TOMSK POLYTECHNIC UNIVERSITY

N.V. Cherepanova

HUMAN RESOURCE MANAGEMENT It is recommended for publishing as a study aid by the Editorial Board of Tomsk Polytechnic University

Tomsk Polytechnic University Publishing House 2012 1

UDC 005.9(075.8) BBC У9(2)240я73 С51 Cherepanova N.V. С51 Human resource management: textbook / N.V.Cherepanova; Tomsk Polytechnic University. – Tomsk: TPU Publishing House, 2012. – 107 p.

The given textbook is design for student of all specialties who study the Management course. The main goal of this textbook is forming the basic knowledge and in the area of Human Resource management in modern market relations. The complicity of current business environment creates necessity of Human Resource management knowledge. Therefore it is necessary for students to have background knowledge of history of HR management. The syllabus contains goals description, discussion issues and case studies. UDC 005.9(075.8) BBC У9(2)240я73

Reviewer Doctor of History, Associate professor of the Tomsk State University of History Department I.G. Popravko

© STE HPT TPU, 2012 © Cherepanova N.V., 2012 © Design. Tomsk Polytechnic University Publishing House, 2012

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Content INTRODUCTION ......................................................................................... 5 CHAPTER 1. HUMAN RESOURCE SYSTEM ........................................ 7 Chapter 1. Practice ................................................................................... 11 Questions for discussion ........................................................................... 11 Situations for discussion ........................................................................... 12 Case study – Rebuilding Competitive Advantage ..................................... 12 CHAPTER 2. PLANNING IN HUMAN RESOURCE MANAGEMENT ... 15 2.1 Strategy and Human Resource Management ....................................... 15 2.2 Human Resource Strategies ................................................................ 16 2.1.1. VRIO Strategy ............................................................................. 16 2.1.2. Organization/Industry Life-Cycle Stages and HR Strategy .......... 18 2.3. Human Resource Planning ................................................................. 20 Chapter 2. Training................................................................................... 26 Questions for discussion ........................................................................... 26 Situation for discussion ............................................................................ 27 Case study ................................................................................................ 27 CHAPTER 3. ANALYZING AND IDENTIFYING JOBS .......................... 30 3.1 Job analysis ........................................................................................ 30 3.2 Job Descriptions and Job Specifications ............................................. 33 Chapter 3. Training................................................................................... 34 Questions for Discussion .......................................................................... 34 Situation for discussion ............................................................................ 34 Case study – Pfizer Outsources Tasks, Not Jobs ....................................... 35 CHAPTER 4. RECRUITMENT AND SELECTION ................................... 37 4.1. Staffing: recruitment and selection definitions ................................... 37 4.2. Recruitment in the labor market ......................................................... 39 4.3. Selection process and placement ........................................................ 43 4.4 Ethical issues in recruitment and selection .......................................... 51 Chapter 4. Practice ................................................................................... 53 Questions for discussion: .......................................................................... 53 Situation for discussion ............................................................................ 54 Case Study – HR in Apple Company ........................................................ 54 CHAPTER 5. TRAINING AND DEVELOPMENT HUMAN RESOURCES ........... 56 5.1 Nature of learning and development ................................................... 56 5.2 Human resource training ..................................................................... 61 5.2.1 Training Approaches and training evaluation ............................... 64 5.3 Personnel development ....................................................................... 69 Chapter 5. Training................................................................................... 79 Questions for discussion ........................................................................... 79 3

Situation for discussion ............................................................................ 80 Case study – Training employees to respect privacy ................................. 81 CHAPTER 6. PERFORMANCE MANAGEMENT .................................... 83 6.1 Performance measurement .................................................................. 83 6.2 Motivating employees ........................................................................ 91 Chapter 6. Practice. ................................................................................ 101 Questions for discussion ......................................................................... 101 Situation for discussion .......................................................................... 102 Case study – Performance Review Takes a Page from Facebook ........... 102 CONCLUSION ......................................................................................... 105 REFERENCES .......................................................................................... 106

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INTRODUCTION Human resource management has become a pervasive and influential approach to the management of employment in a wide range of market economies. The original US prescriptions of the early 1980s have become popularized and absorbed in a wide variety of economic settings: there are very few major economies where the nature of human resource management, to include its sources, operation and philosophy is not actively discussed. As a result, the analysis and evaluation of HRM have become major themes in academic, policy and practitioner literatures. These six chapters are strongly related in that they consider the nature of HRM from a number of perspectives. The first chapter looks at the backgrounds of HRM and allows answering the questions: What are the main concerns of HRM? What are the fundamental problems of HR? The first chapter also gives the idea of the contents of the following chapters. The second chapter continues in examining the strategic nature of HRM in depth: how it is aligned to and configured with organizational strategy and how the debate has moved through a number of incarnations. In making claims for the importance of the strategic nature of HRM it raises questions as to its efficacy in helping meet organizational objectives, creating competitive advantage and ‘adding value’ through what has now become known as ‘high-performance’ or ‘high-commitment work practices’. Is it a major contribution to strategic management? The third chapter continues this contextual theme and examines the ways of analyzing and identifying jobs. It explains the nature of approaches to job analysis and allows implement it in the strategic HR. The forth chapter examines recruiting and selection methods. It gives the opportunity to answer the questions about best recruiting practices and selection approaches. The fifths chapter continues in examining training and development in organization. The types of questions raised in this chapter indicate the differences between training and HR development. Also it allows seeing the place of HR training in strategy HR planning. The sixth chapter examines performance management. Improving employees’ performance is one of the basic roles of HRM. Contemporary approaches give managers opportunity not only to adjust performance to the organizational needs but also considering subordinates’ interests. Each chapter is followed by the self-check questions and situation for analysis. 5

This textbook is based mostly on four textbooks by famous in Great Britain and in the USA authors: J.Beardwell, T.Claydon, N.Hollenbeck, G.Wright, S.Tyson, R.L. Mathis and J.H. Jackson. These books were used as a background while compounding the given textbook.

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CHAPTER 1. HUMAN RESOURCE SYSTEM As human resources have become viewed as more critical to organizational success, many organizations have realized that it is the people in an organization that can provide a competitive advantage. Throughout the book it will be emphasized that the people as human resources contribute to and affect the competitive success of the organization. Human Resource (HR) management deals with the design of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals. In an organization, the management of human resources means that they must be recruited, compensated, trained, and developed. A review of these issues suggests that any discussion of HRM has to come to terms with at least three fundamental problems: ● that HRM is derived from a range of antecedents, the ultimate mix of which is wholly dependent upon the stance of the analyst, and which may be drawn from an eclectic range of sources; ● that HRM is itself a contributory factor in the analysis of the employment relationship, and sets part of the context in which that debate takes place; ● that it is difficult to distinguish where the significance of HRM lies – whether it is in its supposed transformation of styles of employee management in a specific sense, or whether in a broader sense it is in its capacity to sponsor a wholly redefined relationship between management and employees that overcomes the traditional issues of control and consent at work. This ambivalence over the definition, components and scope of HRM can be seen when examining some of the main UK and US analyses. An early model of HRM, developed by Fombrun et al. (1984), introduced the concept of strategic human resource management by which HRM policies are inextricably linked to the ‘formulation and implementation of strategic corporate and/or business objectives’ (Devanna et al., 1984: 34). The model is illustrated in Exhibit 1.11. The matching model emphasizes the necessity of ‘tight fit’ between HR strategy and business strategy. This in turn has led to a plethora of interpretations by practitioners of how these two strategies are linked. Some offer synergies between human resource planning (manpower planning) and business strategies, with the driving force rooted in the ‘product market logic ’. Whatever the process, the result is very much an emphasis on the unitarist view of HRM: unitarism assumes that conflict or at least differing views can1

Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-Hil. 2011.

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not exist within the organisation because the actors – management and employees – are working to the same goal of the organisation’s success. What makes the model particularly attractive for many personnel practitioners is the fact that HRM assumes a more important position in the formulation of organizational policies.

Exhibit 1.1. – Forces influence HRM HR Management Activities The central focus for HR management must be on contributing to organizational success. The key to enhancing organizational performance is ensuring that human resources activities support organizational efforts focusing on productivity, service, and quality. Productivity: As measured by the amount of output per employee, continuous improvement of productivity has become even more important as global competition has increased. The productivity of the human resources in an organization is affected significantly by management efforts, programs, and systems. Quality: The quality of products and services delivered significantly affects organizational success over the long term. If an organization gains a reputation for providing poor-quality products and services, it reduces its organizational growth and performance. An emphasis on quality requires continuous changes aimed at improving work processes. That need opens the door for reengineering the organizational work done by people. Customer value received and satisfaction become the bases for judging success, along with more traditional HR measures of performance and efficiency.

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Service: Because people frequently produce the products or services offered by an organization, HR management considerations must be included when identifying service blockages and redesigning operational processes. Involving all employees, not just managers, in problem solving often requires changes in corporate culture, leadership styles, and HR policies and practices. To accomplish these goals, HR management is composed of several groups of interlinked activities. However, the performance of the HR activities must be done in the context of the organization. Additionally, all managers with HR responsibilities must consider external environmental forces – such as legal, political, economic, social, cultural, and technological ones – when addressing these activities. These external considerations are especially important when HR activities must be managed internationally. The HR activities for which a brief overview follows are (Exhibit 1.22):  HR Planning and Analysis  Equal Employment Opportunity  Staffing  HR Development  Compensation and Benefits  Health, Safety, and Security  Employee and Labor/Management Relations HR Planning and Analysis HR planning and analysis activities have several facets. Through HR planning, managers attempt to anticipate forces that will influence the future supply of and demand for employees. Having adequate human resource information systems to provide accurate and timely information for HR planning is crucial. The importance of human resources in organizational competitiveness must be addressed as well. As part of maintaining organizational competitiveness, HR analysis and assessment of HR effectiveness must occur. The internationalization of organizations has resulted in greater emphasis on global HR management. These topics are examined in Chapter 2. Staffing The aim of staffing is to provide an adequate supply of qualified individuals to fill the jobs in an organization. By studying what workers do, job analysis is the foundation for the staffing function. From this, job descriptions and job specifications can be prepared to recruit applicants for job openings. The selection process is concerned with choosing the most qualified individuals to fill jobs in the organization. Staffing activities are discussed in Chapters 3, 4. 2

Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651.

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HR Development Beginning with the orientation of new employees, HR training and development also includes job-skill training. As jobs evolve and change, ongoing retraining is necessary to accommodate technological changes. Encouraging development of all employees, including supervisors and managers, is necessary to prepare organizations for future challenges. Career planning identifies paths and activities for individual employees as they develop within the organization. Assessing how employees perform their jobs is the focus of performance management. Activities associated with HR development are examined in Chapter 5. Compensation Compensation rewards people for performing organizational work through pay, incentives, and benefits. Employers must develop and refine their basic wage and salary systems. Also, incentive programs such as gain sharing and productivity rewards are growing in usage. The rapid increase in the costs of benefits, especially health-care benefits, will continue to be a major issue. Compensation and benefits activities are discussed in Chapter 6.

Exhibit 1.2. – HR Management activities Compensation and Benefits Compensation rewards people for performing organizational work through pay, incentives, and benefits. Employers must develop and refine their basic wage and salary systems. Also, incentive programs such as gain 10

sharing and productivity rewards are growing in usage. The rapid increase in the costs of benefits, especially health-care benefits, will continue to be a major issue. Health, Safety, and Security The physical and mental health and safety of employees are vital concerns. The traditional concern for safety has focused on eliminating accidents and injuries at work. Additional concerns are health issues arising from hazardous work with certain chemicals and newer technologies. Workplace security has grown in importance, in response to the increasing number of acts of workplace violence. HR management must ensure that managers and employees can work in a safe environment. Employee and Labor/Management Relations The relationship between managers and their employees must be handled effectively if both the employees and the organization are to prosper together. Whether or not some of the employees are represented by a union, employee rights must be addressed. It is important to develop, communicate, and update HR policies and rules so that managers and employees alike know what is expected. In some organizations, union/management relations must be addressed as well. Chapter 1. Practice3 Questions for discussion 1. How can human resource management contribute to a company’s success? 2. Does a career in human resource management appeal to you? Why or why not? 3. What skills are important for success in human resource management? Which of these skills are already strengths of yours? Which would you like to develop? 4. Traditionally, human resource management practices were developed and administered by the company’s human resource department. Line managers are now playing a major role in developing and implementing HRM practices. Why do you think non-HR managers are becoming more involved? 5. If you were to start a business, which aspects of human resource management would you want to entrust to specialists? Why? 6. Why do all managers and supervisors need knowledge and skills related to human resource management?

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Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p

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7. Federal law requires that employers not discriminate on the basis of a person’s race, sex, national origin, or age. Is this a competitive requirement? Explain. Situations for discussion Read situations and answer the questions. a) Imagine that a small manufacturing company decides to invest in a materials resource planning (MRP) system. This is a computerized information system that improves efficiency by automating such work as planning needs for resources, ordering materials, and scheduling work on the shop floor. The company hopes that with the new MRP system, it can grow by quickly and efficiently processing small orders for a variety of products. Questions  Which of the human resource functions are likely to be affected by this change?  How can human resource management help the organization carry out this change successfully? b) When a restaurant employee slipped on spilled soup and fell, requiring the evening off to recover, the owner realized that workplace safety was an issue to which she had not devoted much time. A friend warned the owner that if she started creating a lot of safety rules and procedures, she would lose her focus on customers and might jeopardize the future of the restaurant. The safety problem is beginning to feel like an ethical dilemma. Questions  Can you suggest some ways the restaurant owner might address this dilemma?  What aspects of human resource management are involved? Case study – Rebuilding Competitive Advantage As the U.S. economy moves from recession to recovery, businesses are obsessively focused on risk management, cost containment, supply-chain sustainability, resource efficiency, and maintaining their competitive edge. Yet a company’s success – or lack thereof – in any or all of these areas will be moot unless it recognizes and deals with its vulnerabilities related to retention and succession. Business results will be predicated by an organization’s approach to executive talent management. Bill Conaty, who spent four decades in human resources leadership roles at General Electric (GE), effectively synthesized

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this agenda. He stated that gaining a decided advantage over the competition starts with attracting the right talent to the organization. He added that companies must also invest in executive talent development, assessment, and retention because they’re just as critical to business performance. The market leaders in any industry recognize that attracting and developing the best executive talent is a continual, institutional priority, no matter what the economic environment, Conaty said. He pointed out that development needs – even for people at the most senior level – are not fatal flaws for a corporation or an individual unless they go unaddressed. Claudio Fernandez-Araoz of Egon Zehnder International says that despite today’s high unemployment numbers, companies still need to focus on attracting superior executives because demographics already indicate that the number of managers in the right age bracket for leadership roles will drop by 30 percent in just six years. “Companies need to beef up their ability to attract great leaders,” Fernandez-Araoz contends. “While over the long run companies should focus on becoming more attractive by developing the type of culture, environment and team that outstanding executives want to join, they also need to immediately focus on winning the coming fight for executive talent one leader at a time.” And that’s not just about money. Companies can attract superior talent by demonstrating active support for the candidate’s interests, describing the role realistically, and involving the hiring manager (not just HR) in closing the deal, he adds. Further, by enlisting the involvement of C-level executives while recruiting for top positions and ensuring that compensation for a new recruit is fair to current employees, companies can more effectively integrate new leaders. When it comes to assessing executive talent, Sumner Redstone, majority owner and chairman of the board of his family controlled National Amusements, Inc., and majority owner of CBS Corp. and Viacom, told me recently during an exclusive interview that it all comes down to his “Three C’s.” “I insist that anyone I’ll hire, particularly an executive, bring what I call the ‘Three C’s.’ That’s competence, commitment, and the most important one, character,” Redstone said. “Without character, I’m not interested in their competence or commitment.” The final piece of building, rebuilding, or maintaining a company’s prized management advantage over the competition is retaining the best executives. Former Medtronic CEO Bill George offers his own advice. To keep your top business leaders onboard, George says you have to challenge them. “Put them in tough jobs. Make them responsible for something. Promote young people; flatten the organization; and give people opportunities to lead right now and they’ll stay with you and be true to you.” 13

Exceptional companies, he believes, must reward business leaders for their performance and not simply reward their decision to stay with the company4. Questions 1. Which functions of human resources management are described in this case? Which are missing? In what ways, if any, are the missing functions relevant to building competitive advantage, too? 2. The writer and people interviewed talk about competitive advantage coming from the qualities of a company’s top executives. To what extent do these principles apply to middle managers, supervisors, and non management employees?

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Excerpted from Joseph Daniel McCool, “How Companies Rebuild Competitive Advantage,” BusinessWeek, February 24, 2010, http://www. businessweek.com .

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CHAPTER 2. PLANNING IN HUMAN RESOURCE MANAGEMENT There is confusion over the differentiation between human resource management and strategic human resource management. A wealth of literature has appeared to prescribe, describe and critically evaluate the way organizations manage their human resources. It has evolved from being highly critical of the personnel function’s contribution to the organisation as being weak, non-strategic and lacking a theoretical base, to a wave of strategic human resource management literature focusing on the link or vertical integration between human resource practices and an organization’s business strategy, in order to enhance performance and on the relationship between bestpractice or high-commitment HR practices and organizational performance. Development in Strategic Human Resource Management (SHRM) thinking, charted in this chapter through the development of the best-fit approach have a profound impact on our understanding of the contribution SHRM can make to organisational performance. 2.1 Strategy and Human Resource Management Strategic planning can be defined as the process of identifying organizational objectives and the actions needed to achieve those objectives. It involves analyzing such areas as finance, marketing, and human resources to determine the capacities of the organization to meet its objectives. The process of strategic planning can be thought of as circular in nature. The process includes the steps: 1. identifying and recognizing the philosophy and mission of the organization; 2. scanning the environment; 3. capabilities forecasting; 4. plan development. The first step addresses the most fundamental questions about the organization:  Why does the organization exist?  What unique contribution does it make?  What are the underlying values and motivations of owners and key managers? In recent years it has become increasing popular for organizations to produce a mission statement that sets out the purpose and general direction for the organization. Mission is a general expression of the overall purpose of the organisation, which, ideally is in line with the values and expectations of 15

major stakeholders. Mission statements vary in length, the extent of specific or general content, and according to the type of the organisation. Once the philosophy and mission of the organization are identified, the second step is to scan the environment. This scanning is especially important when rapid changes are occurring, such as in the last several years. HR managers also need the results of environmental scanning. HR managers must be able to predict what capabilities employees will have to implement the business strategy. After external forces are examined, an internal assessment is made of what the organization can do before a decision is reached on what it should do. Internal strengths and weaknesses must be identified in light of the philosophy and culture of the organization. Factors such as current workforce skills, retirement patterns, and demographic profiles of current employees are items that relate to human resource capabilities. The third step forecasting organizational capabilities and future opportunities in the environment to match organizational objectives and strategies. The development of strategies and objectives often is based on a SWOT analysis, which examines the strengths and weaknesses of the organizations internally and the opportunities and threats externally. The purpose of the SWOT analysis is to develop strategies that align organizational strengths with opportunities externally, to identify internal weaknesses to be addressed, and to acknowledge threats that could affect organizational success. Finally, the forth step, specific plans are developed to identify how strategies will be implemented. Details of the plans become the basis for implementation and later adjustments. Like all plans, they must be monitored, adjusted, and updated continually. The strategic planning process is circular, since the environment is always changing and a specific step in the process must be repeated continually. 2.2 Human Resource Strategies5 2.1.1. VRIO Strategy The resource-based view of SHRM explores the ways in which an organisation’s human resources can provide sustainable competitive advantage. This is best explained by the VRIO framework: ● value ● rarity ● inimitability 5

Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p

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● organisation 1. Value. Human resources that can create value are those that can respond to external threats and opportunities. Having this ability means that employees can make decisions and be innovative when faced with environmental changes. In order to achieve this, Human Resources may ask themselves the following questions:  On what basis is the firm seeking to distinguish itself from its competitors? Production efficiency? Innovation? Customer service?  Where in the value chain is the greatest leverage for achieving differentiation?  Which employees provide the greatest potential to differentiate a firm from itscompetitors? The value of an organisation’s resources is not sufficient alone, however, for sustainable competitive advantage, because if other organisations possess the same value, then it will only provide competitive parity. Therefore an organisation needs to consider the next stage of the framework: rarity. 2. Rarity: The special capabilities of people in the organization provide it significant advantages. Especially important is that the human resources in an organization be provided training and development to enhance their capabilities, so that they are continually seen as “the best” by customers and industry colleagues. This rareness also helps in attracting and retaining employees with scarce and unique knowledge, skills, and abilities. Reducing employee turnover is certainly important in preserving the rareness of human resources. 3. Inimitability: Human resources have a special strategic value when they cannot be easily imitated by others. Many companies have created images with customers and competitors that they are different and better at customer service. Any competitors trying to copy the HR management “culture” created in these organizations would have to significantly change many organizational and HR aspects. Thus this third element of the VRIO framework requires Human Resources to develop and nurture characteristics that cannot be easily imitated by the organisation’s competitors. Alchian and Demsetz (1972) also identified the contribution of social complexity in providing competitive advantage, in their work on the potential synergy that results from effective teamwork. They found that this ensured a rare and difficult-to-copy commodity for two reasons: firstly, it provided 17

competitive advantage through its causal ambiguity, as the specific source of the competitive advantage was difficult to identify; secondly, through its social complexity, as synergy resulted as team members were involved in socially complex relationships that are not transferable across organisations. So characteristics such as trust and good relationships become firm-specific assets that provide value, are rare and are difficult for competitors to copy. 4. Organization: Finally, to ensure that the HR function can provide sustainable competitive advantage, the VRIO framework suggests that organisations need to ensure that they are organised so that they can capitalise on the above, adding value, rarity and inimitability. The human resources must be organized in order for an entity to take advantage of the competitive advantages just noted. This means that the human resources must be able to work effectively together, and have HR policies and programs managed in ways that support the people working in the organization. So, to conclude on the VRIO framework, if there are aspects of human resources that do not provide value, they can only be a source of competitive disadvantage and should be discarded; aspects of the organisation’s human resources that provide value and are rare provide competitive parity only; aspects that provide value, are rare but are easily copied provide temporary competitive advantage, but in time are likely to be imitated and then only provide parity. So to achieve competitive advantage that is sustainable over time, the HR function needs to ensure the organisation’s human resources provide value, are rare, are difficult to copy and that there are appropriate HR systems and practices in place to capitalise on this. 2.1.2. Organization/Industry Life-Cycle Stages and HR Strategy6 As noted, organizations go through evolutionary life cycles, and the stage in which an organization finds itself in an industry affects the human resource strategies it should use. EMBRYONIC At the embryonic stage a high-risk, entrepreneurial spirit pervades the organization. Because the founders often operate with limited financial resources, base pay often is modest. When skills are needed, the organization recruits and hires individuals who already have the necessary capabilities. Training and development are done on an as-needed basis. GROWTH During the growth stage, the organization needs investments to expand facilities, marketing, and human resources to take advantage 6

Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651.

