussion, and other activities.

HRM needs to create realistic timelines for the specific type of training planned. For example, how long will the training program take, and how often should they offer it? When is the best time to present it? How does the training align with other company events and strategic planning initiatives?

Training programs are only good if they are effective. In other words, how well did HRM meet its training objectives?

The Kirkpatrick model measures four levels of effectiveness. See Figure 8.7: Kirkpatrick's Four Levels of Training Evaluation.

Kirkpatrick's Four Levels of Training Evaluation

  1. Reaction assesses whether participants react favorably to the training and find it relevant to their job performance.
  2. Learning assesses whether participants acquire the intended knowledge, skills, attitude, confidence, and commitment.
  3. Behavior assesses whether participants change their previous practices to apply what they learned during training to the way they perform their job.
  4. Results assess whether the training supports its targeted outcomes and benefits result from that support future accountability.

Review Steps to Take in Training an EmployeeTypes of Training, and Designing a Training Program.


4b. Describe the impact that career/succession planning has on human capital

  • Define succession planning.
  • What is a career development program, and why are they recommended for today's organizations?
  • How does the failure to address career development impact employee turnover and organizational goals?

Career Development Planning Process

Succession planning is the process businesses follow to identify and develop internal employees who exhibit the potential to fill key business leadership positions. It includes handling the departure of managers and making current employees ready to take on managerial roles when a manager does leave.

Career development programs help employees manage their careers, learn new things, and take steps to improve personally and professionally. These programs encourage and guide employees on ways to attain their short- and long-term career goals. Employees have an opportunity to contribute more to the company, take on a leadership role, and make their jobs more interesting. By making these programs available, the company demonstrates it values employee contributions and cares about the people who work there as individuals.

Companies benefit when they can retain good, knowledgeable, and skilled employees. They will reduce hiring and retraining costs by maintaining a pipeline of loyal and motivated employees to fill future job openings due to resignations and retirements, even during a poor labor market. HRM can formulate future staffing plans, take an active role in minimizing costly turnover, and ensure a motivated and well-trained workforce.

Review Strategic Planning and Designing a Training Program.


Unit 4 Vocabulary

  • Career development program
  • Employee orientation
  • External training
  • Employee training and development
  • In-house training
  • Job shadowing
  • Kirkpatrick's Training Evaluation
  • Learning style
  • Mentoring
  • Quality training
  • Soft skills training
  • Succession planning
  • Vestibule training

Unit 5: Performance Management and Measurement

5a. Explain the distinction between performance management and performance appraisals

  • Define performance management systems.
  • Define performance appraisal.
  • Why is it important for HR to establish and communicate clear policies to handle performance issues?
  • What is a mandated issue in the performance issue model?
  • What type of performance issue may best be resolved with a casual conversation to let the employee know that what they did was inappropriate?
  • Define checklist scale method (performance evaluations).
  • Define critical incident appraisal.
  • Define employment-at-will principle (EAW).
  • Define grievance process.
  • Define implied contract.
  • Define work standards approach appraisals.

HRM should establish clear policies regarding job performance expectations and issues to benefit the employee and the organization.

For example, the discipline process should aim to help employees meet performance expectations rather than punish them. Policies need to be available and communicated to every employee, so they know what the company expects of them. Employees need to be treated fairly and with consistency.

A written policy ensures HRM and supervisors follow certain procedures when handling these complex issues; comply with applicable laws, rules, and regulations; and provide employees with a remedy for violations of any policies. Proper procedures can protect the employee and the organization.

Performance management systems refer to comprehensive processes involving employees, managers, and executive leadership to improve organizational effectiveness and accomplish the company's mission and goals.

Review how performance standards, performance measurement, reporting of progress, and quality improvement are interrelated in Figure 5.2: Performance Management System.

Performance Management System

Graphic of a performance management system

The evaluation or appraisal process a company follows should align with its culture and business needs. For example, a manager may conduct annual evaluations because they feel more frequent meetings could be too disruptive or time-consuming, the job responsibilities are fairly static, or they know staff members regularly discuss progress and goals with each other in less formal ways.

If an employee breaks the rules or does not meet the performance appraisal expectations, the performance issue model can be used to correct the behavior.

HRM categorizes business performance issues in five progressive areas: 1. mandated, 2. single incident, 3. behavior pattern, 4. persistent pattern, 5. disciplinary intervention.

Businesses must address mandated issues immediately.

Examples include sharing information in violation of privacy laws, not following safety procedures, and engaging in sexual harassment. For example, a hospital employee who divulges patient information to unauthorized people violates patient privacy. HRM needs to address these indiscretions immediately to protect their patient's rights and the hospital. Company policies should express these issues and communicate them to every employee, such as through orientations, handbooks, and training. Employees need to acknowledge they have received this information in writing.

HRM can usually solve a single incident, a relatively minor infraction of the rules, with a casual conversation. After advising the employee that their behavior is inappropriate (such as using unacceptable language, running over budget, or submitting a project post-deadline), supervisors expect the employee behavior will improve, and no further discipline will be necessary.

For example, managers use a checklist scale method to mark feedback on employee job performance with a simple "yes" or "no". While this evaluation is easy and convenient, it does not record more detailed answers or analysis regarding employee performance.

For critical incident appraisals, managers provide specific examples of an employee's effective or ineffective behavior during the evaluation period. Unfortunately, managers who use this method tend to focus on negative incidents during the time period.

A work standards approach emphasizes productivity. The employee's performance evaluation is based on a minimum-level, results-focused approach. For example, a manager considers an employee who does not meet a minimum standard sales quota to be non-performing. Unfortunately, this method does not account for reasonable deviations from the minimum standard the manager set. The approach works best in long-term situations where managers consider a reasonable performance measure over a certain time period.

Some managers prefer to meet more frequently to confirm everyone shares the same understanding of what needs to be accomplished and has an opportunity to ask questions and make suggestions. Creating regular, formal lines of communication can be invaluable to employees who meet infrequently otherwise. For example, staff may require more frequent guidance when their job responsibilities change as they learn new skills or collaborate with other team members on multiple projects.

Note that HRM needs to treat employee-related concerns seriously, especially when issues are mandated by outside, legally-enforced rules, regulations, or industry-wide practices. These mandates can affect the entire company if HRM does not respond appropriately. HRM may be able to resolve single issues informally, but behavior patterns can develop when they do not address them correctly. We label these behavior patterns "persistent" when an employee has been corrected for their behavior but continues to disregard the warnings. At this stage, the employee must realize that the company will take further action if their unacceptable behavior continues.

In the United States, the employment-at-will principle (EAW) describes the legal rights an employer has to fire an employee and the right an employee has to leave an organization at any time, without giving any specific cause. In other words, the employer and employee have the freedom to terminate their relationship at any time. There are three exceptions to this principle: 1. public policy exception, 2. implied contract exception, and 3. good faith and fair dealing exception.

The Worker Adjustment and Retraining Notification Act (WARN) requires organizations with more than 100 employees who have worked at the organization for more than six months to give employees and their communities at least 60 days' notice of closure or layoffs that affect 50 or more full-time employees. The law does not apply in unforeseeable business circumstances.

Employers and employees create an implied contract through words and actions – in other words, the contract is not written or spoken. Although the parties have no written contract, the law creates an obligation in the interest of fairness, based on the parties' conduct or circumstances.

Many collective bargaining agreements include a grievance process that outlines the procedure employees can follow to submit a complaint about something their employer has administered incorrectly according to their contract.

Review Appraisal MethodsManaging Employee PerformanceHR Basics: Performance and Rewards, and Developing Employees: Performance Assessment.


5b. Conceptualize HR strategies to improve overall organizational success

  • Define performance evaluation system.
  • What is the importance of setting employee goals, tracking the progress of these goals, and rewarding employees when goals are met?
  • HR professionals should develop a set of policies that deal with performance issues. What is the advantage to the organization of having these policies?
  • Define the progressive discipline process.
  • Define rightsizing.
  • Define Worker Adjustment and Retraining Notification Act (Warning).
  • Define severance package.
  • Define span of control.
  • Define whistleblowing.
  • Define a 360° (degree) performance appraisal.
  • Describe the concept of management by objectives (MBO).
  • Define SMART goals.
  • Define a behaviorally-anchored rating scale (BARS).

A performance evaluation system (also called performance appraisal or assessments) is the systematic procedure businesses follow to examine and measure how well their employees perform according to their expectations. HRM should plan a system that allows managers and employees to provide formal feedback about their job performance.

Businesses implement a systematic performance evaluation system to:

  1. Encourage positive performance and behavior.
  2. Satisfy employee curiosity as to how well they are performing in their job.
  3. Develop the knowledge, skills, and abilities of employees.
  4. Provide a basis for pay raises, promotions, and legal disciplinary actions.

The final step in the performance issue model is to provide disciplinary intervention: a series of steps or corrective action a business takes before terminating an employee who continues to be non-performing.

Progressive discipline typically includes five steps:

  1. First offense: The employer issues an unofficial verbal warning, provides counseling, and issues a restatement of expectations.
  2. Second offense: The employer issues an official written warning that is documented in the employee's file.
  3. Third offense: The employer issues a second official warning and may develop an improvement plan documented in the employee's file.
  4. Fourth offense: The employer suspends employment or issues another form of punishment documented in the employee's file.
  5. Fifth offense: The employer may terminate the employee and begin the process of alternative dispute resolution.

Downsizing (or rightsizing) describes the process businesses follow to reduce their number of employees to decrease expenses or meet other business needs. Employers may offer departing employees a severance package, with pay, benefits, and other compensation, when they leave the organization due to layoffs or retirements. Severance contracts often stipulate the employee will not sue the employer for wrongful termination.

Span of control refers to the number of subordinates a manager or supervisor can directly control. The most effective number of subordinates often depends on the amount of supervision workers require, the supervisor's capabilities, similarity, volume, and type of tasks. The timing of appraisals, such as yearly or semi-annually, may depend on how many employees the manager has in their span of control.

A whistleblower refers to an employee who divulges ethical infractions or legal violations of their business or organization to the public. Federal employment laws in the United States protect whistleblowers from employer retribution. Congress granted this protection in 1989 and extended these provisions in the Sarbanes-Oxley Act of 2002.

Performance appraisal (also called performance evaluations and performance assessments) describes the methods businesses use to examine how well employees perform in their job and obtain other types of feedback.

For example, some companies invite managers and co-workers to evaluate each other's job performance via 360° Feedback, which is especially useful when staff members work on teams and collaborate on projects. In this performance appraisal method, everyone can share their understandings and expectations about how to work together effectively, complement each other's skills and abilities, and how to meet expected goals, outcomes, and the mission of the organization.

Management by objectives (MBO) is a results-oriented approach that invites managers and employees to discuss and formulate mutually-accepted goals and objectives. The employee has "buy-in" because they participate in the process and can use the evaluation to further their skill development.

The written objectives should be SMART goals, or 1. specific, 2. measurable, 3. attainable, 4. result-oriented, and 5. time-limited.

According to the BARS (Behaviorally Anchored Rating Scales) appraisal method, reviewers base their evaluation on specific behaviors required for each position in the company. BARS compare an individual's performance (often collected by a critical incidents system) against specific examples of behavior anchored to numerical ratings.

Review these types of performance appraisal methods and their advantages and disadvantages. Note that no one performance appraisal is best, so most companies use various methods to ensure the best results.

Advantages and Disadvantages of Each Performance Appraisal Method

Type of Performance Appraisal Method



Graphic rating scale

ᐧ Inexpensive to develop.

ᐧ Easily understood by employees and managers.

ᐧ Subjectivity.

ᐧ Can be difficult to use in making compensation and promotion decisions.


ᐧ Can easily provide feedback on the positive abilities of the employee.

ᐧ Subjectivity.

ᐧ Writing ability of reviewer impacts validity.

ᐧ Time consuming (if not combined with other methods).

Checklist scale

ᐧ Measurable traits can point out specific behavioral expectations.

ᐧ Does not allow for detailed answers or explanations (unless combined with another method).

Critical incidents

ᐧ Provides specific examples.

ᐧ Time consuming for the manager.

ᐧ Tendency to report negative incidents.

