Beginning management of human resources

Beginning Management of
Human Resources
v. 1.0


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ii


Table of Contents
Author Bio .............................................................................................................................. 1
Acknowledgments................................................................................................................. 2
Dedications ............................................................................................................................. 4
Preface..................................................................................................................................... 5
Chapter 1: The Role of Human Resources...................................................................... 10
What Is Human Resources?......................................................................................................................... 12
Skills Needed for HRM ................................................................................................................................. 21
Today’s HRM Challenges ............................................................................................................................. 26
Cases and Problems...................................................................................................................................... 40

Chapter 2: Developing and Implementing Strategic HRM Plans .............................. 43
Strategic Planning........................................................................................................................................ 45
Writing the HRM Plan.................................................................................................................................. 57
Tips in HRM Planning .................................................................................................................................. 65
Cases and Problems...................................................................................................................................... 70

Chapter 3: Diversity and Multiculturalism ................................................................... 73
Diversity and Multiculturalism .................................................................................................................. 74
Diversity Plans.............................................................................................................................................. 81
Multiculturalism and the Law .................................................................................................................... 90
Cases and Problems.................................................................................................................................... 101

Chapter 4: Recruitment ................................................................................................... 104
The Recruitment Process .......................................................................................................................... 106
The Law and Recruitment ......................................................................................................................... 115
Recruitment Strategies.............................................................................................................................. 123
Cases and Problems.................................................................................................................................... 136

Chapter 5: Selection.......................................................................................................... 141
The Selection Process ................................................................................................................................ 143
Criteria Development and Résumé Review ............................................................................................. 148
Interviewing ............................................................................................................................................... 154
Testing and Selecting ................................................................................................................................ 164
Making the Offer ........................................................................................................................................ 172
Cases and Problems.................................................................................................................................... 176

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Chapter 6: Compensation and Benefits ........................................................................ 182

Goals of a Compensation Plan................................................................................................................... 183
Developing a Compensation Package ...................................................................................................... 187
Types of Pay Systems................................................................................................................................. 192
Other Types of Compensation .................................................................................................................. 212
Cases and Problems.................................................................................................................................... 225

Chapter 7: Retention and Motivation ........................................................................... 230
The Costs of Turnover ............................................................................................................................... 232
Retention Plans .......................................................................................................................................... 238
Implementing Retention Strategies......................................................................................................... 251
Cases and Problems.................................................................................................................................... 265

Chapter 8: Training and Development ......................................................................... 270
Steps to Take in Training an Employee ................................................................................................... 272
Types of Training ....................................................................................................................................... 279
Training Delivery Methods ....................................................................................................................... 287
Designing a Training Program.................................................................................................................. 296
Cases and Problems.................................................................................................................................... 314

Chapter 9: Successful Employee Communication ...................................................... 318
Communication Strategies........................................................................................................................ 320
Management Styles.................................................................................................................................... 334
Cases and Problems.................................................................................................................................... 343

Chapter 10: Managing Employee Performance .......................................................... 346
Handling Performance .............................................................................................................................. 348
Employee Rights......................................................................................................................................... 368
Cases and Problems.................................................................................................................................... 380

Chapter 11: Employee Assessment ................................................................................ 385

Performance Evaluation Systems............................................................................................................. 387
Appraisal Methods ..................................................................................................................................... 396
Completing and Conducting the Appraisal ............................................................................................. 411
Cases and Problems.................................................................................................................................... 421

Chapter 12: Working with Labor Unions...................................................................... 430
The Nature of Unions................................................................................................................................. 431
Collective Bargaining................................................................................................................................. 447
Administration of the Collective Bargaining Agreement ...................................................................... 455
Cases and Problems.................................................................................................................................... 460

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Chapter 13: Safety and Health at Work........................................................................ 465
Workplace Safety and Health Laws .......................................................................................................... 467
Health Hazards at Work ............................................................................................................................ 478
Cases and Problems.................................................................................................................................... 501

