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Human Resource Management

solving problems that arise” (Cherrington, 1995, p. 5). internally, externally, or both (Mondy, Noe, and Gowan,
There are seven management functions of a human 2005).
resources (HR) department that will be specifically Not only must the HR department attract qualified
addressed: staffing, performance appraisals, compensation applicants through job postings or other forms of adver-
and benefits, training and development, employee and tising, but it also assists in screening candidates’ resumes
labor relations, safety and health, and human resource and bringing those with the proper qualifications in for an
research. interview. The final say in selecting the candidate will
Generally, in small organizations with fewer than a probably be the line manager’s, assuming all Equal
hundred employees there may not be an HR department, Employment Opportunity Commission (EEOC) require-
and so a line manager will be responsible for the functions ments are met. Other ongoing staffing responsibilities
of HR management (HRM). In large organizations with a involve planning for new or changing positions and
hundred employees or more, a human resources manager reviewing current job analyses and job descriptions to
will coordinate the HRM duties and report directly to the make sure they accurately reflect the current position.
chief executive officer (CEO). HRM staff in larger organ-
izations may include human resource generalists and PERFORMANCE APPRAISALS
human resource specialists. As the name implies, an HR Once a talented individual is brought into an organiza-
generalist is routinely involved with all seven HRM func- tion, another function of HRM comes into play—creat-
tions, while the HR specialist focuses attention on only
ing an environment that will motivate and reward
one of the seven responsibilities.
exemplary performance. One way to assess performance is
An understanding of the job analysis is necessary to through a formal review on a periodic basis, generally
understand the seven functions. An essential component annually, known as a performance appraisal or perform-
of any HR unit, no matter the size, is the job analysis, ance evaluation. Because line managers are in daily con-
which is completed to determine activities, skills, and tact with the employees and can best measure
knowledge required of an employee for a specific job. Job performance, they are usually the ones who conduct the
analyses are “performed on three occasions: (1) when the appraisals. Other evaluators of the employee’s perform-
organization is first started, (2) when a new job is created, ance can include subordinates, peers, group, and self, or a
and (3) when a job is changed as a result of new methods, combination of one or more (Mondy, Noe, and Gowan,
new procedures, or new technology” (Cherrington, 2005).
1995). Just as there can be different performance evaluators,
Jobs can be analyzed through the use of question- depending on the job, several appraisal systems can be
naires, observations, interviews, employee recordings, or a used. Some of the popular appraisal methods include (1)
combination of any of these methods. Two important ranking of all employees in a group; (2) using rating scales
tools used in defining the job are (1) a job description, to define above-average, average, and below-average per-
which identifies the job, provides a list of responsibilities formance; (3) recording favorable and unfavorable per-
and duties unique to the job, gives performance standards, formance, known as critical incidents; and (4) managing
and specifies necessary machines and equipment; and (2) by objectives, or MBO (Mondy, Noe, and Gowan, 2005).
the job specification, which states the minimum amount Cherrington (1995) illustrates how performance
of education and experience needed for performing the appraisals serve several purposes, including: (1) guiding
job (Mondy, Noe, and Gowan, 2005). human resource actions such as hiring, firing, and pro-
moting; (2) rewarding employees through bonuses, pro-
STAFFING motions, and so on; (3) providing feedback and noting
areas of improvement; (4) identifying training and devel-
Both the job description and the job specification are use-
opment needs in order to improve the individual’s per-
ful tools for the staffing process, the first of the seven HR
formance on the job; and (5) providing job-related data
functions to be discussed. Someone (e.g., a department
useful in human resource planning.
manager) or some event (e.g., an employee’s leaving)
within the organization usually determines a need to hire
a new employee. In large organizations, an employee req- COMPENSATION AND BENEFITS
uisition must be submitted to the HR department that Compensation (payment in the form of hourly wages or
specifies the job title, the department, and the date the annual salaries) and benefits (insurance, pensions, vaca-
employee is needed. From there, the job description can tion, modified workweek, sick days, stock options, etc.)
be referenced for specific job-related qualifications to pro- can be a catch-22 because an employee’s performance can
vide more detail when advertising the position—either be influenced by compensation and benefits, and vice

370 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION