Human Resource

Management
 GRADING SYSTEM

QUIZ -
40%
EXAMINATION - 30%
REQUIREMENTS - 30%
TOTAL -
100%
MIDTERM TOPICS
THE NATURE OF HUMAN
INDUCTION OF
01 RESOURCE 04 PERSONNEL
MANAGEMENT
FUNCTIONS AND
REWARDS SYSTEM IN
02 ACTIVITIES OF HUMAN 05 ORGANIZATION
RESOURCE MGT

RECRUITMENT AND
03 SELECTION
06 STAFF DEVELOPMENT
FINAL TERM TOPICS
TRANSFER AND STAFF SERVICES:
07 PROMOTION OF STAFF 10 SAFETY, SECURITY AND
IN ORGANIZATION HEALTH SERVICES
MORALE, MOTIVATION
STAFF CONDUCT AND
08 AND PERFORMANCE IN 11 DISCIPLINE
ORGANIZATION
ORGANIZATIONAL
JOB ANALYSIS, JOB
CULTURE, PERSONNEL
09 SATISFACTION AND 12 COMMITMENT TO WORK
PERFORMANCE
AND ORGANIZATIONAL
EFFECTIVENESS
COURSE OBJECTIVES:
At the end of this course, you will be able to know the following:

CO. 1. Discuss the different principles and processes of

managing personnel.
CO. 2. Recall the concepts of personnel Management to
actual situations and understand better how management
responds to given situations.
CO. 3. Analyze the different personnel management
process
 DEFINITION AND
SCOPE OF HUMAN
01 RESOURCE
MANAGEMENT
OBJECTIVES:
At the end of this lesson, the students will be able to know the following:

1. Define Human Resource Management, it’s nature and scope;

2. Synthesize Historical Milestone in HRM Development;
3. Describe the importance of studying HRM;
4. Identify the different features of HRM; and
5. Compare the difference of HRM and HRD.
HUMAN RESOURCE MANAGEMENT-
is the organizational function of managing and handling
one of the most valuable assets of the organization- its
employees.

HRM is composed of human resource (HR) practices that

aid the firm in leading its people successfully and
reasonably throughout their journey during the 3 stages of
employment cycle: pre-hiring, hiring and post-hiring.
Pre-Hiring stage: determine the vacant position to be
filled;
Hiring stage: recruiting and selecting;
Post-Hiring stage: Enhancing employees
performance level, such as training and development,
compensation and benefits administration, employee
health and safety, and separation.
HUMAN RESOURCE
MANAGEMENT-
is the practice of recruiting, hiring,
deploying and managing an
organization's employees. HRM is
often referred to simply as human
resources (HR).

A company or organization's HR
department is usually responsible
for creating, putting into effect and
overseeing policies governing
workers and the relationship of the
organization with its employees.
Fig. 1.
Human resources
permeates every layer of
an organization, from
recruiting to data
management.
FREDERICK WINSLOW TAYLOR
he introduced the people
management through his book The
shop management, which featured
the proper selection and training of
employees in a scientific way.

He studied the Scientific

Management and eventually he
became known as the “FATHER OF
SCIENTIFIC MANAGEMENT”
 Historical Background of Human Resource
Management
Year Events
1890-1910 Taylor, FW., introduced a management approach
known as scientific management that focuses on the
idea of scientific selection of employees based on
their capabilities.
1910-1930 Most companies started to develop departmental
units focused on maintaining the well-being of
employees.
 Historical Background of Human Resource
Management
Year Events
1930-1945 During this period, Hawthorne studies started to have a
tremendous effect on management studies and
principles such that much attention was given to
personal and social interactions in the work-place that
affect and influence worker productivity and level of
performance.
1945-1965 This period marked the birth of union membership that
consider the importance of employee-employeer
relationship.
-pay benefits programs such as paid work leaves,
health and welfare coverage.
 Historical Background of Human Resource
Management
Year Events
1965-1985 The civil rights act of 1964 which prohibited the
discriminatory practices based on an individual’s age,
color, religious, affiliation, race and physical or mental
disabilities.
1985- Diverse labor force, globalization, and strategic HRM
present functions were three pressing concerns during this
period. Employers, primary aim is to effectively cope
with the intense demands and effects of change,
competition and job efficiency.
 Importance of studying Human Resource
Management
Human Resource Management embraces a wide range of basic
business ideas that include:
1. recruitment,
2. selection,
3. training and development,
4. performance appraisal,
5. compensation,
6. safety and health, and
7. other productivity improvement programs.