Chapter 14: International HRM...................................................................................... 505
Offshoring, Outsourcing ............................................................................................................................ 507
Staffing Internationally............................................................................................................................. 524
International HRM Considerations .......................................................................................................... 530
Cases and Problems.................................................................................................................................... 550

v


Author Bio
Laura Portolese Dias holds a master of business administration from City University

of Seattle and a doctorate of business administration from Argosy University. Laura
is a tenured professor at Shoreline Community College and teaches in the business
department. She also teaches graduate and undergraduate management and HRM
courses for The University of Phoenix–Western Washington Campus. Before
becoming a professor, Laura worked for several small and large organizations in
management and operations. She is also an entrepreneur who has performed
consulting work for companies such as Microsoft.
Laura has authored two books for McGraw-Hill and numerous supplemental
materials. In her free time, she enjoys hiking, backpacking, scuba diving, and
snowshoeing. She lives in Seattle, Washington, with her husband, Alain, and her
two rescue dogs, Casey and Sal.

1


Acknowledgments
I would like to thank each and every one of the reviewers for their contributions to
this book. Their ideas, feedback, and suggestions make this book one of the most
innovative HRM books on the market, and I thank them personally for their insight.
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Carol Decker, Tennessee Wesleyan College
Melissa Gruys, Wright State University
Lisa Stafford, Fairfield University
Fred Kellinger, Penn State University–Beaver Campus
Avan Jassawalla, SUNY Geneseo
Cheryl Adkins, Longwood University
James Tan, St. Cloud State University
Niclas Erhardt, Maine Business School
Valerie Wallingford, Bemidji State University
Stanley Ross, Bridgewater State University
Jack Walker, Texas Tech University
Howard Stanger, Canisius College
Tracy Porter, Cleveland State University
Shirish Grover, College of Business, Ferris State University
Josh Daspit, University of North Texas
Robin Hoggins-Blake, Palm Beach State College

Carlton R. Raines, Lehigh Carbon Community College
Kees Rietsema, Embry-Riddle Aeronautical University
Gemmy Allen, North Lake College
Kim Lukaszewski, SUNY New Paltz
Eddy Ng, Dalhousie University
Adib Birkland, The City College of New York
Allison Pratt, Saddleback College/Brandman University
Christina Reis, University of New Haven, College of Business

The team at Unnamed Publisher is the best in the business. I am grateful to Michael
Boezi for bringing me on the FWK author team. His enthusiasm for the FWK model
and his vision is inspiring. Jenn Yee’s ability to get me started in the right direction
and Melissa Yu’s follow-through, lightning-fast e-mail responses, amazingly good
judgment, and quiet encouragement is ultimately what created the innovative
finished product. I would also like to thank the talented people at FWK whom I
don’t know, who quietly work in the background, such as the rendering people,
technical people, and others, who I know put a great deal of effort into the final

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Acknowledgments

product and are a key component to FWK’s success. Also, thank you to Danielle
Loparco for editing my first round of work.
I would like to thank my friends and family, who have supported me through this
process. This list is long, but I hope they know who they are. I would like to
specifically mention my husband, Alain, for understanding the late nights and long
days, and also for being my best friend. My parents, Emanuele and JoAnn, for their
constant encouragement and support of me professionally and personally not only

today, but always. Lastly, thank you to the professors who adopt this book and
support this new model of textbooks, which inevitably supports our students’
educational goals and success.

3


Dedications
I would like to dedicate the book to the students who will be using it. I wish you
future career success and hope you never stop learning.

4


Preface
Thank you for using Portolese Dias’s Human Resource Management! Whether you are
an instructor or student, by using this book you are part of the Unnamed Publisher
revolution. As instructors, the ability to customize this book by changing, adding,
deleting, and moving text around, we are leveraging technology while making it
beneficial (and cheaper!) for our students. If you are a student, I think you will
appreciate the conversational style and features designed to make reading the book
engaging.
Competing books are focused on the academic part of HRM, which is necessary in a
university or college setting. However, the goal with this book is not only to provide
the necessary academic background information but also to present the material
with a practitioner’s focus on both large and small businesses. While the writing
style is clear and focused, we don’t feel jargon and ten-dollar words are necessary to
making a good textbook. Clear and concise language makes the book interesting
and understandable (not to mention more fun to read) to the future HRM
professional and manager alike.

