Hrm

Human Resource Management IPM 213 Thomas H. JJäkel äkel ƒ Phone 00-2729-6305 -2729-6305 ƒ E -Mail [email protected] E-Mail 01/2005

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Recommended Text Title: Human Resource Management Ninth Edition Author: John M. Ivancevich Publisher: McGraw-Hill ISBN: 007-123248-6

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Roadmap

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What is Human Resource Management? Strategic Management Approach to Human Resource Management Human Resource Planning Job Analysis and Competency Model Recruitment Selection Mid-Term Examination

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Performance Evaluation and Management Compensation: An Overview Compensation: Methods and Policies Employee Benefits and Services Training and Development Career Planning and Development Organizational Development Review Final Examination

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Chapter

1 What is Human Resource Management?

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Human Resource Management Human Resource Management is the function performed in organizations that facilitates the most effective use of people (employees) to achieve organizational and individual goals.

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Equal employment opportunity compliance Job analysis Human resource planning Employee recruitment, selection, motivation, and orientation Performance evaluation and compensation Training and development Labor relations Safety, health, and wellness

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It is action-oriented It is people-oriented It is globally-oriented It is future-oriented Thomas H. Jäkel

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Strategic Importance of HRM The increased strategic importance of HRM means that: ƒ Human resource specialists must show that they contribute to the goals and mission of the firm The actions, language, and performance of the HRM function must be: ƒ Measured ƒ Precisely communicated ƒ Evaluated

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Note

The new strategic positioning of HRM means that accountability must be taken seriously

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Key Strategic HRM Concepts ƒ Analyzing and solving problems from a profit-oriented, not just a serviceoriented, point of view ƒ Assessing and interpreting costs or benefits of such HRM issues as productivity, salaries and benefits, recruitment, training, absenteeism, overseas relocation, layoffs, meetings, and attitude surveys ƒ Using planning models that include realistic, challenging, specific, and meaningful goals ƒ Preparing reports on HRM solutions to problems encountered by the firm ƒ Training the human resources staff and emphasizing the strategic importance of HRM and the importance of contributing to the firm’s profits

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Note

If the HRM function is to be successful, managers in other functions must be knowledgeable and involved 01/2005

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HRM and Organizational Effectiveness Criteria and Components ƒ Performance ƒ Legal compliance ƒ Employee satisfaction ƒ Absenteeism ƒ Turnover ƒ Training effectiveness ƒ Training return on investment ƒ Grievance rates ƒ Accident rates In order for a firm to survive and prosper and earn a profit, reasonable goals in each of these components must be achieved. In most organizations, effectiveness is measured by the balance of such complementary characteristics as reaching goals, employing the skills and abilities of employees efficiently, and ensuring the influx and retention of well-trained and motivated employees. 01/2005

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Objectives of the HRM Function ƒ Helping the organization reach its goals ƒ Employing the skills and abilities of the workforce efficiently ƒ Providing the organization with well-trained and well-motivated employees ƒ Increasing to the fullest the employee’s job satisfaction and selfactualization ƒ Developing and maintaining a quality of work life that makes employment in the organization desirable ƒ Communicating HRM policies to all employees ƒ Helping to maintain ethical policies and socially responsible behavior ƒ Managing change to the mutual advantage of the organization’s stakeholders ƒ Managing increased urgency and faster cycle time

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Who Performs HRM Activities In most organizations two groups perform HRM activities: ƒ HR manager-specialists (staff) ƒ Operating managers (line) Competencies needed ƒ Communication skills ƒ Problem solving ƒ Leadership ƒ Recruiting/staffing ƒ Employment law ƒ Training and development ƒ Technology ƒ Forecasting ƒ Compensation design ƒ Benefits design and administration ƒ Accounting and finance ƒ Record keeping 01/2005

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Note

The HR department has a responsibility to be a proactive, integral component of management and the strategic planning process 01/2005

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HRM’s Place in Management

HRM must: ƒ ascertain specific organizational needs for the use of its competence ƒ evaluate the use and satisfaction among other departments ƒ educate management and employees about the availability and use of HRM services

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HRM Strategy

The HRM strategy will help aggregate and allocate a firm’s resources into a unique entity on the basis of: ƒ Its internal strengths and weaknesses ƒ Changes in the environment ƒ The anticipated actions of competitors

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Strategy, Objectives, Policies, Rules Strategy Strategy––The Theplan planthat that integrates integratesmajor majorobjectives objectives

Objectives Objectives––Goals Goalsthat thatare are specific specificand andmeasurable measurable

Policies Policies––Guides Guidesto to decision decisionmaking making

Procedures/Rules Procedures/Rules––Specific Specific directions directionsfor fordecision decisionmaking making 01/2005

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Levels of Performance The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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Summary ƒ HRM is action-oriented, individual-oriented, globally-oriented, and future oriented - It focuses on satisfying the needs of individuals at work ƒ HRM is a necessary function - Effectively performed, it can make the crucial difference between successful and unsuccessful organizations ƒ One of the challenges faced in HRM is that many decisions require input from both operating managers and HR specialists ƒ This dual role can lead to conflict, or it can result in more effective HRM decisions

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chapter

2 A Strategic Management Approach to Human Resource Management

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A Diagnostic HRM Framework The diagnostic approach ƒ Can help operating managers focus on a set of relevant factors ƒ Offers a map that aids a person in seeing the whole picture or parts of the picture

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Diagnostic Approach to HRM

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1. Diagnosis

2. Prescription

4. Evaluation

3. Implementation

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 22

Internal & External Environment Laws & Regulations

Geographical Location

Unions

Shareholders Strategy, Goals

Corporate Environment Economy

Culture

Productivity

Nature of Task

Minorities

Human Resource Core Functions Work Group

Competitiveness Labor Force Older Employees

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Corporate Environment

Leadership

Educational Factors

Experience

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Key Job Factors ƒ Degree of knowledge and ability to use information technology ƒ Degree of empowerment ƒ Degree of physical exertion required ƒ Degree of environmental unpleasantness ƒ Physical location of work ƒ Time dimension of work ƒ Human interaction on the job ƒ Degree of variety in the task ƒ Task identity ƒ Task differences and job design

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Enhance & Sustain Competitive Advantage ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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Employment security Selectivity in recruiting High wages Incentive pay Employee ownership Information sharing Participation and empowerment Teams and job redesign Training as skill development Cross-utilization and cross training Symbolic egalitarianism Wage compression Promotion from within Long-term perspective Measurement of practices Overarching philosophy

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Three Levels of Strategy Strategic (long term)

Managerial (medium term)

Operational (short term)

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HR Activities by Level of Strategy (1) LEVEL

Employee Selection and Placement

Rewards (Pay and Benefits)

Strategic (long term)

Specify the characteristics of people needed to run business over long term

Establish reward program that will be competitive with domestic and international competitors

Determine the level type of perform-ance crucial for the growth of the firm

Plan development experiences for staff

Examine labor force trends

Establish reward system that is linked to strategic goals

Develop equitable performance criteria

Plan development program with flexibility necessary to adjust to change

Analyze immigration flows into the country

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Appraisal

Development

Link appraisal to accomplishment of long-term objectives

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HR Activities by Level of Strategy (2) LEVEL

Managerial (medium term)

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Employee Selection and Placement

Rewards (Pay and Benefits)

Appraisal

Development

Make longitudinal validation of selection criteria

Set up five-year compensation progression plan for individuals

Validate systems that relate current conditions and future needs

Establish general management development program

Develop recruitment marketing plan

Set up cafeteria-type benefits menu

Establish assessment centers for development

Provide for organizational development

Develop approach to build labor resource pool

Set up retirement packages

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Encourage selfdevelopment

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HR Activities by Level of Strategy (3) LEVEL

Operational (short term)

Employee Selection and Placement

Rewards (Pay and Benefits)

Development

Prepare staffing plans

Administer wage and salary program

Use annual or more frequent appraisal system

Use specific job-skill training

Prepare recruitment plans

Administer benefits packages

Use day-to-day performance review systems

Use on-the-job training

Review performance of workers daily

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Appraisal

Use Web-based training on a 24/7 basis

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Strategic Challenges Facing HRM

Technology

Caliber of the Workforce

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Diversity: Building A Competitive Workforce Organizational Restructuring and Downsizing Thomas H. Jäkel

Contingent Workers

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People and the Diagnostic Framework

