BUS301 Study Guide

Navigating this 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
• 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 this 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

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

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

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

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

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

To review, see:

• The Role of Human Resources

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

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

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

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

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

To review, see:

• The Role of Human Resources
• The Changing Role of Strategic Human Resources
• Strategic Planning

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

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

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

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

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

To review, see:

• Introduction to Strategic Management
• Strategic Planning

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

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

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

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

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

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

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

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

To review, see:

• The Role of Human Resources

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

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

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

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

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

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

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

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

To review, see:

• Introduction to the US Equal Employment Opportunity Commission
• Overview of the U.S. Equal Employment Opportunity Commission
• Laws Enforced by the EEOC

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

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

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

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

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

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

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

To review, see:

• Multiculturalism and the Law
• Workplace Diversity Strategy
• Diversity, Equity, and Inclusion
• Trends in Organizational Diversity

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

• How does an organization benefit from effective diversity management?

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

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

To review, see:

• Trends in Organizational Diversity
• Diversity and Inclusion in the Workplace

Unit 1 Vocabulary

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

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

Unit 2: Strategic Human Resource Planning and Staffing

2a. Describe the role of strategic human resource planning

• How does HRM contribute to the overall profit objectives of the company?
• According to the Ulrich HR model, what are some of the roles of HRM?
• How can HRM use a SWOT analysis to identify gaps between the HRM and the company's overall strategic plan?
• What are some of the laws that impact many aspects of human capital management and strategic HR planning?

A company's HR or personnel department used to only be 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 (a 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 be a strategic partner with every department of the business, such as by aligning potential and available human capital to fulfill the organization's needs. HRM can also 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 expert (or functional expert), HRM must understand and implement policies, procedures, and processes related to the overall strategic plan. As a human capital developer, 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 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.

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

Bona Fide 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, an organization may require 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. As you learned in Unit 1, 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.

To review, see:

• Strategic Planning
• Recruitment

2b. Explain the purpose of conducting a job analysis that includes knowledge, skills, and abilities required for the job

• What is the primary purpose for including KSAs (knowledge, skills, and abilities) in a job description?
• Some traits regarding knowledge, skills, and abilities may be mandatory, while others may be desirable. Can you give examples of types of jobs where one characteristic might be more important than another?

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 the organization's roles helps hiring managers identify the most effective traits of those who work in specific positions. They must recognize that individuals may need to complement their coworkers' knowledge, skills, and abilities (KSAs) so the entire team has what it needs to complete its work in the best way possible.

The U.S. Office of Personnel Management defines knowledge as the body of information applied directly to the performance of a function. For example, a safety engineer must know the laws and regulations applicable to their work site. Skill is an observable competence to perform a learned psychomotor act. A computer programmer might demonstrate a skill for writing code for a specific program. Ability is the competence to perform an observable behavior that results in an observable product. A candidate might demonstrate how they have been able to work independently and as part of a team. KSAs describe attributes required to perform a job and are generally demonstrated through qualifying service, education, or training. For example, an employee's success may hinge on their capacity to learn on the job, accept constructive criticism, remain calm, and work well during stressful situations.

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 hiring, such as equivalent work experience or other competencies. Employers could signal that they are open to training job candidates to perform the desirable or preferred skills they lack, but this is not necessarily the case.

To review, see:

• Recruitment
• 2.2 Protecting Human Capital

2c. Identify the role of job analysis in supporting key human capital functions

• What is the purpose of a job analysis, and what are the six steps of writing one?
• What is the difference between task-based and competency-based (or skills-based) job analysis? What is an example of each?
• What is the purpose of a job description? What primary components would you expect to find in a job description?
• How can we 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?

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

Process for Writing the Job Analysis

A task-based job analysis focuses on tasks, duties, and responsibilities. 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-based job analyses (or skills-based job analyses) focus on how individuals use their knowledge, skills, and abilities. Examples of this type of analysis might include using data analysis tools, working within teams, or creating a visual presentation.

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

• 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;

• 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;

• 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

• Physical requirements refer to the physical motor-based functions the job candidate will be required to perform, such as lifting a certain weight, standing for long periods, working at a computer desk, or seeing or hearing 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 function to make it more effective. For example, managers may realign the employee's responsibilities or tasks to accommodate new technologies and industry innovations.