Work standards approach

ᐧ Ability to measure specific components of the job.

ᐧ Does not allow for deviations.


ᐧ Can create a high-performance work culture.

ᐧ Validity depends on the amount of interaction between employees and managers.

ᐧ Can negatively affect teamwork.

ᐧ Possible bias.


ᐧ Open communication.

ᐧ Employee may have more "buy-in".

ᐧ Many only work for some types of job titles.


ᐧ Focus is on desired behaviors.

ᐧ Scale is for each specific job.

ᐧ Desired behaviors are clearly outlined.

ᐧ Time consuming to set up.


Review HR Basics: Performance and RewardsManaging Employee PerformanceEmployee Assessment, and Employee Assessment.


Unit 5 Vocabulary

  • 360° (degree) performance appraisal
  • Behaviorally-anchored rating system (BARS)
  • Checklist scale method (performance evaluations)
  • Critical incident appraisal
  • Employment-at-will principle (EAW)
  • Grievance process
  • Implied contract
  • Management by objectives (MBO)
  • Performance appraisal
  • Performance evaluation system
  • Performance issue model
  • Performance management system
  • Progressive discipline process
  • Rightsizing
  • Severance package
  • SMART goals
  • Span of control
  • Whistleblowing
  • Work standards approach appraisals
  • Worker Adjustment and Retraining Notification Act (WARN)

Unit 6: Compensation and Benefits

6a. Identify and apply the concepts/issues associated with compensation and benefits to create an attractive environment that draws valuable resources to an organization

  • What is the purpose of a compensation plan?
  • Define a market compensation policy.
  • Define a market plus and market minus compensation philosophy.
  • Give an example of an internal pay factor and an external pay factor for determining compensation.
  • What types of compensation, other than pay, might be part of a compensation package?
  • Describe how employers perform a job evaluation to determine the relative worth of jobs to create an appropriate pay structure for employee compensation.
  • Describe job ranking, paired comparison system, point-factor system, compensable factors, Hay profile method.
  • Define job classification system
  • Describe equity theory and explain how this concept relates to fairness and motivation.
  • Define expectancy theory and reinforcement theory
  • Define pay grading and delayering and banding process
  • Define skill-based pay.

HRM creates compensation plans to attract, retain, and motivate employees to work at their peak performance and improve morale. Employees who believe they are fairly compensated tend to contribute more and provide better customer service, promoting organizational growth and development in the business community.

A business with a market compensation policy pays the going market rate for a particular job based on research and salary studies.

Businesses adopt a market plus philosophy by adding a percentage increase to the going rate. For example, if the job category shows a median salary of $57,000, a business with a five percent market plus philosophy pays $59,850.

A business with a market minus philosophy pays a percentage rate lower than the market rate. For example, If the job category shows a median salary of $57,000, a business with a five percent market minus philosophy pays $54,150 for the same job.

Internal pay factors may include the employer's ability to pay, the type of industry, and the business strategy. HRM may consider the number of skilled workers the company needs to hire versus the existing skills levels in the company, how much the company values its employees and what it needs to accomplish, and the job evaluation and performance appraisal system, such as differential pay for different jobs or performance-based pay. Employees can also influence their compensation in the areas of performance, experience, and potential. Other factors include whether the employees receive other financial incentives, such as a percentage of sales (commission) or an annual performance-based bonus.

External pay factors may include the economy's general state, the inflation rate, the area's general cost of living, or the pay rate competing companies are offering in the area.

A market compensation policy's goal is to pay the going rate for a particular job, within a particular market, based on research and salary studies. Other external pay factors include the relevant labor market, productivity (influenced by new technologies, new methods, and better management techniques), cost of living index, the existence of a labor union, and applicable labor laws.

A compensation plan refers to all of the components of a compensation package, including how the business pays its employees and offers bonuses, salary increases, and other incentives. In addition to a paycheck, compensation can include other financial incentives, such as bonuses, profit-sharing, stock options, and other compensation types. Benefits can include group health insurance, dental insurance, vision plans, disability insurance, life insurance, flexible spending accounts, retirement and 401K plans, vacation and sick leave, family and medical leave, childcare benefits, wellness benefits, and education tuition stipends.

A job evaluation helps businesses determine the relative worth of their positions to determine an appropriate pay structure. How valuable is each position in terms of helping the business achieve its goals? A job evaluation can help determine whether the pay it offers is equitable and fair among its employees.

There are several ways to perform a job evaluation.

Job ranking lists the job titles and ranks them in order of importance to the organization.

A paired comparison system compares individual jobs with every other position, based on a ranking system, and assigns an overall score to each job, from the highest-valued to the lowest-valued position.

A point-factor job evaluation system determines the relative value of each position at a company via a point system. HRM calls the points it gives to each specific job compensable factor. Each compensable factor receives a weight, which allows HRM to compares the relative importance of this skill or ability to the organization. HRM applies this system to every position in the organization: listing compensable factors for each job and the corresponding points to determine which jobs are most important to the company.

Examples of compensable factors include leadership ability, knowledge, autonomy, supervision, psychological demands, interpersonal skills, internal and external contacts, to specific skills and responsibilities required to perform each job.

The Hay profile job evaluation method is a proprietary classification that focuses on three factors: know-how, problem-solving, and accountability. The process establishes a point value for characteristics that reflect each job and uses job descriptions to evaluate jobs and determine compensation. The system is quantitative, but it can be time-consuming and expensive to perform an elaborate job evaluation.

In a job classification system, positions are categorized and grouped based on the knowledge and skills required for the job, years of experience, and the amount of authority required to perform the job. The U.S. military, federal government, and most state governments use this system, which ties basic function, characteristics, and typical work of the job classification, in addition to pay range data, to each position.

Example of a Paired Comparison for a Job Evaluation

In this example, based on the paired ranking system, the sales director should have a higher salary than the project administrative assistant because the job receives a higher ranking. Likewise, a receptionist should be paid less than the project administrative assistant because this job ranks lower.












0 = 4th






1 = 3rd






3 = 2nd






6 = 1st

After completing a job evaluation, HRM engages in pay grading, delayering, and banding.