It is highly likely that anyone in business will have to take on an HRM role at some
point in their careers. For example, should you decide to start your own business,
many of the topics discussed will apply to your business. This is the goal of this
book; it is useful enough for the HRM professional, but the information presented is
also applicable to managers, supervisors, and entrepreneurs. Besides these
differences, other key differences include the following:
• This book utilizes a technology focus and shows how HRM activities
can be leveraged using technology.
• We have also included a chapter on communication and information
about motivational theories. Since communication is a key component
of HRM, it makes sense to include it as a full chapter in this book.
Human motivation is one of the cornerstones of HR, which is why we
include information on this as well.
• Rather than dividing certain chapters, we have combined some
chapters to provide the entire picture of related topics at once. For
example, in Chapter 6 "Compensation and Benefits" we discuss both
pay and benefits, instead of separating them into two chapters.
• The exercises and cases utilize critical thinking skills and teamwork to
help the points come through.

5


Preface

• The Fortune 500 boxes focus on the concepts and how large companies
apply these concepts. However, we still focus on small- and mediumsized businesses.
• Practical application is the focus of this book. We want you to be able
to read the book and apply the concepts. We feel this approach makes
the material much more useful, instead of only academic.

• We use several YouTube videos in each chapter.
• The author introduces each chapter in a video format.
• How Would You Handle This? situations in the book utilize criticalthinking skills to think about ethical situations in HRM. Each situation
also includes audio examples on how an HRM professional or manager
could handle the situation.
These features and pedagogical components make the book easy to read and
understand while still maintaining an academic focus.

Organization
The organization of the book is intuitive. The book follows the process HR
professionals or managers will go through as they ensure they have the right
employees at the right time to make sure the company is productive and profitable.
• In Chapter 1 "The Role of Human Resources", we discuss the role of
human resources in business and why, in a constantly changing world,
the HRM function is key to a successful business.
• In Chapter 2 "Developing and Implementing Strategic HRM Plans", we
discuss HR strategic plans and how those plans should be developed.
Strategic planning is necessary to tie company objectives with HRM
objectives, but it is also important to have a “people plan” and address
the ever-changing work environment.
• In Chapter 3 "Diversity and Multiculturalism", we discuss the diversity
aspect of business and why multiculturalism is so important to
ensuring a healthy organization.
• In Chapter 4 "Recruitment", recruitment, the process for getting the
most qualified individuals with diverse backgrounds, is the focus. We
discuss some of the important laws to consider when hiring people and
methods to recruit highly qualified individuals.
• In Chapter 5 "Selection", we talk about the selection process. Once you
have recruited people, you must organize the process that selects the
best candidate. This can include interviewing, employment tests, and

selecting the criteria by which candidate performance will be
measured.

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Preface

• In Chapter 6 "Compensation and Benefits", we discuss how you
compensate individuals through pay, benefits, vacation time, and other
incentives.
• Chapter 7 "Retention and Motivation" discusses the talent
management approach—that is, how you can retain the best employees
through retention strategies and motivation techniques.
• The training and development aspect of HRM is likely one of the most
important aspects of HRM. After you have gone through the time and
effort to recruit, select, and compensate the employee, you will need to
ensure career growth through continuing training, which is the focus
of Chapter 8 "Training and Development".
• Since communication is a key component to any and all aspects of
HRM, we have a detailed discussion on communication and
management style. While some of the information may be covered in
other classes on topics in which people (such as HRM) are the focus, a
review on communication is important. In Chapter 9 "Successful
Employee Communication", we also discuss management styles, since
this is an important form of communication, and in fact, many people
leave organizations because of their managers.
• Chapter 10 "Managing Employee Performance" discusses some of the
possible performance issues and how to handle those performance
issues. We also discuss employee discipline and how to handle layoffs.