HRM should consider employees as assets. The entire company suffers when businesses do not treat their valuable assets properly. Disgruntled and unproductive employees reduce the productivity of the whole 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.

To review, see:

• Protecting Human Capital
• The Recruitment Process
• How to Write a Job Description

2d. Identify effective techniques for attracting talent

• Once a job opening occurs, what is one strategy for filling the position with an internal candidate?
• What recruiting strategies are appropriate for a high-level position? An entry-level position?

In an effective recruiting strategy, an organization must be ready to fill open positions as they occur. Sources of appropriate candidates come from both inside and outside the firm.

Many companies have an internal job posting (or bidding) system for hiring internal candidates. This system allows employees to apply for qualified positions. These positions may be opportunities to obtain more skills in a lateral move or offer a promotion to an employee who has proven his ability to take on new tasks and responsibilities. 

When the company wants to fill an executive-level position, in addition to internal candidates whom it may have identified, trained, and developed, the firm may look to the outside services of an executive search firm or other outside head-hunting firms.

To review, see:

• The Recruitment Process

Unit 2 Vocabulary

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

• ability
• Bona Fide occupational qualification (BFOQ)
• competency-based job analysis
• cost center
• Disparate impact
• Equal Employment Opportunity (EEO)
• Immigration Reform and Control Act (IRCA)
• job analysis
• job description
• job design
• knowledge
• knowledge, skills, and abilities (KSAs)
• Patriot Act
• skill
• SWOT analysis
• task-based job analysis
• Ulrich HR model

Unit 3: Recruitment and Selection

3a. Discuss strategies for recruiting and selecting talent in an organization

• How does an executive search firm differ from a corporate recruiter?
• What is an employee referral program (ERP)?
• What are the goals of employee orientation and onboarding?
• What is one advantage of using social media to attract talented people to an organization?
• Although there are many reasons why corporations incorporate social media in their recruiting efforts, why should they be cautious in relying on social media for screening and background checks?

HRM should ensure the recruiting and selection process is fair and the outcomes are positive for both the applicants and the organization.

Overview of the Steps to the Recruitment Process

Various recruiting methods have advantages and disadvantages. 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.

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

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

Companies use social media recruitment in many ways in their recruiting and selection process. Advantages include a wide reach for potential talent and the relatively inexpensive costs of proactively ensuring a healthy pipeline of qualified applicants. In addition, it is an effective way for a company to promote its brand and foster credibility. LinkedIn, Facebook, and Twitter (now "X") are popular sites for companies to maintain their profiles.

However, companies need to be aware of existing state and federal employment laws when using social media for tasks such as screening applicants and performing background checks. While social media supports recruitment efforts, it is recommended that companies rely on clear job descriptions, good interview questions, and due diligence as the foundation of their recruiting and selection efforts. 

Other ways of sourcing talent or an organization include (but certainly not limited to):

• internal postings;
• advertising in newspapers and specialist publications;
• search consultants;
• schools and university contacts; and
• word of mouth from current employees.

Advantages and Disadvantages of Recruiting Methods

To review, see:

• The Psychology of Recruiting and Selecting Employees
• Effective Recruitment and Selection
• Using Social Media in Nonprofit Talent Acquisition

3b. Describe best practices in recruitment and selection

• To avoid prejudices in the hiring process, what is good advice about screening applicants?
• What are other best practices when recruiting and selecting an applicant?
• Contrast validity and reliability in evaluating and choosing selection tools for hiring new employees. Which concept implies we should get the same results repeatedly?

It is helpful to compare applicants after interviews using a common set of information to assist hiring managers in avoiding prejudices. Additionally, several rounds of screening with different interviewers and involving senior management in the process all contribute to a perception of fairness and enthusiasm within the company.

In addition to the interview process, other best practices include valid and reliable selection tests, background checks, and evaluation of the degree of "cultural fit" and value congruence with the organization. These are important elements of effective hiring practices. Selecting the right people by employing these best practices impacts subsequent turnover and productivity.