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of the demand for its products and services. Often, backlog and scheduling problems indicate that the organization has grown faster than its ability to handle the demand. Extensive efforts are made to recruit employees to handle the expanded workload. It is also important to have HR plans, and planning processes, rather than just reacting to immediate pressures. Compensation practices have to become more market-competitive in order to attract sufficient employees with the necessary capabilities. Communicating with those employees about career opportunities affects their retention, so career planning efforts and HR development efforts to support them are expanded. SHAKEOUTS In the shakeout stage the industry reacts to rapid growth, and not all firms will continue to exist. Some will be bought out by other larger competitors; others will fade from the industry. The explosive growth in Internet businesses and the consolidations of Internet providers illustrate how shakeouts occur. Regarding HR management in a shakeout industry, competition to retain human resources is important, especially while restructuring and reducing the number of jobs to control costs. Compensation costs must be monitored, but a balance is required in order to retain key employees using short- and longer-term incentives. HR development is focused on high-potential, scarce-skilled employees who are seen as ones who will ensure that the organization is a major player following the shakeout. MATURITY In the maturity stage, the organization and its culture are stabilized. Size and success enable the organization to develop even more formalized plans, policies, and procedures. Often, organizational politics flourish and HR activities expand. Compensation programs become a major focus for HR efforts, and they are expanded to reward executives as well. Extensive HR development occurs, coordinated by an internal training staff. DECLINE The organization in the decline stage faces resistance to change. Numerous examples can be cited in the manufacturing sectors of the U.S. economy. Manufacturing firms have had to reduce their workforces, close plants, and use their accumulated profits from the past to diversify into other industries. During the decline stage, employers try certain HR practices such as productivity enhancement and cost-reduction programs. Unionized workers resist the decline by demanding no pay cuts and greater job-security provisions in their contracts. Nevertheless, employers are compelled to reduce their workforces through attrition, early retirement incentives, and major facility closings.

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2.3. Human Resource Planning Business strategy affects strategies and activities in the HR area. Strategic planning must include human resources planning (HRP) to carry out the rest of the plan (Exhibit 2.17).

Exhibit 2.1. – Factors that determine HR plans In order to convey the meaning of HRP as a set of activities that represent a key element of HRM but are distinct from it, and to include both the soft and hard aspects of the planning process, the definition used in this chapter is as follows: HRP is the process for identifying an organisation’s current and future human resource requirements, developing and implementing plans to meet these requirements and monitoring their overall effectiveness. There are a number of ways in which this process can be undertaken. The chapter begins with an exploration of the key stages in the traditional approach to HRP (incorporating many of the ‘hard’ elements) and then considers more contemporary variants. The prime concern within traditional or ‘hard’ HRP relates to balancing the demand for and the supply of human resources. Demand reflects an organisation’s requirements for human resources while supply refers to the availability of these resources, both within the organisation and externally. Key stages within the traditional HRP process are largely derived from the techniques associated with manpower planning (Exhibit.2.38). 7 8

Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651. Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p.

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Analysis and investigation Internal labor market analysis A combination of quantitative and qualitative data can provide a ‘snapshot’ of the existing workforce. This can include analysis of the workforce on a variety of levels such as skills, qualifications, length of experience and job type as well as on factors relating to equal opportunities, i.e. gender, ethnic origin, disability and age. This can help to ensure that the organisation is making most effective use of existing resources and can identify any potential problem areas; for example, if the composition of the workforce does not reflect the local community or if the organisation is not fully utilising the skills it has available. Movement through the organisation can also be investigated by tracking promotions, transfers and the paths of those in more senior positions. Auditing Jobs and Skills The starting point for evaluating internal strengths and weaknesses is an audit of the jobs currently being done in the organization. This internal assessment helps to position an organization to develop or maintain a competitive advantage. A comprehensive analysis of all current jobs provides a basis for forecasting what jobs will need to be done in the future. Much of the data to answer these questions should be available from existing staffing and organizational databases. The following questions are addressed during the internal assessment:  What jobs now exist?  How many individuals are performing each job?  What are the reporting relationships of jobs?  How essential is each job?  What jobs will be needed to implement the organizational strategy?  What are the characteristics of anticipated jobs? External labor market analysis At the heart of strategic planning is the knowledge gained from scanning the external environment for changes. Environmental scanning is the process of studying the environment of the organization to pinpoint opportunities and threats. Scanning especially affects HR planning because each organization must draw from the same external labor market that supplies all other employers. Indeed, one measure of organizational effectiveness is the ability of an organization to compete for a sufficient supply of human resources with the appropriate capabilities. 21

Investigation and analysis are primarily concerned with the availability of the type of labour the organisation requires at the price it can afford. It is likely that those responsible for human resource planning will need to collect data from local, national and international labour markets depending on the nature of jobs and the skills required. Data can be collected by formal and informal means, including local and national surveys, benchmarking and information provided by applicants on application forms and CVs. Analysis and investigation can potentially cover a broad range of issues as the external supply of labour can be affected by a number of factors.

Exhibit 2.2. – Traditional human resource planning process 22

Corporate capability analysis Data can be gathered to provide a snapshot of the current situation within the organisation in order to identify current strengths and weaknesses. Information on organisational performance can include productivity and service levels, turnover and profitability and these may be measured at organisational, unit or department level. Analysis may also relate to ways in which human resources are currently managed, e.g. the extent to which the current workforce structure, job design and reward systems enhance or restrict productivity and performance levels. Corporate strategy analysis Whereas corporate capability is primarily concerned with the current situation in the organisation, corporate strategy focuses on future direction. Factors to be considered here might include the organisation’s stage in its life cycle; plans for consolidation or diversification; mergers, acquisitions and key organisational objectives. Each of these factors is likely to have some impact on the numbers and types of human resources required in the future. Forecasting The information gathered from external environmental scanning and assessment of internal strengths and weaknesses is used to predict or forecast HR supply and demand in light of organizational objectives and strategies. Forecasting uses information from the past and present to identify expected future conditions. Projections for the future are, of course, subject to error. Changes in the conditions on which the projections are based might even completely invalidate them, which is the chance forecasters take. Usually, though, experienced people are able to forecast with enough accuracy to benefit organizational long-range planning. Approaches to forecasting human resources range from a manager’s best guess to a rigorous and complex computer simulation. Simple assumptions may be sufficient in certain instances, but complex models may be necessary for others. It is beyond the scope of this text to discuss in detail the numerous methods of forecasting available, but a few of the more prominent ones will be highlighted. Forecasting Periods HR forecasting should be done over three planning periods: short range, intermediate, and long range. The most commonly used planning period is short range, usually a period of six months to one year. This level of planning is routine in many organizations because very few assumptions about the future are necessary for such short-range plans. These short-range 23

forecasts offer the best estimates of the immediate HR needs of an organization. Intermediate and long-range forecasting are much more difficult processes. Intermediate plans usually project one to five years into the future, and long-range plans extend beyond five years. Methods for Forecasting HR Demand  Judgmental Methods Estimates can be either top-down or bottom-up, but essentially people who are in a position to know are asked, “How many people will you need next year?” Rules of thumb rely on general guidelines applied to a specific situation within the organization. For example, a guideline of “one operations manager per five reporting supervisors” aids in forecasting the number of supervisors needed in a division. However, it is important to adapt the guidelines to recognize widely varying departmental needs. The Delphi technique uses input from a group of experts. The experts’ opinions are sought using separate questionnaires on what forecasted situations will be. These expert opinions are then combined and returned to the experts for a second anonymous opinion. The process continues through several rounds until the experts essentially agree on a judgment. For example, this approach was used to forecast effects of technology on HR management and staffing needs. The nominal group technique, unlike the Delphi technique, requires experts to meet face to face. Their ideals are usually generated independently at first, discussed as a group, and then compiled as a report.  Mathematical Methods Statistical regression analysis makes a statistical comparison of past relationships among various factors. For example, a statistical relationship between gross sales and number of employees in a retail chain may be useful in forecasting the number of employees that will be needed if the retailer’s sales increase 30%. Simulation models are representations of real situations in abstract form. For example, an econometric model forecasting the growth in software usage would lead to forecasting the need for software developers. Numerous simulation techniques are available, but surveys reveal that the more complex simulation techniques are used by relatively few firms. Productivity ratios calculate the average number of units produced per employee. These averages can be applied to sales forecasts to determine the number of employees needed. For example, a firm could forecast the number of needed sales representatives using these ratios. 24

Staffing ratios can be used to estimate indirect labor. For example, if the company usually uses one clerical person for every 25 production employees, that ratio can be used to help estimate the need for clerical people. HR planning The likely results of forecasting activity are the identification of a potential mismatch between future demand and supply. If future demand is likely to exceed supply, then plans need to be developed to match the shortfall but if future supply is likely to exceed demand, then plans need to be developed to reduce the surplus. While the detailed content of action plans will be determined by the nature of the imbalance between demand and supply and HR and corporate objectives, they are likely to cover at least some of the following areas: ● working patterns – e.g. balance of full-time and part-time workers, overtime, shortterm contracts, annualised hours, job sharing, remote working; ● organisation structure and development – e.g. workforce size and structure, degree of centralisation, use of subcontracting; ● recruitment and selection – e.g. skills and experience required, main sources of applicants, methods to attract suitable candidates, recruitment freezes; ● workforce diversity – e.g. monitoring of current and prospective employees, equal opportunities/diversity policies, awareness training; ● pay and reward – e.g. mix of financial and non-financial rewards, use of contingent pay, market position; ● performance management – e.g. type of performance appraisal, links to reward, attendance management; ● retention – e.g. family friendly policies, terms and conditions, employee development; ● training and development – induction, training programs, development reviews, education; ● employment relations – e.g. union recognition, communication, grievance and disciplinary policies; ● release – e.g. natural wastage, redundancy programs, outplacement support. Advocates of human resource planning state that the process helps to ensure vertical and horizontal integration, i.e. the alignment of human resource policies and practices with corporate goals and with each other. So, for example, plans to address supply shortages by altering selection criteria can influence the type of training required, the level of pay and reward offered to existing and prospective employees and the way the employment relationship is managed. However, in practice the situation is likely to be com25

plicated by the fact that the balance between demand and supply may vary in different parts of the organisation; for example, supply shortages may be identified in some areas while surpluses are predicted in others. The development of action plans can potentially help to ensure that managers are aware of significant inconsistencies. Implementation and control The final stage of the traditional HRP process is concerned with implementation of HR plans and evaluation of their overall effectiveness. This stage of the model tends to be rather neglected in the literature but there is little point in developing comprehensive plans if they are not put into practice. Implementation of plans is likely to involve a number of different players, including line managers, employee representatives and employees, but the extent of involvement can vary considerably. The shift towards ‘softer’, more qualitative aspects of human resource planning places far more emphasis on the need to involve employees throughout the process (e.g. through the use of enhanced communication and tools such as attitude surveys) than is apparent in a ‘harder’ focus on headcount. Control relates to the extent to which the planning process has contributed to the effective and efficient utilisation of human resources and ultimately to the achievement of corporate objectives. The IPM (now CIPD) suggests three criteria for evaluating the effectiveness of the HRP process: ● the extent to which the outputs of HR planning programs continue to meet changing circumstances; ● the extent to which HRP programs achieve their cost and productivity objectives; ● the extent to which strategies and programs are replanned to meet changing circumstances. Chapter 2. Training9 Questions for discussion: 1. How does each of the following labor force trends affect HRM? a. Aging of the labor force. b. Diversity of the labor force. c. Skill deficiencies of the labor force.

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2. At many organizations, goals include improving people’s performance by relying on knowledge workers, empowering employees, and assigning work to teams. How can HRM support these efforts? 3. Merging, downsizing, and reengineering all can radically change the structure of an organization. Choose one of these changes, and describe HRM’s role in making the change succeed. If possible, apply your discussion to an actual merger, downsizing, or reengineering effort that has recently occurred. 4. When an organization decides to operate facilities in other countries, how can HRM practices support this change? 5. Why do organizations outsource HRM functions? How does outsourcing affect the role of human resource professionals? Would you be more attracted to the role of HR professional in an organization that outsources many HR activities or in the outside firm that has the contract to provide the HR services? Why? 6. What e-HRM resources might you use to meet the challenges in Question 4? 7. What HRM functions could an organization provide through self-service? What are some advantages and disadvantages of using self-service for these functions? 8. How is the employment relationship typical of modern organizations different from the relationship of a generation ago? Situation for discussion Suppose you have been hired to manage human resources for a small company that offers business services including customer service calls and business report preparation. The 20-person company has been preparing to expand from serving a few local clients that are well known to the company’s owners. The owners believe that their experience and reputation for quality will help them expand to serve more and larger clients. Question  What challenges will you need to prepare the company to meet?  How will you begin? Case study The mission statement of the Hershey Company brings to mind its signature chocolate bars and kisses: “Bringing sweet moments of Hershey happiness to the world every day.” Living out that mission, however, comes down to more than candy. The company defines its mission in terms of its relationships with all stakeholders – consumers, employees, business partners 27

(such as suppliers and distributors), shareholders, and the communities in which it operates. With regard to employees, the mission involves “winning with an aligned and empowered organization . . . while having fun.” “Aligned” employees should share values, be clear about how their work contributes to the organization’s mission, collaborate effectively, and be selected, equipped, and rewarded for meeting company objectives. These requirements, of course, call upon the skills of human resource management. With regard to values, Hershey has identified four and communicates them on its Web site: We are Open to Possibilities by embracing diversity, seeking new approaches and striving for continuous improvement. We are Growing Together by sharing knowledge and unwrapping human potential in an environment of mutual respect. We are Making a Difference by leading with integrity and determination to have a positive impact on everything we do. We are One Hershey, winning together while accepting individual responsibility for our results. All of these values play into the way Hershey addresses human resource management. Take, for example, the age distribution of the workforce. When Hershey provided training in characteristics of the different generations of workers, manager Mary Parsons became interested in how this might apply to building a workforce that better embraces this type of diversity and meets the value of “unwrapping human potential.” One application of this idea was the creation of a mentoring program for the research and development group. When R&D hires a new “millennial” worker (the generation now in their twenties), it pairs this worker with a more experienced employee from the baby boom. The baby boomers tend to be interested in leaving a legacy, making the world better, so they generally are enthusiastic about mentoring their younger colleagues. Hershey has also redesigned its performance management system. Appealing to the younger generations’ eagerness for challenge, autonomy, and results, the redesign was a bottom-up effort, in which people throughout the company set goals and track progress on projects. The system measures not only business results but whether they are achieved in accordance the Hershey’s four core values. One area in which two generations – baby boomers and millennials – are already aligned is in a desire to have a positive impact on the world. Hershey reflects that with a commitment to social responsibility carried out through involvement in the communities where it is located. In particular, the company supports the Milton Hershey School, which provides care and education to disadvantaged children. Also, through a program called “Dollars for

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Doers,” Hershey contributes cash to charitiesat which its employees volunteer for at least 100 hours per year10. Questions 1. Pick any two of the trends described in this chapter, and discuss how Hershey’s values result in positioning the company to use those trends to its advantage. 2. Besides the mentorship program, how else might Hershey encourage its younger and older researchers to work together toward company goals? What might be the role of human resource staff in supporting or implementing your ideas? 3. How well does this description of working at Hershey fit with the new “psychological contract” described in this chapter? Explain.

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Mary Parsons, “Generations at Work,” Research-Technology Management, November–December 2009, pp. 41–44; and Hershey Company, “About the Hershey Company,” corporate Web site, http://thehersheycompany.com, accessed February 25, 2010.

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CHAPTER 3. ANALYZING AND IDENTIFYING JOBS 3.1 Job analysis The most basic building block of HR management, job analysis, is a systematic way to gather and analyze information about the content and human requirement of jobs, and the context in which jobs are performed. Job analysis usually involves collecting information on the characteristics of a job that differentiate it from other jobs. Information that can be helpful in making the distinction includes the following:  Work activities and behaviors  Machines and equipment used  Interactions with others  Working conditions  Performance standards  Supervision given and received  Financial and budgeting impact  Knowledge, skills, and abilities needed Although the terms job and position are often used interchangeably, there is a slight difference in emphasis. A job is a grouping of common tasks, duties, and responsibilities. A position is a job performed by one person. Thus, if there are two persons operating word processing equipment, there are two positions (one for each person) but just one job (word processing operator)11. A key aim for job design is to provide individuals meaningful work that fits effectively into the flow of the organization. It is concerned with changing, simplifying, enlarging, enriching, or otherwise making jobs such that the efforts of each worker fit together better with other jobs. Job analysis has a much narrower focus in that it is a formal system for gathering data about what people are doing in their jobs. The information generated by job analysis may be useful in redesigning jobs, but its primary purpose is to get a clear understanding of what is done on a job and what capabilities are needed to do a job as it has been designed. Documents that capture the elements identified during a job analysis are job descriptions and job specifications.  Task-Based Job Analysis