• Chapter 11 "Employee Assessment" focuses on how to assess
performance of the employee. We address performance evaluation
systems and methods.
• Most HRM professionals will work with unions, the focus of Chapter 12
"Working with Labor Unions". The unionization process, how to
negotiate union contracts, and history of labor unions are discussed.
• Employee safety and health are necessary to a productive workplace.
Chapter 13 "Safety and Health at Work" addresses some of the health
and safety issues, such as drug use, carpal tunnel, and other issues
relating to keeping employees healthy at work.
• Finally, Chapter 14 "International HRM" looks at the differences
between international HRM and domestic HRM. We discuss the
recruitment, selection, and retention components of international
HRM.

Features
Each chapter contains several staple and innovative features as follows:
• Opening situation: The opening situation is used to show how the
chapter topics have real-life applications for HR professionals and

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Preface

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managers. The short openings are straightforward and show the
practical application of the concepts.
Learning objectives by section: Instead of a long list of learning
objectives at the front of the chapter, we divide the learning objectives
by section and offer exercises and key terms for every section in the
book. This is a great way to “self-check” and make sure the key
concepts are learned before moving to the next section.
How Would You Handle This? situation: These situations are created
to utilize critical-thinking skills that are necessary for strategic HRM.
The situations are ethics-based in nature and also include audio that
discusses the situation.
Introduction video: Every chapter includes an introductory video by
the author, discussing the importance of the chapter to HRM.
YouTube videos: Since the book is technology focused, it makes sense
to use the free technology available to cement many of the concepts.
Each chapter has at least two YouTube videos, with some chapters
including up to five or six.
Figures: There are numerous figures in every chapter. I think you will
find they are clear and focused but are not a series of endless graphs
and charts of statistics that are interesting but of little value to

learning the key strategic concepts in HRM.
Case study: The case study at the end of every chapter is a good way to
make sure students have learned the material. The case presents realworld situations and utilizes HRM knowledge and skills to complete.
The case studies are often tied to not only the current chapter but also
past chapters to ensure continued application of past concepts.
Team activities: The team activities will sometimes require students
to work in small groups but may also involve the entire class. These
activities are designed to promote communication, teamwork, and of
course, the specific HRM concept, which are all valuable skills in HRM.
Instructor’s Manual: The instructor’s manual includes PowerPoint
slides with notes, author teaching notes, exercise solutions, extra
discussion questions, video to accompany the case study, and an
additional case study. In addition to these features, additional YouTube
videos are included to share with your class if you wish. A 1,400
question test bank is also included, with true-or-false, fill-in-the-blank,
multiple-choice, and essay questions.

I am confident you will enjoy this book as much as I enjoyed writing it for
instructors, professors, and students. Feel free to send me a personal e-mail if you
have questions or comments about this book.
Best wishes for a great semester or quarter!

8


Preface

Laura
Seattle, Washington

9


Chapter 1
The Role of Human Resources
Human Resource Management Day to Day
You have just been hired to work in the human resource department of a small
company. You heard about the job through a conference you attended, put on by
the Society for Human Resource Management (SHRM). Previously, the owner of the
company, Jennifer, had been doing everything related to human resource
management (HRM). You can tell she is a bit critical about paying a good salary for
something she was able to juggle all on her own. On your first day, you meet the ten
employees and spend several hours with the company owner, hoping to get a
handle on which human resource processes are already set up.
Shortly after the meeting begins, you see she has a completely different perspective
of what HRM is, and you realize it will be your job to educate her on the value of a
human resource manager. You look at it as a personal challenge—both to educate
her and also to show her the value of this role in the organization.
First, you tell her that HRM is a strategic process having to do with the staffing,
compensation, retention, training, and employment law and policies side of the
business. In other words, your job as human resources (HR) manager will be not
only to write policy and procedures and to hire people (the administrative role) but
also to use strategic plans to ensure the right people are hired and trained for the
right job at the right time. For example, you ask her if she knows what the revenue
will be in six months, and Jennifer answers, “Of course. We expect it to increase by
20 percent.” You ask, “Have you thought about how many people you will need due
to this increase?” Jennifer looks a bit sheepish and says, “No, I guess I haven’t
gotten that far.” Then you ask her about the training programs the company offers,
the software used to allow employees to access pay information online, and the

compensation policies. She responds, “It looks like we have some work to do. I
didn’t know that human resources involved all of that.” You smile at her and start
discussing some of the specifics of the business, so you can get started right away
writing the strategic human resource management plan.