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 a company's recruitment and selection processes work every time they need to hire someone, or just once?

To review, see:

• Selecting the Right People

Unit 3 Vocabulary

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

• employee leasing
• employee referral programs (ERPs)
• reliability
• social media recruitment
• special interest groups (SIGs)
• validity
• value congruence

Unit 4: Training, Development, and Career Planning

4a. Describe strategies used in the training and development of talent

• What role does employee training and development have in employee retention and growth?
• Which of the four steps for effective employee training is quality assurance training?
• When it comes to safety training, what agency is charged with this responsibility?
• What are the levels of Kirkpatrick's Training Evaluation Model for designing a training program?

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

Most companies provide informal and formal employee 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 onboarding 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.

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 are explaining company policies and describing how the employee's position fits within the organization.

2. HRM may create in-house training programs to clarify company policies related to areas such as customer service, ethics, management, and sexual harassment. 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 and department and how 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 employees to take college courses or enroll in off-site seminars to enhance management potential or develop new job-related skills.

HRM creates various training opportunities to develop a "holistic" employee, such as:

• 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 that characterize relationships with co-workers and clients, such as communication, personal habits, and social graces. Examples include improving communication, becoming better listeners, and interacting 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 type of training often takes place in the company's classrooms or 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 enforcing safety and health regulations. OSHA provides external and in-house training on OSHA standards.

A needs assessment addresses the 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, or figures. An auditory learner will appreciate listening to a lecture or to someone explaining how to do something. A kinesthetic learner learns 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 audience's learning styles.

The delivery mode is the method used to present the training. These include on-the-job coaching, mentoring, brown bag lunch, web-based training, job shadowing, job swapping, and vestibule training.

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

Delivery style refers to various ways HRM appeals to trainees' different learning styles. For example, icebreakers, 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, and whether the group includes diverse 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 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 discussions, 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 Training Evaluation model measures four levels of effectiveness.

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 jobs.
4. Results assess whether the training supports its targeted outcomes and what benefits resulted from that training.

To review, see:

• Designing a Training Program

4b. Identify talent management's role in the overall success of the organization

• How does HR play a proactive role in talent management to align with organizational objectives?
• Why is it necessary to consider more than person-to-job fit when hiring employees?

Talent management's role as a strategic partner is to ensure that future and current hiring needs are met. To accomplish this, talent management must include recruiting and selecting the right people for the right jobs. An important part of ensuring a healthy pipeline of available talent to replace outgoing managers and executives is to create an effective succession plan that includes accurate forecasts of the labor market, effective training and development programs, competitive compensation, benefits, and rewards programs. Of course, to attract and retain a productive workforce, it is also necessary to foster an organizational culture that values diversity and inclusiveness.

One of the goals of strategic hiring is to identify candidates who will be motivated to grow in their positions, stay with the company, and have the potential to be trained and developed to progress to fill vacated and newly created positions within the organization. There are numerous challenges for talent managers, including selecting applicants who feel the organization suits them. Research has shown that the "degree of cultural fit" and alignment of values between applicants and the firm significantly predict subsequent turnover and job performance. Therefore, talent managers must assess recruiting and selection practices that target the candidate's technical ability and cultural fit with the organization.

To review, see:

• Training and Development
• Designing a Training Program

4c. Define the role of career and succession planning

• What role does succession planning play in ensuring that valued employees are available to fill vacated positions within the company?
• What is a career development program, and why are they recommended for today's organizations?
• How does failing to address career development affect 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 managers' departures 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 can 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, actively minimize costly turnover, and ensure a motivated and well-trained workforce.

To review, see:

• Designing a Training Program

Unit 4 Vocabulary

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

• career development program
• delivery mode
• delivery style
• employee orientation
• employee training and development
• external training
• in-house training
• job shadowing
• Kirkpatrick Training Evaluation model
• learning style
• mentoring
• needs assessment
• onboarding process
• safety training
• skills training
• soft skills training
• succession planning
• technical training
• vestibule training

Unit 5: Performance Management and Measurement

5a. Describe the role of performance management in meeting performance expectations

• What is the purpose of performance management systems, and how are performance appraisals integral to performance management?
• 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 is one downside of using the checklist scale method in the evaluation process?