It is important even to non-HR personnel such as employees,

supervisor and leaders.
 Importance of studying Human Resource
Management
1. ENTREPRENEURS
HRM will give these
entrepreneurs useful insights
and a thorough understanding
of the employment cycle, and a
broader idea about various
human resource practices in
order to meet present and future
challenges.
 Importance of studying Human Resource
Management
2. EMPLOYEES
It is important to know that people
will always be one of the
company’s valuable assets. Hence,
it is essential for employees to
understand HR management so
they may gain a better
understanding of their rights and
privileges as thinking, feeling, and
doing individuals in an
organization.
 Importance of studying Human Resource
Management
3. SUPERVISORS AND LEADERS
HRM involves in designing various
productivity improvement programs
that could provide learning and
enhancement in the quality of life
and level of performance of
employees.
 Best Features of Human Resource Management
Human Resource Management is a continuing process of managing
people and their activities at work while squeezing out the best
potential from them so they become productive individuals.
It has the following features:
1. It is prevalent in nature- “performed in continuous basis”
2. It is dynamic- “HRM moves, HRM Acts”
3. It is individually-oriented-
4. Employee-oriented-
5. Forward-looking
6. Growth-oriented-
 Difference between HRM and HRD
Human Resource Management Human Resource Development
1. HRM focuses on enhancement of 1. HRD is concerned with enhancing the
employees, potential from a long-term capabilities of employees that will result in
perspective. positive behavior change.
2. HRM gives attention to the effective 2. HRD see to it that there is continuing
utilization of employees and their opportunities for growth and development.
capabilities
3. HRM takes decisions on HRD Plans 3. HRD depends on the decisions of HRM.

4. HRM at its center has HRD. 4. The goal of HRD is anchored to the that
of HRM, which boils down the benefit of the
workers
5. HRM attends to every employee 5. HRD promotes upscaling of skills and
demand resulting in increase satisfaction knowledge resulting in outstanding
and productivity. performance.
Any questions ?
 QUIZ
get ¼ sheet of
paper
 EQUAL EMPLOYMENT
02 OPPORTUNITY (EEO)
AND THE LAW
OBJECTIVES:
At the end of this lesson, the students will be able to know the following:

1. Define employment discrimination and describe its various

forms;
2. cite various discriminatory HRM issues that impact an
organization’s HR practices
3. Identify Equal Employment Opportunity (EEO) laws in the
Philippines, and;
4. Identify and discuss the various Equal Employment Opportunity
(EEO) laws in the Philippines.
Employment Discrimination
is the unjust or prejudicial treatment of different
categories of people or thing specifically on the basis
of their age, race, gender and religious beliefs.

During recruitment, firms should be cautious not to

infringe anti-discrimination laws. The goal of these
laws is to make certain that an individual who seeks
employment is equal chances to vie for it.
Example:
is it discriminatory to refuse to hire a

To avoid
discrimination, the
firm should apply the
concept of “bona
fide occupational
Women that requires carrying
objects that weight of more than
requirement”
50kg?
“Bona fide Occupational Requirement”
means that the company must be able to
prove that the requirement is indeed
essential.
Example: If a fitness center wants to hire
only women to supervise its
women’s locker room and
sauna.

It can do so without
discrimination because it
established a bona fide
occupational requirement.
However, even after referring to bona fide
occupational requirements, other
uncertainties remain. Would a bank be
Consider these three cases: discriminating because it
Would an agency be refused to hire an
Would a business firm be
discriminating if it applicant whom the
discriminating if it refused
advertised for a male human resource
to hire someone as a
model about 60y.o. for an manager believes would
receptionist because the
advertisement? not fit because of the
applicant is overweight?
person’s appearance ?
 Two categories of people protected by Equal
Employment Opportunity (EEO) Laws:
1. Protected Classifications
Categories of people who are lawfully protected against
employment discrimination based on their age, gender,
skin, color, ethnicity, and physical or mental disability.