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Abilities of Employees

Employees’ Attitudes and Preferences

Motivation of Employees

Personality of Employees

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Desirable End Results

ƒ Organizational effectiveness is critically influenced by human resource (HR) management practices ƒ Changes in staffing, training, and compensation form an integral part of a coordinated change effort ƒ HR management systems must be in alignment with other management systems

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Summary

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A sound HRM program can contribute to organizational end results. Before choosing an HRM program, the diagnostic approach suggests examining: the nature of employees the external environmental influences the internal environmental influences organizational factors HRM has become a strategic area now recognized as important in creating and implementing the overall strategies of a firm. Organizational factors must be taken into account to maximize the effectiveness of HRM. The work sector in which the organization operates is a key factor on management systems and the HRM function

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chapter

5 Human Resource Planning

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Human Resource Planning

ƒ Both a process and a set of plans ƒ How organizations assess the future supply of and demand for human resources ƒ Provides mechanisms to eliminate any gaps between supply and demand ƒ Determines the number and types of employees to be recruited into the organization or phased out of it

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 36

Human Resource Planning Process HR Demand

Strategic Planning Technological forecasts Technological forecasts Economic forecasts Economic forecasts Market forecasts Market forecasts Organizational planning Organizational planning Investment planning Investment planning Annual operating plans Annual operating plans

HR Supply

Annual employment requirements Annual employment requirements Numbers Numbers Skills Skills Occupation categories Occupation categories

Existing employment inventory Existing employment inventory After application of expected loss After application of expected loss and attrition rates and attrition rates

Variances Variances

Action Decisions

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If none

IfIfsurplus surplus

IfIfShortage Shortage

Decisions Decisions -Layoffs -Layoffs - -Retirement Retirement - -etc etc

Decisions Decisions -Overtime -Overtime -Recruitment -Recruitment -etc -etc

End End

End End

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End End

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Levels of Performance The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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Factors Affecting Planning

ƒ Goals of the controlling interests in the organization ƒ Government policies ƒ Changing demographics and the future composition of the workforce

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Strategic and Human Resource Planning

Strategic Planning –an organization’s decision about: ƒ What it wants to accomplish (its mission) ƒ How it wants to go about accomplishing it ƒ HR planning is important for developing a strategic plan ƒ HR planning is critical to the implementation of the strategic plan

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Strategic Human Resource Management

ƒ The acknowledgement that HR policies and practices have critical linkages with an organization’s overall strategy ƒ Central premise is that HR policies will have direct effects on an organization’s profitability ƒ HR must “fit” strategically with the mission of the organization

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Four Stages of HR Planning

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Situation analysis or environmental scanning Forecasting demand for human resources Analysis of the supply of human resources Development of plans for action

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Analysis and Scanning ƒ Strategic plan must adapt to environmental circumstances ƒ HRM is a primary mechanism to be used during the adaptation process ƒ e.g., rapid technological changes in the environment demand employees with new skills ƒ an effective HR plan that supports recruitment and selection allows the firm to move quickly to remain competitive Analyzing the Current Supply of Employees ƒ Skills Inventory ƒ Data summarizing the employee’s past ƒ Data summarizing status of present skills ƒ Data that focus on the future ƒ Management Inventory ƒ Maintaining the Skills Inventory ƒ Interview ƒ Questionnaire ƒ Data storage and maintenance 01/2005

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Action Decisions: Shortage of Employees

ƒ Overtime ƒ Training and promotions of present employees ƒ Recruitment and training of less-skilled employees ƒ Recall of employees previously laid off ƒ Use of part-time workers ƒ Use of contingent workers

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Action Decisions: Surplus of Employees

1. Attrition

2. Early retirements

4. Demotions

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3. Creation of work

5. Layoffs

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6. Terminations

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Human Resource Information Systems ƒ Integrated approach to acquiring, storing, analyzing, and controlling the flow of information about an organization ƒ Useful in nearly all HRM functions ƒ Can increase efficiency and response times of labor/time intensive human resource activities ƒ Specialized HRIS applications ƒ Integrated HRIS for use by all employees ƒ Executive information system (EIS) ƒ Succession planning

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Safeguarding Privacy in an HRIS ƒ Review information-gathering practices to determine the best way to collect data ƒ Limit the information collected to what is relevant to a specific business decision ƒ Inform employees about the types of information kept on file and how that information is used ƒ Let employees inspect and (if necessary) correct the information maintained on them ƒ Keep sensitive information separate from other records ƒ Limit the internal use of personal information to those activities where it is necessary ƒ Disclose personal information about an employee to outsiders only after the employee consents

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Summary ƒ There is no one best method for conducting HR planning ƒ Methods and techniques all differ from organization to organization ƒ Many companies do not devote enough time and energy to the HR planning process ƒ An effective HR plan should work in partnership with a strategic plan ƒ Human resource planning can be an integral part of the HRM program ƒ It is directly related to: recruitment, selection, training, and promotion ƒ By matching supply and demand, the organization can know: ƒ how many people of what type it needs to fill positions from within (by promotion and training) ƒ how many people it must acquire from outside (by recruiting and selection) 01/2005

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chapter

6 Job Analysis and Competency Modeling

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Introduction ƒ Organizations must have a systematic way to determine which employees are expected to perform a particular function or task that must be accomplished ƒ The cornerstone of the organization is the set of jobs performed by its employees ƒ The jobs provide the mechanism for coordinating and linking the various activities of the organization that are necessary for success

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Note

Studying and understanding jobs through the process known as job analysis is a vital part of any HRM program.

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Job analysis provides answers to … ƒ How much time is taken to complete important tasks? ƒ Which tasks are grouped together and considered a job? ƒ How can a job be designed or structured so that the employee’s performance can be enhanced? ƒ What kinds of behaviors are needed to perform the job? ƒ What kind of person (i.e., traits and experience) is best suited for the job? ƒ How can the information acquired by a job analysis be used in the development of HRM programs?

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The Vocabulary of Job Analysis ƒ Job analysis – A purposeful, systematic process for collecting information on the important work-related aspects of a job ƒ Job description – The principal product of a job analysis ƒ Represents a written summary of the job as an identifiable organizational unit ƒ Job specification – A written explanation of the knowledge, skills, abilities, traits, and other characteristics necessary for effective performance on a given job ƒ Tasks – Coordinated and aggregated series of work elements used to produce an output ƒ e.g., a unit of production or service to a client ƒ Position – Consists of the responsibilities and duties performed by an individual ƒ There are as many positions in an organization as there are employees ƒ Job – Group of positions that are similar in their duties ƒ e.g., computer programmer or compensation specialist ƒ Job family – Group of two or more jobs that have similar duties 01/2005

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The Steps in Job Analysis

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Examine the total organization and the fit of each job Determine how job analysis information will be used Select jobs to be analyzed Collect data by using acceptable job analysis techniques Prepare job description Prepare job specification

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Levels of Performance The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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The Uses of Job Analysis ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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Job design Planning Recruitment Selection & training Strategic planning Performance evaluation Compensation & benefits EEO compliance Follow-up evaluation

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Who Should Conduct the Job Analysis?

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External Job Analysis Expert

Internal Job Analysis Expert

Supervisor

Job Incumbent

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Methods of Data Collection

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Observation

Interviews

Questionnaires

Job Incumbent Diaries or Logs

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Specific Quantitative Techniques

Functional Job Analysis

Position Analysis Questionnaire

Management Position Description Questionnaire 01/2005

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Position Analysis Questionnaire (PAQ)

Major sections of the PAQ: ƒ Information input ƒ Mental processes ƒ Work output ƒ Relationships with other people ƒ Job context ƒ Other job characteristics

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Management Position Description

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General information Decision making Planning and organizing Administering Controlling Supervising Consulting and innovating Contacts Coordinating Representing Monitoring business indicators Overall ratings Knowledge, skills, and abilities Organization chart Comments and reactions Thomas H. Jäkel

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Job Descriptions ƒ A primary output of a systematic job analysis ƒ A written description of what the job entails ƒ Thorough, accurate, and current job descriptions are important to an organization ƒ restructuring and downsizing ƒ employee motivation and rewards ƒ technological changes in work environments ƒ legal compliance with employment laws

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Job Descriptions Include

Job Title

Equipment

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Summary

Environment

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Activities

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Job Specifications ƒ Evolve from the job description ƒ Address the question: “What personal traits and experience are needed to perform the job effectively?” ƒ Useful in offering guidance for recruitment and selection ƒ Any trait or skill stated on the job specification should actually be required for performance on the job ƒ Job specifications must differentiate between: ƒ Essential skills – those for which alternative ways of accomplishing the job are not possible ƒ Nonessential skills – can be accommodated by changing the structure or work methods of the job ƒ Under the Americans with Disabilities Act: ƒ If disabled people could accomplish the job successfully after accommodation, then it should be done 01/2005

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Note

Job design integrates work content, qualifications, and rewards for each job in a way that meets the needs of employees and the organization.