HRM should establish clear policies regarding job performance expectations and issues to benefit employees 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 consistently.

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 policy violations. Proper procedures can protect the employee and the organization.

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

A company's evaluation or performance appraisal process 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; and
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 the rights of their patients and the hospital. Company policies should express these issues and communicate them to employees through orientations, handbooks, and training. Employees need to acknowledge they have received this information in writing.

Various terms are associated with the performance management evaluation process. Some of these concepts are described below.

HRM can usually solve a single incident, a relatively minor rule infraction, 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's behavior to 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 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 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.

HRM must 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 are not addressed correctly. We label these behavior patterns "persistent" when an employee has been corrected for their behavior but continues disregarding 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 (EAW) principle describes an employer's legal rights to fire an employee and the right of employees to leave an organization at any time without giving any specific cause. In other words, the employer and employee can terminate their relationship at any time. This principle has three exceptions:

1. public policy exception;
2. implied contract exception; and
3. good faith and fair dealing exception.

The Worker Adjustment and Retraining Notification (WARN) Act 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.

To review, see:

• Managing Employee Performance
• Performance and Rewards
• Performance Assessment

5b. Describe the role of performance appraisals as a component of organizational success

• How does a performance evaluation system enable employers and employees to meet individual goals and company objectives?
• What is the importance of setting SMART employee goals, tracking the progress of these goals, and rewarding employees when goals are met? What are two types of appraisals that rely on communication and goal setting?
• HR professionals should develop policies regarding performance issues. What is the advantage to the organization of having these policies?
• How does a company's progressive discipline process benefit employees and the company?

A performance evaluation system (also called performance appraisal or assessment) 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:
encourage positive performance and behavior;

1. satisfy employee curiosity as to how well they are performing in their job;
2. develop the knowledge, skills, and abilities of employees; and
3. provide a basis for pay raises, promotions, and legal disciplinary actions.
4. Performance appraisal (also called performance evaluations and performance assessments) describes the methods businesses use to examine how well employees perform in their jobs 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 in 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 meet the organization's expected goals, outcomes, and mission.

Management by objectives (MBO) is a results-oriented approach that invites managers and employees to discuss and formulate mutually acceptable goals and objectives. Employees have "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, meaning they are specific, measurable, attainable, result-oriented, and time-limited. This allows both manager and employee to have mutually agreed-upon objectives that can be tracked, and in addition to meeting stated goals, it also encourages the employee to continue to improve.

The final step in the performance issue model is to provide disciplinary intervention: a series of steps or corrective actions 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.

To review, see:

• Managing Employee Performance
• Performance and Rewards
• Performance Assessment
• Performance Evaluation Systems

Unit 5 Vocabulary

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

• 360° Feedback
• checklist scale method
• critical incident appraisal
• employment-at-will (EAW) principle
• grievance process
• implied contract
• management by objectives (MBO)
• mandated issue
• performance evaluation system
• performance issue model
• performance management system
• progressive discipline
• SMART goals
• Worker Adjustment and Retraining Notification (WARN) Act
• work standards approach

Unit 6: Compensation and Benefits

6a. Describe 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? What are the market plus and market minus philosophies?
• What types of compensation, other than pay, might be part of a compensation package?
• How do employers perform a job evaluation to determine the relative worth of jobs and to create an appropriate pay structure for employee compensation?
• Is pay sufficient to motivate an employee? How do expectancy theory and reinforcement theory relate to an employee's motivation?

HRM creates compensation plans to attract, retain, and motivate employees to work at 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 skill 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 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.

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), the 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 may 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 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. It 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 compare 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. Compensable factors include leadership ability, knowledge, autonomy, supervision, psychological demands, interpersonal skills, internal and external contacts, and specific skills and responsibilities required to perform each job.

• The Hay profile job evaluation method is a proprietary classification focusing on 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 grouped based on the knowledge and skills required, years of experience, and the authority necessary to perform the job. The U.S. military, federal government, and most state governments use this system, which ties basic function, characteristics, and typical job classification work, 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 a project administrative assistant because this job ranks lower.

