As grocery chains face increasing competition from Amazon.com (and its purchase of Whole Foods Market), they’re searching for ways to remain competitive. Kroger Co., for example, is hiring 11,000 workers to improve customer service and efficiency at its 2,800 supermarkets.3 Its strategy? Invest in people and be positioned to better compete with Amazon.

The quality of an organization is to a large degree determined by the quality of the people it employs. Success for most organizations depends on finding the employees with the skills to successfully perform the tasks required to attain the company’s strategic goals. Staffing and HRM decisions and actions are critical to ensuring that the organization hires and keeps the right people.

Getting that done is what human resource management (HRM) is all about. The eight important HRM activities (the green boxes) are shown in Exhibit 9–1.

Exhibit 9–1

The Human Resource Management Process

After an organization’s strategy has been established and the organization structure designed, it’s time to add the people—to acquire the talent! That’s one of the most critical roles for HRM and one that has increased the importance of HR managers to the organization. The first three activities in the HRM process represent employment planning: the addition of staff through recruitment, the reduction in staff through downsizing, and selection. When executed properly, these steps lead to the identification and selection of competent, talented employees who can assist an organization in achieving its strategic goals.

Once you select the people you want, you need to help them adapt to the organization and ensure that their job skills and knowledge are kept current. These next two activities in the HRM process are accomplished through orientation and training. The last steps in the HRM process are designed to identify performance goals, correct performance problems if necessary, and help employees sustain a high level of performance over their entire work life. The activities involved include performance appraisal, and compensation and benefits. (HRM also includes safety and health issues, but we’re not covering those topics in this book.) All these activities, if properly executed, will staff an organization with competent, high-performing employees who are capable of sustaining their performance levels over the long run.

Notice in Exhibit 9–1 that the entire process is influenced by the external environment. Many of the factors we discussed in Chapter 2 directly affect all management practices, but their effect is keenly felt in managing the organization’s human resources because whatever happens to an organization ultimately influences what happens to its employees. So, before we review the HRM process, let’s examine one external force that affects it—the legal environment.

What Is the Legal Environment of HRM?

HRM practices are governed by laws, which vary from country to country. State (or provincial) and local regulations further influence specific practices within countries. Consequently, it’s impossible to provide you with all the information you need about the relevant regulatory environment. As a manager, it will be important for you to know what you legally can and cannot do wherever you’re located.

What Are The Primary U.S. Laws Affecting HRM?

Since the mid-1960s, the federal government in the United States has greatly expanded its influence over HRM by enacting a number of laws and regulations (see Exhibit 9–2 for examples). Although we’ve not seen many laws enacted recently at the federal level, many states have enacted laws that add to the provisions of the federal laws. Today’s employers must ensure that equal employment opportunities exist for job applicants and current employees. Decisions regarding who will be hired, for example, or which employees will be chosen for a management training program must be made without regard to race, sex, religion, age, color, national origin, or disability. Exceptions can occur only when special circumstances exist. For instance, a community fire department can deny employment to a firefighter applicant who is confined to a wheelchair, but if that same individual is applying for a desk job, such as a fire department dispatcher, the disability cannot be used as a reason to deny employment. The issues involved, however, are rarely that clear-cut. For example, employment laws protect most employees whose religious beliefs require a specific style of dress—robes, long shirts, long hair, and the like. However, if the specific style of dress may be hazardous or unsafe in the work setting (e.g., when operating machinery), a company could refuse to hire a person who would not adopt a safer dress code.

Exhibit 9–2

Major HRM Laws

LAW OR RULING	YEAR	DESCRIPTION
Equal Employment Opportunity and Discrimination
Equal Pay Act Civil Rights Act, Title VII Age Discrimination in Employment Act Vocational Rehabilitation Act Americans with Disabilities Act	1963 1964 (amended in 1972) 1967 (amended in 1978) 1973 1990	Prohibits pay differences for equal work based on gender Prohibits discrimination based on race, color, religion, national origin, or gender Prohibits discrimination against employees 40 years and older Prohibits discrimination on the basis of physical or mental disabilities Prohibits discrimination against individuals who have disabilities or chronic illnesses; also requires reasonable accommodations for these individuals
Compensation/Benefits
Worker Adjustment and Retraining Notification Act Family and Medical Leave Act Health Insurance Portability and Accountability Act Lilly Ledbetter Fair Pay Act Patient Protection and Affordable Care Act	1990 1993 1996 2009 2010	Requires employers with more than 100 employees to provide 60 days’ notice before a mass layoff or facility closing Gives employees in organizations with 50 or more employees up to 12 weeks of unpaid leave each year for family or medical reasons Permits portability of employees’ insurance from one employer to another Changes the statute of limitations on pay discrimination to 180 days from each paycheck Health care legislation that puts in place comprehensive health insurance reforms
Health/Safety
Occupational Safety and Health Act (OSHA) Privacy Act Consolidated Omnibus Reconciliation Act (COBRA)	1970 1974 1985	Establishes mandatory safety and health standards in organizations Gives employees the legal right to examine personnel files and letters of reference Requires continued health coverage following termination (paid by employee)

Trying to balance the “shoulds and should-nots” of these laws often falls within the realm of equal employment opportunity (EEO) initiatives and affirmative action programs. EEO strives to ensure that anyone has an equal opportunity based on his or her qualifications. And many organizations operating in the United States have affirmative action programs to ensure that decisions and practices enhance the employment, upgrading, and retention of members from protected groups such as minorities and females.

Operating within legal constraints, U.S. managers are not completely free to choose whom they hire, promote, or fire. Although laws and regulations have significantly helped to reduce employment discrimination and unfair employment practices and improve employee safety, they have, at the same time, reduced management’s discretion over HR decisions.

Are HRM Laws The Same Globally?

No. As a global manager, you’ll need to know applicable laws and regulations. Here’s a quick overview of some HRM laws in other countries.

Canada

• HRM laws closely parallel those in the United States. Example: Human Rights Act—a law that governs practices throughout the country—prohibits discrimination on the basis of race, religion, age, marital status, sex, physical or mental disability, or national origin.

• HRM environment involves more decentralized lawmaking at the provincial level. Example: Discrimination on the basis of language is not prohibited anywhere in Canada except in Quebec.

Mexico

• Although once heavily unionized, unionization rates have been declining.

• Labor issues are governed by the Mexican Federal Labor Law.

• Example: One hiring law states that an employer has 28 days to evaluate a new employee’s work performance; after that period, the employee has job security and termination is difficult and expensive.

• Violators face severe penalties, including criminal action, steep fines, and even jail sentences for employers who fail to pay, for example, the minimum wage.

Australia

• Discrimination laws not enacted until the 1980s and generally apply to women (who need improved opportunities).

• Industrial relations specialists have important organizational roles, reducing the control line managers have over workplace labor issues.

• Labor and industrial relations laws were overhauled in 1997 with the goal of increasing productivity and reducing union power.

• The Workplace Relations Bill gives employers greater flexibility to negotiate directly with employees on pay, hours, and benefits, and also simplifies federal regulation of labor–management relations.

Germany

• Similar to most other Western European countries when it comes to HRM practices.

• Although women make up a relatively large proportion of the workforce, they are comparatively underemployed and underpaid.5 German companies are making strides in addressing this inequality.

• Laws require companies to have representative participation—thus redistributing power within the organization and putting labor on a more equal footing with the interests of management and stockholders.

• Two most common forms of representative participation are (1) work councils, which are groups of nominated or elected employees who must be consulted when management makes decisions involving personnel, and (2) board representatives, who are employees who sit on a company’s board of directors and represent the interests of the firm’s employees.