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Job Characteristics Model of Work Motivation Core Job Dimensions Skill variety Task identify Task significance

Critical Psychological States Experienced meaningfulness of the work

Autonomy

Experienced responsibility for outcomes of the work

Feedback

Knowledge of the actual results of the work activities

Personal and Work Outcomes High internal work motivation High-quality work performance High satisfaction with the work Low absenteeism and turnover

Employee Growth Need Strength 01/2005

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Job Enlargement and Job Enrichment Job Enlargement ƒ Employees given a greater variety of things to do ƒ Horizontal expansion of work ƒ Greater number of tasks ƒ Responsibility and authority not increased Job Enrichment ƒ Job is expanded vertically ƒ Increased responsibility ƒ Focus on growth and recognition

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Summary

ƒ Job analysis plays a major role in HRM activities and programs ƒ The job is the major building block of an organization ƒ Each characteristic of each job in an organization must be clearly understood

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chapter

7 Recruitment

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Recruitment ƒ Organizational activities that influence: ƒ Number and types of applicants who apply for a job ƒ Whether the applicants accept jobs that are offered ƒ Directly related to HR planning and selection ƒ Represents the first contact between organizations and prospective employees

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 71

External Influences on Recruitment

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Government Restrictions

Competitiveness

Union Restrictions

Labor Market Conditions

Composition of the Labor Force

Location of the Organization

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Internal Influences

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Strategy

Goals

Corporate Culture

Nature of the Task

Work Group

Leader’s style and experience

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Guidelines for Recruitment ƒ Post notices regarding the availability of a job ƒ Publish a list of qualifications necessary to fill the job ƒ Distinguish between essential qualifications and desirable qualifications ƒ Do not rely on word-of-mouth sources of recruits ƒ Use recruiting sources that will reach the greatest number of potential applicants in the job market ƒ Be wary of establishing qualifications that might directly or indirectly exclude members of protected groups ƒ Be sure job qualifications are applied to every applicant in a consistent manner 01/2005

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The Organization’s View of Recruiting

Recruiting Requirements

Organizational Policies and Practices

Organizational Image

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Potential Employee’s View of Recruiting

Preferences Preferencesof of recruits for recruits for organizations organizationsand and jobs jobs

Jobsearch searchand and Job findingaajob: job:The The finding recruit recruit

Applicants’ abilities, attitudes, and preferences are based on: ƒ Work experiences ƒ Influences by parents, teachers, and others These influences affect them in two ways: ƒ How they set job preferences ƒ How they go about seeking a job

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Responsibilities for Recruiting

ƒ In larger organizations, the HR department does the recruiting ƒ In smaller organizations, multipurpose HR people or operating managers recruit and interview applicants

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Internal Recruiting Job posting and bidding

Inside moonlighting

Employees’ friends

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External Recruiting Media Advertising

E-recruiting

Employment Agencies Executive Search Firms

Summer Internships

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Special Events Recruiting College Recruiting Thomas H. Jäkel

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E-Recruiting: Key Issues to Keep in Mind

ƒ Be careful not to inadvertently screen out diverse candidates ƒ Make sure the job opening is communicated to large portions of the target population ƒ Recruiters need to figure out a way to track applicants who apply for online job postings ƒ Email communication might be too casual

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Consequences of Job Preview: Traditional Preview

ƒ Sets initial job expectations too high ƒ Job is typically viewed as attractive, stimulating, and challenging ƒ High rate of acceptance of job offers ƒ Work experience disconfirms expectations ƒ Dissatisfaction and realization that job is not matched to needs ƒ Low job survival, dissatisfaction, frequent thoughts of quitting

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Consequences of Job Preview: Realistic Preview

ƒ Sets job expectations realistically ƒ Job may or may not be attractive, depending on individual’s needs ƒ Some accept, some reject job offer ƒ Work experience confirms expectations ƒ Satisfaction; needs matched to job ƒ High job survival, satisfaction, infrequent thoughts of quitting

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Alternatives to Recruitment Overtime

Employee Leasing

Temporary Employment

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Evaluating Recruiting

Effectiveness of recruiters

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Sources of recruits

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Summary

ƒ A better job of recruiting and matching employees to jobs will mean: ƒ Lower employee turnover ƒ Greater employee satisfaction and organizational effectiveness ƒ The Internet is revolutionizing organizational recruitment

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chapter

8 Selection

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Note

Selection – the process by which an organization chooses from a list of applicants the person or persons who best meet the selection criteria for the position available, considering current environmental conditions

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 88

Internal Factors Influencing Selection

ƒ Organization characteristics that can influence the selection process: ƒ Size ƒ Complexity ƒ Technological volatility ƒ Attitude about hiring from within

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External Factors Influencing Selection

ƒ Federal government employment laws and regulations ƒ State-specific regulations ƒ Size, composition, and availability of local labor markets ƒ Economic, social, and political pressures on a community

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Selection Criteria

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Formal Education

Experience and Past Performance

Physical Characteristics

Personal Characteristics and Personality Type

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Reliability of Selection Criteria ƒ Reliability – how stable or repeatable a measurement is over a variety of testing conditions ƒ How to assess reliability: ƒ Test-retest reliability ƒ Alternative-form reliability ƒ Inter-rater reliability

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Validity of Selection Criteria ƒ Validity – addresses the questions of: ƒ What a selection tool measures ƒ How well it has measured it ƒ It is not sufficient for a selection tool to be reliable ƒ The selection tool must also be valid ƒ Content Validity – degree to which a test, interview, or performance evaluation measures the skill, knowledge, or ability to perform ƒ Construct Validity – extent to which a selection tool actually measures the unobservable trait that it claims to measure ƒ Criterion-Related Validity – extent to which a selection technique can accurately predict one or more important elements of job behavior ƒ Predictive Validity ƒ Concurrent Validity

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Typical Selection Decision Process 1. 1. Preliminary Preliminary screening screening

Application blank Biographical Information Blank Interview

2. 2. Employment Employment interview interview 3. 3. Employment Employment tests tests

4. 4. Background Background && reference reference checks checks 5. 5. Selection Selection decision decision

6. 6. Physical Physical examination examination 01/2005

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Preliminary Screening

ƒ Application blanks ƒ Useful selection tools ƒ Subject to same legal standards as any other selection method ƒ Biographical information blank (BIB) ƒ Weighted application blank

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Employment Interview ƒ Two strategies for effective us of interviews: ƒ Structuring the interview to be reliable and valid ƒ Training managers on best interview techniques ƒ Unstructured interview ƒ Structured interview ƒ Behavioral description interview (BDI) ƒ Situational interview (SI)

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Employment Tests ƒ Mechanism that attempts to measure certain characteristics of individuals, e.g., ƒ Aptitudes ƒ manual dexterity ƒ Intelligence ƒ personality ƒ Should be validated before being used to make hiring decisions ƒ Job sample performance tests ƒ Cognitive ability tests ƒ Wechsler Adult Intelligence Scale ƒ Wonderlinc Personnel Test ƒ California Test of Mental Maturity (adult level) ƒ Psychomotor ability simulations ƒ Personality inventories and temperament tests ƒ Polygraph and honesty tests

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Reference Checks and Recommendations

ƒ Do not always provide an organization with meaningful information about applicants ƒ Concerns over the legality of asking for and providing confidential information about applicants ƒ Legal status surrounding reference-checking and providing recommendations is not clear

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Selection of Managers ƒ Assessment center ƒ several interviews ƒ work samples ƒ Simulations ƒ paper-and-pencil tests of abilities and attitudes ƒ Individuals evaluated on many dimensions ƒ Shown to be a valid way to select managers

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Summary ƒ The way that an organization hires employees is directly tied to other HR programs ƒ The linkage with training is important ƒ Putting more money into selection can significantly reduce the amount of money it must spend on training ƒ A selection system will make some mistakes ƒ No guarantee of successful job performance

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chapter

9 Performance Evaluation and Management

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Performance Management ƒ Process by which executives, managers, and supervisors work to align employee performance with the firm’s goals ƒ Defines, measures, monitors, and gives feedback ƒ Performance evaluation is a crucial part of a firm’s performance management process ƒ The activity used to determine the extent to which an employee performs work effectively ƒ Informal performance evaluation system ƒ Formal performance evaluation system

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Levels of Performance The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 104

Purposes of Formal Performance Evaluation

Development

Motivation

Communication

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HR and employment planning

Legal compliance Thomas H. Jäkel

HRM research

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Note

To provide information that can serve the organization’s goals and that complies with the law, a performance evaluation system must provide accurate and reliable data. This is enhanced if a systematic process is followed.