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

Pay grading refers to creating a pay scale for specific positions or types of jobs. HRM begins by creating various pay grade levels and assigning each position a pay grade. Employee raises stay within the range of their 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 that 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. Employees who believe the system is unfair may retaliate by reducing their output or leaving the company.

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 employees believe they will be paid favorably, they will achieve the desired outcomes. They will not work as hard if they believe the rewards will not equal their effort.

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.

To review, see:

• Compensation and Benefits

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

• What is the concept of comparable worth? In what way does comparable worth differ from the Equal Pay Act of 1963?
• In what ways does the Equal Employment Opportunity Commission (EEOC) ensure fairness in the management of human capital?
• How did the Lilly Ledbetter Fair Pay Act of 2009 benefit people who wished to file an equal pay lawsuit to protest pay discrimination?
• Three protections are granted by the Fair Labor Standards Act (FLSA). What protection relates to the number of hours in the workweek?
• How do the Federal Unemployment Tax Act (FUTA) and the Federal Employees Compensation Act (FECA) differ in their compensation goals?

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.

An employee could win a legal case against an employer for wrongful discharge (or wrongful termination) if they can prove any exceptions exist.

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

Title I of the Americans 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, the U.S. Department of Justice's Civil Rights Division, the U.S. Occupational Safety and Health Administration (OSHA), and the Social Security Administration.

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. 
   
3. it established a national minimum wage; and
4. it prohibited most minors from being employed in "oppressive child labor".

The Federal Unemployment Tax Act (FUTA) provides unemployment compensation to workers terminated due to layoffs or fired without cause (through no fault of their own). Most employers pay federal and state unemployment taxes 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.

To review, see:

• Compensation and Benefits

6c. Differentiate between direct financial compensation, indirect financial compensation, and non-financial compensation

• How is direct financial compensation different from indirect compensation? Do you think one type is more motivational than the other? Why or why not?
• An employee receives an award for exceeding his goals for the quarter. This recognition has inspired him to try to exceed next quarter's goals. How has this type of non-financial compensation benefitted both the employee and the company?

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.

Compensation may be broken down as follows (adapted from Human Resource Management, BY-NC-SA 3.0).

The types of pay are:

• Salary: Fixed compensation is calculated weekly, biweekly, or monthly. No extra pay for overtime work.
• Hourly wage: Employees are paid based on the number of hours they work.
• Piecework system: Employees are paid based on the number of items they produce.

Incentive plans may include:

• Commission plans: Employees may or may not receive a salary and will be paid extra for every sale they make, such as a percentage.
• Bonus plans: Extra pay for meeting or surpassing a predetermined goal. Bonus plans may include monetary compensation, time off, gift certificates, and other incentives.
• Profit-sharing plans: Bonuses are paid to employees based on the organization's profit during a given period.
• Stock options: Employees can purchase company stock at a particular rate. A stock option differs 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 may include:

• Fringe benefits: These can include various options, such as sick leave, paid vacation time, health club memberships, and daycare services.
• Health benefits: Most organizations offer health and dental care benefits to employees (the monthly fee is deducted from the employee's paycheck or provided at no charge). Many also 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 the employee's contribution to the plan.

To review, see:

• The Comfort of Compensation
• Compensation and Benefits
• Strategic Compensation

Unit 6 Vocabulary

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

• 401(k) plan
• Age Discrimination in Employment Act of 1967 (ADEA)
• Americans with Disabilities Act of 1990 (ADA)
• broadbanding
• Civil Rights Act of 1991
• comparable worth
• compensable factor
• compensation package
• compensation plan
• competency-based pay
• delayering and banding
• direct financial compensation
• Equal Pay Act of 1963
• equity theory
• expectancy theory
• external pay factor
• Fair Labor Standards Act (FLSA)
• Federal Employees Compensation Act (FECA)
• Federal Unemployment Tax Act (FUTA)
• Genetic Information Nondiscrimination Act of 2008 (GINA)
• Hay profile job evaluation method
• indirect financial compensation
• job classification system
• job evaluation
• job ranking
• Lilly Ledbetter Fair Pay Act of 2009
• market compensation policy
• market minus policy
• market plus policy
• non-financial compensation
• paired comparison system
• pay grading
• point-factor job evaluation system
• Pregnancy Discrimination Act
• Rehabilitation Act of 1973
• reinforcement theory
• skill-based pay
• Title VII of the Civil Rights Act of 1964
• wrongful discharge