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Analyzing jobs based upon what is done on the job focuses on the tasks, duties, and responsibilities performed in a job. A task is a distinct, identifiable work activity composed of motions, whereas a duty is a larger work segment composed of several tasks that are performed by an individual. Because both tasks and duties describe activities, it is not always easy or necessary to distinguish between the two. For example, if one of the employment supervisor’s duties is to interview applicants, one task associated with that duty would be asking questions. Job responsibilities are obligations to perform certain tasks and duties. For jobs that remain task-based, many standard phases of the job analysis process can continue. As indicated in the phases of traditional job analyses that are outlined later in the chapter, extensive effort is made to clarify what specifically is done on a job. Development of job descriptions identifies what is done and lists job functions.  Competency Approach to Job Analysis Competencies are basic characteristics that can be linked to enhanced performance by individuals or teams of individuals. The groupings of competencies may include knowledge, skills, and abilities. Knowledge, being more visible, is recognized by any employers in matching individuals to jobs. With skills, although some are evident such as skill in constructing financial spreadsheets, others such as negotiating skills, may be less identifiable. But it is the “hidden” competencies of abilities, which may be more valuable, that can enhance performance. For example, the abilities to conceptualize strategic relationships and to resolve interpersonal conflicts are more difficult to identify and assess. Many earlier efforts to use competencies have been job-based, meaning that competencies are identified in the context of specific jobs. In this way the competency approach is a logical extension of traditional job analysis activities. However, some organizations are taking the competency approach to another level by focusing on role-based competencies. This shift has been accentuated by the growing use of work teams, whereby individuals move among tasks and jobs. Some of the roles might be leader, supporter, tactician, technical expert, administrator, or others. Through competency analysis, the competencies needed for individuals playing different roles in work teams can be identified. Then selection criteria, development activities, and other HR efforts must be revised to focus on the different sets of competencies needed for the various roles. Job Analysis Methods Job analysis information can be gathered in a variety of ways. One consideration is who is to conduct the job analysis. Most frequently, a mem31

ber of the HR staff coordinates this effort. Depending on which of the methods discussed next is used, others who often participate are managers, supervisors, and employees doing the jobs. For more complex analyses, industrial engineers may conduct time and motion studies. Another consideration is the method to be used. Common methods are observations, interviews, questionnaires, and specialized methods of analysis. Combinations of these approaches frequently are used, depending on the situation and the organization. Each of these methods is discussed in some detail next.  Observation When the observation method is used, a manager, job analyst, or industrial engineer observes the individual performing the job and takes notes to describe the tasks and duties performed. Observation may be continuous or based on intermittent sampling. Use of the observation method is limited because many jobs do not have complete and easily observed job duties or complete job cycles. Thus, observation may be more useful for repetitive jobs and in conjunction with other methods. Managers or job analysts using other methods may watch parts of a job being performed to gain a general familiarity with the job and the conditions under which it is performed. Multiple observations on several occasions also will help them use some of the other job analysis methods more effectively. Work sampling. As a type of observation, work sampling does not require attention to each detailed action throughout an entire work cycle. Instead, a manager can determine the content and pace of a typical workday through statistical sampling of certain actions rather than through continuous observation and timing of all actions. Work sampling is particularly useful for routine and repetitive jobs. Employee dairy. Another method requires that employees “observe” their own performances by keeping a diary/log of their job duties, noting how frequently they are performed and the time required for each duty. Although this approach sometimes generates useful information, it may be burdensome for employees to compile an accurate log. Also, employees sometimes perceive this approach as creating needless documentation that detracts from the performance of their work.  Interviewing The interview method of gathering information requires that a manager or HR specialist visit each job site and talk with the employees performing each job. A standardized interview form is used most often to record the information. Frequently, both the employee and the employee’s supervisor 32

must be interviewed to obtain a complete understanding of the job. In some situations, such as team directed jobs, group interviews also can be used, typically involving experienced job incumbents and/or supervisors. It usually requires the presence of a representative from the HR department as a mediator. For certain difficult-to-define jobs, group interviews are probably most appropriate. The interview method can be quite time consuming, especially if the interviewer talks with two or three employees doing each job. Professional and managerial jobs often are more complicated to analyze and usually require longer interviews. For these reasons, combining the interview with one of the other methods is suggested.  Questionnaires The questionnaire is a widely used method of gathering data on jobs. A survey instrument is developed and given to employees and managers to complete. The major advantage of the questionnaire method is that information on a large number of jobs can be collected inexpensively in a relatively short period of time. However, the questionnaire method assumes that employees can accurately analyze and communicate information about their jobs. Employees may vary in their perceptions of the jobs, and even in their literacy. For these reasons, the questionnaire method is usually combined with interviews and observations to clarify and verify the questionnaire information. One type of questionnaire sometimes used is a checklist. Differing from the open-ended questionnaire, the checklist offers a simplified way for employees to give information. An obvious difficulty with the checklist is constructing it, which can be a complicated and detailed process. 3.2 Job Descriptions and Job Specifications In most cases, the job description and job specifications are combined into one document that contains several different sections. An overview of each section follows next. A job description indicates the tasks, duties, and responsibilities of a job. It identifies what is done, why it is done, where it is done, and briefly, how it is done. Performance standards should flow directly from a job description, telling what the job accomplishes and how performance is measured in key areas of the job description. The reason for including the performance standards is clear. If employees know what is expected and how performance is to be measured, they have a much better chance of performing satisfactorily. 33

Unfortunately, performance standards often are omitted from job descriptions. Even if performance standards have been identified and matched to job descriptions, they may not be known by employees if the job descriptions are not provided to employees but used only as tools by the HR department and managers. Such an approach limits the value of job descriptions. While the job description describes activities to be done, it is job specifications that list the knowledge, skills, and abilities an individual needs to perform a job satisfactorily. Knowledge, skills, and abilities (KSAs) include education, experience, work skill requirements, personal abilities, and mental and physical requirements. Job specifications for a data entry operator might include a required educational level, a certain number of months of experience, a typing ability of 60 words per minute, a high degree of visual concentration, and ability to work under time pressure. It is important to note that accurate job specifications identify what KSAs a person needs to do the job, not necessarily what qualifications the current employee possesses. Chapter 3. Training12 Questions for Discussion 1. What are the implications for job analysis, considering that some jobs are more varied and require more advanced capabilities compared to other jobs that are more routine and require less knowledge and skills? 2. Why is competency-based job analysis more difficult to conduct than the traditional task-based approach? 3. Obtain an organization chart from an existing organization and evaluate it in light of the suggestions contained in this chapter. 4. Why is job analysis the foundation of many other HR activities? 6. Describe the methods of analyzing jobs, including some advantages and disadvantages of each method. 7. Explain how you would conduct a job analysis in a company that had never had job descriptions. 8. Discuss how you would train someone to write job descriptions and job specifications. Situation for discussion Assume you are the manager of a fast-food restaurant. What are the outputs of your work unit? What are the activities required to produce those 12

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outputs? What are the inputs? Consider the cashier’s job in the restaurant. What are the outputs, activities, and inputs for that job? Case study – Pfizer Outsources Tasks, Not Jobs David Cain loves his job. Well, most of it anyway. As an executive director for global engineering at Pfizer, Cain finds real satisfaction in assessing environmental real estate risks, managing facilities, and overseeing a multimilliondollar budget for the pharmaceutical giant. What he doesn’t love so much: creating PowerPoint slides and riffling through spreadsheets. Lucky for Cain, Pfizer now lets him punt those tedious and timeconsuming tasks to India with the click of a button. Pfizer Works, launched early last year, permits some 4,000 employees to pass off parts of their job to outsiders. You might call it personal outsourcing. With workers in India handling everything from basic market research projects to presentations, professionals such as Cain can focus on higher-value work. “It has really been a godsend,” says Cain. “I can send them something in the evening, and the next morning it’s waiting for me when I get to the office.” other resources are dwindling. As companies cull people by the thousands – Pfizer itself announced some 8,000 job cuts in January [2009] – those who stay behind are being asked to do more. In a down economy, though, it’s especially critical that executives direct their energies to motivating teams, creating new products, and thinking strategically about their next move. “The stakes go up even higher,” says David Kreutter, Pfizer’s vice president for U.S. commercial operations. Originally dubbed the Office of the Future, PfizerWorks is partly the by-product of a cost-cutting push that began several years ago. Jordan Cohen, the architect and head of the program, came up with the idea after reading Thomas L. Friedman’s book The World Is Flat and observing how his own team worked. Cohen recalls seeing one of his recruits, a new father, stay late at the office one night to crunch numbers and search for information on the Web. To Cohen, it didn’t seem like time best spent. Instead of shifting jobs overseas, as companies have done for years, Cohen wanted to find a way to shift tasks. He also felt the program should let employees do one-stop shopping. Instead of setting up a few specialized services, Pfizer employees click a single button on their computer desktop that sends them to the PfizerWorks site. They write up what they need on an online form, which is sent to one of two Indian service35

outsourcing firms: Genpact, in Gurgaon, and a unit of Chicago’s R. R. Donnelley. Once a request is received, a team member such as R. R. Donnelley’s Biju Kurian in India sets up a call with the Pfizer employee to clarify what’s needed and when. The costs involved in each project are charged to the employee’s department. Pfizer is now looking to expand the program to more employees and to a wider array of tasks. While he was introducing a group of Pfizer scientists to the service last year, Cohen says, one of them immediately pointed out its limitations. “I got it, Jordan, we can use this,” the researcher said. “But what I really need is a smart guy for a day.” He had a point. Some tasks can’t easily be broken down into instructions on an online form, Cohen admits, and sometimes employees need an assistant working in the same time zone. As a result, Pfizer is testing an arrangement with a small Columbus, Ohio-based firm called Pearl Interactive Network. Pearl employs mostly people with physical disabilities who help with such administrative tasks as organizing a marketing team’s research documents on a shared server or scheduling meetings. While the partnership is modest and isn’t meant to supplant arrangements in India or administrative jobs, Cohen hopes it will make Pfizer staff even more productive. Although PfizerWorks hasn’t quite reached its first anniversary, Cohen estimates that it has already freed up 66,500 hours for employees. Pfizer finds employees are now spending less money on other providers, such as graphic design shops or market research firms. Employees are asked to rate their satisfaction with the finished product. If the score isn’t high enough, a department can refuse to pay, which has happened only a handful of times13. Questions 1. As PfizerWorks is described here, the analysis of work flow and decisions about which tasks to outsource are handled by individual employees, rather than HR teams or outside analysts. What are some advantages and drawbacks of this approach? 2. If you worked in HR for Pfizer, how would you need to adjust job descriptions and requirements to account for employees’ ability to outsource tasks? 3. The examples in this case refer to managers and scientists. What positions, if any, at Pfizer should not have access to PfizerWorks? Why?

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Excerpted from Jena McGregor, “Outsourcing Tasks Instead of Jobs,” BusinessWeek, March 12, 2009, http://www.businessweek.com .

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CHAPTER 4. RECRUITMENT AND SELECTION 4.1. Staffing: recruitment and selection definitions Staffing is the process of matching appropriate people with appropriate jobs. From the viewpoint of organizations, staffing entails using HR planning information to determine the correct numbers and kinds of candidates, locating them, and then selecting those who are most likely to be satisfactory employees. Staffing consists of two parts: recruiting and selection. The importance of ensuring the selection of the right people to join the workforce has become increasingly apparent as the emphasis on people as the prime source of competitive advantage has grown. There are three key issues that have increased the potential importance of the selection decision to organisations. First, demographic trends and changes in the labor market have led to a more diverse workforce, which has placed increasing pressure on the notion of fairness in selection. Second, the desire for a multi-skilled, flexible workforce and an increased emphasis on team working has meant that selection decisions are concerned more with behavior and attitudes than with matching individuals to immediate job requirements. And third, the emphasis between corporate strategy and people management has led to the notion of strategic selection: that is, a system that links selection processes and outcomes to organizational goals and aims to match the flow of people to emerging business strategies. The recruitment and selection process is concerned with identifying, attracting and choosing suitable people to meet an organisation’s human resource requirements. They are integrated activities, and ‘where recruitment stops and selection begins is a moot point14’. Nevertheless, it is useful to try to differentiate between the two areas 15: describes the recruitment process as a positive one, ‘building a roster of potentially qualified applicants’, as opposed to the ‘negative’ process of selection. So a useful definition of recruitment is ‘searching for and obtaining potential job candidates in sufficient numbers and quality so that the organisation can select the most appropriate people to fill its job needs’16; whereas selection is concerned more with ‘predicting which candidates will make the most appropriate contribution to the organisation – now and in the future’17. 14

Anderson A.H. Effective Personnel Management: A Skills and Activity-Based Approach. Oxford: Blackwell Business. 1994 15 Whitehill A.M. Japanese management: tradition and transition. Publisher, Routledge, 1991 16 Dowling, P., Schuler R. S. International dimensions of human resource management. PWS-Kent Pub. Co.1990. 192p. 17 Hackett P., Personnel: The Department at Work, London: IPM, 1991

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Many employers currently are facing shortages of workers with the appropriate knowledge, skills, and abilities (KSAs) in tight labor markets. However, because business cycles go up and down, the demand for labor changes and the number of people looking for work changes. Because the labor market is the environment in which staffing takes place, learning some basics about labor markets aids understanding of recruiting. There actually is not one, but several labor markets that are the external sources from which employers attract employees. These markets occur because different conditions characterize different geographical areas, industries, occupations, and professions at any given time. For example, the demand for qualified teachers is very strong at this writing (a tight labor market). Yet with downsizing and mergers in the banking industry, there is a surplus of middle level banking managers (a loose market). There are many ways to identify labor markets, including by geographical area, type of skill, and educational level. Some labor market segments might include managerial, clerical, professional and technical, and blue collar. Classified differently, some markets are local, others regional, others national; and there are international labor markets as well. Recruiting locally for a job market that is really national likely will result in disappointing applicant rates. For example, attempting to recruit a senior accounting faculty member in a small town is not likely to be successful. Conversely, it may not be necessary to recruit nationally for workers in unskilled positions on the assembly line. The job qualifications needed and the distribution of the labor supply determine which labor markets are relevant. Changes in a labor market may force changes in recruiting efforts. If a new major employer locates in a regional labor market, then other employers may see a decline in their numbers of applicants. To understand the components of labor markets in which recruiting takes place, three different concepts must be considered. Those three groups are labor force population, applicant population, and applicant pool. The labor force population includes all individuals who are available for selection if all possible recruitment strategies are used. This vast array of possible applicants may be reached in very different ways. Different recruiting methods – for example, newspaper ads versus college recruiting – will reach different segments of the labor force population. The applicant population is a subset of the labor force population that is available for selection using a particular recruiting approach. For example, an organization might limit its recruiting for management trainees to MBA graduates from major universities. This recruiting method will result in a very different group of applicants from those who would have applied had the em38

ployer chosen to advertise openings for management trainees on a local radio station. At least four recruiting decisions affect the nature of the applicant population:  Recruiting method:advertising medium chosen and considering use of employment agencies.  Recruiting message: what is said about the job and how it is said.  Applicant qualifications required: education level and amount of experience necessary.  Administrative procedures: time of year recruiting is done, the follow-ups with applicants, and use of previous applicant files. The applicant pool consists of all persons who are actually evaluated for selection. Many factors can affect the size of the applicant pool. For example, the organization mentioned previously is likely to interview only a small percentage of the MBA graduates at major universities, because not all graduates will want to be interviewed. The applicant pool at this step will depend on the reputation of the organization and industry as a place to work, the screening efforts of the organization, and the information available to the applicant population. Assuming a suitable candidate can be found, the final selection is made from the applicant pool. The supply and demand of workers in the labor force population has a substantial impact on the staffing strategies of organizations. Internal labor markets also influence recruiting because many employers choose to promote from within whenever possible, but hire externally for entry-level jobs. A discussion of these and other strategic decisions to be made in recruiting follows. 4.2. Recruitment in the labor market The decisions that are made about recruiting help dictate not only the kinds and numbers of applicants, but also how difficult or successful recruiting efforts may be. Exhibit 4.118 shows an overview of these recruiting decisions. Recruiting strategy entails identifying where to recruit, who to recruit,

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and what the job requirements will be. One key consideration is deciding about internal vs. external searches that must be made.

Exhibit 4.1. – Recruiting Decisions Internal and External Recruiting Advantages and disadvantages are associated with promoting from within the organization (internal recruitment) and hiring from outside the organization (external recruitment) to fill openings. Promotion from within generally is thought to be a positive force in rewarding good work, and some organizations use it well indeed. However, if followed exclusively, it has the major disadvantage of perpetuating old ways of operating. In addition, there are equal employment concerns with using internal recruiting if protectedclass members are not already represented adequately in the organization. Recruiting externally can infuse the organization with new ideas. Also, it may be cheaper to recruit professionals such as accountants or computer programmers from outside than to develop less-skilled people within the organization. But recruiting from outside the organization for any but entrylevel positions presents the problem of adjustment time for the new employees. Another drawback to external recruiting is the negative impact on current employees that often results from selecting an outsider instead of promoting a current employee. Table 4.119 shows some of the major advantages and disadvantages of internal and external recruiting. 19

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Table 4.1. – Advantages and disadvantages of internal and external sources

Most organizations combine the use of internal and external methods. Organizations that operate in a rapidly changing environment and competitive conditions may need to place a heavier emphasis on external sources in addition to developing internal sources. However, for those organizations existing in environments that change slowly, promotion from within may be more suitable. Recruitment methods Organisations can choose from a wide variety of methods, including the use of: ● informal personal contacts, such as existing employees, informal grapevine (word of mouth) and speculative applications; ● formal personal contacts, such as careers fairs, open days and leaflet drops; ● notice boards, accessible by current staff or the general public; ● advertising, including local and national press, specialist publications, radio and TV, and the Internet; ● external assistance, including job centers, careers service, employment agencies and ‘head-hunters’. Informal personal contacts: existing employees, informal grapevine. A reliable source of people to fill vacancies is composed of friends and/or family members of current employees. Employees can acquaint potential applicants with the advantages of a job with the company, furnish letters of introduction, and encourage them to apply. These are external applicants recruited using an internal information source. 41

Utilizing this source is usually one of the most effective methods of recruiting because many qualified people can be reached at a low cost. In an organization with numerous employees, this approach can develop quite a large pool of potential employees. Some research studies have found that new workers recruited through current employee referral had longer tenure with organizations than those from other recruiting sources. Some employers pay employees incentives for referring individuals with specialized skills that are difficult to recruit through normal means. Design of advertisements The most popular formal recruitment method continues to be press advertising. Good communication from the employer to potential applicants requires thought and skill, and many organisations use the services of a recruitment agency for the design of the advertisement and advice on the most effective media. The aim of the advertisement is to attract only suitable applicants, and therefore it should discourage those who do not possess the necessary attributes while, at the same time, retaining and encouraging the interest of those with potential to be suitable. S.Taylor (2002) suggests a number of key decisions faced by recruiters in the style and wording of advertisements: ● Wide trawls or wide nets – i.e. whether the advert aims to attract a wide range of candidates or only those with very specific qualities. ● Realistic or positive – in terms of the language used and information provided on the job and the organisation. ● Corporate image or specific job – the emphasis most likely to appeal to the target audience can depend on a number of factors, e.g. whether the organisation is a household name or has a good reputation in the area, or whether the type of job is well known or highly sought-after. ● Precise vs. vague information – variations are especially apparent in relation to salary information: some organisations (particularly in the public sector) provide very precise information. External assistance, including job centers, careers service, employment agencies and ‘head-hunters’. Executive Search Firms Some employment agencies focus their efforts on executive, managerial, and professional positions. These executive search firms are split into two groups: (1) contingency firms that charge a fee only after a candidate has been hired by a client 42

company and (2) retainer firms that charge a client a set fee whether or not the contracted search is successful. Most of the larger firms work on a retainer basis. The fees charged by executive search firms may be 33% or more of the employee’s first-year salary. Most employers pay the fees, but there are some circumstances in which employees pay the fees. The size of the fees and the aggressiveness with which some firms pursue candidates for openings have led to such firms being called headhunters. Search firms are ethically bound not to approach employees of client companies in their search efforts for another client. As search firms are retained by more corporations, an increasing number of potential candidates become off limits. At some point, the large search firms feel they may lose their effectiveness, because they will have to shun the best candidates for some jobs due to conflict-of-interest concerns. Internet Recruiting Organizations first started using computers as a recruiting tool by advertising jobs on a “bulletin board service” from which prospective applicants would contact the company. Then some companies began to take e-mail applications. Now some employers are not only posting jobs and accepting resumes and cover letters on-line but also are conducting employment interviews on-line. Advantages for such Internet recruiting by employers include:  Reaching more applicants.  Having lower costs and faster response time frames.  Tapping an applicant pool conversant with the Net. Employers often begin the Internet search process by establishing an organization website and listing jobs on it. Alternatively, companies with a web page that specializes in posting job listings (an Internet job service) – much like the electronic bulletin board of days gone by – can be used by job seekers. Finally, online employment agencies can be used to post jobs and find applicants on the Net. One advantage of Internet recruiting is that it may improve the chances of contacting “passive job seekers” – those people who are not actively seeking work. Listing at popular job-search Internet sites is a good way to attract such browsing high-tech workers. Indeed, recent surveys show that many companies now use the Net for recruiting, and the rate is increasing rapidly 4.3. Selection process and placement Selection is the process of choosing individuals who have relevant qualifications to fill jobs in an organization. Without qualified employees, an organization is in a poorer position to succeed. Selection is much more than 43

just choosing the best available person. Selecting the appropriate set of knowledge, skills, and abilities (KSAs) – which come packaged in a human being – is an attempt to get a “fit” between what the applicant can and wants to do, and what the organization needs. The task is made more difficult because it is not always possible to tell exactly what the applicant really can and wants to do. Fit between the applicant and the organization affects both the employer’s willingness to make a job offer and an applicant’s willingness to accept a job. Fitting a person to the right job is called placement. More than anything else, placement of human resources should be seen as a matching process. Gaps between an individual’s skills and the job requirements are common factors that lead to rejection of an applicant. How well an employee is matched to a job affects the amount and quality of the employee’s work. This matching also directly affects training and operating costs. Workers who are unable to produce the expected amount and quality of work can cost an organization a great deal of money and time. Estimates are that hiring an inappropriate employee costs an employer three to five times that employee’s salary before it is resolved. Yet hiring mistakes are relatively common. Good selection and placement decisions are an important part of successful HR management. Some would argue that these decisions are the most important part. Productivity improvement for an employer may come from changes in incentive pay plans, improved training, or better job design; but unless the employer has the necessary people with the appropriate KSAs in place, those changes may not have much impact. The very best training will not enable someone with little aptitude for a certain job to do that job well and enjoy it. To put selection decisions in perspective, consider that organizations on average reject a high percentage of applicants. In some situations about five out of six applicants for jobs are rejected. Perhaps the best perspective on selection and placement comes from two traditional HR truisms that clearly identify the importance of effective employment selection. Already having the needed knowledge, skills, and abilities (KSAs) may be very important for a new employee to do a job well. For example, specific KSAs may be used to hire people for a given job: math skills, ability to weld, or a knowledge of spreadsheets. Job analysis can provide the basis for identifying appropriate KSAs if it is done properly. People already in jobs can help identify the most important KSAs for success as part of job analysis. These KSAs can be used to place an applicant in a suitable job based on how well their KSAs match. However, specific KSAs may not be necessary immediately in some jobs; they can be taught on the job. In fact, for certain jobs it may be good selection strategy to deemphasize the precise matching of applicants’ specific KSAs to a job and focus on more general predictors of suc44

cess.3 For example, if an employer hires at the entry level and promotes from within for most jobs, specific KSAs might be less important than general ability to learn and conscientiousness. Ability to learn allows a person to grasp new information and make good decisions based on that job knowledge. Conscientiousness might include thoroughness, responsibility, and an organized approach to the job. Whether an employer uses specific KSAs or the more general approach, effective selection of employees involves using criteria and predictors of job performance. The Selection Process Most organizations take certain common steps to process applicants for jobs. Variations on this basic process depend on organizational size, nature of jobs to be filled, number of people to be selected, and pressure of outside forces. This process can take place in a day or over a much longer period of time. If the applicant is processed in one day, the employer usually checks references after selection. Often, one or more phases of the process are omitted or the order changed, depending on the employer. The selection process shown in Exhibit 4.220 is typical of a large organization. Assume a woman applicant comes to the organization, is directed to the employment office, and is received by a receptionist. Some firms conduct a job preview/interest screen to determine if an applicant is qualified for open jobs before giving out an application form. Next, the receptionist usually gives the individual an application form to complete. The completed application form serves as the basis for an interview or a test. After the interview or test, the applicant may be told that she does not fit any position the company has available. However, if she does appear to have appropriate qualifications, her background and previous employment history may be checked and/or an additional, more in-depth interview may be conducted. If responses are favorable, the applicant may receive a conditional offer of a job, provided she passes a medical test. Selection techniques Various selection techniques are available, and a selection procedure will frequently involve the use of more than one. The most popular techniques are outlined here, and their validity and effectiveness are discussed later in the chapter.