The Role of Human Resources
(click to see video)

10


Chapter 1 The Role of Human Resources

The author introduces the chapter defining the role of human resource management.

11


Chapter 1 The Role of Human Resources

1.1 What Is Human Resources?
LEARNING OBJECTIVES
1. Explain the role of HRM in organizations.
2. Define and discuss some of the major HRM activities.

Every organization, large or small, uses a variety of capital1 to make the business
work. Capital includes cash, valuables, or goods used to generate income for a
business. For example, a retail store uses registers and inventory, while a consulting
firm may have proprietary software or buildings. No matter the industry, all
companies have one thing in common: they must have people to make their capital

work for them. This will be our focus throughout the text: generation of revenue
through the use of people’s skills and abilities.

What Is HRM?
Human resource management (HRM)2 is the process of employing people,
training them, compensating them, developing policies relating to them, and
developing strategies to retain them. As a field, HRM has undergone many changes
over the last twenty years, giving it an even more important role in today’s
organizations. In the past, HRM meant processing payroll, sending birthday gifts to
employees, arranging company outings, and making sure forms were filled out
correctly—in other words, more of an administrative role rather than a strategic
role crucial to the success of the organization. Jack Welch, former CEO of General
Electric and management guru, sums up the new role of HRM: “Get out of the
parties and birthdays and enrollment forms.… Remember, HR is important in good
times, HR is defined in hard times.”Kristen B. Frasch, David Shadovitz, and Jared
Shelly, “There’s No Whining in HR,” Human Resource Executive Online, June 30, 2009,
accessed September 24, 2010, />story.jsp?storyId=227738167.
1. Capital includes cash,
valuables, or goods used to
generate income for a business.
2. The process of employing
people, training them,
compensating them,
developing policies relating to
the workplace, and developing
strategies to retain employees.

It’s necessary to point out here, at the very beginning of this text, that every
manager has some role relating to human resource management. Just because we
do not have the title of HR manager doesn’t mean we won’t perform all or at least

some of the HRM tasks. For example, most managers deal with compensation,
motivation, and retention of employees—making these aspects not only part of
HRM but also part of management. As a result, this book is equally important to

12


Chapter 1 The Role of Human Resources

someone who wants to be an HR manager and to someone who will manage a
business.

Human Resource Recall
Have you ever had to work with a human resource department at your job?
What was the interaction like? What was the department’s role in that specific
organization?

The Role of HRM
Keep in mind that many functions of HRM are also tasks other department
managers perform, which is what makes this information important, despite the
career path taken. Most experts agree on seven main roles that HRM plays in
organizations. These are described in the following sections.

Staffing
You need people to perform tasks and get work done in the organization. Even with
the most sophisticated machines, humans are still needed. Because of this, one of
the major tasks in HRM is staffing. Staffing3 involves the entire hiring process from
posting a job to negotiating a salary package. Within the staffing function, there are
four main steps:
1. Development of a staffing plan. This plan allows HRM to see how

many people they should hire based on revenue expectations.
2. Development of policies to encourage multiculturalism at work.
Multiculturalism in the workplace is becoming more and more
important, as we have many more people from a variety of
backgrounds in the workforce.
3. Recruitment. This involves finding people to fill the open positions.
4. Selection. In this stage, people will be interviewed and selected, and a
proper compensation package will be negotiated. This step is followed
by training, retention, and motivation.

3. The entire hiring process from
the first step of posting a job to
the actual hiring of an
employee.

1.1 What Is Human Resources?

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Chapter 1 The Role of Human Resources

Development of Workplace Policies
Every organization has policies to ensure fairness and continuity within the
organization. One of the jobs of HRM is to develop the verbiage surrounding these
policies. In the development of policies, HRM, management, and executives are
involved in the process. For example, the HRM professional will likely recognize the
need for a policy or a change of policy, seek opinions on the policy, write the policy,
and then communicate that policy to employees. It is key to note here that HR
departments do not and cannot work alone. Everything they do needs to involve all

other departments in the organization. Some examples of workplace policies might
be the following:
•
•
•
•
•

Discipline process policy
Vacation time policy
Dress code
Ethics policy
Internet usage policy

These topics are addressed further in Chapter 6 "Compensation and Benefits",
Chapter 7 "Retention and Motivation", Chapter 8 "Training and Development", and
Chapter 9 "Successful Employee Communication".

Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair, meets industry
standards, and is high enough to entice people to work for the organization.
Compensation4 includes anything the employee receives for his or her work. In
addition, HRM professionals need to make sure the pay is comparable to what other
people performing similar jobs are being paid. This involves setting up pay systems
that take into consideration the number of years with the organization, years of
experience, education, and similar aspects. Examples of employee compensation
include the following:

4. Anything the employee
receives for his or her work. It

can include pay, benefits,
vacation time, and sick leave.

1.1 What Is Human Resources?

•
•
•
•
•
•
•
•

Pay
Health benefits
401(k) (retirement plans)
Stock purchase plans
Vacation time
Sick leave
Bonuses
Tuition reimbursement

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Chapter 1 The Role of Human Resources

Since this is not an exhaustive list, compensation is discussed further in Chapter 6
"Compensation and Benefits".

Retention
Retention5 involves keeping and motivating employees to stay with the
organization. Compensation is a major factor in employee retention, but there are
other factors as well. Ninety percent of employees leave a company for the
following reasons:
1.
2.
3.
4.

Issues around the job they are performing
Challenges with their manager
Poor fit with organizational culture
Poor workplace environment

Despite this, 90 percent of managers think employees leave as a result of pay.Leigh
Rivenbark, “The 7 Hidden Reasons Why Employees Leave,” HR Magazine, May 2005,
accessed October 10, 2010, />ai_n13721406. As a result, managers often try to change their compensation
packages to keep people from leaving, when compensation isn’t the reason they are
leaving at all. Chapter 7 "Retention and Motivation" and Chapter 11 "Employee
Assessment" discuss some strategies to retain the best employees based on these
four factors.

Training and Development
Once we have spent the time to hire new employees, we want to make sure they not
only are trained to do the job but also continue to grow and develop new skills in
their job. This results in higher productivity for the organization. Training is also a
key component in employee motivation. Employees who feel they are developing
their skills tend to be happier in their jobs, which results in increased employee

retention. Examples of training programs might include the following:
•
•
•
•

5. The process and strategies of
keeping and motivating
employees to stay with the
organization.

1.1 What Is Human Resources?

Job skills training, such as how to run a particular computer program
Training on communication
Team-building activities
Policy and legal training, such as sexual harassment training and ethics
training

We address each of these types of training and more in detail in Chapter 8 "Training
and Development".

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Chapter 1 The Role of Human Resources

Dealing with Laws Affecting Employment
Human resource people must be aware of all the laws that affect the workplace. An
HRM professional might work with some of these laws:

•
•
•
•
•

Discrimination laws
Health-care requirements
Compensation requirements such as the minimum wage
Worker safety laws
Labor laws

The legal environment of HRM is always changing, so HRM must always be aware of
changes taking place and then communicate those changes to the entire
management organization. Rather than presenting a chapter focused on HRM laws,
we will address these laws in each relevant chapter.

Worker Protection
Safety is a major consideration in all organizations. Oftentimes new laws are
created with the goal of setting federal or state standards to ensure worker safety.
Unions and union contracts can also impact the requirements for worker safety in a
workplace. It is up to the human resource manager to be aware of worker
protection requirements and ensure the workplace is meeting both federal and
union standards. Worker protection issues might include the following:
•
•
•
•

Chemical hazards

Heating and ventilation requirements
Use of “no fragrance” zones
Protection of private employee information

We take a closer look at these issues in Chapter 12 "Working with Labor Unions"
and Chapter 13 "Safety and Health at Work".

1.1 What Is Human Resources?

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Chapter 1 The Role of Human Resources

Communication
Besides these major roles, good communication skills
and excellent management skills are key to successful
human resource management as well as general
management. We discuss these issues in Chapter 9
"Successful Employee Communication".