2. Protected Groups
Sub-categories of people within each protected
classifications.
Ex. White, black, and brown are protected groups under the
protected classification skin color
To determine non-compliance or violation of EEO law, a
person should know how the court defines discrimination:
1. Intentional Discrimination or Disparate Treatment
This is a kind of an unlawful discrimination wherein the
employer makes gestures the intentionally treats an
individual.

2. Unintentional Discrimination of Disparate Impact

This is an indirect type of discrimination whereby a policy or
standard that is work-related gives unequal chances to
individuals from various protected groups.
EQUAL EMPLOYMENT OPPORTUNITY LEGISLATION- IN
THE PHILIPPINES
1. REPUBLIC ACT NO. 7277. An act providing for the
rehabilitation self-development and self-reliance of
disabled persons and their integration into the mainstream
of society and for other purposes.

CHAPTER I
EMPLOYMENT
Disabled persons are those suffering from restriction or
different abilities, as a result of a mental, physical or
sensory impairment, which render them unable to perform
an activity in the manner of within the range considered
normal for human being;
Sec. 5. Equal Opportunity for Employment
No disabled person shall be denied access to opportunities for
suitable employment. Qualified disabled employee subject to
same terms and conditions of employment and same
compensation, privileges, benefits, incentives or allowances.

Sec. 6. Sheltered Employment

setting in which people with disabilities receive services and
training to develop work-related skills and behaviors.
“Sheltered,” as a concept, originally implied an environment,
which was safe and protected for individuals with disabilities.
The state shall endeavor to provide it by means of sheltered
employment.

Sec. 7. Apprenticeship
Subject to the provisions of the Labor Code as amended
disabled persons shall be eligible as apprentices or learners:
provided that their handicap is not as much to effectively
impede the performance of job operations in the particular
Sec. 8. Incentives for Employers
In promoting the welfare of disabled person and to ensure
gainful employment for qualified disabled persons, adequate
incentives shall be provided to private entities which employ
disabled persons.

Sec. 9. Vocational Rehabilitation

The state shall take appropriate vocational rehabilitations
measures that serves to develop the skills and potentials of
disabled persons.
2. ANTI-SEXUAL HARRASMENT ACT, 1995- PHILIPPINES
All forms of sexual harassment in employment, education and
training environment are declared unlawful.

Sexual harassment is committed when such favor is demanded

in return for employment or promotion.

TWO TYPES OF SEXUAL HARRASMENT:

1. QUID PRO QUI SEXUAL HARRASMENT
Happens when a manager demands sexual intimacy from a
subordinate or a possible hire in exchange for employment.

2. HOSTILE ENVIRONMENT
Can take place when unsolicited criticisms and actions
interfere with the employee’s performance and well-being or
has created a disrespectful or insulting work environment for
the harassed employee.
3. WAGE RATIONALIZATION ACT, 1989
The wages in the Philippines is regulated by this Act. It aims to
promote the objective appraisal of jobs in the basis of the
work. This is limited to the determination of minimum wage
rates for workers in general regardless of sex. Collective
bargaining is to be promoted by the State as the primary mode
of settling wages and other terms and conditions of
employment.

4. ACT TO REGULATE THE EMPLOYMENT OF WOMEN AND

CHILDREN, to PROVIDE FOR PENALTIES IN VIOLATION HEREOF,
AND FOR OTHER PURPOSES, 1952
The act prohibits the employment of women in work which
involves prolonged standing or lifting heavy objects and night
work, and provide rest periods (Section 7). It also provide
maternity leave benefits, and requires establishment or
facilities for women and children at the workplace.
5. LOCAL GOVERNMENT CODE, 1991
Section 41c of this act provides seats for women in all local
legislative assemblies or local government units nationwide.

6. LABOR CODE OF THE PHILIPPINES, 1974

The labor code of the Philippines, According to the Art 12, the
secretary labor must establish standards that will ensure the
safety and health of women employees, notably in relation to
seats, separate toilet rooms and lavatories, and nurseries.
Any questions ?
 QUIZ
get ¼ sheet of
paper
 RECRUITMENT AND
03 SELECTION PROCESS
OBJECTIVES:
At the end of this lesson, the students will be able to know the following:

1. Define recruitment;
2. Describe the different recruitment sources;
3. Outline the steps organizations take in recruitment exercise;
4. State the components of employment interview, and;
5. State the methods of staff selection after the interview is
conducted.
What is Recruitment ?
- Finding applicants for possible employment.
- The company starts by notifying job seekers
about the qualifications needed, professional and
personal advancement for the particular job.
Sources of Locating and Attracting Candidates

1. EXTERNAL RECRUITMENT (OUTSIDE

SOURCES)
* Advertising
* Walk-ins
* Internet Recruiting
* Employee Referral Program
* Head Hunters
* Campus Recruiting
* Employee Agencies

2. INTERNAL RECRUITMENT (recruitment from within)

RECRUITMENT PROCESS
1. SHORT LISTING
The agency should, therefore,
short-list those to be interviewed by
preliminary screening and selection
based on the informatoin available in
the application of the applicants.
2. Preliminary Interview
it is the 2nd step
after a short-listing exercise.
Prelim interview enable
employers to see the
applicants personally so that
both physical and emotional
disposition of applicant can
be assessed. Also, it enables
recruiting officers to
evaluate the validity and
verify the information in the
application of the
applicants.
3. Employment Interview
After shortlisting and
preliminary interviews, the
next is the final or
employment interview. The
recruitment officer are
expected to choose only
the MOST suitable
candidates for the position
of vacancy.
PRINCIPLES OF INTERVIEWING
A good interviewing requires certain basic
principles or a short guide or framework to base the
assessment of candidates.

Using this framework, interviewers are expected to

observe the following principles of interviewing:
1. First impression and physical make-up;
2. Qualifications and Expectations;
3. Brains and abilities;
4. Motivation and
5. Adjustments
These principles differ from those 5
presented by Edwin Flippo (1980) which
include:
1. Preparation;
2. Setting;
3. Conduct and Interview;
4. Close; and
5. Evaluation.
1. Preparation
The applicant must have some basic
knowledge about the interviewee before the
commencement of this final interview.
This is the important stafe in the
interviewing processes, unfortunately
eludes Ubeku who goes straight to start with
what he calls “first impression and physical
make-up” which in fact, is the largely
“setting” the second stage in Filippo’s
analysis.
2. Setting
The interviewer is expected to
observe the principle of setting which is of
two major types: Physical and mental
settings.

3. Conduct and Interview

This is the real “action” stage at which
the interviewer obtains desired information
and supplies the interviewee may wish to
know.
4. Close
The “close” stage is important in the
sense that the interviewee needs to be
given some indications that the interview is
about to end.

5. Evaluation
The evaluation of an interview follows
almost immediately after the interviewee
leaves the interview room while the detaols
are still fresh in the minds of the
interviewers.
6. SELECTION
The final selection is done after the
evaluation. The best thing is to make the
final selection immediately after the
evaluation stage.
Any questions ?
 QUIZ
get ¼ sheet of
paper
 INDUCTION OF
04 PERSONNEL
 REWARDS SYSTEM IN
05 ORGANIZATION
• Organizational reward system
• Concerned with selection of types of rewards to be
used by organization
• Organizational rewards
• Rewards that result from employment the
organization; includes all types of rewards, both
intrinsic and extrinsic
• Intrinsic rewards – Internal to individual and are
normally derived from involvement in certain
activities or tasks
• Examples – Job satisfaction and
feelings of accomplishment
• Extrinsic rewards – Directly controlled and
distributed by organization and more tangible than
intrinsic rewards
• Examples – Pay and hospitalization benefits
• Although differing, intrinsic and extrinsic rewards are
closely related
• Often an extrinsic reward provides recipient with
12-75
intrinsic rewards
12-76
• Management must recognize what
employees perceive as meaningful
rewards
• Pay is usually the first, and sometimes the
only, reward most people think about
• However, rewards should be viewed in the
larger perspective a s anything
employees value
• M a y include things such as
• Office location
• Allocation of certain pieces of equipment
• Assignment of preferred work tasks
• Informal recognition