20

Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651.

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Exhibit 4.2 – The selection process Interviews Interviewing is universally popular as a selection tool. An interview as ‘a controlled conversation with a purpose’, but this broad definition encompasses a wide diversity of practice. Differences can include both the number of interviewers and the number of interview stages. Over the years interviews have received a relatively bad press as being overly subjective, prone to interviewer bias, and therefore unreliable predictors of future performance. Such criticisms are leveled particularly at unstructured interviews, and in response to this, developments have focused on more formally structuring the interview or supplementing the interview with less subjective selection tools such as psychometric tests and work sampling. There are different types of structured interview, but they have a number of common features: ● the interaction is standardised as much as possible. ● all candidates are asked the same series of questions. ● replies are rated by the interviewer on preformatted rating scales. ● dimensions for rating are derived from critical aspects of on-the-job behavior. The two most popular structured interview techniques are behavioral and situational interviews. Both use critical incident job analysis to de46

termine aspects of job behavior that distinguish between effective and ineffective performance. The difference between them is that in behavioral interviews the questions focus on past behavior (for example, ‘Can you give an example of when you have had to deal with a difficult person? What did you do?’), whereas situational interviews use hypothetical questions (‘What would you do if you had to deal with a team member who was uncooperative?’). Decisions about the number of interviewers, the type of interview and the number of interview stages are likely to take account of the seniority and nature of the post and the organisation’s attitude towards equal opportunities. Telephone interviewing. Some organisations are now using telephone interviews as part of their selection procedure, particularly for jobs that involve a lot of telephone work, such as call centre operators. Telephone interviews are usually used as part of the shortlisting process rather than to replace the face-to-face selection interview. For example, a short, highly structured telephone interview can be used to identify and discount unsuitable applicants or a longer more in-depth approach can be used to shortlist candidates for a face-to-face interview, particularly for more senior posts. Advances in technology continue to facilitate other forms of ‘remote’ interviewing, for example by video link or via the Internet, but take-up is still relatively low. The stress interview is a special type of interview designed to create anxiety and put pressure on the applicant to see how the person responds. In a stress interview, the interviewer assumes an extremely aggressive and insulting posture. Those who use this approach often justify its use with individual who will encounter high degrees of stress on the job, such as a consumer complaint clerk in a department store or an air traffic controller. The stress interview is a high-risk approach for an employer. The typical applicant is already somewhat anxious in any interview, and the stress interview can easily generate a very poor image of the interviewer and the employer. Consequently, an applicant that the organization wishes to hire might turn down the job offer. Even so, many interviewers deliberately put applicants under stress. Usually, applicants are interviewed by one interviewer at a time. But when an interviewee must see several people, many of the interviews are redundant and therefore unnecessarily time consuming. In a panel interview, several interviewers interview the candidate at the same time. All the interviewers hear the same responses. On the negative side, applicants are frequently uncomfortable with the group interview format. The questioning techniques that an interviewer uses can and do significantly affect the type and quality of the information obtained. Some specific suggestions follow. 47

Many questions an interviewer asks assume that the past is the best predictor of the future, and it usually is. An interviewer is less likely to have difficulty when questioning the applicant’s demonstrated past performance than when asking vague questions about the future. Some types of questions provide more meaningful answers than others. Good interviewing technique depends on the use of open-ended questions directed toward a particular goal. An open-ended question is one that cannot be answered yes or no. Who, what, when, why, tell me, how, and which are all good ways to begin questions that will produce longer and more informative answers. “What was your attendance record on your last job?” is a better question than, “Did you have good attendance on your last job?” because the latter question can be answered with a simple yes, which elicits less information. Certain kinds of questions should be avoided:  Questions that rarely produce a true answer: An example is, “How did you get along with your coworkers?” This question is almost inevitably going to be answered, “Just fine.”  Leading questions: A leading question is one to which the answer is obvious from the way that the question is asked. For example, “You do like to talk to people, don’t you?” Answer: “Of course.”  Illegal questions: Questions that involve information such as race, age, gender, national origin, marital status, and number of children are illegal. They are just as inappropriate in the interview as they are on the application form.  Obvious questions: An obvious question is one for which the interviewer already has the answer and the applicant knows it. Questions already answered on the application blank should be probed, not asked again.  Questions that are not job related: All questions asked should be directly related to the job for which the interviewee has applied. Tests ‘Testing is essentially an attempt to achieve objectivity, or, to put it more accurately, to reduce subjectivity in selection decision-making’ (Lewis, 1985: 157)21. The types of test used for selection are ability and aptitude tests, intelligence tests and personality questionnaires. Ability tests (such as typing tests) are concerned with skills and abilities already acquired by an individual, whereas aptitude tests (such as verbal reasoning tests or numerical aptitude) focus on an individual’s potential to undertake specific tasks. Intelli21

Human resource management: contemporary approach. Textbook. J.Beardwell, T. Claydon. Pearson. 2010. 710 p.

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gence tests can give an indication of overall mental capacity, and have been used for selection purposes for some considerable time. Psychological/Personality Tests. Personality is a unique blend of individual characteristics that affect interaction with the environment and help define a person. Historically, predictive validities have tended to be lower for personality tests used as predictors of performance on the job. However, some studies have shown that carefully chosen personality tests that logically connect to work requirements can help predict the interpersonal aspects of job success. For example, a person’s ability to tolerate stress might be a valid concern for a police officer, emotional stability for a nuclear plant operator, and a “people” orientation for a social worker. There is a never-ending list of characteristics that can be used to differentiate human beings. The multitude of different personality traits has long frustrated psychologists, who have argued that there is a relatively small number of underlying major traits. The most widely accepted approach to these underlying personality traits (although not the only one) is often referred to as the “Big Five” personality traits. The Big Five can be considered generally useful predictors of training success and job performance. The Big Five are: 1. Emotional stability: This is the extent to which a person does not suffer from neurosis, depression, anger, worry, and insecurity. 2. Extroversion: Sociable, gregarious, talkative people are considered extroverted. 3. Agreeableness: People who are cooperative, good natured, softhearted, tolerant, and trusting score high on the agreeable dimension. 4. Openness/Experience: This describes people who are flexible in thought and open to new ideas, broad minded, curious, and original. 5. Conscientiousness: This is the extent to which a person is achievement-oriented, careful, hardworking, organized, and responsible. Extroversion predicts success in jobs requiring social interaction, such as many sales jobs. The usefulness of the other three varies depending on the kind of job and organization. When used in selection, psychological or personality testing requires that a solid link be made with job relatedness. Some very questionable tests are used in employee selection. For instance, graphology, psychics, and blood types all have been used by various employers. Graphology: Graphology is a type of “test” in which an “analysis” is made of an individual’s handwriting. Such characteristics as how people dot an i or cross a t, whether they write with a left or right slant, and the size and boldness of the letters they form supposedly tell graphologists about the individuals’ personalities and their suitability for employment. The cost 49

of a handwriting analysis ranges from $175 to $500 and includes an examination of about 300 personality traits. Formal scientific evaluations of graphology arenot easily found. Its value as a personality predictor is very questionable, but it is popular in France, Israel, and several other countries. Psychics: Similarly, some firms use psychics to help select managerial talent. The psychics are supposedly able to determine if a person is suited for a job both intellectually and emotionally. However, most businesses would not want anyone to know that they used “psychic advisers.” Blood type: If using psychics in selection seems outlandish, how about blood type as a predictor of personality? In Japan, many people think blood type is an excellent predictor. Type O blood supposedly indicates a person who is generous and bold; type A, one who is industrious; type B, one who is impulsive and flexible; and type AB, one who is both rational and creative. A manager at Mitsubishi Electric chose people with type AB blood to dream up the next generation of fax machines. One Japanese nursery school divides children based on their blood types Assessment centres An assessment centre is not a place but rather a process that ‘consists of a small group of participants who undertake a series of tests and exercises under observation, with a view to the assessment of their skills and competencies, their suitability for particular roles and their potential for development’22. There are a number of defining characteristics of an assessment centre: ● A variety of individual and group assessment techniques are used, at least one of which is a work simulation. ● Multiple assessors are used (frequently the ratio is one assessor per two candidates). These assessors should have received training prior to participating in the centre. ● Selection decisions are based on pooled information from assessors and techniques. ● Job analysis is used to identify the behaviors and characteristics to be measured by the assessment centre. Assessment centres are used by just over a quarter of organisations. The assessment centre process allows organisations to observe candidate behavior in a work-related setting; and the combination of techniques used helps to improve the consistency and objectivity of the selection process. The use of such a sophisticated technique, if handled well, can also help the organisation to display a positive image to potential candidates. The drawbacks 22

Fowler, A. How to plan an assessment centre. PM Plus. 1992

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primarily relate to the costs and resources required. For this reason, assessment centres are most likely to be used in public sector organisations and by larger private sector employers. A number of recent trends have been identified in the design and delivery of assessment centres, including: more emphasis on the integration of exercises (i.e. using the same business context and same characters in different exercises); a clearer link between exercises and work content; more candidate friendly (i.e. better briefing on how people will be assessed, more comprehensive feedback); and a focus on core values to identify candidates who will contribute most in rapidly changing circumstances. 4.4 Ethical issues in recruitment and selection Up to now we have focused on recruitment and selection from an organisational perspective. We should not forget that recruitment and selection is a two-way process, and so our final topic for discussion concerns the extent to which any approach respects the rights of individuals participating in the process. Ethical issues arise concerning the treatment of people during recruitment and selection. To a large extent, whether certain activities are perceived as ethical or unethical reflects the prevailing attitudes within the society or societies in which an organisation operates. However, differences in attitudes also reflect the judgement and positioning chosen by major stakeholders, and can be determined by traditional values inherent within the organisation itself. ● Recruitment Providing equality of opportunity for a diverse number of groups is considered important by certain organisations. However, opportunity to apply for positions can be restricted through the (sometimes unnecessary) insistence on previous experience, or prior development of skills and competences. ‘Glass ceilings’ exist in internal labour markets for women and minority groups. In the case of third-party recruitment, particularly executive search, opportunities to widen the net can be forestalled, with organisations frequently relying on the knowledge and networking of one consultant to deliver the chosen recruit, often to a specification that ensures that the status quo is maintained. The continued existence of such practices suggests a society in which those in power tolerate them as rational and sound, and where there is insufficient groundswell of opinion from society at large to insist on change. In a similar vein, multinational and other organisations that have overseas supplier links have to consider their ethical position in relation to both employment conditions and more particularly targeted recruits. 51

The business decision may be difficult and involve weighing up important economic, financial, marketing and public relations considerations. While component costs may fall dramatically through the use of overseas subsidiaries and suppliers, bad publicity and loss of sales can ensue through dealing with an organisation where, for example, child labor is found to be extensively used, employment conditions are unsafe, or recruits are paid less than a living wage. Model codes of practice have been drawn up, but for many organisations the ethical issues in ‘make or buy’ decisions will continue to be debated. ● Selection Issues in selection revolve around areas of individual rights, the potential for abuse of power, issues of control and social engineering, use of certain assessment techniques, and the issues of equality of opportunity implied in the above. The ownership of information about an individual passes in the recruitment and selection process from the individual to the organisation. While some protection is afforded by data protection legislation, the organisation is perceived to increase its power over the individual by holding such information and by accumulating more through the use of various selection techniques, the findings of which are not always made known to the candidate. An individual’s right to privacy is further challenged by the impact of scientific developments assisting the prediction of future employment scenarios. For example, tests now exist to enable organisations to conduct preemployment medicals that predict the future health of candidates. In the USA, where most health costs are met by the employer, discrimination against apparently healthy people who have, or may have, a genetic defect is common, and health insurance has been found to be refused to many employees. The use of interviews as a selection method has long been open to criticism on the grounds of subjectivity and stereotyping. Using biodata as a basis of selection has potential for misuse, discriminating against individuals and groups on factors that are beyond their control (education, social class and gender, for example). Graphology attracts criticism for similar reasons of social stereotyping and superficial judgements. In conclusion, the use of both external and internal labour markets and associated selection techniques can raise ethical issues. Poaching experienced people from the external labour market implies an approach that only ‘takes’ from society, in terms of the costs of education and previous training and development, and the higher wages needed to attract applicants can be perceived as inflationary. Alternatively, one can view the use of the internal labour market through in-house development around organisation-based objectives as somewhat menacing, tying the individual closely to the organisation from which escape is per52

ceived as increasingly difficult and from which the measurement of individual freedom, and the quality of the conditions of employment enjoyed, become more difficult to judge. Chapter 4. Practice23 Questions for discussion: 1. Suppose an organization expects a labor shortage to develop in key job areas over the next few years. Recommend general responses the organization could make in each of the following areas: a. Recruitment b. Training c. Compensation (pay and employee benefits) 2. Some organizations have detailed affirmative-action plans, complete with goals and timetables, for women and minorities, yet have no formal human resource plan for the organization as a whole. Why might this be the case? What does this practice suggest about the role of human resource management in these organizations? 3. Give an example of a personnel policy that would help attract a larger pool of job candidates. Give an example of a personnel policy that would likely reduce the pool of candidates. Would you expect these policies to influence the quality as well as the number of applicants? Why or why not? 4. Discuss the relative merits of internal versus external recruitment. Give an example of a situation in which each of these approaches might be particularly effective. 5. List the jobs you have held. How were you recruited for each of these? From the organization’s perspective, what were some pros and cons of recruiting you through these methods? 6. Recruiting people for jobs that require international assignments is increasingly important for many organizations. Where might an organization go to recruit people interested in such assignments? 7. A large share of HR professionals have rated e-cruiting as their best source of new talent. What qualities of electronic recruiting do you think contribute to this opinion? 8. How can organizations improve the effectiveness of their recruiters?

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Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p.

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Situation for discussion Suppose you are a human resource professional at a large retail chain. You want to improve the company’s hiring process by creating standard designs for interviews, so that every time someone is interviewed for a particular job category, that person answers the same questions. You also want to make sure the questions asked are relevant to the job and maintain equal employment opportunity. Think of three questions to include in interviews for each of the following jobs. For each question, state why you think it should be included. a. Cashier at one of the company’s stores b. Buyer of the stores’ teen clothing line c. Accounts payable clerk at company headquarters Case Study – HR in Apple Company In a turnaround from a trend in which high-tech (and other) manufacturers have outsourced the making of important components in order to increase efficiency and focus on what they do best, Apple has recently made moves that seem aimed at bringing the design of microchips back in-house. Apple is known for innovative design, and along with that, it tends to keep details of what it makes highly secret. Making chip design a company process, rather than a product to buy, gives Apple more control over the process – and over the secrecy. Of course, the decision to handle its own development has huge implications for human resource management. The company needs all-new labor forecasts, a larger labor force, and an intense push to bring in technical talent. Recently, Apple has been hiring many new engineers. Products they could be assigned to include microchips that require less power to operate iPhones and iTouch devices, as well as circuitry to improve the graphics displayed in games and videos played on its devices. A topnotch team could, at least in theory, come up with unique improvements that will take rivals by surprise. One way to acquire a lot of talent fast is to acquire entire companies and make them part of Apple. And that’s one move Apple has been making. The company recently acquired P.A. Semi, a start-up company that designs microchips. Its products could be used to run iPhones and iPods. Observers are guessing that chips developed by P.A. Semi could take the place of chips Apple has been buying from Samsung for its iPhone. Samsung had customized the chips to Apple’s specifications. Apple could be worried that a company such as Samsung might intentionally or unintentionally start applying some of Apple’s ideas to chips made for competitors’ products. 54

Another bit of evidence about Apple’s hunt for talent is visible online at the LinkedIn networking site, where members list their job histories. According to the Wall Street Journal, more than 100 people on the site have current job titles at Apple plus past jobs involving microchips. Their prior companies include Intel, Samsung, and Qualcomm. One recent hire was the chief technology officer from Advanced Micro Devices’ graphic products group. Furthermore, it’s possible to evaluate job openings that Apple has been posting. These have included positions that involve expertise in handwriting recognition technology and microchips used in managing displays. Apple has been seen at job fairs, too. Its recruiters participated in a job fair for employees who were being laid off at Spansion, a company that makes memory chips and recently declared bankruptcy24. Questions 1. Given the ideas presented about Apple’s strategy, what HR actions would be most suitable for supporting that strategy? 2. What challenges would you expect to be most significant for Apple’s HR staff in meeting these human resource requirements? 3. What sources of job applicants would you recommend that Apple use to meet the needs described here?

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Yukari Iwatani Kane and Don Clark, “In Major Shift, Apple Builds Its Own Team to Design Chips,” Wall Street Journal, April 30, 2009, http://online.wsj.com ; “Apple Turning to Chip Design for Its Innovation,” InformationWeek, April 30, 2009, Business & Company Resource Center, http://galenet.galegroup.com ; and “Apple Increases Investment in BritishChip Designer,” InformationWeek, June 26, 2009, Business & Company Resource Center, http://galenet.galegroup.com .

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CHAPTER 5. TRAINING AND DEVELOPMENT HUMAN RESOURCES 5.1 Nature of learning and development The new ways of working are demanding not just extensive training in new task skills, but completely new ways of thinking about work, doing work, and relating with one another. Individuals at all levels need to be able to challenge traditional ways of thinking and working; think and work ‘outside the box’ of traditional job descriptions; and work without prior experience, clear guidelines or close supervision; be flexible, prepared to change, undertake new tasks or move to a different organisation. In the struggle to ‘think global and act local’, organisations need people who have ‘a “matrix of the mind”; sharing learning and creating new knowledge are among the key capabilities that organisations must have25. Although many employers are now recognizing the need to invest in their employees’ learning, it is also held that individuals must take some responsibility for it; that they must invest in their own learning and development to ensure their own ‘employability’. Exhibit 5.1 shows some costs and benefits that may result from training and development. While some benefits (such as attitude changes) are hard to quantify, comparison of costs and benefits associated with training remains the best way to determine if training is cost effective.