Pay grading refers to creating a pay scale for specific positions or types of jobs. HRM begins by creating a variety of pay grade levels and assigning each position a pay grade. Employee raises stay within the range of their individual pay grade until they receive a promotion, which may push them into a higher pay grade. Employers can add percentages to reflect the cost of living for employees who work in more expensive areas. The advantage of this system is that it is fair. However, a pay grading system can affect employee motivation since they are not rewarded for working harder.

Companies who want hierarchical levels and more agility may adopt a delayering and banding process, which reduces the number of pay levels, creates a broader pay range and provides more flexibility within each level. Managers can reward performance but maintain a basic model for hiring managers to follow.

In a skill-based pay system, HRM bases salary levels on an employee's skills rather than their job title. Similar to the pay grade model, HRM assigns a particular pay grade to a set of skills.

In a competency-based pay system, HRM bases salary levels on an employee's traits or characteristics, focusing on what the employee can become instead of the skills they already have.

Broadbanding is similar to a pay grade system, except HRM assigns a specific pay rate to all positions in a particular category. For example, everyone working in customer service or all administrative assistants (regardless of department) are paid within the same general band. McDonald's uses this form of compensation in its corporate offices and says it allows for flexibility in pay, movement, and employee growth.

Equity theory is a motivational theory that says individuals base their satisfaction level on what others receive compared to themselves. In terms of compensation, employees can become less motivated to work hard if they learn a co-worker is earning more money, but they believe the other person is not working as hard as they are. An employee who believes the system is unfair may retaliate by reducing their own output or leaving the company.

Note that an employee's perception of fairness in compensation may not match reality compared to what others receive. They may not know the full story.

Expectancy theory is a motivational theory that says employees will put in as much work as they expect to receive in rewards. For example, if an employee believes they will be paid favorably, they will achieve the desired outcomes. If they believe the rewards will not equal their effort, they will not work as hard.

Reinforcement theory says that employees are more likely to perform the desired behavior to achieve the reward when HRM rewards high performance. However, if HRM does not reward employees for high performance, employees are less likely to perform the desired behavior. Some believe HRM should use bonus and commission plans to promote and reward desired behavior, rather than guarantee the reward as part of the employee's regular compensation.

Review Goals of a Compensation Plan, Developing a Compensation Package, Types of Pay Systems, and Other Types of Compensation.


6b. Identify key laws and legislation with regard to compensation and benefits that shape how human capital decisions should be made

  • Define comparable worth.
  • What does the Equal Pay Act of 1963 cover?
  • What is the purpose of the Equal Employment Opportunity Commission (EEOC)?
  • How did the Lilly Ledbetter Fair Pay Act of 2009 benefit people who wished to file an equal pay lawsuit to protest pay discrimination?
  • Describe three protections granted by the Fair Labor Standards Act (FLSA).
  • Describe the goals of the Federal Unemployment Tax Act (FUTA).
  • Describe the goals of the Federal Employees Compensation Act (FECA).

The concept of comparable worth states that employees who perform the same type of job should receive similar pay. However, in many industries, research shows that women who work in traditionally female-dominated jobs earn less than men in comparable male-dominated jobs. Note that comparable worth differs from the concept of "equal pay for equal work". The Equal Pay Act of 1963 makes it illegal for employers to pay different wages to men and women if they perform equal work in the same workplace.

In the United States, the Equal Employment Opportunity Commission (EEOC) is the federal agency responsible for enforcing civil rights and employment laws. The EEOC prohibits companies from discriminating based on age, color, disability, gender, national origin, race, or religion. Concerning employee recruitment, employers with at least 15 employees cannot discriminate based on age (40 years or older), disability, genetic information, national origin, sex, pregnancy, race, or religion. Most companies include an EEO statement in their job announcements.

President Barack Obama signed the Lilly Ledbetter Fair Pay Act of 2009 to amend Title VII of the Civil Rights Act of 1964. The Act states that the 180-day statute of limitations for filing an equal-pay lawsuit regarding pay discrimination resets with each discriminatory paycheck. The U.S. Supreme Court originally barred Lilly Ledbetter's discrimination claim because she made it after the statute of limitations had expired. The new Act allows workers to file pay discrimination lawsuits after the original 180-day statute of limitations.

The Fair Labor Standards Act (FLSA) of 1938 grants three protections:

  1. It introduced the 40-hour workweek for employees in non-exempt jobs and guaranteed time-and-a-half for overtime in certain non-exempt jobs;
  2. It established a national minimum wage;
  3. It prohibited most minors from being employed in "oppressive child labor".

The Federal Unemployment Tax Act (FUTA) provides unemployment compensation to workers who are terminated due to layoffs or fired without cause (through no fault of their own). Most employers pay a federal and state unemployment tax to support the payment of these unemployment benefits.

The Federal Employees Compensation Act (FECA) provides compensation benefits, such as disability, to federal employees injured in the performance of their jobs.

Review The Law and Recruitment, EEO Set of Laws and Types of Pay Systems, Laws Relating to Pay.


6c. Differentiate among direct financial compensation, indirect financial compensation, and non-financial compensation and give examples of each

  • Define direct financial compensation and give an example.
  • Define indirect financial compensation and give an example.
  • Define non-financial compensation and give an example.

Direct financial compensation refers to direct monetary payment to employees, such as salaries, wages, commissions, and bonuses.

Indirect financial compensation includes non-cash benefits, such as medical, dental, disability, and life insurance; paid holidays and sick days; retirement plans; stock options; profit-sharing programs; and other employee benefits, such as counseling, legal referral, career planning, wellness plans, and fitness club memberships.

Non-financial compensation does not have monetary value but creates value for employees in ways that stimulate their morale and improve their performance. These incentives may include pride in the company's mission, a sense of job security, recognition for achievements, and participation in training programs.

These three types of compensation convince current and potential employees that the company values their work and cares for them. A generous and understanding employer can foster company loyalty and motivation and help retain existing employees.

Types of Pay




Fixed compensation is calculated on a weekly, biweekly, or monthly basis. No extra pay for overtime work.


Employees are paid based on the number of hours they work.


Employees are paid based on the number of items they produce.

Incentive Plans


Employees may, or may not, receive a salary and will be paid extra, such as a percentage for every sale they make.