Unit 7: Safety, Health, and Wellness

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

• How can chronic stress due to insufficient training lead to costs for the employee and the employer?
• How can positive stress help us meet our goals?
• 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?
• When it comes to employees who are at an increased risk for workplace violence, what three types of workers are named by the U.S. Occupational Safety and Health Administration (OSHA)?
• How does an Employee Assistance Program (EAP) contribute to employees' health, safety, and wellness?

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

The following terms describe the various types of stress we encounter. Note that there are positive and negative types of stress. We can use positive stress and learn to manage unhealthy levels of negative stress.

Positive stress (eustress) is healthy and can give a feeling of fulfillment and other positive emotions. Eustress can also 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 can experience hyperstress, a type of extreme stress where they see little or no relief for a long time, causing burnout. On the other hand, 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 can include lost productivity, less creative work, and physical symptoms such as headaches or gastrointestinal issues. From a financial perspective, stress not only decreases worker productivity and output in the long run but 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 healthcare 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 substantially limiting 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; and
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; and
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; and
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; and
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; and
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; and
5. explosive outbursts of anger or rage without provocation.

Workplace bullying is an individual or group's 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 identity 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; and
3. providing training to staff who will have access to private employee information.

Some employers provide Employee Assistance Program (EAP) benefits to help employees respond to personal problems that can affect their work performance. These programs can provide training, counseling, and referral services for substance abuse, depression, and other personal issues.

To review, see:

• Safety and Health at Work
• Return on Investment (ROI) for Employee Health
• Employee Wellness Innovations
• Restoring Employee Wellbeing for the New World of Work

7b. Identify key laws and legislation about 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 for 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 (EPA) 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).

To review, see:

• Safety and Health at Work

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

• How do employee wellness programs benefit employees and the organization?
• Why do employee wellness programs play a very important role for employees in hospitality and service positions?
• Hybrid work, where employees come to work part of the week and work from home the other part of the week, has created significant and uncontrollable disruptions at work. Employees have indicated such issues as being overwhelmed, isolated from colleagues, and feeling at risk of burnout. How have employers addressed these issues to restore resilience and improve the performance of their employees?

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, and online programs and training to maintain or improve employee health before problems arise.

Employee wellness programs are especially beneficial for employees in hospitality and service positions. These workers face a constantly changing work environment and endure physical discomforts, such as bending, lifting, and standing on their feet for hours. In addition to the bombardment of stressors such as angry customers, on-demand service, etc., physical ailments relating to performing their jobs also take their toll. With the assistance of employee wellness programs, these workers receive the attention needed to put their mental and physical health first. This, in turn, results in lower turnover and absenteeism for the employer.

Since the pandemic, there has been a shift from a workplace-centric to a worker-centric world. Employers are responding to these shifting priorities that rank above quality of life and financial health in the minds of their employees. To help employees boost well-being through physical, mental, and social health, they are creating a path to resilience and performance to help employees feel safe, well, and flourish.

To review, see:

• Safety and Health at Work
• Restoring Employee Well-Being for the New World of Work

Unit 7 Vocabulary

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

• acute stress
• chronic stress
• cumulative trauma disorder (CTD)
• cyberbullying
• distress
• Emergency Planning and Community Right to Know Act (EPCRA)
• Employee Assistance Program (EAP)
• employee identity theft
• environmental illness (EI)
• Environmental Protection Agency (EPA)
• eustress
• hyperstress
• hypostress
• multiple chemical sensitivity (MCS)
• Occupational Safety and Health Administration (OSHA)
• stressor
• wellness program
• workplace bullying

Unit 8: Labor Relations and Internal Employee Relations

8a. Define key concepts in labor relations

• What is the relationship between labor unions and labor relations?
• What is the term for the negotiations between the company and the union representatives?
• In addition to their focus on legislative changes, what are the activities of a national union?
• What is one of several challenges the U.S. labor movement is experiencing?