Exhibit 5.1. – Balancing costs and benefits of training and development 25

Black, J. Stewart, Dave Ulrich The New Frontier of Global HR. 1999

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From birth, humans, like all animals, learn and develop: learning is a natural process in which we all engage. It is not just a cognitive activity, and it affects the person as a whole. This learning and development lead to skilful and effective adaptation to and manipulation of the environment, which is one element in a much-quoted definition of intelligence (Wechsler, 1958, in Ribeaux and Poppleton, 1978: 189). People continue learning throughout life, whether encouraged or not, whether formally taught or not, whether the outcomes are valued or not. Moreover, the process of their learning knows no boundaries: learning in one domain, such as employment, hobbies or maintenance of home and car, cross-fertilises that in another and thereby achieves a wider understanding and more finely honed skills. People learn at different rates and are able to apply what they learn differently. Ability to learn must be accompanied by motivation, or intention, to learn. Motivation to learn is determined by answers to questions like these: “How important is my job to me?” “How important is it that I learn that information?” “Will learning this help me in any way?” and “What’s in it for me?” Additionally, people vary in their beliefs about their abilities to learn through training. These perceptions may have nothing to do with their actual ability to learn, but rather reflect the way they see themselves. People with low self-efficacy (low level of belief that they can accomplish something) benefit from one-on-one training. People with high self-efficacy seem to do better with conventional training. Because self-efficacy involves a motivational component, it affects a person’s intention to learn. The outcomes of a person’s learning and development are the way they think, feel and interpret their world (their cognition, affect, attitudes, overall philosophy of life); the way they see themselves, their self-concept and selfesteem; and their ability to respond to and make their way in their particular environment (their perceptual-motor, intellectual, social, and interpersonal skills). Some of the transformational impact of learning can be seen of the journey of development. Learning and development are therefore significant experiences for individuals and for organisations. Following from this, it should also be noted, the facilitation of another’s learning is a moral project: it has the potential to promote changes that may have a profound effect in the other’s life. Learning and development are processes that we all experience, active processes in which we all engage: we do not have learning and development done to us. However, we rarely pay conscious attention to them and so might not fully understand them. Managers responsible for human resource development need to understand the nature of learning and development. We will, therefore, first examine the outcomes of learning, such as skill, competence and tacit knowledge, and employability, an indirect outcome. It will then look at the process of 57

learning, the various levels of cognitive and other skills, at models of learning, and finally at barriers to learning. Skills the performance of any task which, for its successful and rapid completion, requires an improved organisation of responses making use of only those aspects of the stimulus which are essential to satisfactory performance. This definitions is particularly appropriate to perceptual-motor skills, which involve physical, motor responses to perceived stimuli in the external world. Such skills are needed at every level of an organisation, from the senior manager’s ability to operate a desktop computer to the cleaner’s operation of a floor-scrubbing machine. High levels of such skills are particularly needed to operate complex and expensive technology. There are many other kinds of skills needed in organisations, such as cognitive, linguistic, social and interpersonal skills, that could also be defined in these terms. However, their complexity suggests that various levels of skill have to be recognised, which is what a later subsection will do in presenting some hierarchies of skills. Competence – also referred to as competency in the literature – has been defined as the ability to perform the activities within an occupational area to the levels of performance expected in employment. The core of the definition is an ability to apply knowledge and skills with understanding to a work activity. Competences are now a major element in the design of training and development, and seem to fit well with what is happening in organisations. Proposes that they are a means of aligning what people can offer – their competencies – against the demands of customers rather than against the ill-fitting and ill-designed demands of jobs. What needs to be noted at this point is that the concept of competence integrates knowledge and skill that are assessed via performance. This leads on to the distinction between formal knowledge and ‘know-how’, in which tacit knowledge has a significant part to play. ‘Knowing how to do something’ is a very different matter from knowing about ‘knowing how to do something’. This truism is captured in the everyday suspicion and disparagement of ‘the ivory tower’: ‘those who can, do; those who can’t, teach’. It is also apparent in the reluctance of employers to value higher education, evidenced in the small proportion of managers with degrees. It is wise to makes the distinction between ‘know-how’ and ‘knowthat’. ‘Know-how’ is the tacit knowledge of how to execute something, whereas ‘know-that’ is the statement of formal thinking (propositional knowledge) about the actual set of procedures involved in the execution. Learning Principles It is usually better to give trainees an overall view of what they will be doing than to deal immediately with the specifics. This concept is referred to 58

as whole learning or Gestalt learning. As applied to job training, this means that instructions should be divided into small elements after employees have had the opportunity to see how all the elements fit together. Another concept is attentional advice, which refers to providing trainees information about the processes and strategies that can lead to training success. By focusing the trainees’ attention on what they will encounter during training and how it is linked to their jobs, trainers can improve trainees’ participation in the training process. For instance, if customer service representatives are being trained to handle varying types of difficult customer calls, the training should give an overview of the types of calls, the verbal cues indicating the different types of calls, and the desired outcomes for each type of all. A comprehensive approach to training has been developed based on the concept of reinforcement. This popular approach, behavior modification, uses the theories of psychologist B.F. Skinner, who stated that “learning is not doing; it is changing what we do.” Behavior modification makes use of four means of changing behavior, labeled intervention strategies. The four strategies are positive reinforcement, negative reinforcement, punishment, and extinction. Each is reviewed next. A person who receives a desired reward receives positive reinforcement. If an employee is on time every day during the week and, as a result, receives extra pay equivalent to one hour of normal work, the employee has received positive reinforcement of his or her good attendance by receiving a desired award. Negative reinforcement occurs when an individual works to avoid an undesirable consequence. An employee who arrives at work on time every day may do so to avoid a supervisor’s criticism. Thus, the potential for criticism leads to the employee’s taking the desired action. Action taken to repel a person from undesirable action is punishment. A grocery manager may punish a stock clerk for leaving the stockroom dirty by forcing her to stay after work and clean it up. Behavior can also be modified through a technique known as extinction, which is the absence of an expected response to a situation. The hope is that unreinforced behavior will not be repeated. All four strategies can work to change behavior, and combinations may be called for in certain situations. But research suggests that for most training situations, positive reinforcement of the desired behavior is most effective. Levels of learning An earlier section concluded that today’s organisations need their employees generally, and their managers in particular, to practice higher-order thinking skills. This implies that there are several types and levels of skill. This subsection presents several classifications, some of different types of skill, others of different levels or stages. Some are couched in terms of stages 59

rather than levels: the individual can progress from the lower to the higher stages, but does not necessarily do so. The lower levels are prerequisites for, and subsumed by, the higher. Organisations require several types and levels of skills, not only the higher-level thinking skills. The human resource manager can therefore use these classifications, first to identify the prior learning that needs to take place before skills of various levels can be attained, and then to plan ways of facilitating the learning of such skills. Fitts’s stages of skills acquisition Fitts distinguished three stages of learning, in particular of perceptualmotor skills acquisition. It is recognised that they may overlap. ● Cognitive stage. The learner has to understand what is required, its rules and concepts, and how to achieve it. ● Associative stage. The learner has to establish through practice the stimulus–response links, the correct patterns of behaviour, gradually eliminating errors. ● Autonomous stage. The learner refines the motor patterns of behaviour until external sources of information become redundant and the capacity simultaneously to perform secondary tasks increases. Dreyfus et al.’s stage model of skills acquisition26 Dreyfus set out a more elaborate model of the acquisition of skills that is relevant to understanding the development of cognitive skills. Their fivestage model moves from the effective performance of lower- to higher-order skills. ● Stage 1: the novice. Novices follow context-free rules, with relevant components of the situation defined for them: hence they lack any coherent sense of the overall task. ● Stage 2: the advanced beginner. Through their practical experience in concrete situations learners begin to recognize the contextual elements of their task. They begin to perceive similarities between new and previous experiences. ● Stage 3: competent. They begin to recognize a wider range of cues, and become able to select and focus upon the most important of them. Their reliance upon rules lessens; they experiment and go beyond the rules, using trial and error. ● Stage 4: proficient. Those who arrive at this stage achieve the unconscious, fluid, effortless performance referred to in the definitions of skill 26

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given earlier. They still think analytically, but can now ‘read’ the evolving situation, picking up new cues and becoming aware of emerging patterns; they have an involved, intuitive and holistic grasp of the situation. ● Stage 5: expert. At this stage highly experienced people seem to be able to recognize whole scenarios without decomposing them into elements or separate features. With this intuitive understanding of the implications of a situation, they can cope with uncertainty and unforeseen situations. Managers’ levels of learning (Burgoyne and Hodgson) A similar hierarchy has been proposed specifically for the learning of managers. Burgoyne and Hodgson (1983) suggest that managers have a gradual build-up of experience created out of specific learning incidents, internalize this experience, and use it, both consciously and unconsciously, to guide their future action and decision-making. They identify three levels of this learning process: ● Level 1 learning, which occurs when managers simply take in some factual information or data that is immediately relevant but does not change their views of the world. ● Level 2 learning, which occurs at an unconscious or tacit level. Managers gradually build up a body of personal ‘case law’ that enables them to deal with future events. ● Level 3 learning, when managers consciously reflect on their conception of the world, how it is formed, and how they might change it. 5.2 Human resource training Training is a process whereby people acquire capabilities to aid in the achievement of organizational goals. Because this process is tied to a variety of organizational purposes, training can be viewed either narrowly or broadly. In a limited sense, training provides employees with specific, identifiable knowledge and skills for use on their present jobs. Sometimes a distinction is drawn between training and development, with development being broader in scope and focusing on individuals gaining new capabilities useful for both present and future jobs. Types of Training Internal training. Training in on-the-job locations tends to be viewed as being very applicable to the job, it saves the cost of sending employees away for training, and it often avoids the cost of outside trainers. However, trainees who are learning while working can incur costs in the form of lost 61

customers and broken equipment, and they may get frustrated if matters do not go well. Often, technical training is conducted inside organizations. Technical training is usually skills based, for example, training to run precision computer-controlled machinery. Due to rapid changes in technology, the building and updating of technical skills have become crucial training needs. Basic technical skills training are also being mandated by federal regulations. One internal source of training that has grown is informal training, which occurs internally through interactions and feedback among employees. One study found that 70% of what employees know about their jobs they learned informally from other employees, not from formal training programs. Several factors account for the amount of informal learning.  First, as employees work in teams and on projects with others, they ask questions, receive explanation, and share information with coworkers.  Second, rather than relying on the employer to train them and keep their capabilities current, employees request assistance from other employees more knowledgeable or skilled.  Third, informal learning occurs among employees striving to meet organizational goals and deadlines. However, problems with informal training include the fact that some training done by fellow employees may not be accurate and may miss certain important details. At one company in the southeastern United States, managers initially became concerned about the amount of time that employees spent talking with each other in the lunchroom. However, an HR professional who spent time in the lunchroom found that many of the conversations were problem solving discussions about company projects. Consequently, white boards and flip charts were placed in the lunchroom for employees to use if they wish to do so. External training. External training occurs for several reasons:  It may be less expensive for an employer to have an outside trainer conduct training in areas where internal training resources are limited.  There may not be sufficient time to develop internal training materials.  The HR staff may not have the level of expertise needed for the subject matter where training is needed.  There are advantages to having employees interact with managers and peers in other companies in training programs held externally. One growing trend is the outsourcing of training. Vendors are being used to train employees. For example, many software providers have users’ 62

conferences where employees from a number of employers receive detailed training on using the software and new features being added. Also, vendors can do training inside the organization if sufficient numbers of employees are to be trained. Several computer software vendors offer employees technical certifications on their software. For example, being a Master Certified Novell Engineer or Microsoft Certified Product Specialist gives employees credentials that show their level of technical expertise. The certifications also provide employees items to put on their resumes should they decide to change jobs. These certifications also benefit employers, who can use the certifications as job specifications for hiring and promotion purposes. If an employer pays for employees to become certified, employees may view the employer more positively and be less prone to leave. Orientation: Training for New Employees Orientation is the planned introduction of new employees to their jobs, coworkers, and the organization. However, orientation should not be a mechanical, one-way process. Because all employees are different, orientation must incorporate a sensitive awareness of the anxieties, uncertainties, and needs of the individual. Orientation in one form or another is offered by most employers. Orientation requires cooperation between individuals in the HR unit and other managers and supervisors. In a small organization without an HR department, such as a machine shop, the new employee’s supervisor or manager has the total responsibility for orientation. In large organizations, managers and supervisors, as well as the HR department, should work as a team in employee orientation. Together they must develop an orientation process that will communicate what the employee needs to learn. Supervisors may not know all the details about health insurance or benefit options, for example, but they usually can best present information on safety rules; the HR department then can explain benefits. The overall goal of orientation is to help new employees learn about the organization as soon as possible, so that they can begin contributing. From the perspective of employers, the orientation process has several specific purposes, which are described next. 1. Productivity enhancement Both employers and new employees want individuals starting jobs to become as productive as possible relatively quickly. Texas Instruments found that orientation helps new employees reach full productivity levels at least two months sooner than those without effective orientation experiences. 63

Some employers, including a large accounting firm, give new employees computer and intranet access upon acceptance of a job offer. That way new employees can become more familiar with the organization and its operations even before they go through a formal orientation program. This example illustrates that orientation to the organization really begins during the recruiting and selection processes, because the way individuals are treated and what they learn about the organization during the first contacts may shape how they approach new jobs. Another facet of orientation that affects productivity is training new employees on the proper ways to perform their jobs. One construction company has found that emphasizing safety and instructing new employees in safe work practices has significantly reduced the number of lost-time injuries experienced by new employees. 2. Turnover reduction Some employers have experienced significant turnover of newly hired employees, and it is common for over half of all new hires in hourly jobs to leave within their first year of employment. But employers with effective orientation programs have found that new employees stay longer. Corning Glass identified that 70% of the employees rating orientation highly were likely to stay at least three years. Another firm was able to reduce annual turnover rates by 40%, and much of the decline was attributed to more effective orientation of new employees. Turnover is costly, and if orientation helps reduce turnover, then it contributes to organizational success. 3. Organizational overview Another purpose of orientation is to inform new employees about the nature of the organization. A general organizational overview might include a brief review of the organization; the history, structure, key executives, purpose, products, and services of the organization; how the employee’s job fits into the big picture; and other general information. If the employer prepares an annual report, a copy may be given to a new employee. Also, some organizations give new employees a list of terms that are used in the industry to help them learn regularly used vocabulary. 5.2.1 Training Approaches and training evaluation Once objectives have been determined, the actual training can begin. Regardless of whether the training is job specific or broader in nature, the appropriate training approach must be chosen. The following overview of common training approaches and techniques classifies them into several major groups. Other methods that are used more frequently for management de64

velopment are discussed in the next chapter, although there can be overlap in the use of some of the methods. On-the-Job Training The most common type of training at all levels in an organization is on-the-job training (OJT). Whether or not the training is planned, people do learn from their job experiences, particularly if these experiences change over time. On-the-job training usually is done by the manager, other employees, or both. A manager or supervisor who trains an employee must be able to teach, as well as to show, the employee what to do. A special, guided form of on-the-job training is known as job instruction training (JIT). Developed during World War II, JIT was used to prepare civilians with little experience for jobs in the industrial sector producing military equipment. Because of its success, JIT is still used. In fact, its logical progression of steps is an excellent way to teach trainers to train. Exhibit 5.227 shows the steps in the JIT process.

Exhibit 5.2. – Job Instruction Training (JIT) Process On-the-job training is by far the most commonly used form of training because it is flexible and relevant to what the employee is doing. However, OJT has some problems as well. A common problem is that OJT often is haphazardly done. Trainers may have no experience in training, no time to do it, and no desire to participate. Under such conditions, learners essentially are on their own, and training likely will not be effective. Another problem is that OJT can disrupt regular work. Unfortunately, OJT can amount to no training at all in some circumstances, especially if the trainee simply is abandoned by an ineffective trainer to learn the job alone. However, well-planned and well-executed OJT can be very effective. Simulation Simulation is a training approach that uses a training site set up to be identical to the work site. In this setting, trainees can learn under realistic conditions but be away from the pressures of the production schedule. For example, having an employee practice on a PBX console in a simulated set27

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ting before taking over as a telephone receptionist allows the person to learn the job more easily and without stress. Consequently, there may be fewer mistakes in handling actual incoming calls. One type of simulation is called vestibule training, which occurs in special facilities that replicate the equipment and work demands of jobs. Examples of vestibule training include airlines that use simulators to train pilots and cabin attendants, astronauts who train in mock-up space capsules, and nuclear power plant operators who use model operations control rooms and consoles. Behavioral simulations and computer-generated virtual reality have grown as computer technology and use of the Internet for training have grown. Virtual reality uses three-dimensional environments to replicate a job. Computers, audio equipment, and video equipment all may be a part of a virtual reality training approach. It is very useful where danger to the learner or to expensive equipment is involved, such as teaching pilots to fly a 757 aircraft or teaching police officers when to use their weapons and when to hold their fire in situations where their lives may be in danger. Cooperative Training Two widely used cooperative training methods are internships and apprenticeships. Both mix classroom training and on-the-job experiences. An internship is a form of on-the-job training that usually combines job training with classroom instruction in trade schools, high schools, colleges, or universities. Internships are advantageous to both employers and interns. Interns get “realworld” exposure, a line on the vita (resume), and a chance to examine a possible employer closely. Employers who hire from campuses get a costeffective selection tool that includes a chance to see an intern at work before a final hiring decision is made. Another form of cooperative training that is used by employers, trade unions, and government agencies is apprentice training. An apprenticeship program provides an employee with on-the-job experience under the guidance of a skilled and certified worker. Certain requirements for training, equipment, time length, and proficiency levels may be monitored by Labor Laws. Apprentice training is used most often to train people for jobs in skilled crafts, such as carpentry, plumbing, photoengraving, typesetting, and welding. Apprenticeships usually last two to five years, depending on the occupation. During this time the apprentice receives lower wages than the certified individual.

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Evaluation of Training Evaluation of training compares the post-training results to the objectives expected by managers, trainers, and trainees. Too often, training is done without any thought of measuring and evaluating it later to see how well it worked. Because training is both time-consuming and costly, evaluation should be done. The management axiom that “nothing will improve until it is measured” may apply to training assessment. In fact, at some firms, what employees learn is directly related to what they earn, which puts this principle of measurement into practice. One way to evaluate training is to examine the costs associated with the training and the benefits received through cost/benefit analysis. As mentioned earlier, comparing costs and benefits is easy until one has to assign an actual dollar value to some of the benefits. The best way is to measure the value of the output before and after training. Any increase represents the benefit resulting from training. However, careful measurement of both the costs and the benefits may be difficult in some situations. Therefore, benchmarking training has grown in usage. Benchmarking Training Rather than doing training evaluation internally, some organizations are using benchmark measures of training that are compared from one organization to others. To do benchmarking, HR professionals in an organization gather data on training and compare it to data on training at other organizations in the industry and of their size. Levels of Evaluation It is best to consider how training is to be evaluated before it begins. Donald L. Kirkpatrick identified four levels at which training can be evaluated. The ease of evaluating training becomes increasingly more difficult as training is evaluated using reaction, learning, behavior, and results measures. But the value of the training increases as it can be shown to affect behavior and results instead of reaction and learning-level evaluations. Later research has examined Kirkpatrick’s schematic and raised questions about how independent each level is from the others, but the four levels are widely used to focus on the importance of evaluating training. Organizations evaluate the reaction level of trainees by conducting interviews or by administering questionnaires to the trainees. Assume that 30 managers attended a two-day workshop on effective interviewing skills. A reaction-level measure could be gathered by having the managers complete a survey that asked them to rate the value of the training, the style of the instructors, and the usefulness of the training to them. However, the immediate reaction may measure only how much the people liked the training rather than how it benefited them. 67

Learning levels can be evaluated by measuring how well trainees have learned facts, ideas, concepts, theories, and attitudes. Tests on the training material are commonly used for evaluating learning and can be given both before and after training to compare scores. To evaluate training courses at some firms, test results are used to determine how well the courses have provided employees with the desired content. If test scores indicate learning problems, instructors get feedback, and the courses are redesigned so that the content can be delivered more effectively. To continue the example, giving managers attending the interviewing workshop a test at the end of the session to quiz them on types of interviews, legal and illegal questions, and questioning types could indicate that they learned important material on interviewing. Of course, learning enough to pass a test does not guarantee that the trainee can do anything with what was learned or behave differently. One study of training programs on hazardous waste operations and emergency response for chemical workers found that the multiple-choice test given at the end of the course did not indicate that those trained had actually mastered the relevant material. Also, as students will attest, what is remembered and answered on learning content immediately after the training is different from what may be remembered if the “test” is given several months later. Evaluating training at the behavioral level involves (1) measuring the effect of training on job performance through interviews of trainees and their coworkers and (2) observing job performance. For instance, a behavioral evaluation of the managers who participated in the interviewing workshop might be done by observing them conducting actual interviews of applicants for jobs in their departments. If the managers asked questions as they were trained and they used appropriate follow-up questions, then a behavioral indication of the interviewing training could be obtained. However, behavior is more difficult to measure than reaction and learning. Even if behaviors do change, the results that management desires may not be obtained. Employers evaluate results by measuring the effect of training on the achievement of organizational objectives. Because results such as productivity, turnover, quality, time, sales, and costs are relatively concrete, this type of evaluation can be done by comparing records before and after training. For the interviewing training, records of the number of individuals hired to the offers of employment made prior to and after the training could be gathered. The difficulty with measuring results is pinpointing whether it actually was training that caused the changes in results. Other factors may have had a major impact as well. For example, managers who completed the interviewing training program can be measured on employee turnover before and after the 68

training. But turnover is also dependent on the current economic situation, the demand for product, and the quality of employees being hired. Therefore, when evaluating results, managers should be aware of all issues involved in determining the exact effect on the training. 5.3 Personnel development Recognition of the importance of human resource development (HRD) in recent years has been heavily influenced by the intensification of overseas competition and the relative success of economies such as Japan, Germany and Sweden, where investment in employee development is emphasized. Technological developments and organizational change have gradually led some employers to realize that success relies on the skills and abilities of their employees, and this means considerable and continuous investment in training and development. This has also been underscored by the rise in human resource management, with its emphasis on the importance of people and the skills they possess in enhancing organizational efficiency. Such HRM concepts as ‘commitment’ to the company and the growth in the ‘quality’ movement have led senior management teams to realize the increased importance of training, employee development and long-term education. There has also been more recognition of the need to complement the qualities of employees with the needs of the organisation. Such concepts require not only careful planning but also a greater emphasis on employee development. Indeed, some commentators have seen this aspect of HRM as so important that they see HRD as an equally important discipline in its own right (Hall, 1984; Nadler, 1984). In HRM companies such as Hewlett-Packard, Xerox, IBM, Caterpillar and The Body Shop, HRD is seen as a major key to the success of the organisation, and is emphasized at all levels. HRD has also served as an agent for change or even survival in organisations such as Harley Davidson and EuroDisney. HRD programs are continuous, and shaped to fit the culture changes in the organisation in relation to the needs of the individual. In this way training and HRD become tools for effecting change, and the policy ramifications can be wide-ranging and strategic. As a result, HRD takes on a variety of forms and covers a multitude of subjects. HRD is just one of the instruments at the disposal of the HR department and the organisation in creating HR strategy. 69

Development is different from training, in that it is often the result of experience and the maturity that comes with it. It is possible to train most people to run a postage meter, drive a truck, operate a computer, or assemble a radio. However, development in such areas as judgment, responsibility, decision making, and communications is much more difficult, because such factors may or may not develop over time, either through life experiences or as part of a planned program. While managers may need a variety of experiences to enhance their development, a planned system of development experiences for all employees can help expand the overall level of capabilities in an organization. Exhibit 5.328 profiles development and contrasts it with training.