Figure 1.1

Awareness of External Factors
In addition to managing internal factors, the HR
manager needs to consider the outside forces at play
that may affect the organization. Outside forces, or
external factors6, are those things the company has no
direct control over; however, they may be things that
could positively or negatively impact human resources.

External factors might include the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

6. Anything the company has no
direct control over; it could
positively or negatively impact
human resources.
7. A policy that allows employees
to set their own schedules to
work around family and
personal needs.
8. Allows employees to work from
home or a remote location for
a specified period of time, such
as one day per week.

1.1 What Is Human Resources?

Knowing the law regarding
worker protection is generally
the job of human resources. In

some industries it is extremely
important; in fact, it can mean
life or death.
© Thinkstock

Globalization and offshoring
Changes to employment law
Health-care costs
Employee expectations
Diversity of the workforce
Changing demographics of the workforce
A more highly educated workforce
Layoffs and downsizing
Technology used, such as HR databases
Increased use of social networking to distribute information to
employees

For example, the recent trend in flexible work schedules7 (allowing employees to
set their own schedules) and telecommuting8 (allowing employees to work from
home or a remote location for a specified period of time, such as one day per week)
are external factors that have affected HR. HRM has to be aware of these outside
issues, so they can develop policies that meet not only the needs of the company
but also the needs of the individuals. Another example is the Patient Protection and
Affordable Care Act, signed into law in 2010. Compliance with this bill has huge
implications for HR. For example, a company with more than fifty employees must
provide health-care coverage or pay a penalty. Currently, it is estimated that 60
percent of employers offer health-care insurance to their employees.Peter Cappelli,
“HR Implications of Healthcare Reform,” Human Resource Executive Online, March 29,
2010, accessed August 18, 2011, />story.jsp?storyId=379096509. Because health-care insurance will be mandatory, cost

17


Chapter 1 The Role of Human Resources

concerns as well as using health benefits as a recruitment strategy are big external
challenges. Any manager operating without considering outside forces will likely
alienate employees, resulting in unmotivated, unhappy workers. Not understanding
the external factors can also mean breaking the law, which has a concerning set of
implications as well.
Figure 1.2

An understanding of key external factors is important to the successful HR professional. This allows him or her to be
able to make strategic decisions based on changes in the external environment. To develop this understanding,
reading various publications is necessary.

One way managers can be aware of the outside forces is to attend conferences and
read various articles on the web. For example, the website of the Society for Human
Resource Management, SHRM Online,Society for Human Resource Management,
accessed August 18, 2011, not only has
job postings in the field but discusses many contemporary human resource issues
that may help the manager make better decisions when it comes to people
management. In Section 1.3 "Today’s HRM Challenges", we go into more depth
about some recent external issues that are affecting human resource management

1.1 What Is Human Resources?

18

Chapter 1 The Role of Human Resources

roles. In Section 1.1.2 "The Role of HRM", we discuss some of the skills needed to be
successful in HRM.
Figure 1.3

Most professionals agree that there are seven main tasks HRM professionals perform. All these need to be considered
in relation to external and outside forces.

1.1 What Is Human Resources?

19


Chapter 1 The Role of Human Resources

KEY TAKEAWAYS
• Capital includes all resources a company uses to generate revenue.
Human resources or the people working in the organization are the
most important resource.
• Human resource management is the process of employing people, training
them, compensating them, developing policies relating to the
workplace, and developing strategies to retain employees.
• There are seven main responsibilities of HRM managers: staffing, setting
policies, compensation and benefits, retention, training, employment laws,
and worker protection. In this book, each of these major areas will be
included in a chapter or two.
• In addition to being concerned with the seven internal aspects, HRM
managers must keep up to date with changes in the external environment
that may impact their employees. The trends toward flexible schedules

and telecommuting are examples of external aspects.
• To effectively understand how the external forces might affect human
resources, it is important for the HR manager to read the HR literature,
attend conferences, and utilize other ways to stay up to date with new
laws, trends, and policies.

EXERCISES
1. State arguments for and against the following statement: there are other
things more valuable in an organization besides the people who work
there.
2. Of the seven tasks an HR manager does, which do you think is the most
challenging? Why?

1.1 What Is Human Resources?

20