12-77
• Returns benefiting organization
through distribution of awards can be
realized only if desires of employees
are known
• Organizations should learn what
employees perceive as meaningful
rewards, which is not necessarily what
management perceives
• Traditionally, managers have assumed
they are fully capable of deciding
just what rewards employees need
and want
• Unfortunately, this is often not true
• Studies have shown that employees tend to
rank lack of recognition as the most
probable reason good employees quit their
jobs 12-78
• Another false assumption is exemplified by fact
that most organizations offer sa m e mix of
rewards to all employees
• Studies show that m a ny variables can
influence employee preferences for
certain rewards. They include
• Age
• Gender
• Marital status
• Number of dependents
• Years of service
• For example, older employees are usually
much more concerned with pension and
retirement benefits than are younger
employees
12-79
• When selecting types of rewards to offer,
intrinsic benefits that might accrue as a
result of the rewards need to be considered
• Managers and employees alike consider
only tangible benefits associated
with a reward
• External factors that place limitations
on an organization’s reward system
also exist
• These factors (usually beyond the control
of the organization) include such things as
• Organization’s size
• Environmental conditions
• Stage in product life cycle
• Labor market
12-80
• Free enterprise sy stem is based on the
premise that rewards should depend on
performance
•
Performance–reward relationship is desirable at
• Organizational or corporate level
• Individual level
•
Employees will be motivated when they believe
such motivation will lead to desired rewards
• M a n y formal rewards provided by
organizations are not related to performance
• These rewards are almost always
determined by organizational membership
and seniority; they include
• Paid vacations
• Insurance plans
• Paid holidays 12-81
• Other rewards, such a s promotion, can and
should be related to performance
• Opportunities for promotion ma y occur only rarely
• When available, higher positions ma y be filled
• On basis of seniority
• B y someone outside the organization
• Primary organizational variable used to reward
employees and reinforce performance is pay
• Even though many U.S. companies have some
type of pay-for- performance program, most do a
poor job of relating the two
• Surveys repeatedly show that employees do not
have much confidence about a positive
relationship exists between the two
• Evidence shows that paying for performance is
working at the highest levels in many companies

12-82
• W h y is the practice not more widespread?
• Not easy to do; much easier to give
everybody the sa m e thing, as
evidenced by the ever-popular across-
the-board pay increase
• Relating rewards to performance requires
that performance be accurately
measured, and this is often not easily
accomplished
• Requires discipline to actually relate
rewards to performance
• M a ny union contracts require that certain
rewards be based on totally objective
variables, such as seniority
• No one successful formula for implementing a
pay- for-performance program has yet been
developed
12-83
• Trust in management
• If employees are skeptical of management,
it is difficult to make a pay-for-
performance program work
• Absence of performance constraints
• Jobs must be structured so that an
employee’s performance is not
hampered by factors beyond his or
her control
• Trained supervisors and managers
• Supervisors and managers must be
trained in setting and measuring
performance standards
• Good measurement systems
• Performance should be based on criteria
that are job specific and focus on results 12-84
achieved
• Ability to pay
• Merit portion of the salary increase budget
must be large enough to get the attention
of employees
• Clear distinction a m o n g cost of living, seniority,
and merit
• In absence of strong evidence to the
contrary, employees will naturally
a s s um e a pay increase is a cost-of- living or
seniority increase
• Well-communicated total pay policy
• Employees must have a clear
understanding of how merit pay fits into
the total pay picture
• Flexible reward schedule
• It is easier to establish a credible pay-for-
performance plan if all employees do not 12-85
• An employee’s general attitude toward the job
• Organizational reward system often has a significant
impact on level of employee job satisfaction
• Manner in which extrinsic rewards are dispersed can
affect intrinsic rewards (and satisfaction) of
recipients
•
There are five major components of job satisfaction:
• Attitude toward the work group
• Attitude toward the company
• Attitude toward management
• General working conditions
• Monetary benefits

• Other components include

• Employee’s state of mind about the work itself
• Life in general
• Health, age
• Level of aspiration, social status, and political and
social activities
12-86
• JS is not synonymous with
Organizational morale – Employee’s
feeling of being accepted by and
belonging to a group of employees
• Through common goals
• Confi dence in desirability of those goals
• Desire to progress toward the goals
• Morale is the by-product of a group
• Job satisfaction is more an individual
state of mind
• Two concepts are interrelated in that job
satisfaction can contribute to morale and
morale can contribute to job satisfaction