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Six Steps for a Systematic Process ƒ Establish performance standards for each position and the criteria for evaluation ƒ Establish performance evaluation policies on when to rate, how often to rate, and who should rate ƒ Have raters gather data on employees’ performance ƒ Have raters (and employees in some systems) evaluate employees’ performance ƒ Discuss the evaluation with the employee ƒ Make decisions and file the evaluation

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Characteristics of Effective Criteria

ƒ Reliability – a measure of performance must be consistent ƒ Relevance – a measure of performance must be related to the actual output of an incumbent ƒ Sensitivity – criteria must be able to reflect the difference between high and low performers ƒ Practicality – the criteria must be measurable ƒ Data collection cannot be inefficient or too disruptive

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Who Should Evaluate the Employee?

ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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Immediate supervisor Rating by a committee of several supervisors Rating by the employee’s peers (co-workers) Rating by the employee’s subordinates Rating by someone outside the immediate work situation Self-evaluation Rating by a combination of approaches

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360-Degree Appraisal Systems Positive ƒ Multiple perspectives of a person’s performance ƒ Ratings can evaluate person based on actual contact and observation ƒ Feedback is provided from multiple directions (above, below, and peer) ƒ Upward feedback when anonymous, results in full participation ƒ Learning about weaknesses and strengths is motivation Negative ƒ Feedback from all sources can be overwhelming ƒ Rater can hide in a group of raters and provide harsh evaluations ƒ Conflicting ratings can be confusing and frustrating ƒ Providing feedback that is constructive requires a plan and well-trained raters ƒ Not typically found in organizations

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Performance Evaluation Methods

Multiple-Person Evaluation Methods

Individual Evaluation Methods

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Individual Evaluation Methods Graphic Rating Scale

Individual Evaluation Methods Behavioral Observation Scales

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Forced Choice

Essay Evaluation Critical Incident Technique Checklists and Weighted Checklists

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Advantages and Disadvantages of Some Individual Methods of Performance Evaluation

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Individual Methods

Comments

Rating Scales

Easy to use, easy to complete, relatively low cost; focuses too much on person instead of on performance.

Forced Choice

Selectively low cost, easy to use; difficult to explain to those evaluated.

Essay

Good in providing specific feedback if evaluator is a good writer; difficult in making comparisons across those being evaluated.

Critical Incidents

Time consuming, must be disciplined to log in incidents, reveals critical behaviors that can be fed back easily.

Behavior Scales

Difficult to develop, time consuming, great for providing specific feedback to aid in improving performance.

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Multiple-Person Evaluation Methods

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Ranking

Paired Comparison

Forced Distribution

Management by Objectives

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Advantages and Disadvantages of Some MultiplePerson Methods of Performance Evaluation

Multiple-Person Methods

Comments

Ranking and Paired Hard to use for providing feedback, good for making comparisons Comparisons among employees. MBO

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Focuses on results that are important, sometimes too short-term oriented, does not engage in comparisons among employees.

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MBO Program Process ƒ Supervisor and employee conduct meetings to define key tasks of the subordinate and to set a limited number of objectives (goals) ƒ Participants set objectives that are realistic, challenging, clear, and comprehensive ƒ Supervisor, after consulting with the employee, establishes the criteria for assessing the accomplishment of the objectives ƒ Dates for reviewing intermediate progress are agreed upon and used ƒ Supervisor and employee make any required modifications in the original objectives ƒ Final evaluation by the supervisor is made; counseling meeting is held with employee ƒ Objectives for next cycle are set by employee after consulting with supervisor (keeping in mind previous cycle and future expectations)

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Problems with the MBO Process

ƒ ƒ ƒ ƒ ƒ ƒ

Too much paperwork is involved Too many objectives are set, and confusion occurs MBO is forced into jobs where establishing objectives is extremely difficult Failure to tie in MBO results and rewards Too much emphasis on the short term Supervisors are not trained in the MBO process and the mechanics involved ƒ Original objectives are never modified ƒ MBO is a used as a rigid control device that intimidates rather than motivates

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Problems in Performance Evaluation

Opposition to Evaluation System Design and Operating Problems

Rater Problems

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Employees’ Problems with Performance Evaluation

ƒ Employees do not understand the system or its purpose ƒ Employees are not work-oriented ƒ Evaluation may be below the employee’s expectations

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Rater Problems Standards of Evaluation

Rater Problems

Halo Effect

Leniency or Harshness Central Tendency Error

Personal Bias (stereotyping; “similar to me”)

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Contrast Effects

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“Recency of Events” Error

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The Feedback Interview

ƒ Can be effective if the evaluation information is meaningful, clear, and helpful ƒ Feeding back information can be quite stressful if the evaluation is: ƒ considered unfair ƒ Inaccurate ƒ poorly designed

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Summary

ƒ Properly performed, performance evaluation can contribute to: ƒ organizational objectives ƒ employees’ development and satisfaction ƒ These are goals of performance management

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chapter

10 Compensation: An Overview

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Compensation

ƒ Deals with every type of reward individuals receive in exchange for performing organizational tasks ƒ Major cost of doing business ƒ Chief reason why most individuals seek employment ƒ An exchange relationship

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 125

Why do we compensate employees? „ „ „ „ „ „ „ „ „ „ „ „ 01/2005

Payment for Services Rendered? Motivation? Productivity? Efficiency? Cooperation? Compliance? Creativity? Loyalty? Competitiveness? Social Reasons? Legal Reasons? …….? Thomas H. Jäkel

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Compensation Types Compensation Financial

Non-Financial

Direct

Indirect

The Job

Job Environment

• • • • • • •

• • • • • •

• • • • •

• • • • •

Wages Salaries Commissions Bonuses Expenses Allowances Contributions

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Unemployment Health Pension Retirement Workers’ Comp Pay for time not worked • Employee Services

Skill Variety Task Identity Task Significance Autonomy Feedback

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Sound Policies Competent Staff Leadership Model Status Symbols Working Conditions • Workplace Flexibility

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Objective of Compensation

ƒ To create a system of rewards that is equitable to the employer and employee alike ƒ The desired outcome is an employee who is: ƒ Attracted to the work ƒ Motivated to do a good job for the employer

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Requirements Adequate*

A Compensation system should be:

Equitable*

Incentiveproviding* Cost-effective

(* focus of this chapter)

Acceptable to the employee

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Secure Balanced Thomas H. Jäkel

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External Influences on Compensation

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Government Restrictions

Competitiveness

Union Restrictions

Labor Market Conditions

Composition of the Labor Force

Location of the Organization

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Note

Comparable Worth Attempts to prove that employers systematically discriminate by paying women less than their work is intrinsically worth, versus what they pay men who work in comparable (equally valuable) positions – and to remedy this situation.

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Internal Influences on Compensation

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Strategy

Goals

Corporate Culture

Nature of the Task

Work Group

Leader’s style and experience

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Pay and Motivation

ƒ Motivation – set of attitudes and values that predisposes a person to act in a specific, goal-directed manner: ƒ the direction of behavior (working to reach a goal) ƒ the strength of behavior (how hard or strongly the individual will work)

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Theories of Motivation

Needs Theories

Social Comparison Theories

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Herzberg’s Two-Factor Theory

Expectancy Theory

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Reinforcement Theories

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Pay and Employees’ Satisfaction

ƒ Pay Satisfaction – refers to an employee’s liking for or dislike of the employer’s compensation package (including pay and benefits) ƒ Lawler’s Model – the distinction between the amount employees receive and the amount they think others are receiving is the immediate cause of pay satisfaction or dissatisfaction

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Pay dissatisfaction is a function of six important judgments: ƒ A discrepancy between what employees want and what they receive ƒ A discrepancy between a comparison outcome and what they get ƒ Past expectations of receiving more rewards ƒ Low expectations for the future ƒ A feeling of deserving or being entitled to more than they are getting ƒ A feeling that they are not personally responsible for poor results

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Pay and Employees’ Productivity

ƒ Studies indicate that if pay is tied to performance, the employee produces a higher quality and quantity of work ƒ The key to making compensation systems more effective is to be sure that they are directly connected to expected behaviors