Exhibit 5.3. – Development vs. Training Development can be thought of as growing capabilities that go beyond those required by the current job; it represents efforts to improve employees’ ability to handle a variety of assignments. Development is beneficial to both the organization and the individuals. Employees and managers with appropriate experiences and abilities enhance the ability of an organization to compete and adapt to a changing competitive environment. In the development process, the individuals’ careers also gain focus and evolve. At the organizational level of analysis, executives responsible for crafting the broader organizational strategies should establish a system for developing the people who will manage and achieve those identified strategies. The successful CEO is likely to have employee and managerial succession 28

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plans on several levels and in several different succession pathways as part of that development. Specific development needs can be identified by HR planning. Currently, more jobs are taking on the characteristics of knowledge work. People in such jobs must combine mastery of technical expertise with the ability to work in teams with other employees, form relationships with customers, and analyze their own practices. The practice of management increasingly involves guiding and integrating autonomous, highly skilled people. Developing Capabilities Exactly what kind of development a given individual might need to expand his or her capabilities depends on both the person and the capabilities needed. However, the following are some important and common management capabilities to be developed:  action orientation  quality decisions  ethical values  technical skills Equally important but much less commonly developed capabilities for successful managers are team building, developing subordinates, directing others, and dealing with uncertainty. Developing capabilities requires assessing a person’s current capabilities, communicating that assessment to the person, and planning experiences or education to meet the development goals. When organizations take sole responsibility for developing capabilities, research shows that older, longerservice employees, lower-level employees, women, and less-educated employees receive less development than do managers. As noted earlier, when individuals take responsibility for their own development, they are guided by their development needs as they see and define them. Lifelong Learning Learning and development do not occur only once during a person’s lifetime; lifelong learning and development are much more likely. To professionals, lifelong learning may mean continuing education requirements to keep certified. For example, lawyers, CPAs, teachers, and dentists have continuing education requirements in most states to keep their licenses to practice. For semi-skilled employees, learning and development may involve training to expand existing skills and prepare for different jobs or promotions. Employers may help with some of the lifelong development that is necessary, typically done through programs at work or by paying for tuition reimbursement under specified circumstances. However, much of lifelong learning is 71

voluntary, taking place outside the job or work hours. The learning may have no immediate relevance to a person’s current job, but might enhance confidence, ideas, or enthusiasm. Of course, much valuable development occurs outside formal coursework as well. Choosing a Development Approach Possible development approaches are described next, under two major headings: job-site development and off-site development. Both are appropriate in developing managers and other employees. The HR Perspective discusses the variables that facilitate participation in development. When asked, “How does learning occur in your company?” a panel of senior HR executives responded with a mix of methods occurring both on-site and off premises. Investing in human intellectual capital, whether at work or off the job, seems to be a requirement of the “knowledge work” that is becoming more important for almost all employers. Yet identifying exactly the right mix and approaches for development needs remains an art rather than a science. Job-Site Methods A number of job-site development methods are available. A major difficulty with development that takes place on the job site is that too often, unplanned activities are regarded as development. It is imperative that managers plan and coordinate development efforts so that the desired development actually occurs. The oldest on-the-job development technique is coaching, which is the daily training and feedback given to employees by immediate supervisors. Coaching involves a continual process of learning by doing. For effective coaching, a healthy and open relationship must exist between employees and their supervisors or managers. Many firms conduct formal training courses to improve the coaching skills of their managers. Unfortunately, like other on-the-job methods, coaching can be temptingly easy to implement without any planning at all. Even if someone has been good at a job or a particular part of a job, there is no guarantee that he or she will be able to coach someone else to do it well – but that assumption is often made. It is easy for the “coach” to fall short in guiding the learner systematically, even if he or she knows which systematic experiences are best. Sometimes, too, doing a full day’s work gets priority over learning and coaching. Also, many skills have an intellectual component that might be better learned from a book or lecture before coaching occurs. Sometimes “executive” coaches are hired either by the individual executives or by employers to work with executives who are having problems of one sort or another. 72

Outside coaches are paid well for observing behavior and providing critiques and advice to the individuals. Assigning promising employees to important committees can give these employees a broadening experience and can help them to understand the personalities, issues, and processes governing the organization. For instance, assigning employees to a safety committee may give them the safety background they need to become supervisors. Also, they may experience the problems involved in maintaining employee safety awareness. But managers should be aware that it is possible for committee assignments to become time wasting activities, too. Job rotation is the process of shifting an employee from job to job. In some organizations, job rotation is unplanned; other organizations have elaborate charts and schedules, precisely planning the program for each employee. Job rotation is widely used as a development technique. For example, a promising young manager may spend three months in the plant, three months in corporate planning, and three months in purchasing. When properly handled, such job rotation fosters a greater understanding of the organization. At one large firm, job rotation is used during a 15-month sales training program. Trainees work in at least three areas, such as industrial sales, retail sales, and product training. Especially when opportunities for promotion are scarce, job rotation through lateral transfers may be beneficial in rekindling enthusiasm and developing new talents. The best lateral moves do one or more of the following:  Move the person into the core business.  Provide closer contact with the customer.  Teach new skills or perspectives. In spite of its benefits, managers should recognize that job rotation can be expensive. Furthermore, a substantial amount of managerial time is lost when trainees change positions, because they must become acquainted with different people and techniques in each new unit. An “assistant-to” position is a staff position immediately under a manager. Through such jobs, trainees can work with outstanding managers they might not otherwise have met. Some organizations have “junior boards of directors” or “management cabinets” to which trainees may be appointed. Assignments such as these are useful if trainees have the opportunity to deal with challenging or interesting assignments. Off-Site Methods Off-the-job-site development techniques can be effective because they give the individual an opportunity to get away from the job and concentrate solely on what is to be learned. Moreover, meeting with other people who are 73

concerned with somewhat different problems and come from different organizations may provide an employee with new perspectives on old problems. Various off-site methods are used. Many off-the-job development programs include some classroom instruction. The advantage of classroom training is that it is widely accepted because most people are familiar with it. But a disadvantage of classroom instruction is the lecture system, which encourages passive listening and reduced learner participation. Sometimes trainees have little opportunity to question, clarify, and discuss the lecture material. The effectiveness of classroom instruction depends on the group size, ability, instructor, and subject matter. Organizations often send employees to externally sponsored seminars or professional courses. These programs are offered by many colleges and universities. Some larger organizations have established training centers exclusively for their own employees. Many organizations encourage continuing education by paying for employees to take college courses. A very high proportion of organizations reimburse employees for school tuition. Some employers encourage employees to study for advanced degrees such as MBAs in this manner. Employees often earn these degrees at night after their regular workdays end. Human relations training originated with the well-known Hawthorne studies. Initially, the purpose of the training was to prepare supervisors for “people problems” brought to them by their employees. This type of training focuses on the development of the human relations skills a person needs to work well with others. Many human relations training programs are aimed at new or relatively inexperienced first-line supervisors and middle managers. Human relations programs typically have sessions on motivation, leadership, employee communication, and humanizing the workplace. The problem with such programs is the difficulty in measuring their effectiveness. The development of human relations skills is a long-range goal; tangible results are hard to identify over the span of several years. Consequently, such programs often are measured only by participants’ reactions to them. Reaction-level measurement is the weakest form of evaluating the effectiveness of training. There are some of the reasons managers are most likely to fail after being promoted to management. The most common reason – poor teamwork with subordinates and peers – is a human relations issue. The case study is a classroom-oriented development technique that has been widely used. Cases provide a medium through which trainees can study the application of management or behavioral concepts. The emphasis is on application and analysis, not mere memorization of concepts. 74

One common complaint is that cases sometimes are not sufficiently realistic to be useful. Also, cases may contain information inappropriate to the kinds of decisions that trainees would make in a real situation. This also can be one of the values of case studies, though, if the focus is to test whether students can select appropriate information. Role playing is a development technique requiring the trainee to assume a role in a given situation and act out behaviors associated with that role. Participants gain an appreciation of the many behavioral factors influencing on-the-job situations. For instance, a labor relations director may be asked to play the role of a union vice-president in a negotiating situation in order to give the director insight into the constraints and problems facing union bargaining representatives. Role playing is a useful tool in some situations, but a word of caution applies. Trainees are often uncomfortable in roleplaying situations, and trainers must introduce the situations well so that learning can occur. Several business games, or simulations, are available commercially. A simulation requires participants to analyze a situation and decide the best course of action based on the data given. Some are computer-interactive games in which individuals or teams draw up a set of marketing plans for an organization to determine such factors as the amount of resources to allocate for advertising, product design, selling, and sales effort. The participants make a variety of decisions, and then the computer tells them how well they did in relation to competing individuals or teams. Simulations have been used to diagnose organizational problems as well. When properly done, a simulation can be a useful management development tool. However, simulation receives the same criticism as role playing. Realism is sometimes lacking, so the learning experience is diminished. Learning must be the focus, not just “playing the game.” Many organizations send executives off to ordeals in the wilderness, called outdoor training, as a development tool. General Foods, Xerox, GE, Honeywell, Burger King, AMEX, Sears, and other organizations have sent executives and managers to the outdoors for stays of several days or even weeks. The rationale for these wilderness excursions is as follows: For individuals, such experiences can increase self-confidence and help them reevaluate personal goals and efforts. For work units, a shared risk outside the office environment can create a sense of teamwork. The challenges may include rock climbing in the California desert, whitewater rafting on the Rogue River, backpacking in the Rocky Mountains, or handling a longboat off the coast of Maine. The survival-type management development course may have more impact than many other management seminars. There are perils, 75

however, and some participants have not been able to handle the physical and emotional challenges associated with rappelling down a cliff or climbing a 40-foot tower. The decision whether to sponsor such programs should depend on the personalities of the employees who will be involved. Career development Management development can only be effective if careful consideration is given to career paths and opportunities for promotion and progression. This requires a well-prepared human resource plan that is future oriented. In the past, career development very much reflected more traditional organizational structures and cultures. Hierarchical progression was seen to be upwards through clearly defined junior, middle and senior management roles based on tenure and the possession of specialist skills and the display of patterns of expected behaviors. However, in the face of radical organizational change such pathways are now giving way to a more uncertain and less clearly defined progression where ‘automatic’ promotion is no longer available to many. How People Choose Careers Four general individual characteristics affect how people make career choices. Interests: People tend to pursue careers that they believe match their interests. Self-image: A career is an extension of a person’s self-image, as well as a molder of it. Personality: This factor includes an employee’s personal orientation (for example, whether the employee is realistic, enterprising, and artistic) and personal needs (including affiliation, power, and achievement needs). Social backgrounds: Socioeconomic status and the educational and occupation level of a person’s parents are a few factors included in this category. Less is known about how and why people choose specific organizations than about why they choose specific careers. One obvious factor is the availability of a job when the person is looking for work. The amount of information available about alternatives is an important factor as well. Beyond these issues, people seem to pick an organization on the basis of a “fit” between the climate of the organization as they perceive it and their own personal characteristics. Many factors may influence job choice, including the gender of the job informant who passed along job information. The “dream jobs” of young people ages 13 to 17 change over time. Further, people change jobs more now than ever before. A typical American 76

holds 8.6 jobs between ages 18 and 32, with most of the job changes occurring earlier rather than later. People clearly make choices about the stops along the way in their careers, basing these stops on many different factors. General Career Progression The typical career today probably will include many different positions, transitions, and organizations – more so than in the past, when employees were less mobile and organizations more stable as long-term employers. In this context, it is useful to think about general patterns in people’s careers and in their lives. Many theorists in adult development describe the first half of life as the young adult’s quest for competence and a way to make a mark in the world. According to this view, happiness during this time is sought primarily through achievement and the acquisition of capabilities. The second half of life is different. Once the adult starts to measure time from the expected end of his or her life rather than from the beginning. The need for competence and acquisition changes to the need for integrity, values, and well-being. Internal values take precedence over external scorecards for many. In addition, mature adults already have certain skills, so their focus may shift to other interests. Career-ending concerns reflect additional shifts also. Exhibit 5.429 shows a model identifying general periods in a career and a lifetime.

Exhibit 5.4. – General Periods in Careers Contained within this view is the idea that careers and lives are not predictably linear but cyclical. Periods of high stability are followed by transition, by less stability, and by inevitable discoveries, disappointments, and triumphs. Therefore, lives and careers must be viewed as cycles of structure and transition. This view may be a useful perspective for those suffering the negative results of downsizing and early career plateaus in large organiza29

Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651

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tions. Such a perspective argues for the importance of flexibility in an individual’s career and may encourage a willingness to acquire diverse skills. Whether retirement comes at age 50 or 70, it can require a major adjustment for many people. Some common emotional adjustments faced by retirees include: Self-management: The person must adjust to being totally self-directed after retirement. There is no longer any supervisor or work agenda dictating what to do and when to do it. Need to belong: When a person retires, he or she is no longer a member of the work group that took up so much time and formed an important social structure for so many years. What takes its place? Pride in achievement: Achievement reinforces self-esteem and is often centered around work. In retirement, past achievements quickly wear thin as a source of self-esteem. Territoriality: Personal “turf,” in the form of office, company, and title, is lost in retirement. Other ways to satisfy territorial needs must be found. Career of a manager Citing research by Benbow, Thomson (2001) captures the mood amongst UK and US managers about their future career development: a high proportion of respondents do not feel in control of their future career development. The pace of change over the last decade has shattered career and financial expectations, generating a need for individuals to re-examine many of the inherited wisdoms of the past. The demise of the job for life and the trend towards a wholly flexible employment market are clear examples of the extent to which new agendas are being set. Such concerns reflect in part the emphasis now being placed on managers to ensure their employability and marketability. This in turn reflects a redefining of the psychological contract that exists between managers and their employing organisation. In terms of career progression, the emphasis is shifting towards individuals who display greater flexibility, adaptability and personal characteristics such as emotional resilience. Some will find themselves facing a ‘boundary less’ career in which there will be less job security and career progression opportunities will be limited. Instead, career progression is likely to involve a greater emphasis on horizontal or diagonal rather than vertical movement, e.g. projects, overseas secondments and postings, departmental and job shifts, internal consultancy roles, acting as mentors and coaches etc. In terms of management development strategies, some significant rethinking of HR policies and approaches will be required at both an individual and an organizational level if they are to fit and support these significant 78

shifts in management career prospects. Organizational policies in terms of career planning workshops, mentoring arrangements, performance management systems and processes etc. will all require reviewing. The new imperative for organisations will be to ensure that their managers are made fully aware of the realities of the changing nature of their careers, with concomitant efforts being made to reward, retain and motivate those who find themselves moving sideways, not upwards. The risk of not attending to these issues is that the relationship between managers and their employing organisation becomes one that is short terms and calculative, stifling innovation, creativity and a developmental outlook. Unfortunately, there is evidence to suggest that some organisations appear to be unaware or unwilling to communicate the harsh reality of the changing nature of managerial careers to their managers. The picture emerging then is one of traditional career management structures and approaches struggling to balance and reconcile organizational and individual goals which themselves are changing in response to an increasingly self-centered, instrumental climate. In respect of management development approaches therefore, it is important that these reflect shifts in philosophy about managerial careers and that they encourage managers first and foremost to take a greater responsibility for their own development. In addition, managers will require the knowledge and skills to progress horizontally and diagonally, e.g. how to work in and lead a project team or how to make a success of an overseas posting. In this sense, management development approaches will have to reflect the required self-reliant, adaptive and intellectual capacities that such career moves suggest. Chapter 5. Training30 Questions for discussion 1. “Melinda!” bellowed Toran to the company’s HR specialist, “I’ve got a problem, and you’ve got to solve it. I can’t get people in this plant to work together as a team. As if I don’t have enough trouble with our competitors and our past-due accounts, now I have to put up with running a zoo. You’re responsible for seeing that the staff gets along. I want a training proposal on my desk by Monday.” Assume you are Melinda. a. Is training the solution to this problem? How can you determine the need for training? b. Summarize how you would conduct a needs assessment. 30

Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p.

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2. How should an organization assess readiness for learning? In Question 1, how do Toran’s comments suggest readiness (or lack of readiness) for learning? 3. Assume you are the human resource manager of a small seafood company. The general manager has told you that customers have begun complaining about the quality of your company’s fresh fish. Currently, training consists of senior fish cleaners showing new employees how to perform the job. Assuming your needs assessment indicates a need for training, how would you plan a training program? What steps should you take in planning the program? 4. Many organizations turn to e-learning as a less expensive alternative to classroom training. What are some other advantages of substituting elearning for classroom training? What are some disadvantages? 5. Suppose the managers in your organization tend to avoid delegating projects to the people in their groups. As a result, they rarely meet their goals. A training needs analysis indicates that an appropriate solution is training in management skills. You have identified two outside training programs that are consistent with your goals. One program involves experiential programs, and the other is an interactive computer program. What are the strengths and weaknesses of each technique? Which would you choose? Why? 6. Consider your current job or a job you recently held. What types of training did you receive for the job? What types of training would you like to receive? Why? 7. Explain how to assess employees’ readiness for training. 8. Summarize how to implement a successful training program. Situation for discussion A manufacturing company employs several maintenance employees. When a problem occurs with the equipment, a maintenance employee receives a description of the symptoms and is supposed to locate and fix the source of the problem. The company recently installed a new, complex electronics system. To prepare its maintenance workers, the company provided classroom training. The trainer displayed electrical drawings of system components and posed problems about the system. The trainer would point to a component in a drawing and ask, “What would happen if this component were faulty?” Trainees would study the diagrams, describe the likely symptoms, and discuss how to repair the problem. If you were responsible for this company’s training, how would you evaluate the success of this training program? Suppose the maintenance supervisor has complained that trainees are having difficulty trouble-shooting problems with the new electronics system. They are spending a great deal of time on problems with the system and com80

ing to the supervisor with frequent questions that show a lack of understanding. The supervisor is convinced that the employees are motivated to learn the system, and they are well qualified. What do you think might be the problems with the current training program? Case study – Training employees to respect privacy Many employees deal with information that requires a respect for someone’s privacy. Examples include employees who process data related to patients’ or employees’ health, clients’ financial matters, and corporate secrets, such as a new product under development. Employees also need to identify appropriate boundaries with one another: for instance, when, if ever, is it OK for one employee to read another’s e-mail messages without permission? The answers to such questions must meet ethical (and sometimes legal) requirements. For example, some companies have fired employees for sending e-mail that is “inappropriate” but haven’t clarified for their employees how to measure appropriateness—or even that the company monitors e-mail. To help employees identify situations requiring protection of others’ privacy and to teach them how to handle those situations appropriately, some companies provide training in privacy matters. For instance, hospitals may train employees to notice, report, and prevent situations where carelessness with computers or paper makes it possible that the privacy of patients’ data was compromised. Employees responsible for a company’s information system need policies and guidance for identifying and communicating the boundaries between employees’ privacy rights and the organization’s right to know what its employees’ are doing and communicating. At Claremont Savings Bank, training in privacy begins at employee orientation. That training program includes case studies of actual situations involving customers’ privacy. To reinforce those lessons, the human resource department for the New Hampshire bank uses real-world privacy examples in ongoing communications with the bank’s employees. In addition, every year, Claremont’s board of directors reviews and approves the bank’s privacy policy, and then the HR department communicates with employees to describe any changes or areas needing reinforcement31. Questions 31

Eric Krell, “Privacy Matters,” HR Magazine, February 2010, Business & Company Resource Center, http://galenet.galegroup.com ; Jay Cline, “Privacy Training GoneAwry,” Computerworld, February 8, 2010, Business & CompanyResource Center, http://galenet.galegroup.com ; and“Security: Employees Are Key,” Health Management Technology,January 2010, Business & Company Resource Center, http://galenet.galegroup.com .