12-87
• “The path of least resistance” – Attempts to
explain belief that a satisfied employee is
necessarily a good employee
• If a performance problem exists, increasing
an employee’s happiness is far more
pleasant than discussing with the employee
his or her failure to meet standards
• Although happiness eventually results from
satisfaction, the latter goes much deeper and is far
less tenuous than happiness
• Two propositions concerning the
satisfaction- performance theory exist
• Traditional view is that satisfaction
causes performance
• Satisfaction is the effect rather than the
cause of performance
12-88
• Performance leads to rewards that result
in a certain level of satisfaction
• Rewards constitute a necessary
intervening variable in the
relationship
• Another position considers both satisfaction
and performance to be functions of rewards
• Satisfaction results from rewards, but
current performance also affects
subsequent performance if rewards
are based on current performance
• Research evidence generally rejects the more
popular view that satisfaction leads to
performance
• It does provide moderate support for the
view that performance leads to
satisfaction
12-89
• Evidence also strongly indicates that
• Rewards constitute a more direct
cause of satisfaction than
does performance
• Rewards based on current performance
enhance subsequent performance

12-90
• It has been clearly established that job satisfaction
does have a positive impact on
• Turnover
• Absenteeism
• Tardiness
• Accidents
• Grievances
• Strikes
• Experience, gender, and performance can
have a moderating effect on these
relationships
• Organizations prefer satisfied employees
simply because they make the work
environment more pleasant
• Although a satisfied employee is not necessarily
a high performer, there are numerous reasons for
cultivating employee satisfaction 12-91
• Wide range of both internal and external factors
affect an employee’s level of satisfaction
• Surveys have found that the top drivers of
employee job satisfaction were
• Pay, and benefits
• Job security, and feeling safe in the work
environment
• Flexibility to balance work and life
• Job satisfaction and motivation are not synonymous
• Motivation is a drive to perform
• Organizational reward systems can influence
both job satisfaction and employee motivation
• It affects job satisfaction by making the employee
more or less comfortable as a result of the rewards
received
• It influences motivation primarily through the
perceived value of the rewards and their 12-92
contingency on performance
12-93
• Compensation
• All extrinsic rewards that employees
receive in exchange for their work
• Composed of base wage or salary, any
incentives or bonuses, and any benefits
• Base wage or salary – Hourly, weekly, or
monthly pay employees receive for their
work
• Incentives – Rewards offered in addition to the
base wage or salary and are usually directly
related to performance
• Benefits – Rewards employees receive a s a
result of their employment and position with the
organization (Examples: Paid vacations, health
insurance, and retirement plans)
• Pay
• Refers only to actual dollars employees
receive in exchange for work
12-94
12-95
• Policies must deal with following issues:
• Minimum and maximum levels of pay –
Taking into consideration
• Worth of job to organization
• Organization’s ability to pay
• Government regulations
• Union influences
• Market pressures
• General relationships a mo ng levels of pay
(e.g., between senior management and
operating management, operative
employees, and supervisors)
• Division of total compensation dollar (i.e.,
what portion goes into base pay,
incentive programs, and benefits)
12-96
• Organizations must also make
decisions concerning
• How much money will go into pay
increases for the next year
• W ho will recommend them
• How raises will generally be determined
• Another important decision concerns
whether pay information will be kept
secret or made public

12-97
• Ma n y organizations have a policy of not
disclosing pay- related information
• Information about pay system a s well a s
individual pay received
• Justification for pay secrecy
• To avoid any discontent that might result from
employees’ knowing what everybody else is being
paid
• Ma n y employees, especially high achievers, feel
very strongly that their pay is nobody else’s
business
• Drawbacks of pay secrecy
• Difficult for employees to determine whether
pay is related to performance and does not
eliminate pay comparisons
• M a y cause employees to overestimate pay of their
peers and underestimate pay of their supervisors
• Can create feelings of dissatisfaction
• Employees m a y become suspicious 12-98
• S o m e companies actually forbade
employees to discuss and/or disclose their
pay
• In 1992, the National Labor Relations Board
(NLRB) ruled that forbidding employees
to discuss their pay constitutes a
violation of the National Labor Relations Act
• Women’s groups in U.S. and UK have begun
to challenge pay-secrecy rules stating that
they perpetuate income gap between
men and women
• A compromise on issue of pay secrecy is to
disclose pay ranges for various job levels
within the organization
• Clearly communicates general ranges of
pay for different jobs, but it does not
disclose exactly what any particular
employee is making
12-99
• Theory holds that while true worth of jobs to
employer m a y be similar, some jobs
(especially those held by women) are often
paid a lower rate than other jobs (often held
by men)
• Drawback
• Determining worth of the jobs in
question is difficult
• How should job worth be established?
• U.S. courts have generally rejected cases
based on comparable worth claims
• Although comparable worth has generally
floundered in court, it has received
considerable attention
• At the collective bargaining table
• In the political arena
12-33
• Little doubt exists that inadequate pay can have a
very negative impact on an organization
• Pay dissatisfaction can infl uence employees’
feelings about their jobs in two ways:
• Can increase desire for more money
• Can lower attractiveness of the job
• An employee who desires more mone y is likely to
engage in actions that can increase pay
• These actions might include
• Joining a union
• Looking for another job
• Performing better
• Filing a grievance
• Going on strike
12-34
• All of the consequences (except performing
better) are generally undesirable by
management
• Better performance results only in those
cases where pay is perceived a s being
directly related to performance
• When job decreases in attractiveness, the
employee is more likely
• To be absent or tardy
• To quit
• To become dissatisfied with the job itself