Extra pay for meeting or surpassing a predetermined goal. Bonus plans may include monetary compensation, time off, gift certificates, and other incentives.


Bonuses are paid to employees based on the amount of profit the organization earned during a given period.

Stock Options

Employees receive the right to purchase company stock at a particular rate. A stock option is different from when a company gives the actual stock outright – an option infers employees will buy the stock at a set rate, usually cheaper than the market rate.

Other Types of Compensation


These can include various options, such as sick leave, paid vacation time, health club memberships, and daycare services.


Most organizations provide health and dental care benefits to employees (the monthly fee is deducted from the employee's paycheck or provided at no charge). Also, many offer disability and life insurance benefits.

401(k) Plans

Many organizations provide retirement plans for employees. The company works with a financial organization to create a plan so employees can save money. Many companies "match" a percentage of what the employee contributes to the plan.

Review Types of Pay Systems and Other Types of Compensation.


Unit 6 Vocabulary

  • Broadbanding
  • Comparable worth
  • Compensable factors
  • Compensation plan
  • Competency-based pay
  • Delayering and banding process
  • Direct financial compensation
  • Equal Employment Opportunity Commission (EEOC)
  • Equal Pay Act of 1963
  • Equity theory
  • Expectancy theory
  • External pay factor
  • Federal Employees Compensation Act (FECA)
  • Fair Labor Standards Act (FLSA)
  • Federal Unemployment Tax Act (FUTA)
  • Hay profile job evaluation method
  • Indirect financial compensation
  • Internal pay factor
  • Job classification system
  • Job evaluation
  • Job ranking system
  • Lilly Ledbetter Fair Pay Act of 2009
  • Market compensation plan
  • Market minus compensation
  • Market plus compensation
  • Non-financial compensation
  • Pay grading
  • Paired comparison system
  • Point factor system
  • Reinforcement theory
  • Skill-based pay

Unit 7: Safety, Health, and Wellness

7a. Identify and apply the concepts associated with employee safety and health in support of effectively managing human capital

  • What are two factors American workers cite as responsible for producing stress?
  • Define stressor.
  • How can positive stress help us meet our goals?
  • Compare eustress to distress.
  • Compare chronic stress to acute stress.
  • Compare hyperstress to hypostress.
  • What are some negative consequences of stress on the job?
  • Define cumulative trauma disorders (CTDs).
  • Define carpal tunnel syndrome.
  • Explain how CTDs cause additional costs to the company.
  • Explain how video display terminals (VDTs) contribute to worker discomfort and health issues.
  • Define multiple chemical sensitivity (MCS) and environmental illness (EI).
  • Why does the U.S. Equal Employment Opportunity Commission (EEOC) consider multiple chemical sensitivity (MCS) or environmental illness (EI) eligible for reasonable accommodations in the workplace?
  • List three policies or practices companies can implement to accommodate employees with MCS.
  • List three benefits to a smoke-free work environment for employees.
  • List three benefits to a smoke-free work environment for employers.
  • List three types of workers who are at an increased risk for workplace violence, according to the U.S. Occupational Safety and Health Administration (OSHA).
  • List three tips OSHA recommends to employers to provide a safer workplace.
  • List five pre-incident indicators of workplace violence noted by the Workplace Violence Research Institute.
  • Describe and give three examples of workplace bullying.
  • Define cyberbullying.
  • List three ways HRM can combat employee identity theft.
  • Define an employee assistance program (EAP).

Americans cite two primary sources of stress: job instability and balancing work and non-work demands. A stressor is an activity, event, or other stimuli that cause a positive or negative body reaction.

Positive stress (eustress) is healthy and gives a feeling of fulfillment and other positive feelings. Eustress can cause us to push ourselves harder to meet an end goal.

Negative stress (distress) produces negative feelings and can go on for a long time without relief. Chronic stress is prolonged exposure to stress. Acute stress occurs in shorter bursts. For example, an employee may experience acute stress while responding to a tight deadline for a project.

Employees experience hyperstress, a type of extreme stress where they see little or no relief for a long time, causing burnout.

Hypostress, a lack of eustress or distress, can create feelings of restlessness. People who work in a factory or a repetitive job may experience this type of stress.

Negative consequences of stress on the job include headaches, gastrointestinal issues, lost productivity, and less creative work. From a financial perspective, stress not only decreases worker productivity and output in the long run, but it can also raise health insurance costs and increase employee turnover rates.

Cumulative trauma disorders (CTDs) are injuries employees suffer to their fingers, hands, arms, or shoulders from repetitive motions, such as typing. Carpal tunnel syndrome (CTS) is a common cumulative trauma disorder that affects the hand and wrist. CTD disorders cost companies money through higher health-care costs and worker's compensation payments. Frequent use of video display terminals (VDTs), such as computer monitors, can cause vision problems, fatigue, eye strain, and neck, back, arm, and muscle pain.

The U.S. Equal Employment Opportunity Commission (EEOC) defines a disability as a physical or mental impairment that substantially limits one or more of an individual's major life activities.

Multiple chemical sensitivity (MCS) or environmental illness (EI) is the inability to tolerate an environmental chemical or class of foreign chemicals. After providing evidence of this type of impairment, individuals with MCS can receive reasonable accommodations in the workplace.

Companies can limit MCS and EI by:

    1. Instituting a fragrance-free workplace policy;
    2. Limiting the use of restroom air fresheners, cleaning agents, and candles;
    3. Ensuring the office ventilation system is in good working order.

Employees benefit from working in a smoke-free work environment because:

    1. It creates a safer, healthier workplace;
    2. Employees are not exposed to smoke in the workplace;
    3. Smokers have an additional reason to quit smoking.

Employers benefit from providing a smoke-free work environment because:

    1. It helps create a safer, healthier, and more productive workplace;
    2. A healthier environment may reduce direct healthcare costs to the company;
    3. Employees may be less likely to miss work due to smoking-related illnesses.

The U.S. Occupational Safety and Health Administration (OSHA) considers the following three types of employees at increased risk for workplace violence:

  1. Employees who exchange money with the public;
  2. Employees who deliver goods, passengers, or services;
  3. Employees who work alone or in small groups.

The U.S. Occupational Safety and Health Administration (OSHA) provides tips for a safer workplace, including (but not limited to):

  1. Establish a workplace violence prevention policy, with a zero-tolerance policy;
  2. Provide safety education;
  3. Secure the workplace with cameras, extra lighting, and alarm systems.

Five pre-incident indicators of workplace violence include:

  1. Increased use of alcohol or illegal drugs;
  2. Unexplained increase in absenteeism;
  3. Noticeable decrease in attention to appearance and hygiene;
  4. Depression or withdrawal;
  5. Explosive outbursts of anger or rage without provocation.

Workplace bullying is defined as individuals or groups' tendency to use persistent or repeated aggressive or unreasonable behavior against a coworker or subordinate. Cyberbullying refers to using the Internet or technology to send text or images that are intended to hurt or embarrass another person. Examples include using Facebook to post negative comments or setting up a fake email account to pretend the victim sends false and damaging emails to others.

HRM can combat employee identify theft by:

  1. Conducting background and criminal checks on employees who will have access to sensitive data;
  2. Restricting access to areas where data is stored, including computers;
  3. Providing training to staff who will have access to private employee information.

Employers provide EAP benefits to help employees respond to personal problems that can affect their performance at work. These programs can provide training, counseling, and referral services for substance abuse, depression, and other personal issues.

Review Health Hazards at WorkWorkplace Drug Testing, and Employee Drug Treatment Program Saves Lives and Makes Money.


7b. Identify key laws and legislation with regard to safety and health that shape how human capital decisions should be made

  • What is the purpose of the U.S. Occupational Safety and Health Administration (OSHA)?
  • What is the purpose of the Emergency Planning and Community Right to Know Act (EPCRA)?

In 1970, the U.S. Congress passed the Occupational Safety and Health Act to create and enforce standards and promote training, outreach, education, and assistance to ensure working men and women work in safe and healthy working conditions. The U.S. Department of Labor administers the agency the act created: the Occupational Safety and Health Administration (OSHA).

In 1986, the U.S. Congress passed the Emergency Planning and Community Right to Know Act (EPCRA), requiring local and state governments to create emergency response plans to respond to chemical emergencies. Individuals have a right to know about the chemicals they "may be exposed to in their daily living". While the U.S. Environmental Protection Agency administers these "right-to-know laws", compliance in the workplace falls under OSHA. For example, businesses must disclose hazardous substances used inside and outside buildings to the appropriate state agency responsible for state Environmental Protection Agency regulatory actions (not including federal land).

Review Workplace Safety and Health Laws.


7c. Describe the purpose of wellness programs within today's organizations

  • What is the purpose of employee wellness programs?

Wellness programs offer information on creating a balanced lifestyle, managing stress, embracing an exercise program, stopping smoking, and myriad other topics to motivate people to live healthier lifestyles. HRM can communicate the availability of these types of programs to employees during benefit meetings and through posters, newsletters, and online pop-up reminders.

Employers should be concerned with their employees' health since healthy employees boost workplace performance and productivity, use fewer sick day benefits, and are more likely to build stronger and longer-lasting relationships with their employers. In addition to employee assistance programs, many companies offer in-house, external, online programs and training to maintain or improve employee health before problems arise.

Review Health Hazards at Work and Stress Management.


Unit 7 Vocabulary

  • Acute stress
  • Carpal tunnel syndrome
  • Chronic stress
  • Cumulative trauma disorders (CTDs)
  • Cyberbullying
  • Distress
  • Emergency Planning and Community Right to Know Act (EPCRA)
  • Employee Assistance Plan (EAP)
  • Employee privacy
  • Environmental illness (EI)
  • Employee identity theft
  • Environmental Protection Agency (EPA)
  • Eustress
  • Hazardous substances
  • Hyperstress
  • Hypostress
  • Material data safety sheet
  • Multiple chemical sensitivity (MCS)
  • Occupational Safety & Health Administration (OSHA)
  • Stress
  • Stressor
  • Wellness Program
  • Workplace bullying

Unit 8: Labor Relations and Internal Employee Relations

8a. Define the concept of labor relations

  • Define labor relations.
  • Define labor unions.
  • Define collective bargaining.
  • Define union steward.
  • In addition to their focus on legislative changes, list four activities of a national union.
  • Describe three challenges the U.S. labor movement is experiencing.

Labor relations is how workers and managers of a company talk to, behave toward, and deal with each other. A labor union is when workers agree to band together to work toward common goals, such as to convince their employer to offer them better pay, benefits, or promotion rules.

Collective bargaining describes the negotiation process between a company and representatives of the union. Every local union has a union steward who represents union members' interests and is elected by their peers.

In 1935 the U.S. Congress passed the Wagner Act (the National Labor Relations Act), which changed how employers can respond to several aspects of unions.

According to the Wagner Act:

  1. Employers must allow freedom of association and organization and cannot interfere with, restrain, or coerce employees who form a union.
  2. Employers may not discriminate against employees who form or become part of a union or those who file charges against them.
  3. An employer must bargain collectively with union representation.

Review Labor Relations and Internal Employee RelationsWorking with Labor UnionsSuccessful Employee Communication10 Myths About Your Employee Manager RelationshipTrust in Manager-Employee Relationship, and Workplace Discrimination (Title VII) and the Supreme Court.


8b. Identify key laws and legislation with regard to labor relations that shape how human capital decisions should be made

  • Define the Railway Labor Act (RLA).
  • Define the Norris-LaGuardia Act (anti-injunction bill).
  • Define a yellow-dog contract.
  • Define the Wagner Act (National Labor Relations Act)
  • What is the responsibility of the National Relations Board (NLRB)?
  • Why was the Taft-Hartley Act introduced and passed in 1947?
  • What is a wildcat strike?
  • What is the purpose of the Landrum Griffin Act, also known as the Labor Management Reporting and Disclosure (LMRDA) Act?