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

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

Three challenges facing today's labor unions include a decline in membership, globalization, and problems faced because employers are focused on maintaining a non-union status.

In addition to their focus on legislative changes, a national union:

1. lobbies in government for workers' rights laws;
2. resolves disputes between unions;
3. helps organize national protests; and
4. works with allied organizations and sponsors various programs for the support of unions.

To review, see:

• Working with Labor Unions

8b. Define key concepts in employee relations

• What is one reason employers pay careful attention to employee relations?
• What factors indicate how much support and direction a manager should provide an employee when applying the situational leadership model?
• What four elements should be quantified to foster ethical behavior in an organization?

The term employee relations is broad and encompasses virtually every aspect of employer-to-employee partnerships, from hiring to exiting. 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.

Leaders should try to develop their active listening skills to understand what the other person means and convey beyond what they say with their spoken or written words. They should also use emotional intelligence, which requires empathizing with others.

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.

There are four primary workplace communication styles or personalities:

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

1. A passive communicator tends to put the interests of others before their own.
2. An aggressive communicator stands up for their 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 as insulting or offensive. Many prefer to have an assertive communicator in the workplace because, while they exhibit self-esteem, they respect others and do not try to mislead them.

Body language describes non-verbal language, 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.

In addition to effective communication, establishing trust is the most important element of a successful manager-employee relationship. From a business perspective, trust is necessary 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 encourage 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.

There are several management styles:

• 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 have the necessary tools 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 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 in the project.

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

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

• A manager with a free-rein style gives employees total freedom to decide 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 of leadership, a leader's role is to define goals and create pathways so employees can accomplish their tasks. Employees who are satisfied with this leadership style 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 establishing an ethical corporate culture is critical to creating an effective organization.

To instill ethical behavior in an 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. provide advice and guidance on ethical situations; and
4. systems for confidential reporting.

Three ethical issues in sales and marketing include pricing practices, promotional activities, and 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 creative accounting, earnings management, misleading financial analysis, insider trading, securities fraud, bribery, kickbacks, and facilitation payments.

To review, see:

• Successful Employee Communication
• Employee Relations
• Trust in Manager-Employee Relationship
• Ethical Issues at an Organizational Level
• Building an Ethical Culture

8c. Identify key labor laws and legislation that impact workforce relations

• What legislation was enacted to prohibit employers from interfering with employees' freedom of association and organization to form unions?
• What is the responsibility of the National Relations Board (NLRB)?
• What kind of strikes were prohibited by the Taft-Hartley Act introduced and passed in 1947?
• How did the Landrum Griffin Act, also known as the Labor Management Reporting and Disclosure Act (LMRDA), address corruption charges by union leaders?

Historically, employers and employees have struggled to find a balance of power that recognizes the value both parties contribute to an organization or industry. Each side has asserted their leverage, and in the process, both sides came up short of their objectives. Initially, employers set the rules that employees were powerless to object to. As employees recognized that there was strength in numbers, they began to seek ways to form coalitions and unions to have their concerns heard by management. Below is a brief description of several impactful laws relating to workers' rights and the protections of employers to conduct business.

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 there was no disruption 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 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 could join unions without employer interference.

In 1935, the U.S. Congress passed the Wagner Act (also called the National Labor Relations Act), which changed how employers responded 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. While the Wagner Act oversaw unfair labor practices by companies, the Taft-Hartley Act focused on unfair labor actions by unions. The Taft-Hartley Act outlawed strikes that 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 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

To review, see:

• Working with Labor Unions
• American Labor History

Unit 8 Vocabulary

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

• active listening
• autocratic style
• body language
• collective bargaining
• communication style
• directing style
• downward communication
• emotional intelligence
• employee relations
• free-rein style
• labor relations
• labor union
• Landrum Griffin Act
• National Labor Relations Board
• Norris-LaGuardia Act
• participatory style
• path-goal theory of leadership
• people-oriented style
• Railway Labor Act (RLA)
• situational leadership model
• Taft-Hartley Act
• task-oriented style
• union steward
• upward communication
• Wagner Act
• wildcat strike