12-35
12-36
• Equity theory of motivation holds that
• Employees have a strong need to
maintain a balance between what
they perceive as their inputs to their
jobs and what they receive from their
jobs in the form of rewards
• Employees who perceive inequities will
take action to eliminate or reduce
them
• Pay equity concerns whether employees
believe they are being fairly paid
• For example, if an employee believes he or
she is underpaid, that employee will likely
reduce expended effort by working more
slowly, taking off early, or being absent
• Similarly, if an employee believes she or
he is being overpaid, that employee is 12-37
likely to work harder or for longer hours
• Several dimensions of equity to be
considered when looking at pay equity
• Internal equity – Addresses what an
employee is being paid for doing a job
compared to what other employees in
the sa m e organization are being paid to
do their jobs
• External equity – Addresses what
employees in other organizations are
being paid for performing similar jobs
• Individual equity – Addresses issue of
rewarding individual contributions; is
very closely related to the pay-for-
performance question
• Organizational equity – Addresses how
profits are divided up within the
organizations 12-38
• Employee interpretations of pay equity are
based on their perceptions
• Organizations should make these
perceptions as accurate as possible
• An employee can also feel good about one or
more equity dimensions and feel bad about
others
• For example, an employee m a y feel good
about his or her pay in comparison to
what friends working in other
organizations are making
• She or he m a y also believe the company
profits are fairly distributed within the
company
• However, this sa m e person m a y be very
unhappy about his or her pay
relative to several other people in the
sa m e organization 12-39
• Based on the idea that employees will be
satisfied with their pay when their perception of
what their pay is and of what they think it should
be agree
• Happens when employees feel good about
internal and external equity of their pay
•
Present pay is a primary factor
influencing an employee’s perception of
equity
• Person’s wage history and perception of what
others are getting also have an influence
• For example, employees who have
historically received high pay tend to lower
their perception of present pay
• Similarly, the higher the pay of friends and
• peers, the lower one’s individual pay
appears to be
These factors account for the fact that two people 12-40
• An employee’s perception of what pay should be
depends on several other factors, including
• Job inputs
• Includes all the experience, skills, and abilities an
employee brings to the job in addition to the
effort the employee puts into it
• The perceived inputs and outcomes of friends and
peers
• Refer to the individual’s perception of what friends
and peers put into their jobs and what kind of pay
they get in return
• Nonmonetary outcomes
• Refer to the fact that certain nonmonetary
rewards can sometimes substitute for pay, at
least up to a point
• It makes allowances for employees who believe
their pay exceeds what they think it should be
• Research has shown that in such cases, people
often experience feelings of guilt, inequity, and
discomfort 12-41
12-42
• Role of human resource manager in
overall organizational reward system is to
assist in its design and to administer the
system
• Administering the system – Carries
responsibility of ensuring that system is
fair to all employees and that it is
clearly communicated to all
employees
• Ensuring that the system is fair places
burden of minimizing reward
inequities and employee’s
perceptions of reward inequities squarely on
the human resources manager
• Little doubt exists that organizations need to
do a better job of explaining and
communicating their compensation system
to employees
• M a ny tools and techniques are available to 12-43
 TRAINING AND
06 DEVELOPMENT