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Compensation Decisions ƒ Pay-Level Decision ƒ Examines pay relative to employees working on similar jobs in other organizations ƒ Objective is to keep the organization competitive in the labor market ƒ Pay survey is the major tool used in this decision ƒ Pay-Structure Decision ƒ Examines pay relative to employees working on different jobs within the organization ƒ Involves setting a value on each job within the organization relative to all other jobs ƒ Job evaluation is the approach used ƒ Individual Pay Determination ƒ Examines pay relative to employees working on the same job within the organization

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Pay-Level Strategies

High-Pay Strategy

Low-Pay Strategy

Comparable-Pay Strategy 01/2005

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Factors Affecting the Choice of Pay Strategy

ƒ The motivation and attitudes held by management ƒ The ethical and moral attitude of management ƒ The degree to which an organization can attract and retain personnel ƒ The organization’s ability to pay

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Summary ƒ The objective of the compensation function is to create a system of rewards that is equitable to the employer and employee alike ƒ Compensation should be adequate, equitable, costeffective, secure, incentive-providing, and acceptable to the employee ƒ The pay-structure decision involves comparing jobs within the organization to determine their relative worth ƒ Determining the worth of a job is difficult because it involves measurement and subjective decisions ƒ Using systematic job evaluation procedures is one way to determine net worth 01/2005

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chapter

11 Compensation: Methods and Policies

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Compensation System Adequate

A Compensation system should be:

Equitable

Incentiveproviding Cost-effective*

(* focus of this chapter)

Acceptable to the employee*

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Secure* Balanced* Thomas H. Jäkel

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Note

To the individual employee, the most important compensation decision is how much he or she will earn.

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Determination of Individual Pay

Three questions need to be addressed: ƒ How should one employee be paid relative to another when they both hold the same job in the organization? ƒ Should we pay all employees doing the same work at the same level the same? ƒ If not, on what basis should we make the distinction?

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Pay differentials are based on:

ƒ Individual differences in experience, skills, and performance ƒ Expectations that seniority, higher performance (or both) deserve higher pay

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Reasons for pay differentials ƒ Pay differentials allow firms to recognize that different employees performing the same job make substantially different contributions to meeting organizational goals ƒ Differentials allow employers to communicate a changed emphasis on important job roles, skills, knowledge, etc. ƒ Differentials provide organizations with an important tool for emphasizing norms of enterprise without having employees change jobs (i.e., promotion) ƒ Pay differentials allow firms to recognize market changes between jobs in the same grade without requiring a major overhaul of the whole compensation system ƒ Without differentials, ƒthe pay system violates the internal equity norms of most employees, ƒreducing satisfaction with pay, and ƒmaking attraction and retention of employees more difficult

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Methods of Payment

Flat Rates

Payment for Time Worked

Variable Pay: Incentive Compensation 01/2005

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Payment for Time Worked

ƒ General, across-the-board increase for all employees ƒ Merit increases paid to some employees ƒ based on some indicator of job performance ƒ Cost-of-living adjustment (COLA) ƒ based on the consumer price index (CPI) ƒ Seniority

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Variable Pay

ƒ Percentage of an employee’s paycheck is put at risk ƒ If business goals are not met, the pay rate will not rise above the lower base salary ƒ Annual raises are not guaranteed ƒ Helps manage labor costs ƒ Does not guarantee equitable treatment of employees

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Variable Pay: Key Design Factors

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Support by management

Acceptance by employees

Supportive organizational culture

Timing

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Types of Variable Pay

Individual Incentives

Group Incentives

Organization Incentives 01/2005

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Individual Variable Pay ƒ Merit incentives ƒ Employees fail to make the connection between pay and performance ƒ The secrecy of the reward is perceived by other employees as inequity ƒ The size of the merit award has little effect on performance ƒ Individual incentives ƒ Piecework ƒ production bonuses ƒ Commissions ƒ Possible only in situations where performance can be specified in terms of output ƒe.g., sales dollars generated ƒe.g., number of items completed ƒ Employees must work independently of each other so that individual incentives can be applied equitably 01/2005

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Effective Individual Incentive Plans

ƒ ƒ ƒ ƒ ƒ

The task is liked The task is not boring The supervisor reinforces and supports the system The plan is acceptable to employees and managers The incentive is financially sufficient to induce increased output ƒ Quality of work is not especially important ƒ Most delays in work are under the employees’ control

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Reasons to Use Team Incentives

ƒ When it is difficult to measure individual output ƒ When cooperation is needed to complete a task or project ƒ When management feels this is a more appropriate measure on which to base incentives

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Organization-wide Incentives

ƒ Usually based on one of two performance concepts: ƒ A sharing of profits generated by all employees altogether ƒ A sharing of money saved as a result of employees’ efforts to reduce costs

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Approaches to Organization-wide Incentives

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Suggestion Systems

Gainsharing

Profit Sharing

Ownership

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Suggestion Systems: Essential Elements

ƒ ƒ ƒ ƒ ƒ ƒ

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Management commitment Clear goals Designated administrator Structured award system Regular publicity Immediate response to each suggestion

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Gainsharing Plans • Employees earn bonuses tied to unit-wide performance as measured by a predetermined, gainsharing formula • Commonly used gainsharing plans: • Lincoln Electric Plan • Scanlon Plan • Rucker Plan • ImproShare • Key Elements in Designing a Gainsharing Plan • Strength of reinforcement • Productivity standards • Sharing the gains • Scope of the formula • Perceived fairness of the formula • Production variability

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Newer Approaches to Gainsharing Business Plan Gainsharing Winsharing

Spot Gainsharing 01/2005

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Typical Profit Sharing Plans

ƒ Cash or current distribution plans provide full payment to participants soon after profits have been determined ƒ Deferred plans credit a portion of current profits to employees’ accounts with cash payments made at the time of retirement, disability, severance, or death ƒ A combination of both incorporates aspects of current and deferred options

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Ownership ƒ Employee stock ownership plan (ESOP) – employees receive stock in the company ƒ ESOPs are tax qualified ƒi.e., in return for meeting certain rules designed to protect the interests of plan participants, ESOP sponsors receive various tax benefits ƒ ESOPs are defined contribution plans ƒthe employers makes yearly contributions that accumulate to produce a benefit that is not defined in advance

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People-Based Pay

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Skill-Based Pay

KnowledgeBased Pay

CredentialBased Pay

Feedback Pay

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Executive Pay

More likely to be based on comparative performance: ƒ Compensation committees link CEO’s pay to returns to shareholders ƒ Variable performance-based pay is emphasized over guarantees ƒ CEOs are encouraged to invest in company stock ƒ Performance yardsticks are linked to actual key productivity indices, to the competition, or to both ƒ CEOs are held responsible for the cost of capital

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Issues in Compensation Administration

Pay Secrecy or Openness Pay Security

Pay Compression 01/2005

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Pay Security Plans

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Guaranteed Annual Wage (GAW)

Supplementary Unemployment Benefits (SUB)

Cost of Living Adjustments (COLAS)

Severance Pay

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Solutions to Pay Compression ƒ Reexamining how many entry-level people are needed ƒ Reassessing recruitment itself ƒ Focusing on the job evaluation process, emphasizing performance instead of salary-grade assignment ƒ Basing all salaries on longevity ƒ Giving first-line supervisors and other managers the authority to recommend equity adjustments for incumbents who have been unfairly victimized by pay compression ƒ Limiting the hiring of new employees seeking excessive salaries

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Summary

ƒ There is a growing realization that traditional pay systems do not effectively link pay to performance ƒ The trend is toward a total compensation approach made up of base pay, variable pay, and benefits ƒ Flexibility is an essential ingredient in any compensation plan and can be built using a variable pay approach

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chapter

12 Employee Benefits and Services

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Indirect Financial Compensation - Benefits

ƒ All employer-provided rewards and services (other than wages and salaries) arising from: ƒ legally required social insurance payments ƒ private insurance and retirement plans ƒ payment for time not worked ƒ extra cash payments other than bonuses based on performance ƒ employee services

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Background ƒ Most benefits and services are available to workers as long as they are employed by an organization regardless of seniority or performance ƒ Decisions about indirect compensation are more complex than those concerned with wages and salaries ƒ Employers face rising benefits costs resulting from: ƒ increased legislation ƒ insurers’ insolvency ƒ cost of advanced medical technologies ƒ aging workforce ƒ new immigration ƒ more women in the workforce ƒ global competition