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1. In general, what skills and abilities do employees need for making ethical decisions about privacy? What else to they need besides skills and abilities? 2. Suppose you became responsible for providing training in privacy at Claremont Savings Bank. Describe the training methods you think would be most effective, and explain why you chose those methods. 3. Suppose you work in a company’s human resource department, and a rumor has reached you that one of the employees during her lunch hour sent out an e-mail to a few friends, describing an embarrassing but not illegal situation she had been in over the weekend. Someone from the company’s IT department came to you with the news. What should be your response to this situation? Where in the company are ethical (or legal) issues that should be addressed? How will you address them?

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CHAPTER 6. PERFORMANCE MANAGEMENT 6.1 Performance measurement As a separate management concern the issue of reward systems is fairly recent, indeed reward management has often been viewed as the ‘poor relation’ of HRM concerned with ‘systems, figures and procedures’. During the development of a ‘factory’-based economy, owners found that they were unable to control the ‘effort’ side of the bargain effectively. Workers, who were previously self-controlled and motivated in many respects by subsistence, worked in small ‘cottage’ industries within which the product of their labor was owned by the producers (workers themselves; notably in regard to the skilled artisans) and they worked as hard as necessary in order to meet their subsistence needs. Owners found that getting workers to keep regular hours and to commit the effort owners considered to constitute ‘a fair day’s work’ was problematic. In response to this dilemma they employed the ‘butty’ system of reward management. Under this system owners committed a specific level of investment to a selected group of workers (normally skilled artisans) who then hired labor on ‘spot contracts’ by the day. The major problem for the owners with this system was that these ‘subcontractors’ had control over the effort/reward bargain and were able to enrich themselves at the expense of the owners. The owners enjoyed little or no control over the process of production so the system was economically inefficient and failed to deliver the returns (rents/profits) required or more importantly that were possible from the process of industrialization. From this group of ‘favored’ workers, along with the introduction of some university graduates there grew a new management cadre. This was a slow process. These changes did little to address the problems associated with the effort/reward bargain, meaning productivity was below optimum levels. In part the problem was generated by the fact that ‘the managers’ brain was still under the workers’ cap’, more precisely that these managers rarely possessed the skills or knowledge of the production process held by the workers. This led to lower than optimum levels of production and reduced profits, a system F.W. Taylor described as ‘Systematic Soldiering’. This activity was engaged in by workers, according to Taylor, ‘with the deliberate object of keeping their employers ignorant of how fast work can be done’ (Taylor, 83

1964). From his observations Taylor took the view that workers acting in this manner were merely behaving as ‘economically rational actors’ desiring their own best interests. It was clear therefore that management needed to take the reins of the production process and reclaim their right to determine the outcome of the wage/effort bargain. Taylor, as the so-called ‘father of Scientific Management’, developed a system of measuring work which assisted the process of reclaiming managerial rights. Jobs were broken down into specific elements which could then be timed and rated, whilst in the process, returning the determination of the speed of work to management and allowing for the development of pay systems which reflected, however crudely, performance. This scientific system devised by Taylor became the basis of countless pay systems operating effectively alongside the routinization and deskilling of work which is often associated with Scientific Management. Whilst this allowed management to reassert their control over the level of outputs, to relocate the managers’ brain under their own hats and hence the determination of the wage/effort bargains, it did generate problems in relation to managerial attempts to convince workers to take work seriously. In straightforward terms we can suggest that the ‘Measured-Work’ techniques advocated by adherents of Taylorism further separated conception from execution and led to feelings of alienation. Alienation can be defined as ‘various social or psychological evils which are characterized by a harmful separation, disruption or fragmentation which sunders things that properly belong together’ (Wood, 2000); in our terms that means the separation of workers from that which they produce. Blauner (1964) argued that such an objective state is created as an offshoot of the subjective feelings of separation which workers experience under modern production systems. These feelings and their outcomes can be briefly outlined in the following manner:  Powerlessness – the inability to exert control over work processes.  Meaninglessness – the lack of a sense of purpose as employees only concentrated on a narrowly defined and repetitive task and therefore could not relate their role to the overall production process and end product.  ‘Self-estrangement’ – the failure to become involved in work as a mode of self-expression.  Isolation – the lack of sense of belonging. Measuring the outcomes Where the objectives relate to numbers, increased sales or an increased production of widgets, for example, the measurement appears unproblematic. However, not all of us are ‘sales’ representatives or ‘widget’-makers; indeed, 84

in the current economic climate such crude measures may be inappropriate and in some respects a return to ‘old pay’ notions of piecework. The growth of ‘knowledge’ workers has been accompanied by a change to competencebased approaches to measurement which centre on the three stages of competence development (know-what, know-why and know-how). Therefore the outcomes can be measured in relation to the individual’s success in deploying, integrating and improving their competence in the identified field of activity. This allows the organisation to refocus on the development of competitive advantage through the application of ‘core knowledge’, including tangible and intangible assets. It allows the application of ‘just enough discipline’ to establish a relevant ‘core knowledge’ base which is defined by strategic business drivers and monitored to maintain balance (see Klien, 1998). The outcomes are often measured by the application of appraisal schemes. The purpose of performance planning, review and appraisal needs to be made clear if employees at all levels in the organisation are to play an active part in the process. It is possible that some employees and line managers may meet performance appraisal schemes with distrust, suspicion and fear, but an integrated and effective process can lead to increased organizational performance and employee motivation. It is important for employees to be genuinely involved in the design of an appraisal scheme, the evaluation of performance, and the objective-setting process. An appraisal scheme should be set up in an atmosphere of openness, with agreement between management, employees and employee representatives on the design of the scheme (Grayson, 1984: 177). Employees need to have a clear understanding of the purpose of the process (evaluative or developmental). From this we can suggest that the key principles in the design of a performance appraisal scheme are that it should be congruent with the organisation’s competitive strategy Exhibit 6.1. It needs to provide direction for continuous improvement activities and identify both tendencies and progress in performance. Manifestly it needs to facilitate the understanding of cause and effect relationships regarding performance while remaining intelligible to those employees to which it applies. It ought to be dynamic, covering all of the company’s business processes, and provide real-time information about all aspects of performance. A scheme that does not include employees’ attitudes is unlikely to allow performance to be compared against benchmarks because it will not be composed of effective performance measures. Finally, we can note that a performance appraisal system should provide a perspective of past, present and future performance which is visible to both employees and management. 85

Exhibit 6.1. – Linkage between Strategy, Outcomes, and Organizational Results The following list shows factors which were typically appraised: ● job knowledge and abilities (ability to perform all aspects of the job); ● adaptability/flexibility (ability to cope with change; multi-skilling for craft workers); ● productivity (individual work output); ● quality of work (attention to detail; consistent quality); ● attitude to work (commitment; motivation; enthusiasm); ● interaction with others (communication skills; team working ability); ● originality of thought/initiative (problem-solving); ● perception (ability to correctly interpret job requirements); ● judgement, use of resources (setting priorities; ability to plan and organise work); 86

● attendance and time keeping (number of and reasons for absence; punctuality); ● safety awareness (awareness of health and safety standards); ● need for supervision (leadership; ability to develop others); ● performance against targets (extent to which previously set targets have been achieved). From this we can suggest that assessment of these factors is achieved by a mixture of ‘subjective’ and ‘objective’ measures, almost always carried out by the employee’s immediate superior. The most commonly used measures will therefore relate to the individual’s attitude to work as well as the quality of their work and their attendance and time keeping. These will be assessed alongside their knowledge of the job and productivity, while more subjective measures involving a judgment of their ability to interact with others will be included in a good scheme in order to develop an insight into the effectiveness of recruitment procedures. In terms of ‘rating’ or ‘scoring’ individual employees, a number of ‘target areas’ can be identified for assessment. Accountabilities Accountabilities define the responsibilities of a certain job and the results that jobholders are expected to achieve. The employees’ actual output in terms of measurable productivity, timeliness and quality may be directly assessed as part of the appraisal scheme. This presupposes the employees’ job role is open to such quantitative assessment. Skills acquisition Employees may be assessed on their acquisition of new skills required to further improve their performance in the job or the continued development of essential skills. Jones the Bootmaker, a footwear company in the Midlands, have recently developed a new performance appraisal scheme in which they specifically appraise managers on the job they are currently required to do rather than place undue emphasis on developing skills and competences for future positions. Andrew White, company representative, stated ‘We found that the previous scheme was appraising managers on competences beyond their current job role, which in some cases led to demotivation’ (White, November 2002). Self-assessment This approach is mainly concerned with the identification of selfdevelopment needs by the actual employee. Margerison (1976) has suggested that self-assessment is the only way to give a complete picture of the performance of the employee and to avoid a ‘criticize– defend’ scenario. It does, however, require the employee to have a detailed and informed understanding of both the current and future needs of the job role and the organizational 87

needs against which they can accurately assess their current performance and so their future development needs. Paired comparisons This is a comparative method of performance assessment in which a superior assesses the performance of pairs of individuals, until each employee has been judged relative to each other employee, or until every possible combination of employees has been considered. A rating scale is then devised to show the number of times an individual employee was judged as ‘better’ (Roberts, 2001: 542). Ranking This is another comparative measure of assessment in which employees are assessed against pre-set and documented measures of effectiveness and placed in a hierarchy from best to worst. At Cummins Engines the appraisal system is based on a 10:80:10 ranking scheme. Those employees ranked in the top 10 per cent are identified for promotion and special development. Those identified within the next 80 per cent are maintained within the organisation and the remaining 10 per cent are effectively ‘managed out’ of the organisation. In Cummins the appraisal scheme is very open and there are no ‘secrets’ over how it operates in practice! Rating scale This is considered to be an ‘absolute’ method of performance assessment. The method, according to Roberts (2001: 542), lists a number of factors such as job-related qualities or behaviors or can include certain personality traits. Individual employees are then rated on the extent to which they possess these factors. The rating scale can be numerically, alphabetically or graphically represented on a continuum, i.e. from ‘very high’ to ‘very low’. However, when scoring is involved it can get ugly. The attraction of rating systems – the school-report model that ranks you as a team player from one to five, or rates your customer focus from A to E – is that the feedback is easy to gather and produces lots of data that can be aggregated and turned into bar charts. In this respect the HR department is happy because they’ve made a ‘fuzzy’ process look scientific, and someone from client services is proud because they got a 4 on knowledge leadership and their colleague only got a 3. But a number may not offer much insight on how to improve. For that you need thoughtful, qualitative comments – harder to gather, but much more helpful. Performance is essentially what an employee does or does not do. Performance of employees that affects how much they contribute to the organization could include:  Quantity of output  Quality of output 88

 Timeliness of output  Presence at work  Cooperativeness Obviously other dimensions of performance might be appropriate in certain jobs, but those listed are common to most. However, they are general; each job has specific job criteria or job performance dimensions that identify the elements most important in that job. For example, a college professor’s job might include the job criteria of teaching, research, and service. Job criteria are the most important factors people do in their jobs; in a sense, job criteria define what the organization is paying an employee to do. Because these criteria are important, individuals’ performance on job criteria should be measured, compared against standards, and then the results must be communicated to each employee. Jobs almost always have more than one job criterion or dimension. For example, a baseball outfielder’s job criteria include home runs, batting average, fielding percentage, and on-base performance, to name a few. In sports and many other jobs, multiple job criteria are the rule rather than the exception, and it follows that a given employee might be better at one job criterion than at another. Some criteria might have more importance than others to the organization. Weights are a way to show the relative importance of several job criteria in one job. In some universities a college professor’s teaching might be a bigger part of the job than research or service. Job criteria and information types The data or information that managers receive on how well employees are performing their jobs can be of three different types. Trait-based information identifies a subjective character trait—such as pleasant personality, initiative, or creativity—and may have little to do with the specific job. Traits tend to be ambiguous, and many court decisions have held that performance evaluations based on traits such as “adaptability” and “general demeanor” are too vague to use as the basis for performance-based HR decisions. Behavior-based information focuses on specific behaviors that lead to job success. For a salesperson, the behavior of “verbal persuasion” can be observed and used as information on performance. Behavioral information is more difficult to identify, but has the advantage of clearly specifying the behaviors management wants to see. A potential problem is that there may be several behaviors, all of which can be successful in a given situation. For example, identifying exactly what “verbal persuasion” is for a salesperson might be difficult. Results-based information considers what the employee has done or accomplished. For jobs in which measurement is easy and appropriate, a results-based approach works very well. However, that which is 89

measured tends to be emphasized, and the equally important but unmeasurable parts of the job may be left out. For example, a car sales representative who gets paid only for sales may be unwilling to do any paperwork or other work not directly related to selling cars. Further, ethical or even legal issues may arise when only results are emphasized and not how the results were achieved. Relevance of criteria When measuring performance, it is important that relevant criteria be used. Generally, criteria are relevant when they focus on the most important aspects of employees’ jobs. For example, measuring customer service representatives in an insurance claims center on their “appearance” may be less relevant than measuring the number of calls handled properly. This example stresses that the most important job criteria should be identified and be linked back to the employees’ job descriptions. Potential Criteria Problems Because jobs usually include several duties and tasks, if the performance measures leave out some important job duties, the measures are deficient. For example, measuring the performance of an employment interviewer only on the number of applicants hired, but not on the quality of those hires, could be deficient. If some irrelevant criteria are included, the criteria are said to be contaminated. An example of contaminated criteria might be appearance for a telemarketing sales representative who is not seen by the customers. Managers use deficient or contaminated criteria for measuring performance much more than they should. Performance measures also can be thought of as objective or subjective. Objective measures can be directly counted – for example, the number of cars sold or the number of invoices processed. Subjective measures are more judgmental and more difficult to measure directly. One example of a subjective measure is a supervisor’s ratings of an employee’s customer service performance. Unlike subjective measures, objective measures tend to be more narrowly focused, which may lead to the objective measures being inadequately defined. However, subjective measures may be prone to contamination or other random errors. Neither is a panacea, and both should be used carefully. Performance Standards To know that an employee produces 10 “photons” per day does not provide a complete basis for judging employee performance as satisfactory or not. A standard against which to compare the information is necessary. Maybe 15 photons is considered a sufficient day’s work. Performance standards define the expected levels of performance, and are “benchmarks,” or “goals,” or “targets” – depending on the approach taken. Realistic, measurable, clearly understood performance standards benefit both the organization and the em90

ployees. In a sense, performance standards define what satisfactory job performance is. It is important to establish standards before the work is performed, so that all involved will understand the level of accomplishment expected. The extent to which standards have been met often is expressed in either numerical or verbal ratings, for example, “outstanding” or “unsatisfactory.” It may sometimes be difficult for two or more people to reach agreement on exactly what the level of performance has been relative to the standard. 6.2 Motivating employees A precise definition of motivation is elusive since the concept involves numerous characteristics and perceptions of the employee and the current situation. But it is characterized by a certain level of willingness on the part of the employee to increase effort, to the extent that this exertion also satisfies some need or desire. At a basic level it can be seen that motivation is about ‘motives’ and ‘needs’. Motives are the internal drives and energies of an employee; they direct behavior, which results in outcomes. Any single outcome (higher performance levels at work) may be the result of multiple motives (the feeling of achievement, the desire to purchase a new car). Needs as internal drives are also important and can be physiological (I need sleep, I need warmth), social (I need the company of others) or based on self-esteem needs (I need to gain the respect of my peers for what I do) (Rosenfield and Wilson, 1999: 75). There are a number of competing definitions, so identifying the one that is just right in relation to reward management is practically impossible. It is better therefore to consider the common underlying assumptions which suggest that motivation is: ● an individual phenomenon – people are unique, and this means that motivation theories usually allow for uniqueness to be reflected in behavior; ● intentional and results in behaviors that are the result of conscious choices; ● a multifaceted concept, which involves (a) factors that arouse people to action (b) choice of behavior and (c) choices about the persistency and intensity of behavior; ● valid as a theory because it helps predict behavior by explaining what prompts the behavior of people, which means that it has very little concern with simply describing or categorizing behavior. An understanding of motivation is important within reward management and the development of reward strategies for a multitude of reasons. 91

Firstly, it enables organisations to ‘humanize’ work for employees so that work is inherently more satisfying, the assumption being that organisations have a moral obligation to make work as satisfying and enjoyable as possible. Secondly, an appropriate understanding of motivation allows organisations to make the jobs more satisfying for employees within the company. The underlying assumption is clearly that if employees are happier at work then they will be more productive. Early Theories of Motivation The 1950s were a fruitful time for the development of motivation concepts. Three specific theories were formulated during this period that, although heavily attacked and now considered questionable, are probably still the best-known explanations of employee motivation. These are the hierarchy of needs theory, Theories X and Y, and the motivation hygiene theory. Although more; explanations of motivation have been developed, you should know these theories for at least two reasons: (1) represent the foundation from which contemporary theories grew and (2) practicing managers regularly use theories and their terminology in explaining employee motivation Maslow’s Hierarchy of needs theory The best-known theory of motivation is probably psychologist Abraham Maslow's hierarchy of needs theory. It stated that within every human being exists a hierarchy of five types of needs: 1. Physiological needs Food, drink, shelter, sexual satisfaction, arid other bodily requirements. 2. Safety needs Security and protection from physical and emotional harm. 3. Social needs Affection, belongingness, acceptance, and friendship. 4. Esteem needs Internal esteem factors such as self-respect, autonomy, and achievement and external esteem factors such as status, recognition, and attention. 5. Sell actualization needs Growth, achieving one's potential, and selffulfillment; the drive to become what one is capable of becoming As each level of need is substantially satisfied, the next need becomes dominant. The individual moves up the hierarchy. I mm a motivation viewpoint, the theory says that, although no need is ever fully gratified, a substantially satisfied need no longer motivates. If you want to motivate someone, according to Maslow, you need to understand where that person is in the hierarchy and focus on satisfying needs at or above that level. 92

Maslow's need theory has received wide recognition, particularly among practicing managers. Its popularity can be attributed to the theory's intuitive logic .mil ease of understanding. Unfortunately, however, research does not generally validate the theory. Maslow provided no empirical substantiation for his theory, and several studies that sought to validate it found no support. McGregor’s X and Y theories Douglas McGregor proposed two distinc t views of the nature of human beings: a basically negative view, labeled Theory X, and a basically positive view, labeled Theory Y. After viewing the way managers dealt with employees, McGregor concluded that a manager's view of human nature is based on a group of assumptions, either positive or negative, and that the manager molds his or her behavior toward employees according to these suppositions. What does McGregor's analysis imply about motivation? The answer is best expressed in the framework presented by Maslow. Theory X assumes that physiological and safety needs dominate the individual. Theory Y assumes that social and esteem needs are dominant. McGregor himself held to the belief that the assumptions of Theory Y were more valid than those of Theory X. Therefore, he proposed that participation in decision making, responsible and challenging jobs, and good group relations would maximize work effort. Unfortunately, there is no evidence to confirm that either set of assumptions is valid or that accepting Theory Y assumptions and altering one's actions accordingly will make one's employees more motivated. In the real world, effective managers do make Theory X assumptions. For instance, Bob McCurry, vice president of Toyota's U.S. marketing operations, essentially follows Theory X. He drives his staff hard and uses a "crack-and-whip" style, yet he has been extremely successful at increasing Toyota's market share in a highly competitive environment. A manager who views employees from:  Theory X (negative) perspective believes: 1 Employees inherently dislike work and, whenever possible, will attempt to avoid it. 2 Because employees dislike work, they must be coerced, controlled, or threatened with punishment to achieve desired goals. 3 Employees will shirk responsibilities and seek formal direction whenever possible. 4 Most workers place security above all other factors associated with work and will display little ambition. 93