The Railway Labor Act (RLA) was the first federal law guaranteeing workers' right to organize, join unions, and elect representatives without employer coercion or interference. Its goal was to ensure no disruption occurred in interstate commerce by encouraging employees and employers to use collective bargaining to apply alternate dispute resolution, arbitration, and mediation to resolve labor disputes. For major disputes over wages, benefits, and working conditions, the RLA created a three-member National Mediation Board, appointed by the president and confirmed by the Senate, with the power to mediate any dispute between carriers (railroads, airlines, and transportation companies) and their employees at the request of either party or upon the board's own motion.

The Norris-LaGuardia Act barred federal courts from issuing injunctions against nonviolent labor disputes and barred employers from interfering with workers joining a union. This act made yellow-dog contracts unenforceable in courts and established that employees were free to join unions without employer interference.

In 1935, the U.S. Congress passed the Wagner Act (the National Labor Relations Act), which changed how employers can respond to several aspects of unions. The National Labor Relations Board administers and handles complaints per the Wagner Act.

According to the Wagner Act:

  1. Employers must allow freedom of association and organization and cannot interfere with, restrain, or coerce employees who form a union.
  2. Employers may not discriminate against employees who form or become part of a union or file charges against them.
  3. An employer must bargain collectively with union representation.

In 1947, the U.S. Congress passed the Taft-Hartley Act to respond to an upsurge of worker strikes that took place during this time. While the Wagner Act oversaw unfair labor practices companies perpetrated, the Taft-Hartley act focused on unfair labor actions by unions. The Taft-Hartley Act outlawed strikes unions did not authorize, called wildcat strikes.

In 1959, the U.S. Congress passed the Landrum Griffin Act in response to charges of racketeering (crimes of coercion and extortion) and corruption by union leaders. The Act required unions to hold secret elections, submit their annual financial reports to the U.S. Department of Labor, and create standards governing a member's expulsion from a union.

Major Acts Regarding Unions at a Glance

Review Working with Labor Unions and American Labor History.


8c. Define the concept of internal employee relations

  • Define employee relations.
  • Explain the concepts of active listening and emotional intelligence.
  • Define and compare upward communication and downward communication.
  • Describe four types of communication styles (personality).
  • Describe three types of communicators. Which type is recommended for the workplace?
  • Explain how body language, which Americans may consider acceptable, may be offensive to someone who works in another country.
  • Describe two ways managers can promote and maintain trust in the workplace.
  • Describe two ways employees can promote and maintain trust in the workplace.
  • Compare task-oriented style managers to people-oriented style managers.
  • Compare participatory management style to a directing management style.
  • Describe an autocratic management style.
  • What is meant by a free-rein management style?
  • Describe the path goal theory for leadership.
  • Describe the situational leadership model.
  • Define the term ethics.
  • List four elements necessary to quantify an organization's ethics.
  • List three issues that deal with ethics in sales and marketing.
  • Describe ethical issues in production.
  • Describe ethical issues in finance.

The term employee relations is broad and encompasses virtually every aspect of employer-to-employee partnerships: from the hiring to exiting process. Many companies try to avoid the increased costs and operational inefficiencies they may experience when their employees unionize. Instead, companies usually benefit from paying careful attention to employee relations and creating programs that address pay, benefits, and other compensation issues.

Creating a productive working relationship requires opening avenues of communication, so employees and employers feel their concerns are being heard. Both sides should demonstrate they care about the other person, value what they have to say, and properly consider the other person's viewpoints.

Both sides should try to develop their active listening skills and emotional intelligence, which requires them to use their ability to empathize with others and try to understand what the other person means to convey beyond what they say with their spoken or written words.

Upward communication occurs when members of the lower levels of an organization (such as administration and support staff) communicate with the organization's upper echelons (such as management or leadership). These messages typically include recommendations for improvement, complaints about inefficiencies, and other grievances that need to be resolved.

Downward communication occurs from an organization's upper echelons to the lower levels, such as when a manager explains to an employee how to do a task, recommendations for improvement, or new rules and regulations that need to be followed.

Review these four primary workplace communication styles or personalities.

  1. Individuals who have an expresser communication style tend to express their interest and excitement, prefer challenges, and rely heavily on hunches and feelings.
  2. Individuals who have a driver communication style tend to be decisive and prefer to drive the conversation, so others adopt their ideas and recommendations.
  3. Individuals who have a relater communication style appreciate positive attention and want to be regarded warmly.
  4. Individuals who have an analytical communication style tend to ask a lot of questions and behave methodically. They do not like to be pressured to make decisions quickly and prefer to work in a structured environment.

Also, people tend to communicate based on three styles:

  1. A passive communicator tends to put the interests of others before their own.
  2. An aggressive communicator stands up for their own interests but may violate others' rights in the process.
  3. An assertive communicator respects and communicates the interests of others. This person tends to be direct, but others do not perceive them to be insulting or offensive. Many prefer to have an assertive communicator in the workplace because, while they exhibit self-esteem, they show respect for others and do not try to mislead them.

Body language describes non-verbal communication, such as facial expressions, eye contact, standing or sitting posture, and hand position. Body language can differ across cultures. For example, in some cultures, direct eye contact can be perceived to be aggressive. The OK sign (thumb and pointer finger put together to form a circle) conveys agreement in the United States but is considered offensive in Brazil, Germany, and Russia.

Employers can promote positive avenues of communication in several ways, such as by creating and maintaining an open-door policy, offering opportunities for respectful listening during meetings, and providing an anonymous tip or complaint hotline.

Establishing trust is the most important element of a successful manager-employee relationship. From a business perspective, trust is a necessary ingredient for creating and maintaining an environment that promotes continuous, on-time delivery and produces quality work that meets a client's business requirements. Employees are more apt to trust managers who promote fairness and consistency.

Employees can promote and maintain trust in the workplace by choosing tasks with the maximum chance of success and keeping their managers informed about their progress. Managers can promote and maintain trust by being honest about their goals and expectations, sharing information that will affect employees, and encouraging one-on-one conversations.

A manager with a task-oriented style is concerned about the technical aspects of the job. They want to ensure employees know what is expected and make sure they have the tools they need to complete the job.

A manager with a people-oriented style focuses on interpersonal relations and is most concerned about the employee's welfare. These managers tend to be friendly and trusting.

A manager with a participatory management style may focus on how their employees fit into the organization's bigger picture. They try to provide support and input where needed and focus on the individual's role as part of the project.

A manager with a directing management style is focused on getting the task done and may be an appropriate leader when deadlines are tight or in emergencies.

An autocratic manager is focused on completing a task. This individual uses their authority to decide, such as who will do what, how the project will proceed, and when deadlines need to be completed. Relationships are of secondary importance.

A free-rein manager gives employees total freedom to make decisions regarding how to complete assignments. This type of manager is removed from day-to-day activities but is typically available to help employees respond to any situation.

According to the path goal theory, a leader's role is to define goals and create pathways so employees can accomplish what they need to get done. If employees are satisfied with this leadership style, they will be motivated to complete these goals.

Ken Blanchard's situational leadership model explains how we can apply management styles to certain situations. A leader should determine the best management style and level of support each employee needs, based on their readiness and commitment.

Blanchard's Situational Leadership Model

Ethics is the branch of philosophy that involves systematizing, defending, and recommending what is considered right and wrong. We typically equate ethics with moral philosophy. Many believe that establishing an ethical corporate culture is the most critical component of creating an effective organization.

HRM should quantify four elements of workplace ethics:

  1. A written code of ethics and standards;
  2. Ethics training to executives, managers, and employees;
  3. Availability of advice on ethical situations, via lines of communication or offices that will provide guidance;
  4. Systems for confidential reporting.

Three ethical issues in sales and marketing include:

  1. Pricing practices;
  2. Promotional activities;
  3. Advertising practices.

Ethical issues in finance include fair trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audits, external audits, and executive compensation.

Specific corporate ethical and legal abuses include: using creative accounting, earnings management, misleading financial analysis, insider trading, securities fraud, bribery, kickbacks, and facilitation payments.

Review What is Employee Relations?Communication Strategies, Trust in Manager-Employee RelationshipManagement StylesEthical Issues at an Organizational Level, and Building an Ethical Culture.


8d. Identify key laws and legislation with regard to internal employee relations that shape how human capital decisions should be made

  • Define wrongful termination.
  • What workplace laws are enforced by the Equal Employment Opportunity Commission (EEOC)?
  • What workplace laws are enforced by the U.S. Department of Labor?
  • Define affirmative action and how this policy impacts diversity in the workplace.

Businesses benefit from work contracts that are employment-at-will (EAW) because they provide their company with great freedom regarding employment. For example, an EAW contract allows companies to terminate an employee at any time without any reason, explanation, or warning. These contracts also allow employees to quit at any time for any reason – or no reason at all.

However, depending on the state where the business resides, the company that terminates an employee who has an EAW contract can run afoul of the law if any one of three conditions occurs:

  1. Public policy exception – if the termination violates their state's doctrine or statute;
  2. Implied contract exception – if the employer who terminates the employee had implied or indicated the person had job security; or
  3. Good faith and fair dealing exception – if the employer who terminates the employee treated them unfairly, such as firing them to avoid distributing commissions that were due, misleading them about promotions and pay increases, or taking extreme actions to try and force them to quit.

An employee could win a legal case against an employee for wrongful discharge (termination) if they can prove any one of these exceptions exists.

Title VII of the Civil Rights Act of 1964 makes it illegal for employers to discriminate against someone based on race, color, religion, national origin, or sex.

The Pregnancy Discrimination Act amended Title VII to make it illegal for employers to discriminate against a woman due to pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.

The Equal Pay Act of 1963 (EPA) makes it illegal for employers to pay different wages to men and women if they perform equal work in the same workplace.

The Age Discrimination in Employment Act of 1967 (ADEA) makes it illegal for employers to discriminate against people aged 40 or older.

Title I of the American with Disabilities Act of 1990 (ADA) makes it illegal for employers to discriminate against a qualified person with a disability in the private sector and state and local governments.

Sections 102 and 103 of the Civil Rights Act of 1991 amend Title VII and the Americans with Disabilities Act to permit jury trials and compensatory and punitive damage awards in intentional discrimination cases.

Sections 501 and 505 of the Rehabilitation Act of 1973 make it illegal for the federal government to discriminate against a qualified person with a disability. The law also requires employers to reasonably accommodate the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, unless doing so would impose an undue hardship on the operation of the employer's business.

The Genetic Information Nondiscrimination Act of 2008 (GINA) makes it illegal for employers to discriminate against employees or applicants because of genetic information.

Many of these rules and regulations are covered by other governmental agencies, including the U.S. Department of Labor, U.S. Department of Justice's Civil Rights Division, the U.S. Occupational Safety and Health Administration (OSHA), and the Social Security Administration.

Review Employee Rights, Laws Enforced by the EEOC, and Workplace Laws Not Enforced by the EEOC.


Unit 8 Vocabulary

  • Active listening
  • Affirmative action
  • Age Discrimination in Employment Act (ADEA)
  • Agency shop
  • American with Disabilities Act (ADA)
  • Arbitrator
  • Autocratic management style
  • Body language
  • Checkoff provision of a contract
  • Civil Rights Act
  • Closed shop
  • Collective bargaining
  • Communication style
  • Downward communication
  • Economic strike
  • Emotional intelligence
  • Employee relations
  • Equal Pay Act (EPA)
  • Ethics
  • Free-rein management style
  • Genetic Information Nondiscrimination Act (GINA)
  • Grievance procedure
  • Jurisdictional strikes
  • Labor Management Reporting and Disclosure Act (LMRDA)
  • Labor relations
  • Labor union
  • Landrum Griffin Act
  • Lockout
  • Mediator
  • Nonverbal language
  • Norris LaGuardia Act
  • Participatory management style
  • Passive-aggressive communicator
  • Path-goal theory of leadership
  • People-oriented style
  • Pregnancy Discrimination Act
  • Railway Labor Act
  • Rehabilitation Act
  • Right-to-work states
  • Situational leadership model
  • Taft-Hartley Act
  • Task-oriented style
  • Unfair labor practices strike
  • Union steward
  • Upward communication
  • U.S. Equal Employment Opportunity Commission (EEOC)
  • U.S. Department of Labor
  • Wagner Act (National Labor Relations Act)
  • Wildcat strike
  • Wrongful termination
  • Yellow dog contract