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Changes in Benefits Programs „ „ „ „ „ „ „

Then Nuclear families of working male with female and 2.3 children at home Employment for large part of career White male-dominated workforce Cradle-to-grave expectations Paternalistic employer Entitlement perception of benefits Low cost of benefits

„ „ „ „ „ „ „

„ Protection for illness

„

„ Single set of benefits

„

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Now Double-income families with and without children, and single-head families Multiple career industry, & job moves Multicultural workforce Portability issues Shared responsibility Benefits as part of total compensation Benefits costs escalating faster than CPI and employer’s ability to pay Promotion of wellness Cafeteria and customized benefits programs

172

The Role of Managers Benefits & Services Function Benefits & services budget

Operating Manager (OM)

HR Manager (HRM)

Preliminary budget approved Preliminary budget or adjusted by top developed by HRM management

Voluntary benefits & services Programs approved by OM (top management)

Programs recommended by HRM

Communication of benefits & OM cooperates with HRM services

Primary duty of HRM

Evaluation of benefits & services

Done by HRM

Administration of benefits & services programs

Done by HRM

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Benefits and Services Programs Voluntary Benefits

Income in Retirement

Mandated Benefits

Flexible Benefits

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Employee Services

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Mandated Benefits Programs Unemployment Insurance Social Security

Workers’ Compensation 01/2005

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Unemployment Insurance

ƒ Unemployment tax paid by employer ƒ Unemployment tax rates, eligibility requirements, weekly benefits, and duration of regular benefits vary from state to state ƒ Employee receives compensation for a limited time – typically a maximum of 26 weeks

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Social Security „ „ „ „ „

Social Security Retirement income Disability benefits Death benefits Survivor’s benefits 6.2% of eligible earnings up to „ „

$84,900 (2002) $87,000 (2003)

„ „ „ „

Medicare Hospital insurance (Medicare, Part A) Medical Insurance (Medicare, Part B) 1.45% of eligible earnings (unlimited) Employee and employer funded

„ Employee and employer

funded

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Workers’ Compensation ƒ Based on the principle of liability without fault ƒ Employer absolutely liable for providing benefits to employees that result from occupational disabilities or injuries regardless of fault ƒ Employers assume costs of occupational injuries and accidents ƒ Employers pay premium to insurance company or state fund ƒ experience-rated (5-10 year period) ƒ Disability must be work related ƒ Benefits include: ƒ medical care ƒ disability income ƒ Rehabilitation ƒ death benefits

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Voluntary Benefits Programs Insurance Protection

Retirement Plans

Compensation for Time Not Worked 01/2005

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Compensation for Time Not Worked Paid Holidays

Paid Vacations

Sick Leave 01/2005

Personal Time Off

Family Leave Thomas H. Jäkel

Maternity and Parental Leave 180

Employer-Purchased Insurance Health Insurance

Life Insurance

Disability Income Replacement 01/2005

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Health Insurance ƒ Traditional membership programs ƒ Pay for both physician and hospital expenses as these costs are incurred ƒ Approach is not preventive ƒ Health maintenance organizations (HMO) ƒ Outpatient and hospital coverage offered for a fixed monthly fee ƒ Prepayment for comprehensive health care that promotes preventive care ƒ Preferred provider organizations (PPO) ƒ Health care plan based on agreements between doctors, hospitals, and other related medical service facilities with an employer or an insurance company ƒ Services provided for a fixed fee ƒ Incentives to use selected providers ƒ Emphasis on cost control

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Income in Retirement Programs

Retirement Income from Savings & Work Simplified Employee Pension IRAs 01/2005

Individual Retirement Accounts (IRAs)

401 (k) Plans

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Private Pensions

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Pension Benefits

ƒ Defined benefit pension plan ƒ Specifies the benefit employees will receive at retirement ƒ Defined contribution pension plan ƒ Specifies the employer’s contribution ƒ Cannot predetermine the employee’s actual pension benefit

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Employee Services Stock Ownership Plans

Employee Services Social and Recreational Programs

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Financial Services Thomas H. Jäkel

Education Programs Pre-retirement Programs Childcare

Eldercare

185

Flexible Benefits Plans

ƒ Allow employees to choose between two or more types of benefits ƒ Common choices include: ƒ health care ƒ life insurance ƒ disability insurance ƒ option of receiving cash to spend on coverage in the open market

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Reimbursement Accounts

ƒ Also known as flexible spending accounts ƒ Provide funds from which employees pay for expenses not covered by the regular benefits package ƒ Usually pretax deductions ƒ Funds can be allocated for: ƒ unreimbursed health care ƒ Childcare ƒ care for elderly or disabled relatives

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Managing an Effective Benefits Program

ƒ Step 1: Set Objectives and Strategy for Benefits ƒ Pacesetter strategy ƒ Comparable benefits strategy ƒ Minimum benefits strategy ƒ Step 2: Involve Participants and Unions ƒ Step 3: Communicate Benefits ƒ Step 4: Monitor Costs Closely

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Summary ƒ Top managers must consider the following when making decisions about benefits: ƒ Mandated programs must be funded ƒ There is little evidence that benefits and services really motivate performance ƒ Benefits do not necessarily increase satisfaction ƒ Most employees view benefits and services as entitlements ƒ Unions, competitors, and industry trends continue to pressure employers to provide or increase voluntary benefits ƒ Costs of benefits and services continue to escalate dramatically ƒ To avoid administrative nightmares, employers should concentrate on fewer benefits plans ƒ If possible, implement those preferred by most employees

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chapter

13 Training and Development

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

Competitive, Competitive,high high quality products quality products Thomas H. Jäkel

Competitive, Competitive,high high quality services quality services 191

Nature of Corporate Training Training is often seen as an employee benefit, which is not expected to provide a tangible return. Isn’t training just part of enlightened management, intrinsically good unquestionably valuable in unmeasurable ways? No. Training must be treated like any other investment. ƒ If the return on a given training investment is not easily quantified, how can managers describe the specific benefits to the organization of that training effort? ƒ How can the investment in training to be assessed before the investment is made? ƒ If top managers are committed to spending a certain percentage of revenue on training, how can they be sure that they are investing in the right training?

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Common View In a prevailing view, people exist in a vacuum. If managers want to establish or improve a certain performance output, all they need to do is arrange for the proper training input.

Skills/Knowledge

Performance

Training is likely to be prescribed when training is not needed.

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The Systems View The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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Reacting to Training Requests ƒ Identify, at the Organizational Level, the critical business issue – the actual performance problem or opportunity of concern. ƒ Identify, at the Process Level, the business process that has the greatest impact on the critical business issue. ƒ Use a Process Map to document the adjudication process and to identify any gaps between desired and actual performance of each process step. ƒ Identify the jobs that have an impact on the performance of the process steps in which there are gaps. ƒ Develop a list of desired outputs. Identify which of the desired outputs are not being produced. ƒ Identify the causes of any subpar output. Possible causes include missing or inadequate Performance Specifications, Task Interference, missing or unaligned Consequences, missing or inadequate Feedback, lack of Skills or Knowledge, and lack of Individual Capacity.

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Proactive Training Planning ƒ Identify major clients (by business unit or department, with a senior manager as the contact in each client organization). ƒ Develop an HRM plan with the client contact. Begin by identifying the client organization’s anticipated operating needs for the next 18 months. These needs should be based on the business unit’s strategy or the departments contribution to the strategy. On the basis of these needs, identify the training that will be required to meet them. ƒ Consolidate all of the business-unit HRM plans into a plan and budget for the HRM function. ƒ Review progress toward the plan with the client every 6 months. ƒ Review progress at the end of the year and update the plan for the next year.