 Theory Y (positive) perspective believes: 1 Employees can view work as being as natural as rest or play. 2 Men and women will exercise self-direction and self-control if they are committed to the objectives. 3 The average person can learn to accept, even seek, responsibility. 4 The ability to make good decisions is widely dispersed throughout the population and is not necessarily the sole province of managers. Herzberg’s motivation-hygiene theory The motivation-hygiene theory was proposed by psychologist Frederick Herzberg. Believing that an individual's attitude toward his or her work can wry-well determine success or failure, Herzberg investigated the question of what people want from their jobs. He asked people to describe in detail situations in which they felt exceptionally good or bad about their jobs. Their responses were then tabulated and categorized. After analyzing the responses, Herzberg concluded that the replies of people I who felt good about their jobs were significantly different from the replies they gave when they disliked their jobs. Certain characteristics were consistently related to job satisfaction and others to job dissatisfaction. Intrinsic factors such as achievement, recognition, and responsibility were related to job satisfaction. When the people questioned felt good about their work, they tended to attribute these characteristics to themselves. On the other hand, when they were dissatisfied, they tended to cite extrinsic factors such as company policy and administration, supervision, interpersonal relationships, and working conditions. The data suggest, said Herzberg, that the opposite of satisfaction is not dissatisfaction, as was traditionally believed. Removing dissatisfying characteristics from a job does not necessarily make the job satisfying. Herzberg proposed that his findings indicate that the opposite of "satisfaction" is "no satisfaction" and the opposite of "dissatisfaction" is "no dissatisfaction." According to Herzberg, the factors that lead to job satisfaction are separate and distinct from those that lead to job dissatisfaction. Therefore, managers who seek to eliminate factors that create job dissatisfaction can bring about peace but not necessarily motivation: They are placating their workforce rather than motivating it. Because they don't motivate employees, the factors that eliminate job dissatisfaction were characterized by Herzberg as hygiene factors. When these factors are adequate, people will not be dissatisfied, but neither will they be satisfied. To motivate people on their jobs, Herzberg suggested emphasizing motivators, those factors that increase job satisfaction. 94

The motivation-hygiene theory is not without its detractors, who criticize, for example, the methodology Herzberg used to collect data and his fa ilure to account for situational variables. Regardless of any criticism, Herzberg's theory has been widely popularized, and few managers are unfamiliar with his recommendations. Much of the enthusiasm for enriching jobs—that is, making them more challenging and giving more autonomy to work—can be attributed to Herzberg's findings and recommendations. Contemporary Theories of Motivation Although the previous theories are well known, they unfortunately have not held up well under close examination. However, all is not lost. There are contemporary theories that all have reasonable degrees of valid supporting documentation. The plowing theories represent the current stateof-the-art explanations of employee motivation. McClelland’s three-needs theory David McClelland and others have proposed the three-needs theory, which maintains that there are three major relevant motives or needs in work situations: Need for achievement (nAch). The drive to excel, to achieve in relation to a set of standards, to strive to succeed; Need for power (nPow). The need to make others behave in a way that they would not have behaved otherwise; Need for affiliation (nAff). The desire for friendly and close interpersonal relationships. Some people have a compelling drive to succeed, but they are striving for personal achievement rather than for the rewards of success per se (nAch). They have a desire to do something better or more efficiently than it has been done before. This drive is the need for achievement. From his research on the achievement need, McClelland concluded that high achievers differentiate themselves by their desire to do things better. They seek situations in which they can assume personal responsibility for finding solutions to problems, in which they can receive rapid and unambiguous feedback on their performance in order to tell whether they are improving, and in which they can set moderately challenging goals. High achievers are not gamblers; they dislike succeeding by chance. They prefer the challenge of working at a problems and accepting the personal response for success or failure rather than leaving the outcome to chance or the actions of others. An important point is that they avoid what they perceive to be very easy or very difficult tasks. The need for power (nPow) is the desire to have impact and to be influential. Individuals high in nPow enjoy being in charge, strive for influence 95

over others, and prefer to be in competitive and status-oriented situations. The third need isolated by McClelland is affiliation (nAff), which is the desire to be liked and accepted by others. This need has received the least attention from researchers. Individuals with high strive for friendships, prefer cooperative situations rather than competitive ones and desire relationships involving a high degree of mutual understanding. Adams’ equity theory Developed by J. Stacey Adams, equity theory says that employees perceive what they get from a job situation (outcomes) in relation to what they put into it (inputs) and then compare their input-outcome ratio with the inputoutcome ratios of relevant others. If workers perceive their ratio to be equal to those of the relevant others with whom they compare themselves, a state of equity exists. They perceive that their situation is fair-that justice prevails. If the ratios are unequal, inequity exists; that is, workers view themselves as underrewarded or overrewarded. When inequities occur, employees attempt to correct them. The referent with whom employees choose to compare themselves is an important variable in equity theory. The three referent categories have been classified as "other," "system," and "self." The other category includes individual with similar jobs in the same organization and friends, neighbors, or professional associates. On the basis of information through word of mouth, newspapers, and magazine articles on issues such as executive salaries or a recent union contract, employees compare their pay with that of others. The system category considers organizational pay policies and procedures and the administration of that system. It considers organization-wide pay policies, both implied and explicit. Patterns by the organization in terms of allocation of pay are major determinants in this category. The self category refers to input-outcome ratios that are unique to the individual. It reflects personal experiences and contacts. This category is influenced Я criteria such as previous jobs or family commitments. The choice of a particular set of referents is related to the information available about referents as well as to the perceived relevance. Equity theory recognizes that individuals are concerned not only with the absolute rewards they receive for their efforts but also with the relationship of those rewards to what others receive. They make judgments concerning the relationship between their inputs and outcomes and the inputs and outcomes of others. On the basis of one's inputs, such as effort, experience, education, and competence, one compares outcomes such as salary levels, raises, recognition other factors. When people perceive an imbalance in their input-outcome ratio relative to those of others, they experience tension. This 96

tension provides the basis for motivation as people strive for what they perceive to be equity and fairness. The theory establishes four propositions relating to inequitable pay, listed below, that have generally proven to be correct. Research consistently confirms the equity thesis: Employee motivation is influenced significantly by relative rewards as well as by absolute rewards. Whenever employees pi inequity, they will act to correct the situation. The result might be lower or higher productivity improved or reduced quality of output, increased absenteeism, or voluntary resignation.  If paid according to time, overrewarded employees will produce more than equitably paid employees. Hourly and salaried employees will generate a high quantity or quality of production in order to increase the input side of the ratio and bring about equity.  If paid according to quantity of production, overrewarded employees will produce fewer but higher-quality units than equitably paid employees. Individuals paid on a piece-rate basis will increase their effort to achieve equity, which can result in greater quality or quantity. However, increases in quantity will only increase inequity, because every unit produced results in further overpayment. Therefore, effort is directed toward increasing quality rather than quantity.  If paid according to time, underrewarded employees will produce less or poorer-quality output. Effort will be decreased, which will bring about lower productivity or poorer-quality output than equitably paid subjects produce.  If paid according to quantity of production, underrewarded employees will produce a large number of low-quality units in comparison with equitably paid employees. Employees on piece-rate pay plans can bring about equity because trading off quality of output for quantity will increase in rewards with little or no increase in contributions From the preceding discussion, however, we should not conclude that equity theory is without problems. The theory leaves some key issues still unclear. For instance, how do employees define inputs and outcomes? How do they combine and weigh their inputs and outcomes to arrive at totals? When and how do the change over time? Regardless of these problems, equity theory has an impressive amount of research support and offers us some important insights into employee motivation. Hackman’s and Oldham’s Job characteristics model What differentiates one job from another? We know that a traveling salesperson's job is different from that of an emergency-room nurse. And we 97

know that both of those jobs have little in common with the job of an editor in a newsroom or that of f component assembler on a production line. But what is it that allows us to these distinctions? Currently, the best answer is something called the job characteristics model (JCM) developed by J. Richard Hackman and Greg R. Oldham. According to Hackman and Oldham, any job can be described in terms of the nig five core job dimensions:  Skill variety The degree to which the job requires a variety of activities so the worker can use a number of different skills and talents.  Task identity The degree to which the job requires completion of a whole and identifiable piece of work.  Task significance The degree to which the job affects the lives or work of other people.  Autonomy The degree to which the job provides freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out.  Feedback The degree to which carrying out the work activities required by the job results in the individual's obtaining direct and clear information about the effectiveness of his or her performance. Table 6.1 offers examples of job activities that rate high and low for each eristic. The links between the job dimensions and the outcomes are moderated or adjusted by the strength of the individual's growth need; that is, by the employee's desire for self-esteem and self-actualization. This means that individuals with a high growth need are more likely tо experience the expected psychological states when their jobs are enriched than are their counterparts with a low growth need. Moreover, they will respond more positively to the psychological states when they are present than will low-growthneed individuals. Research on the JCM has found that the first three dimensions – skill variety, task identity, and task significance – combine to create meaningful work. That is, three characteristics exist in a job; we can predict that the person will view his or her job as important, valuable, and worthwhile. Autonomy gives the worker a feeling of personal responsibility for the results, and feedback lets the employee know effectively he or she is performing. Table 6.1. – Examples of job activities Skill Variety High variety The owner-operator of a garage who does electrical repair, rebuilds engines, does body work, and interacts with customers. Low variety A body shop worker who sprays paint eight hours a day 98

Task Identity High identity A cabinetmaker, who designs a piece of furniture, selects the wood, builds the object, and finishes it to perfection. Low identity A worker in a furniture factory who operates a lathe solely to make table legs. Task Significance High signifi- Nursing the sick in a hospital intensive care unit cance Low signifi- Sweeping hospital floors cance Autonomy High auton- A police detective who schedules his or her own work for the omy day, makes contacts without supervision, and decides on the most effective techniques for solving a case. Low auton- A police telephone dispatcher who must handle calls as they omy come accord to a routine, highly specified procedure. Feedback High feedAn electronics factory worker who assembles a modem and back then tests it to determine if it operates properly. Low feedAn electronics factory worker who assembles a modem and back then routes it to quality control inspector who tests it for proper operation and makes needed adjustments. From a motivational standpoint, the JCM says that internal rewinds are obtained when one learns (knowledge of results) that one personally (experienced responsibility) has performed well on a task that one cares about (experienced meaningfulness). The more these three conditions are present, the greater will be the employee's motivation, performance, and satisfaction. Jobs score high on motivating potential if they are high on at least one of the three factors that lead to experiencing meaningfulness (skill variety, task identity, or task significance). They must also be high on both autonomy and feedback. Creating jobs that meet these requirements can result in a high score. In doing so, motivation, performance, and satisfaction will be positively affected, and the likelihood of absenteeism and turnover will be decreased. The job characteristics model has been well researched. Most of the evidence supports the general framework of the theory – that is, there is a set of multiple job characteristics, and these characteristics affect behavioral outcomes. However, there is still considerable debate about the five specific core dimensions in the JCM and the validity of growth-need Strength as a moderating variable. 99

Vroom’s expectancy theory Currently the most comprehensive explanation of motivation is Victor Vroom’s expectancy theory. Though the theory has its critics, most of the research evidence supports it. Expectancy theory states that an individual tends to act in a certain way on the basis of the expectation that the act will be followed by a given outcome and the attractiveness of that outcome to the individual. It includes three variables or relationships: 1. Effort-performance linkage. The probability perceived by the individual that exerting a given amount of effort will lead to performance. 2. Performance-reward linkage. The degree to which the individual believe that performing at a particular level will lead to the attainment of a desired outcome. 3. Attractiveness. The importance that the individual places on the potential, outcome or reward that can be achieved on the job. This variable considers goals and needs of the individual. Although this might sound complex, it really is not that difficult to visualize. The theory can be summed up in the following questions: How hard do I have to work to achieve a certain level of performance, and can I actually achieve that level? What reward will performing at that level get me? How attractive is this reward to me, and does it help achieve my goals? Whether one has the desire to produce at any given time depends on one's particular goals and one's perception of the relative worth of performance as a path to the attainment of those goals. The strength of a person's motivation to perform (effort) depends on how strongly that individual believes that he or she can achieve what is being attempted, if the goal is achieved (performance), will he or she be adequately rewarded by the organization? If so, will the reward satisfy his or her individual goals? Let us consider the four steps inherent in the theory and then attempt to apply it. First, what perceived outcomes does the job offer the employee? Outcomes may be positive: pay, security, companionship, trust, employee benefits, a chance to use talent or skills, or congenial relationships. On the other hand, an employee may view the outcomes as negative: fatigue, boredom, frustration, anxiety, harsh supervision, or threat of dismissal. Reality is not relevant here: The critical issue is what the employee perceives the outcome to be, regardless of whether his or net perceptions are accurate.

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Chapter 6. Practice32. Questions for discussion 1. How does a complete performance management system differ from the use of annual performance appraisals? 2. Give two examples of an administrative decision that would be based on performance management information. Give two examples of developmental decisions based on this type of information. 3. How can involving employees in the creation of performance standards improve the effectiveness of a performance management system? (Consider the criteria for effectiveness.) 4. Consider how you might rate the performance of three instructors from whom you are currently taking a course. (If you are currently taking only one or two courses, consider this course and two you recently completed.) a. Would it be harder to rate the instructors’ performance or to rank their performance? Why? b. Write three items to use in rating the instructors – one each to rate them in terms of an attribute, a behavior, and an outcome. c. Which measure in ( b ) do you think is most valid? Most reliable? Why? d. Many colleges use questionnaires to gather data from students about their instructors’ performance. Would it be appropriate to use the data for administrative decisions? Developmental decisions? Other decisions? Why or why not? 5. Imagine that a pet supply store is establishing a new performance management system to help employees provide better customer service. Management needs to decide who should participate in measuring the performance of each of the store’s salespeople. From what sources should the store gather information? Why? 6. Would the same sources be appropriate if the store in Question 5 used the performance appraisals to supportdecisions about which employees to promote? Explain. 7. Suppose you were recently promoted to a supervisory job in a company where you have worked for two years. You genuinely like almost all your coworkers, who now report to you. The only exception is one employee, who dresses more formally than the others and frequently tells jokes that embarrass you and the other workers. Given your preexisting feelings for the employees, how can you measure their performance fairly and effectively?

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Human resource management. R.L. Mathis, J.H. Jackson. 2002. South-Western College Pub. 651.

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8. Continuing the example in Question 7, imagine that you are preparing for your first performance feedback session. You want the feedback to be effective—that is, you want the feedback to result in improved performance. List five or six steps you can take to achieve your goal. 9. Besides giving employees feedback, what steps can a manager take to improve employees’ performance? Situation for discussion Suppose you are a human resource professional helping to improve the performance management system of a company that sells and services office equipment. The company operates a call center that takes calls from customers who are having problems with their equipment. Call center employees are supposed to verify that the problem is not one the customer can easily handle (for example, equipment that will not operate because it has come unplugged). Then, if the problem is not resolved over the phone, the employees arrange for service technicians to visit the customer. The company can charge the customer only if a service technician visits, so performance management of the call center employees focuses on productivity – how quickly they can complete a call and move on to the next caller. To measure this performance efficiently and accurately, the company uses electronic monitoring. a. How would you expect the employees to react to the electronic monitoring? How might the organization address the employees’ concerns? b. Besides productivity in terms of number of calls, what other performance measures should the performance management system include? c. How should the organization gather information about the other performance measures? Case study – Performance Review Takes a Page from Facebook In the world of Facebook or Twitter, people love to hear feedback about what they’re up to. But sit them down for a performance review, and suddenly the experience becomes traumatic. Now companies are taking a page from social networking sites to make the performance evaluation process more fun and useful. Accenture has developed a Facebook-style program called Performance Multiplier in which, among other things, employees post status updates, photos, and two or three weekly goals that can be viewed by fellow staffers. Even more immediate: new software from a Toronto startup called Rypple that lets people post Twitter-length questions about their performance in exchange for anonymous feedback. Companies ranging from sandwich chain Great Harvest Bread 102

Company to Firefox developer Mozilla have signed on as clients. Such initiatives upend the dreaded rite of annual reviews by making performance feedback a much more real-time and ongoing process. Stanford University management professor Robert Sutton argues that performance reviews “mostly suck” because they’re conceived from the top rather than designed with employees’ needs in mind. “If you have regular conversations with people, and they know where they stand, then the performance evaluation is maybe unnecessary,” says Sutton. What Rypple’s and Accenture’s tools do is create a process in which evaluations become dynamic – and more democratic. Rypple, for example, gives employees the chance to post brief, 140-character questions, such as “What did you think of my presentation?” or “How can I run meetings better?” The queries are e-mailed to managers, peers, or anyone else the user selects. Short anonymous responses are then aggregated and sent back, providing a quick-and-dirty 360-degree review. The basic service is free. But corporate clients can pay for a premium version that includes tech support, extra security, and analysis of which topics figure highest in employee posts. Rypple’s cofounders have also launched software called TouchBase that’s meant to replace the standard annual review with quick monthly surveys and discussions. Accenture’s software, which it’s using internally and hoping to sell to outside clients, is more about motivating employees than it is about measuring them. With help from management guru Marcus Buckingham, the consultancy’s product has a similar look and feel to other corporate social networks. The major difference is that users are expected to post brief goals for the week on their profile page, as well as a couple for each quarter. If they don’t, the lack of goals is visible to their managers, who are also alerted of the omission by e-mail. By prompting people to document and adjust their goals constantly, Accenture hopes the formal discussion will improve. “You don’t have to desperately re-create examples of what you’ve done,” says Buckingham. Typically, “managers and employees are scrambling to fill [evaluation forms] out in the 24 hours before HR calls saying ‘where’s yours?’ ” If having your performance goals posted for the world to see sounds a bit Orwellian, consider this: Rypple reports that some two-thirds of the questions posted on its service come from managers wanting feedback about business questions or their own performance. The biggest payoff of these social-network-style tools may prove to be better performance by the boss33.

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Jena McGregor, “Performance Review Takes a Page from Facebook,” BusinessWeek, March 12, 2009, www.businessweek.com . 103

Questions 1. Based on the information given, discuss how well Performance Multiplier and Rypple meet the criteria for effective performance management: fit with strategy, validity, reliability, acceptability, and specific feedback. 2. How suitable would these tools be for fulfilling the strategic, administrative, and developmental purposes of performance management? 3. Think of a job you currently hold, used to have, or would like to have. Imagine that this employer introduced Performance Multiplier or Rypple to your workplace. Describe one area of your performance you would like to seek feedback about, and identify which people you would ask to provide that feedback. What concerns, if any, would you have about using this system to seek feedback about your performance?

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CONCLUSION This epilogue summarizes the debates about what the work of human resource management has contributed to organizational performance. In general language terms, a concept refers to an idea, and especially an abstract idea that in scholarly terms can be classified in pursuit of organizing knowledge and human experience. HRM is an experience that most of us undergo; most of us experience some form of employment; most of us experience ‘being managed’. In such contexts, not all of us are equally enamoured by being labeled ‘human resources’. HRM appears to be a field of work which has constantly to justify itself. Unlike other managerial functions, there is a difficulty distinguishing what the activities are in which HR Department engage which affect performance as opposed to the people management work of line managers and supervisors. No one doubts that how organization recruits, selects, rewards, develop and manages its people affects the employees’ motivation, effort and output. This textbook has attempted to clear up the role of human resource management in the effectiveness of the company and unravel the details of the policies in HRM. Without an understanding of nature of these polices and how they interrelate it would be impossible to comprehend HRM. Modern organizational setting is characterized by constant changing relation to environmental factors and human resources. As regard to the environmental factors, we find changes in the operating organizational structure, the network of the working procedures, customs on norms and the economic, political and the social patterns in which organizations exist. Moreover, there is a constant change in human resources; the individuals are employed daily with new creativity, ideas and experiences, while the existing workforce is also continuously changing their ideas, attitudes and even values. The human resources are assuming increasing significance in modern organizations. Obviously, majority of the problem in organizational setting are human and social rather than physical, technical or economic. The failure to recognize this fact causes immense loss to the nation, enterprise and the individual. It is a truism that productivity is associated markedly with the nature of human resources and their total environment consisting of interrelated, interdependent and interacting economic and non-economic (political, religious, cultural, sociological and psychological) factors. Thus, the significance of human resources can be examined from time to time. 105

REFERENCES 1. Anderson A.H. Effective Personnel Management: A Skills and ActivityBased Approach. Oxford: Blackwell Business. 1994 2. Black, J. Stewart, Dave Ulrich.. "The New Frontier of Global HR. 1999 3. Dowling, P., Schuler R. S. International dimensions of human resource management. PWS-Kent Pub. Co.1990. 192p. 4. Essentials of human resource management. S.Tyson. Elsevier. 2008. 464. 5. Evans, P. and Lorange, P. (1989) 'The two logics behind human resource management' 6. Fowler, A. How to plan an assessment centre. PM Plus. 1992 7. Fundamentals of human resource management. N.Hollenbeck, G.Wright. Mc-Graw-HilIrvin.2011. 590 p. 8. Hackett, P., Personnel: The Department at Work, London: IPM, 1991. 9. Human resource management. R.L. Mathis, J.H. Jackson. 2002. SouthWestern College Pub. 651. 10. Human resource management: contemporary approach. Textbook. J.Beardwell, T. Claydon. Pearson. 2010. 710 p. 11. Whitehill. A. M. Japanese management: tradition and transition. Publisher, Routledge, 1991.

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Educational Edition Национальный исследовательский Томский политехнический университет

ЧЕРЕПАНОВА Наталья Владимировна

УПРАВЛЕНИЕ ПЕРСОНАЛОМ Учебное пособие Издательство Томского политехнического университета, 2012 На английском языке Published in author’s version Science Editor Doctor of Economics, Professor Irina E. Nikulina Typesetting Name Cover design Name Printed in the TPU Publishing House in full accordance with the quality of the given make up page

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