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HRM as Performance Department HRM can transform itself from a training operation to the organization’s performance department. ƒ Understand that their mission is to improve performance, not to provide skills and knowledge. ƒ Only conduct training and development that are linked to organization performance needs. ƒ Only conduct training and development that are supported by the environment in which the trainees work. ƒ Evaluate training and development according to its contributions to organization performance needs. ƒ Conduct diagnoses that go beyond training. ƒ Recommend solutions to both training and development and non-training and development needs. ƒ Understand the business at all Three Levels of Performance and the influence of all Nine Performance Variables ƒ Understand that the department is a business and must be run as a business. 01/2005

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Different Types

ƒ Orientation – orients, directs, and guides employees to understand work, firm, colleagues, and mission (socialization) ƒ Training – helps employees do their current work ƒ Development – prepares individuals for the future ƒFocuses on learning and personal development

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Goals of Orientation

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To reduce anxiety

To reduce turnover

To develop realistic expectations

To save time

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How Orientation Works ƒ Orientation should begin with the most relevant and immediate kinds of information ƒ The most significant part of orientation is the human side ƒ New employees should be “sponsored” or directed in the immediate environment by an experienced worker or supervisor ƒ New employees should be gradually introduced to the people with whom they will work ƒ New employees should be allowed sufficient time to get their feet on the ground before job demands on them are increased 01/2005

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Training ƒ The systematic process of altering the behavior of employees in a direction that will achieve organization goals ƒ Training is related to present job skills and abilities ƒ Training has a current orientation ƒ Helps employees master specific skills and abilities needed to be successful

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Goals of Training ƒ Training validity ƒ Did the trainees learn skills or acquire knowledge or abilities during the training? ƒ Transfer validity ƒ Did the knowledge, skills, and abilities learned in training lead to improved performance on the job? ƒ Intraorganizational validity ƒ Is the job performance of a new group of trainees in the same organization that developed the program comparable to the job performance of the original training groups? ƒ Interorganizational validity ƒ Can a training program that has been validated in one organization be used successfully in another firm?

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Learning Theory and Training

ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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The trainee must be motivated to learn The trainee must be able to learn The learning must be reinforced The training must provide for practice of the material The material presented must be meaningful The material must be communicated effectively The material taught must transfer to the job

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Learning Organizations ƒ Organizations that are proficient in: ƒ A systematic approach to problem solving ƒ Experimentation with new approaches ƒ Learning from their own experience and history ƒ Learning from the experiences and best practices of others ƒ Transferring knowledge quickly and efficiently throughout the organization

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Managing the Training Program

ƒ ƒ ƒ ƒ ƒ

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Determining needs and objectives Choosing trainers and trainees Selecting training content and methods to be used Developing evaluation criteria Evaluating the training

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Needs Assessment Organizational Analysis

Person Analysis

Task Analysis

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Employees’ Needs for Training

ƒ ƒ ƒ ƒ

01/2005

Observe employees Listen to employees Ask supervisors about employees’ needs Examine the problems employees have

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Steps to a Performance Analysis ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

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Behavioral discrepancy Cost-value analysis Is it a “cant do” or “won’t do” situation? Set standards Remove obstacles Practice Training Change the job Transfer or terminate Create a motivational climate

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Instructional Methods On-the-Job Training

Training and Development Instructional Methods Outdoor-Oriented Programs

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Behavior Modeling Thomas H. Jäkel

Case Method

Role Playing In-Basket Technique Management Games

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On-the-Job Training for Managers

ƒ Coaching and counseling ƒ Transitory anticipatory experiences ƒ Transfers and rotation

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Off-the-Job Training

ƒ Lecture-discussion approach ƒ Computer-assisted instruction (CAI) ƒ Internet ƒ Intranets ƒ Multimedia-based training (MBT) ƒ Virtual reality (VR) ƒ Distance learning

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Diagnostic Steps in Development Programs 1. Determine short- and longterm goals of the organization

Organizational OrganizationalAnalysis Analysis

2. Examine work requirements, specifications, and changes in work

Work WorkAnalysis Analysis

3. Determine behaviors needed to perform work and performance standards

Human HumanResource ResourceAnalysis Analysis

4. Develop behavior objectives to be accomplished through development programs 01/2005

Objectives to be used in evaluation of success of program Thomas H. Jäkel

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Development: Individual Techniques

Behavior Modification

Goal Setting

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Goal Setting: Key Steps ƒ Diagnosis ƒ Preparing the employees for goal setting by increased interpersonal interaction, communication, training, and action plans ƒ Emphasizing the attributes of goals that should be understood by a manager and subordinates ƒ Conducting immediate reviews to make necessary adjustments in established goals ƒ Performing a final review to check the goals set, modified, and accomplished

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Criticisms of Goal Setting

ƒ Goal setting is complex and difficult to sustain ƒ Goal setting works well for simple jobs but not for complete jobs ƒ Goal setting encourages game playing ƒ Goal setting is used as another check on employees ƒ Accomplishment of goals can become an obsession

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Applied Behavior Modification ƒ ƒ ƒ

ƒ

ƒ

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Managers must identify and define the specific behavior ƒ Can it be seen? ƒ Can it be measured? Managers must measure or count the occurrences of the pinpointed behavior Managers conduct the ABC analysis ƒ Antecedent ƒ Behavior ƒ Consequence The action plan and strategies ƒ Positive reinforcement ƒ Negative reinforcement ƒ Extinction ƒ Punishment Evaluation of critical behavior ƒ Comparing baseline versus after action behaviors ƒ Providing feedback to make changes Thomas H. Jäkel

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Questions for Performance Analysis ƒ Antecedent ƒ Does the employee know what is expected? ƒ Are the standards clear? ƒ Have they been communicated? ƒ Are they realistic? ƒ Behavior ƒ Can the behavior be performed? ƒ Could the employee do it if his or her life depended on it? ƒ Does something prevent its occurrence? ƒ Consequence ƒ Are the consequences weighted in favor of performance? ƒ Are improvements being reinforced? ƒ Do we note improvement even though the improvement may still leave the employee below company standards? ƒ Is reinforcement specific?

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A Group Technique – Team Building

ƒ A development process that helps or prepares organization members to work more efficiently or effectively in groups ƒ Designed to enhance individual team members’ ƒ problem-solving skills ƒ Communication ƒ sensitivity to others ƒ participation

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Total Quality Management (TQM)

ƒ TQM – a philosophy, a process, and a set of principles that provide an organization with what is needed to continuously improve its effectiveness ƒ Everyone in the firm developing and fine-tuning processes that are: ƒ customer-oriented ƒ Flexible ƒ Responsive ƒ To achieve change and to convert to TQM, there must be changes in: ƒ Attitudes ƒ Communication ƒ employee involvement ƒ commitment

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Criteria for Training Evaluation ƒ Participants’ reaction ƒ Whether participants like or dislike the training or development program ƒ Learning ƒ Extent to which participants have assimilated the knowledge offered and skills practiced in the training or development program ƒ Does the participant score higher on tests after the training or development than before? ƒ Behavior ƒ External measure of changes or lack of changes in job behavior ƒ Results Effect of the program on organizational dimensions such as: ƒ employee turnover ƒ Productivity ƒ volume of sales ƒ quality

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An Evaluation Matrix: Issues to Consider

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Relevant Issues to Evaluate

What to Measure

What to Examine for Answers

How to Collect Data

Are the participants learning, changing attitudes, or improving skills?

Participants’ attitudes or skills before and after (even during) training or development sessions

Comments Method of participation Co-workers Superiors

Interviews Questionnaires Records Observations

Are the training or development materials used on the job?

Participants’ on-thejob performance, behavior, and style

Subordinates’ performance, attitudes, and style

Records Interviews Questionnaires Critical incidents Observations

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An Evaluation Matrix: Issues to Consider Relevant Issues to Evaluate

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What to Measure

What to Examine for Answers

How to Collect Data

What are the costs of training and development programs and techniques?

Fixed and variable costs of conducting training or development

Costs of trainers Participants’ time Travel expenses Consultants’ fees Training aids Rent and utilities

Budget records

How long does the training or development have an effect on participants?

Participants’ on-thejob performance, behavior, and style over an extended period of time

Subordinates’ performance, attitudes, and style

Records Interviews Questionnaires Critical incidents Observations

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Summary

ƒ Formal training and development have been shown to be more effective than informal or no training and development ƒ For most training and development programs the results tend to be assumed rather than evaluated

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chapter

14 Career Planning and Development

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The Concept of Career

ƒ A career is the pattern of work-related experiences and activities over the span of the person’s work life, e.g., ƒ job positions ƒ job duties ƒ Decisions ƒ subjective interpretations about work-related events

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Diagnostic Model for HRM Diagnose Prescribe Implement Evaluate

External Environmental Influences

Internal Environmental Influences

Diagnose Prescribe Implement Evaluate

Human Resource Processes Acquiring Human Resources

Rewarding Human Resources

Developing Human Resources

Maintaining and Protecting Human Resources

Focus of each process is on people and results Desirable End Results Socially Socially responsible responsibleand and ethical ethicalpractices practices 01/2005

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Career Development System ORGANIZATIONAL NEEDS

INDIVIDUAL NEEDS

What are the organization’s major strategic issues over the next two or three years?

How do I find career opportunities within the organization that will do the following?

• Critical needs and challenges to be faced? • Critical skills, knowledge, and experience needed to meet these challenges?

ISSUE: Are employees developing themselves in a way that links personal effectiveness and satisfaction with the achievement of the organization’s strategic objectives?

• Use my strengths • Address my developmental needs • Provide challenges

• Staffing levels required?

• Match my interests

• Does the organization have the strength necessary to meet the critical challenges?

• Match my values

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• Match my personal style

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Career Stages Stage I: Apprenticeship ƒ Important needs – safety, security, physiological ƒ Expected to show competence in learning and following directions ƒ Must be able to accept the psychological state of dependence Stage II: Advancement ƒ Important needs – achievement, esteem, autonomy ƒ Demonstrate competence in a specific technical area ƒ Expected to be an independent contributor of ideas in the chosen area Stage III: Maintenance ƒ Important needs – esteem, self-actualization ƒ Expected to become the mentors of those in Stage I ƒ Central activities are training and interaction with others ƒ Assume responsibility for the work of others Stage IV: Strategic Thinking ƒ Important needs – self-actualization ƒ Involves shaping the direction of the organization itself ƒ Expected to play the roles of manager, entrepreneur, and idea generator ƒ Attention directed to long-range strategic planning 01/2005

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Career Choice and Personality Holland’s Personality Types

Realistic

Investigative

Social

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Artistic

Enterprising

Conventional

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Career Development: A Commitment

ƒ Career development programs are most valuable when they are: ƒ offered regularly ƒ open to all employees ƒ modified when evaluation indicates that change is necessary

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Career Development Career Counseling

Career Development Programs

Special Groups Training 01/2005

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Career Pathing

Human Resources Career Information Systems Management or Supervisory Development

231

Causes of Early Career Difficulties

Initial Job Challenge

Initial Job Satisfaction Initial Job Performance Evaluation 01/2005

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How to Counteract Early Career Problems

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Realistic job previews

Challenging initial assignments

Enriched initial assignments

Demanding bosses

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Causes of the Midcareer Plateau ƒ Fewer jobs at the top of organizations ƒ Manager may have the ability ƒ However, no opening exists ƒ Openings may exist ƒ Manager may lack the ability or skills ƒ Manager may lack the desire to fill the opening

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How to Counteract Midcareer Problems

ƒ Midcareer counseling ƒ Midcareer alternatives ƒ Lateral transfers ƒ Downward transfers ƒ Failback positions

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Minimize Retirement Adjustment Problems

ƒ When do employees plan to retire? ƒ Who is attracted by early retirement? ƒ What do employees plan to do during retirement? ƒ Can the organization help them prepare for these activities? ƒ Do retirees plan a second career? ƒ Can the organization assist in this preparation? ƒ Which retirees can still be consulted by the organization to help new employees?

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Career Planning and Pathing

ƒ Career planning – involves matching an individual’s career aspirations with the opportunities available in an organization ƒ Career pathing – the sequencing of the specific jobs associated with the opportunities available in the organization

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A Career Planning and Pathing Process Feedback Individual needs and aspirations

Organizational needs and opportunities

Personal counseling and assessment

Individual development efforts

Matching

Matching

Placement on career path

Formal training and development programs

Personnel planning and career information Feedback

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Career Planning Approaches

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Informal counseling

Formal counseling

Tuition aid programs

Job posting

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Job Posting: Minimum Conditions ƒ It should include promotions and transfers as well as permanent vacancies ƒ Available jobs should be posted at least three to six weeks prior to external recruiting ƒ Eligibility rules should be explicit and straightforward ƒ Standards for selection and bidding instructions should be stated clearly ƒ Vacationing employees should be given the opportunity to apply ahead of time ƒ Employees who apply but are rejected should be notified of the reason in writing ƒ A record of the reason should be placed in their personnel files

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Career Pathing

ƒ Important in workforce planning ƒ Has the potential for closing the gap between the needs of the individual and the needs of the organization ƒ Traditional career paths have emphasized upward mobility in a single occupation or functional area

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Realistic Career Paths

ƒ Include lateral and downward possibilities, as well as upward possibilities ƒ Tentative and responsive to changes in organizational needs ƒ Flexible enough to take into account the qualities of individuals ƒ Jobs along the paths specified in terms of acquirable skills, knowledge, and other specific attributes

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Problems and Issues

ƒ ƒ ƒ ƒ

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Integrating career development and workforce planning Managing dual careers Career planning and equal employment opportunity Downsizing and job loss

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Job Layoff and Job Loss ƒ Job layoff exists when three conditions occur: ƒ There is no work available at the time and the employee is sent home ƒ Management expects the no-work situation to be temporary ƒ Management intends to recall the employee ƒ Job loss means that the employee has permanently lost his or her job

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Managerial Responses to Layoffs and Job Loss

Layoff Criteria

Outplacement Services

Severance Pay

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Summary

“Work, if the longing of the unemployed is any indication, remains a fundamental need – even in the crushing form it has increasingly assumed in the modern world. It provides not simply a livelihood, but an essential passage into the human community. It makes us less alone.” Harry Maurer

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Organizational Development

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Definition Organization Development (OD) is the systematic application of behavioral science knowledge at various levels, such as group, inter-group, organization, etc., to bring about planned change. Its objectives is a higher quality of work-life, productivity, adaptability, and effectiveness. It accomplishes this by changing attitudes, behaviors, values, strategies, procedures, and structures so that the organization can adapt to competitive actions, technological advances, and the fast pace of change within the environment.

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The Three Levels of Performance The Organization Level

Shareholders

Function A

Function B

Function C

Market

The Process Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

The Job/ Performer Level

Shareholders

Function A

Function B

Function C

Process 1 Process 2

Market

Process 3

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Organizational Level „

Relationship with the Market

„

Major Functions

„

Corporate Strategy

„

Corporate Goals

„

Organization Structure

„

Deployment of Resources

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Process Level

„

Organizational level plus

„ Work Flow „ Cross-relations „ How the work is done „ Business view

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Job/Performer Level „

Organization level plus

„

Process level plus „ Skills, Competence „ Hiring practice „ Promotions, Rewards „ Job Descriptions „ Responsibilities „ Standards, Feedbacks „ Motivation „ Satisfaction „ Training

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The Nine Performance Variables

The Three Levels of Performance

The Three Performance Needs

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Goals

Design

Management

Organization Level

Organization Goals

Organization Design

Organization Management

Process Level

Process Goals

Process Design

Process Management

Job/Performer Level

Job Goals

Job Design

Job Management

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Performance Needs Specific standards that reflect customers’

Goals

expectations for product and service quality, quantity, timeliness and cost.

Design

Management

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Necessary components, configured in a way that enables the goals to be efficiently met.

Management practices that ensure that goals are current and are being achieved.

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Organizational Goals „

Organizational goals are part of the business strategy and must comprise the following: „ The organizations competitive advantage „ New Services „ New Markets „ Emphasis on products, services, markets „ Investment on resources and expected returns

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Organization Design

„

Organization Structure

„Responsibilities, Functional Components „Relationships, Input/Output Connections

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Organization Management

„

Corporate Goal Management

„

Performance Management

„

Resource Management

„

Interface Management

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Process Goals

„

External process goals must derive from corporate goals

„

Internal process goals must be driven by the needs of internal customers

„

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Functional goals must be integrated in key processes

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Process Design

„

Logical process structure

„

Streamlines paths

„

Can processes meet the goals?

„

Are all necessary processes in place?

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Process Management

„

Goal Management

„

Performance Management

„

Resource Management

„

Interface Management

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Job Goals

„

Does the job contribute to key processes?

„

Are outputs and goals in line with requirements of key processes?

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Job Design

„

Optimum contribution to job goals

„

Boundaries and responsibilities

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Job Management „

Performance Specification

„

Task Support

„

Consequences

„

Feedback

„

Skills and Knowledge

„

Individual Capacity

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20 Topics (1)

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Delegation of Responsibility

„

Conflict Management

„

Learning Capabilities

„

New Leadership Paradigm

„

Delaying and Team Orientation

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20 Topics (2)

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Creativity

„

Just-in-Time Information

„

Reward and Evaluation

„

Management Development

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Constraints and Policies

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20 Topics (3)

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Brain Drain

„

Training and Employee Orientation

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Value Lens

„

Process Awareness

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Speed vs Accuracy

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20 Topics (4)

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External Lens

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Corporate Image

„

Solution Gap

„

Knowledge Management

„

Communications

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