Human Resource Management Human Resource Management

Human Resource
Management
IPM 213
Thomas H. JJäkel
äkel
Phone 00-2729-6305
-2729-6305
E -Mail thomas@siricon.com
E-Mail
01/2005 Thomas H. Jäkel 1

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

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

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

Chapter
1
What is
Human Resource
Management?

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

Job analysis
Human resource planning
Employee recruitment, selection, motivation, and orientation
Performance evaluation and compensation
Training and development
Labor relations
Safety, health, and wellness
It is action-oriented
It is people-oriented
It is globally-oriented
It is future-oriented

Strategic Importance of HRM
The increased strategic importance of HRM means that:
Human resource specialists must show that they

contribute to the goals and mission of the firm
The actions, language, and performance of the HRM

function must be:
Measured
Precisely communicated
Evaluated

Note
The new strategic

positioning of HRM
means that
accountability must
be taken seriously

Key Strategic HRM Concepts
Analyzing and solving problems from a profit-oriented, not just a service-

oriented, point of view
Assessing and interpreting costs or benefits of such HRM issues as

productivity, salaries and benefits, recruitment, training, absenteeism,
overseas relocation, layoffs, meetings, and attitude surveys
Using planning models that include realistic, challenging, specific, and

meaningful goals
Preparing reports on HRM solutions to problems encountered by the firm
Training the human resources staff and emphasizing the strategic

importance of HRM and the importance of contributing to the firm’s profits

Note
If the HRM function is

to be successful,
managers in other
functions must be
knowledgeable and
involved

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

Objectives of the HRM Function
Helping the organization reach its goals

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

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

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

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

HRM Strategy
The HRM strategy will help aggregate and allocate a

firm’s resources into a unique entity on the basis of:
Its internal strengths and weaknesses

Changes in the environment
The anticipated actions of competitors

Strategy, Objectives, Policies, Rules
Strategy
Strategy––The
Theplan
planthat
that
integrates
integratesmajor
majorobjectives
objectives
Objectives
Objectives––Goals
Goalsthat
thatare
are
specific
specificand
andmeasurable
measurable
Policies
Policies––Guides
Guidesto
to
decision
decisionmaking
making
Procedures/Rules
Procedures/Rules––Specific
Specific
directions
directionsfor
fordecision
decisionmaking
making
Levels of Performance
The Organization
Level Shareholders
Function A Function B Function C
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

Summary
HRM is action-oriented, individual-oriented, globally-oriented, and

future oriented - It focuses on satisfying the needs of individuals at
work
HRM is a necessary function - Effectively performed, it can make

the crucial difference between successful and unsuccessful
organizations
One of the challenges faced in HRM is that many decisions require

input from both operating managers and HR specialists
This dual role can lead to conflict, or it can result in more effective
HRM decisions

chapter
2
A Strategic Management
Approach to Human
Resource Management

A Diagnostic HRM Framework
The diagnostic approach
Can help operating managers focus on a set of relevant

factors
Offers a map that aids a person in seeing the whole

picture or parts of the picture

Diagnostic Approach to HRM
1. Diagnosis 2. Prescription
4. Evaluation 3. Implementation

Diagnostic Model for HRM
Diagnose External Internal Diagnose
Prescribe Environmental Environmental Prescribe
Implement Influences Influences Implement
Evaluate Evaluate
Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human
Resources
Focus of each process is on people and results
Desirable End Results
Socially
Socially Competitive,
Competitive,high
high Competitive,
Competitive,high
high
responsible
responsibleandand quality products
quality products quality services
quality services
ethical
ethicalpractices
practices
Internal & External Environment
Laws & Regulations Geographical Location Shareholders

Unions Strategy, Goals
Corporate Environment
Economy Culture
Productivity Nature of Task

Human Resource
Minorities Core Functions
Competitiveness Work Group
Labor Force Corporate Environment Leadership
Older Employees Educational Factors Experience

Key Job Factors
Degree of knowledge and ability to use information

technology
Degree of empowerment
Degree of physical exertion required
Degree of environmental unpleasantness
Physical location of work
Time dimension of work
Human interaction on the job
Degree of variety in the task
Task identity
Task differences and job design

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

Three Levels of Strategy
Strategic
(long term)
Managerial
(medium term)
Operational
(short term)

HR Activities by Level of Strategy (1)
LEVEL Employee Rewards (Pay Appraisal Development

Selection and and Benefits)
Placement
Strategic Specify the character- Establish reward Determine the level Plan development
(long term) istics of people needed program that will be type of perform-ance experiences for staff
to run business over competitive with crucial for the growth
long term domestic and inter- of the firm
national competitors
Examine labor force Establish reward Develop equitable Plan development
trends system that is linked performance criteria program with flexibil-
to strategic goals ity necessary to adjust
to change
Analyze immigration Link appraisal to
flows into the country accomplishment of
long-term objectives


Placement
Managerial Make longitudinal Set up five-year Validate systems Establish general
(medium validation of selection compensation pro- that relate current management devel-
term) criteria gression plan for conditions and future opment program
individuals needs
Develop recruitment Set up cafeteria-type Establish Provide for organiza-
marketing plan benefits menu assessment centers tional development
for development
Develop approach to Set up retirement Encourage self-

build labor resource packages development
pool


Placement
Operational Prepare staffing plans Administer wage and Use annual or more Use specific job-skill
(short term) salary program frequent appraisal training
system
Prepare recruitment Administer benefits Use day-to-day Use on-the-job

plans packages performance review training
systems
Review performance of Use Web-based

workers daily training on a 24/7
basis

Strategic Challenges Facing HRM
Diversity:
Building A
Technology Competitive
Workforce
Organizational
Contingent
Caliber of the Restructuring
Workers
Workforce and
Downsizing

People and the Diagnostic Framework
Employees’
Abilities of
Attitudes and
Employees
Preferences
Motivation of Personality of
Employees Employees

Organizational effectiveness is critically influenced

by human resource (HR) management practices
Changes in staffing, training, and compensation

form an integral part of a coordinated change effort
HR management systems must be in alignment

with other management systems

Summary
A sound HRM program can contribute to organizational end results.
Before choosing an HRM program, the diagnostic approach suggests
examining:
the nature of employees
the external environmental influences
the internal environmental influences
organizational factors
HRM has become a strategic area now recognized as important in

creating and implementing the overall strategies of a firm.
Organizational factors must be taken into account to maximize the

effectiveness of HRM.
The work sector in which the organization operates is a key factor on

management systems and the HRM function

chapter
5

Both a process and a set of plans

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

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Human Resource Planning Process
Strategic Planning HR Demand HR Supply
Technological forecasts
Technological forecasts
Economic forecasts Annual employment requirements
Economic forecasts Annual employment requirements Existing employment inventory
Market forecasts Numbers Existing employment inventory
Market forecasts Numbers After application of expected loss
Organizational planning Skills After application of expected loss
Organizational planning Skills and attrition rates
Investment planning Occupation categories and attrition rates
Investment planning Occupation categories
Annual operating plans
Annual operating plans
If none
Variances End
Variances End
IfIfsurplus IfIfShortage
surplus Shortage
Decisions Decisions
Action Decisions Decisions
-Layoffs -Overtime
Decisions -Layoffs -Overtime
- -Retirement -Recruitment
Retirement -Recruitment
- -etc -etc
etc -etc
End End
End End

The Organization
Level Shareholders
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

Factors Affecting Planning
Goals of the controlling interests in the organization

Government policies
Changing demographics and the future composition of
the workforce

Strategic and Human Resource Planning
Strategic Planning –an organization’s decision about:
What it wants to accomplish (its mission)

How it wants to go about accomplishing it
HR planning is important for developing a strategic plan

HR planning is critical to the implementation of the
strategic plan

Strategic Human Resource Management
The acknowledgement that HR policies and practices

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

Four Stages of HR Planning
Situation analysis or environmental scanning

Forecasting demand for human resources
Analysis of the supply of human resources
Development of plans for action

Analysis and Scanning
Strategic plan must adapt to environmental circumstances
HRM is a primary mechanism to be used during the adaptation process
e.g., rapid technological changes in the environment demand
employees with new skills
an effective HR plan that supports recruitment and selection allows
the firm to move quickly to remain competitive
Analyzing the Current Supply of Employees

Skills Inventory
Data summarizing the employee’s past
Data summarizing status of present skills
Data that focus on the future
Management Inventory
Maintaining the Skills Inventory
Interview
Questionnaire
Data storage and maintenance
Action Decisions: Shortage of Employees
Overtime
Training and promotions of present employees
Recruitment and training of less-skilled
employees
Recall of employees previously laid off
Use of part-time workers
Use of contingent workers

Action Decisions: Surplus of Employees
1. Attrition
2. Early 3. Creation of
retirements work
5. Layoffs 6. Terminations
4. Demotions

Human Resource Information Systems
Integrated approach to acquiring, storing, analyzing, and

controlling the flow of information about an organization
Useful in nearly all HRM functions
Can increase efficiency and response times of
labor/time intensive human resource activities
Specialized HRIS applications
Integrated HRIS for use by all employees
Executive information system (EIS)
Succession planning

Safeguarding Privacy in an HRIS
Review information-gathering practices to determine the best way to collect

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

Summary
There is no one best method for conducting HR planning
Methods and techniques all differ from organization to organization
Many companies do not devote enough time and energy to the HR planning
process
An effective HR plan should work in partnership with a strategic plan
Human resource planning can be an integral part of the HRM program
It is directly related to: recruitment, selection, training, and promotion
By matching supply and demand, the organization can know:

how many people of what type it needs to fill positions from within
(by promotion and training)
how many people it must acquire from outside (by recruiting and
selection)
chapter
6
Job Analysis and
Competency Modeling

Introduction
Organizations must have a systematic way to determine

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

Note
Studying and under-

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

Job analysis provides answers to …
How much time is taken to complete important tasks?

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

The Vocabulary of Job Analysis
Job analysis – A purposeful, systematic process for collecting information

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

Determine how job analysis information will be used
Select jobs to be analyzed
Collect data by using acceptable job analysis techniques
Prepare job description
Prepare job specification

The Organization
Level Shareholders
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

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

Who Should Conduct the Job Analysis?
External Internal
Job Analysis Job Analysis
Expert Expert
Supervisor Job Incumbent

Methods of Data Collection
Observation Interviews
Job Incumbent
Questionnaires
Diaries or Logs

Specific Quantitative Techniques
Functional Job Analysis
Position Analysis
Questionnaire
Management Position
Description Questionnaire

Position Analysis Questionnaire (PAQ)
Major sections of the PAQ:

Information input
Mental processes
Work output
Relationships with other people
Job context
Other job characteristics

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

Job Descriptions
A primary output of a systematic job analysis

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

Job Descriptions Include
Job Title Summary
Activities
Equipment Environment

Job Specifications
Evolve from the job description
Address the question:
“What personal traits and experience are needed to perform the job
effectively?”
Useful in offering guidance for recruitment and selection
Any trait or skill stated on the job specification should actually be required
for performance on the job
Job specifications must differentiate between:

Essential skills – those for which alternative ways of accomplishing
the job are not possible
Nonessential skills – can be accommodated by changing the
structure or work methods of the job
Under the Americans with Disabilities Act:
If disabled people could accomplish the job successfully after
accommodation, then it should be done

Note
Job design integrates

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

Job Characteristics Model of Work Motivation
Critical Personal
Core Job
Psychological and Work
Dimensions
States Outcomes
Skill variety
Experienced High internal
Task identify meaningfulness work motivation
of the work
Task significance High-quality
Experienced work performance
responsibility
Autonomy
for outcomes High satisfaction
of the work with the work
Knowledge of the Low absenteeism

Feedback actual results of and turnover
the work activities
Employee Growth
Need Strength

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

Summary
Job analysis plays a major role in HRM activities and

programs
The job is the major building block of an organization
Each characteristic of each job in an organization must

be clearly understood

chapter
7
Recruitment

Recruitment
Organizational activities that influence:

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

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
External Influences on Recruitment
Government
Competitiveness
Restrictions
Labor Market
Union Restrictions
Conditions
Composition of Location of the

the Labor Force Organization

Internal Influences
Strategy Goals
Corporate Culture Nature of the Task
Leader’s style and

Work Group
experience

Guidelines for Recruitment
Post notices regarding the availability of a job

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

The Organization’s View of Recruiting
Recruiting Requirements
Organizational Policies and

Practices
Organizational Image

Potential Employee’s View of Recruiting
Preferences
Preferencesof of Jobsearch
Job searchand
and
recruits for
recruits for findingaajob:
finding job:The
The
organizations
organizationsandand recruit
recruit
jobs
jobs
Applicants’ abilities, attitudes, and preferences are based on:

Work experiences
Influences by parents, teachers, and others
These influences affect them in two ways:
How they set job preferences
How they go about seeking a job

Responsibilities for Recruiting
In larger organizations, the HR department does the

recruiting
In smaller organizations, multipurpose HR people or

operating managers recruit and interview applicants

Internal Recruiting
Job posting and bidding
Inside moonlighting
Employees’ friends

External Recruiting
Media Advertising E-recruiting
Employment
Agencies
Executive Search
Firms
Special Events
Summer Internships Recruiting
College Recruiting

E-Recruiting: Key Issues to Keep in Mind
Be careful not to inadvertently screen out diverse

candidates
Make sure the job opening is communicated to large
portions of the target population
Recruiters need to figure out a way to track applicants
who apply for online job postings
Email communication might be too casual

Consequences of Job Preview: Traditional Preview
Sets initial job expectations too high

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

Consequences of Job Preview: Realistic Preview
Sets job expectations realistically

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

Alternatives to Recruitment
Overtime
Employee Leasing
Temporary Employment

Evaluating Recruiting
Effectiveness of Sources of recruits

recruiters

Summary
A better job of recruiting and matching employees to

jobs will mean:
Lower employee turnover
Greater employee satisfaction and organizational
effectiveness
The Internet is revolutionizing organizational
recruitment

chapter
8
Selection

Note
Selection – the process by which an

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

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Internal Factors Influencing Selection
Organization characteristics that can influence

the selection process:
Size
Complexity
Technological volatility
Attitude about hiring from within

External Factors Influencing Selection
Federal government employment laws and regulations

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

Selection Criteria
Experience and
Formal Education
Past Performance
Personal
Physical
Characteristics and
Characteristics
Personality Type

Reliability of Selection Criteria
Reliability – how stable or repeatable a measurement

is over a variety of testing conditions
How to assess reliability:

Test-retest reliability
Alternative-form reliability
Inter-rater reliability

Validity of Selection Criteria
Validity – addresses the questions of:
What a selection tool measures
How well it has measured it
It is not sufficient for a selection tool to be reliable
The selection tool must also be valid
Content Validity – degree to which a test, interview, or performance

evaluation measures the skill, knowledge, or ability to perform
Construct Validity – extent to which a selection tool actually measures

the unobservable trait that it claims to measure
Criterion-Related Validity – extent to which a selection technique can

accurately predict one or more important elements of job behavior
Predictive Validity
Concurrent Validity

Typical Selection Decision Process
1. Application blank
1. Preliminary
Preliminary
screening Biographical Information Blank
screening
Interview
2.
2. Employment
Employment
interview
interview
3.
3. Employment
Employment 4.
4. Background
Background &&
tests
tests reference
reference checks
checks
5.
5. Selection
Selection
decision
decision
6.
6. Physical
Physical
examination
examination

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

Employment Interview
Two strategies for effective us of interviews:

Structuring the interview to be reliable and valid
Training managers on best interview techniques
Unstructured interview
Structured interview
Behavioral description interview (BDI)
Situational interview (SI)

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

Reference Checks and Recommendations
Do not always provide an organization with meaningful

information about applicants
Concerns over the legality of asking for and providing
confidential information about applicants
Legal status surrounding reference-checking and
providing recommendations is not clear

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

Summary
The way that an organization hires employees is directly

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

chapter
9
Performance Evaluation
and Management

Performance Management
Process by which executives, managers, and supervisors work to align

employee performance with the firm’s goals
Defines, measures, monitors, and gives feedback
Performance evaluation is a crucial part of a firm’s performance

management process
The activity used to determine the extent to which an employee

performs work effectively
Informal performance evaluation system
Formal performance evaluation system

The Organization
Level Shareholders
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Purposes of Formal Performance Evaluation
Development
HR and
Motivation employment
planning
Legal HRM research

Communication compliance

Note
To provide information that can serve

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

Six Steps for a Systematic Process
Establish performance standards for each position and

the criteria for evaluation
Establish performance evaluation policies on when to
rate, how often to rate, and who should rate
Have raters gather data on employees’ performance
Have raters (and employees in some systems) evaluate
employees’ performance
Discuss the evaluation with the employee
Make decisions and file the evaluation

Characteristics of Effective Criteria
Reliability – a measure of performance must be

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

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

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

Performance Evaluation Methods
Individual Evaluation Multiple-Person

Methods Evaluation Methods

Individual Evaluation Methods
Graphic Rating
Scale
Forced Choice
Essay Evaluation
Individual
Evaluation
Critical Incident
Methods Technique
Behavioral Checklists and

Observation Weighted
Behaviorally Checklists
Scales
Anchored Rating
Scales
Advantages and Disadvantages of Some Individual
Methods of Performance Evaluation
Individual Methods Comments

Rating Scales Easy to use, easy to complete, relatively low cost; focuses too much on
person instead of on performance.
Forced Choice Selectively low cost, easy to use; difficult to explain to those evaluated.
Essay Good in providing specific feedback if evaluator is a good writer; difficult

in making comparisons across those being evaluated.
Critical Incidents Time consuming, must be disciplined to log in incidents, reveals critical
behaviors that can be fed back easily.
Behavior Scales Difficult to develop, time consuming, great for providing specific feedback
to aid in improving performance.

Multiple-Person Evaluation Methods
Paired
Ranking
Comparison
Forced Management by
Distribution Objectives

Advantages and Disadvantages of Some Multiple-
Person Methods of Performance Evaluation
Multiple-Person Comments
Methods
Ranking and Paired Hard to use for providing feedback, good for making comparisons
Comparisons among employees.
MBO Focuses on results that are important, sometimes too short-term
oriented, does not engage in comparisons among employees.

MBO Program Process
Supervisor and employee conduct meetings to define key tasks of the

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

Problems with the MBO Process
Too much paperwork is involved

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

Problems in Performance Evaluation
Opposition to
Evaluation
System Design and

Operating Problems
Rater Problems

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

Rater Problems
Standards of
Evaluation Halo Effect
Leniency or
Harshness
Rater Problems
Central Tendency
Error
Personal Bias “Recency of

(stereotyping; Events” Error
“similar to me”) Contrast Effects

The Feedback Interview
Can be effective if the evaluation information is

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

Summary
Properly performed, performance evaluation can

contribute to:
organizational objectives
employees’ development and satisfaction
These are goals of performance management

chapter
10
Compensation: An
Overview

Compensation
Deals with every type of reward individuals receive in

exchange for performing organizational tasks
Major cost of doing business
Chief reason why most individuals seek employment
An exchange relationship

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Why do we compensate employees?
Payment for Services Rendered?

Motivation?
Productivity?
Efficiency?
Cooperation?
Compliance?
Creativity?
Loyalty?
Competitiveness?
Social Reasons?
Legal Reasons?
…….?

Compensation Types
Compensation
Financial Non-Financial
Direct Indirect The Job Job Environment
• Wages • Unemployment • Skill Variety • Sound Policies

• Salaries • Health • Task Identity • Competent Staff
• Commissions • Pension • Task Significance • Leadership Model
• Bonuses • Retirement • Autonomy • Status Symbols
• Expenses • Workers’ Comp • Feedback • Working
• Allowances • Pay for time not Conditions
• Contributions worked • Workplace
• Employee Flexibility
Services

Objective of Compensation
To create a system of rewards that is equitable to the

employer and employee alike
The desired outcome is an employee who is:

Attracted to the work
Motivated to do a good job for the employer

Requirements
Adequate*
Equitable*
Incentive-
A Compensation providing*
system should
be: Cost-effective
(* focus of this chapter)
Acceptable to Secure
the employee
Balanced

External Influences on Compensation
Government
Competitiveness
Restrictions
Labor Market
Union Restrictions
Conditions
Composition of Location of the

the Labor Force Organization

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

Internal Influences on Compensation
Strategy Goals
Corporate Culture Nature of the Task
Leader’s style and

Work Group
experience

Pay and Motivation
Motivation – set of attitudes and values that

predisposes a person to act in a specific, goal-directed
manner:
the direction of behavior (working to reach a goal)
the strength of behavior (how hard or strongly the
individual will work)

Theories of Motivation
Herzberg’s
Needs Two-Factor
Theories Theory
Social Reinforcement
Expectancy
Comparison Theories
Theory
Theories

Pay and Employees’ Satisfaction
Pay Satisfaction – refers to an employee’s liking for or

dislike of the employer’s compensation package
(including pay and benefits)
Lawler’s Model – the distinction between the amount

employees receive and the amount they think others
are receiving is the immediate cause of pay satisfaction
or dissatisfaction

Pay dissatisfaction is a function of six
important judgments:
A discrepancy between what employees want and what

they receive
A discrepancy between a comparison outcome and what
they get
Past expectations of receiving more rewards
Low expectations for the future
A feeling of deserving or being entitled to more than they
are getting
A feeling that they are not personally responsible for
poor results

Pay and Employees’ Productivity
Studies indicate that if pay is tied to performance, the

employee produces a higher quality and quantity of
work
The key to making compensation systems more

effective is to be sure that they are directly connected to
expected behaviors

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

Pay-Level Strategies
High-Pay Strategy
Low-Pay Strategy
Comparable-Pay
Strategy

Factors Affecting the Choice of Pay Strategy
The motivation and attitudes held by management

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

Summary
The objective of the compensation function is to create a

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

chapter
11
Compensation: Methods
and Policies

Compensation System
Adequate
Equitable
Incentive-
A Compensation providing
system should
be: Cost-effective*
(* focus of this chapter)
Acceptable to Secure*
the employee*
Balanced*

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

Determination of Individual Pay
Three questions need to be addressed:

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

Pay differentials are based on:
Individual differences in experience, skills, and

performance
Expectations that seniority, higher performance (or

both) deserve higher pay

Reasons for pay differentials
Pay differentials allow firms to recognize that different employees

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

Methods of Payment
Flat Rates
Payment for Time

Worked
Variable Pay: Incentive

Compensation

Payment for Time Worked
General, across-the-board increase for all employees

Merit increases paid to some employees
based on some indicator of job performance
Cost-of-living adjustment (COLA)
based on the consumer price index (CPI)
Seniority

Variable Pay
Percentage of an employee’s paycheck is put at risk

If business goals are not met, the pay rate will not rise
above the lower base salary
Annual raises are not guaranteed
Helps manage labor costs
Does not guarantee equitable treatment of employees

Variable Pay: Key Design Factors
Support by Acceptance by
management employees
Supportive
organizational Timing
culture

Types of Variable Pay
Individual Incentives
Group Incentives
Organization Incentives

Individual Variable Pay
Merit incentives
Employees fail to make the connection between pay and performance
The secrecy of the reward is perceived by other employees as inequity
The size of the merit award has little effect on performance
Individual incentives
Piecework
production bonuses
Commissions
Possible only in situations where performance can be specified in

terms of output
e.g., sales dollars generated
e.g., number of items completed
Employees must work independently of each other so that individual

incentives can be applied equitably

Effective Individual Incentive Plans
The task is liked

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

Reasons to Use Team Incentives
When it is difficult to measure individual output

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

Organization-wide Incentives
Usually based on one of two performance concepts:

A sharing of profits generated by all employees
altogether
A sharing of money saved as a result of employees’
efforts to reduce costs

Approaches to Organization-wide Incentives
Suggestion
Gainsharing
Systems
Profit Sharing Ownership

Suggestion Systems: Essential Elements
Management commitment
Clear goals
Designated administrator
Structured award system
Regular publicity
Immediate response to each suggestion

Gainsharing Plans
• Employees earn bonuses tied to unit-wide performance as measured by a
predetermined, gainsharing formula
• Commonly used gainsharing plans:

• Lincoln Electric Plan
• Scanlon Plan
• Rucker Plan
• ImproShare
• Key Elements in Designing a Gainsharing Plan

• Strength of reinforcement
• Productivity standards
• Sharing the gains
• Scope of the formula
• Perceived fairness of the formula
• Production variability

Newer Approaches to Gainsharing
Business Plan
Gainsharing
Winsharing
Spot Gainsharing

Typical Profit Sharing Plans
Cash or current distribution plans provide full payment to

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

Ownership
Employee stock ownership plan (ESOP) – employees

receive stock in the company
ESOPs are tax qualified
i.e., in return for meeting certain rules designed to
protect the interests of plan participants, ESOP
sponsors receive various tax benefits
ESOPs are defined contribution plans
the employers makes yearly contributions that
accumulate to produce a benefit that is not defined in
advance

People-Based Pay
Skill-Based Knowledge-
Pay Based Pay
Credential-
Feedback Pay
Based Pay

Executive Pay
More likely to be based on comparative performance:

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

Issues in Compensation Administration
Pay Secrecy or
Openness
Pay Security
Pay Compression

Pay Security Plans
Guaranteed Supplementary
Annual Wage Unemployment
(GAW) Benefits (SUB)
Cost of Living
Adjustments Severance Pay
(COLAS)

Solutions to Pay Compression
Reexamining how many entry-level people are needed

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

Summary
There is a growing realization that traditional pay

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

chapter
12
Employee Benefits and
Services

Indirect Financial Compensation - Benefits
All employer-provided rewards and services (other than

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

Background
Most benefits and services are available to workers as

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

Changes in Benefits Programs
Then Now
Nuclear families of working male with Double-income families with and with-
female and 2.3 children at home out children, and single-head families
Employment for large part of career Multiple career industry, & job moves
White male-dominated workforce Multicultural workforce
Cradle-to-grave expectations Portability issues
Paternalistic employer Shared responsibility
Entitlement perception of benefits Benefits as part of total compensation
Low cost of benefits Benefits costs escalating faster than CPI
and employer’s ability to pay
Protection for illness Promotion of wellness
Single set of benefits Cafeteria and customized benefits
programs

The Role of Managers
Benefits & Services Operating Manager (OM) HR Manager (HRM)

Function
Benefits & services budget Preliminary budget approved Preliminary budget
or adjusted by top developed by HRM
management
Voluntary benefits & services Programs approved by OM Programs recommended by
(top management) HRM
Communication of benefits & OM cooperates with HRM Primary duty of HRM

services
Evaluation of benefits & Done by HRM

services
Administration of benefits & Done by HRM

services programs

Benefits and Services Programs
Voluntary Income in
Benefits Retirement
Mandated Benefits
Flexible Employee
Benefits Services

Mandated Benefits Programs
Unemployment
Insurance
Social Security
Workers’
Compensation

Unemployment Insurance
Unemployment tax paid by employer
Unemployment tax rates, eligibility requirements, weekly

benefits, and duration of regular benefits vary from state
to state
Employee receives compensation for a limited time –

typically a maximum of 26 weeks

Social Security
Social Security Medicare

Retirement income Hospital insurance
Disability benefits (Medicare, Part A)
Death benefits Medical Insurance
Survivor’s benefits (Medicare, Part B)
1.45% of eligible earnings
6.2% of eligible earnings
up to (unlimited)
$84,900 (2002) Employee and employer
funded
$87,000 (2003)
Employee and employer
funded

Workers’ Compensation
Based on the principle of liability without fault

Employer absolutely liable for providing benefits to employees that
result from occupational disabilities or injuries regardless of fault
Employers assume costs of occupational injuries and accidents
Employers pay premium to insurance company or state fund
experience-rated (5-10 year period)
Disability must be work related
Benefits include:
medical care
disability income
Rehabilitation
death benefits

Voluntary Benefits Programs
Insurance Protection
Retirement Plans
Compensation for
Time Not Worked

Compensation for Time Not Worked
Paid
Holidays
Paid Personal
Vacations Time Off
Maternity
Sick Family and Parental
Leave Leave Leave

Employer-Purchased Insurance
Health Insurance
Life Insurance
Disability Income
Replacement

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

Income in Retirement Programs
Retirement Individual
Income from Retirement
Savings & Accounts
Work (IRAs)
Simplified Private
Employee 401 (k)
Pensions
Pension Plans
IRAs

Pension Benefits
Defined benefit pension plan

Specifies the benefit employees will receive at
retirement
Defined contribution pension plan

Specifies the employer’s contribution
Cannot predetermine the employee’s actual pension
benefit

Employee Services
Stock
Ownership Education
Plans Programs
Pre-retirement
Employee Programs
Services
Childcare
Social and
Recreational Eldercare
Programs Financial
Services

Flexible Benefits Plans
Allow employees to choose between two or more types

of benefits
Common choices include:
health care
life insurance
disability insurance
option of receiving cash to spend on coverage in the
open market

Reimbursement Accounts
Also known as flexible spending accounts

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

Managing an Effective Benefits Program
Step 1: Set Objectives and Strategy for Benefits

Pacesetter strategy
Comparable benefits strategy
Minimum benefits strategy
Step 2: Involve Participants and Unions
Step 3: Communicate Benefits
Step 4: Monitor Costs Closely

Summary
Top managers must consider the following when making decisions

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

chapter
13
Training and Development

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Nature of Corporate Training
Training is often seen as an employee benefit, which is not expected to

provide a tangible return. Isn’t training just part of enlightened management,
intrinsically good unquestionably valuable in unmeasurable ways?
No.
Training must be treated like any other investment.
If the return on a given training investment is not easily quantified, how

can managers describe the specific benefits to the organization of that
training effort?
How can the investment in training to be assessed before the investment
is made?
If top managers are committed to spending a certain percentage of
revenue on training, how can they be sure that they are investing in the
right training?

Common View
In a prevailing view, people exist in a vacuum. If managers want to establish or

improve a certain performance output, all they need to do is arrange for the
proper training input.
Skills/Knowledge Performance
Training is likely to be prescribed when training is not needed.

The Systems View
The Organization
Level Shareholders
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

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

Proactive Training Planning
Identify major clients (by business unit or department, with a senior

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

HRM as Performance Department
HRM can transform itself from a training operation to the organization’s
performance department.
Understand that their mission is to improve performance, not to provide

skills and knowledge.
Only conduct training and development that are linked to organization
performance needs.
Only conduct training and development that are supported by the
environment in which the trainees work.
Evaluate training and development according to its contributions to
organization performance needs.
Conduct diagnoses that go beyond training.
Recommend solutions to both training and development and non-training
and development needs.
Understand the business at all Three Levels of Performance and the
influence of all Nine Performance Variables
Understand that the department is a business and must be run as a
business.
Different Types
Orientation – orients, directs, and guides employees to

understand work, firm, colleagues, and mission
(socialization)
Training – helps employees do their current work
Development – prepares individuals for the future
Focuses on learning and personal development

Goals of Orientation
To reduce To reduce
anxiety turnover
To develop
realistic To save time
expectations

How Orientation Works
Orientation should begin with the most relevant and

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

Training
The systematic process of altering the behavior of

employees in a direction that will achieve organization
goals
Training is related to present job skills and abilities
Training has a current orientation
Helps employees master specific skills and abilities
needed to be successful

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

Learning Theory and Training
The trainee must be motivated to learn

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

Learning Organizations
Organizations that are proficient in:

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

Managing the Training Program
Determining needs and objectives

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

Needs Assessment
Organizational
Analysis
Person Analysis
Task Analysis

Employees’ Needs for Training
Observe employees
Listen to employees
Ask supervisors about employees’ needs
Examine the problems employees have

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

Instructional Methods
On-the-Job
Training Case Method
Training and Role Playing

Development
Instructional In-Basket
Methods Technique
Outdoor-Oriented Management
Programs Behavior Games
Modeling

On-the-Job Training for Managers
Coaching and counseling
Transitory anticipatory experiences
Transfers and rotation

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

Diagnostic Steps in Development Programs
1. Determine short- and long-

term goals of the organization Organizational
OrganizationalAnalysis
Analysis
2. Examine work requirements,

specifications, and changes in Work
WorkAnalysis
Analysis
work
3. Determine behaviors needed

to perform work and Human
HumanResource
ResourceAnalysis
Analysis
performance standards
4. Develop behavior objectives to Objectives to be used in evaluation

be accomplished through of success of program
development programs

Development: Individual Techniques
Goal Setting Behavior

Modification

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

Criticisms of Goal Setting
Goal setting is complex and difficult to sustain

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

Applied Behavior Modification
Managers must identify and define the specific behavior

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

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

A Group Technique – Team Building
A development process that helps or prepares

organization members to work more efficiently or
effectively in groups
Designed to enhance individual team members’
problem-solving skills
Communication
sensitivity to others
participation

Total Quality Management (TQM)
TQM – a philosophy, a process, and a set of principles that provide

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

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

An Evaluation Matrix: Issues to Consider
Relevant Issues to What to Measure What to Examine for How to Collect Data
Evaluate Answers
Are the participants Participants’ attitudes Comments Interviews
learning, changing or skills before and Method of Questionnaires
attitudes, or improving after (even during) participation Records
skills? training or Co-workers
development sessions Observations
Superiors
Are the training or Participants’ on-the- Subordinates’ Records
development job performance, performance, Interviews
materials used on the behavior, and style attitudes, and style Questionnaires
job?
Critical incidents
Observations

An Evaluation Matrix: Issues to Consider
Relevant Issues to What to Measure What to Examine for How to Collect Data
Evaluate Answers
What are the costs of Fixed and variable Costs of trainers Budget records
training and develop- costs of conducting Participants’ time
ment programs and training or Travel expenses
techniques? development
Consultants’ fees
Training aids
Rent and utilities
How long does the Participants’ on-the- Subordinates’ Records
training or develop- job performance, performance, Interviews
ment have an effect behavior, and style attitudes, and style Questionnaires
on participants? over an extended
period of time Critical incidents
Observations

Summary
Formal training and development have been shown to

be more effective than informal or no training and
development
For most training and development programs the results

tend to be assumed rather than evaluated

chapter
14
Career Planning and
Development

The Concept of Career
A career is the pattern of work-related experiences and

activities over the span of the person’s work life, e.g.,
job positions
job duties
Decisions
subjective interpretations about work-related events

Evaluate Evaluate

Resources
Socially
Competitive,high
high Competitive,
Competitive,high
high
responsible
quality services
ethical
ethicalpractices
practices
Career Development System
ORGANIZATIONAL NEEDS INDIVIDUAL NEEDS
What are the organization’s major How do I find career opportunities

strategic issues over the next two ISSUE: within the organization that will do
or three years? the following?
• Critical needs and challenges to Are employees developing themselves
• Use my strengths
be faced? in a way that links personal
effectiveness and satisfaction with the • Address my developmental
• Critical skills, knowledge, and achievement of the organization’s needs
experience needed to meet these strategic objectives?
challenges? • Provide challenges
• Staffing levels required? • Match my interests
• Does the organization have the • Match my values

strength necessary to meet the • Match my personal style
critical challenges?

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

Career Development: A Commitment
Career development programs are most valuable when

they are:
offered regularly
open to all employees
modified when evaluation indicates that change is
necessary

Career Development
Career
Counseling Career Pathing
Human
Career Resources
Development
Career
Programs Information
Systems
Management or
Special Groups Supervisory
Training Development

Causes of Early Career Difficulties
Initial Job Challenge
Initial Job Satisfaction
Initial Job
Performance
Evaluation
How to Counteract Early Career Problems
Challenging
Realistic job
initial
previews
assignments
Enriched
Demanding
initial
bosses
assignments

Causes of the Midcareer Plateau
Fewer jobs at the top of organizations

Manager may have the ability
However, no opening exists
Openings may exist
Manager may lack the ability or skills
Manager may lack the desire to fill the opening

How to Counteract Midcareer Problems
Midcareer counseling
Midcareer alternatives
Lateral transfers
Downward transfers
Failback positions

Minimize Retirement Adjustment Problems
When do employees plan to retire?

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

Career Planning and Pathing
Career planning – involves matching an individual’s

career aspirations with the opportunities available in an
organization
Career pathing – the sequencing of the specific jobs

associated with the opportunities available in the
organization

A Career Planning and Pathing Process
Feedback
Individual needs and Personal counseling Individual

aspirations and assessment development efforts
Placement on
Matching Matching
career path
Organizational needs Personnel planning Formal training and

and opportunities and career development
information programs
Feedback

Career Planning Approaches
Informal Formal
counseling counseling
Tuition aid
Job posting
programs

Job Posting: Minimum Conditions
It should include promotions and transfers as well as

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

Career Pathing
Important in workforce planning

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

Realistic Career Paths
Include lateral and downward possibilities, as well as

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

Problems and Issues
Integrating career development and workforce planning

Managing dual careers
Career planning and equal employment opportunity
Downsizing and job loss

Job Layoff and Job Loss
Job layoff exists when three conditions occur:

There is no work available at the time and the
employee is sent home
Management expects the no-work situation to be
temporary
Management intends to recall the employee
Job loss means that the employee has permanently lost

his or her job

Managerial Responses to Layoffs and Job Loss
Layoff Criteria
Outplacement
Services
Severance Pay

Summary
“Work, if the longing of the unemployed is any indication,

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

Organizational
Development

Definition
Organization Development (OD) is the systematic

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

The Three Levels of Performance
The Organization
Level Shareholders
Market
The Process
Level Shareholders

Process
1
Process
2 Market
Process
3
The Job/
Performer Level
Shareholders

Process
1
Process
2 Market
Process
3

Organizational Level
Relationship with the Market
Major Functions
Corporate Strategy
Corporate Goals
Organization Structure
Deployment of Resources

Process Level
Organizational level plus
Work Flow
Cross-relations
How the work is done
Business view

Job/Performer Level
Organization level plus
Process level plus
Skills, Competence
Hiring practice
Promotions, Rewards
Job Descriptions
Responsibilities
Standards, Feedbacks
Motivation
Satisfaction
Training

The Nine Performance Variables
The Three Performance Needs
Goals Design Management
Organization Organization Organization Organization

The Three Levels of Performance
Level Goals Design Management
Process Process Process Process

Job/Performer Job Job Job


Performance Needs
Specific standards that reflect customers’

Goals expectations for product and service quality,
quantity, timeliness and cost.
Necessary components, configured in a way

Design
that enables the goals to be efficiently met.
Management practices that ensure that goals

Management are current and are being achieved.

Organizational Goals
Organizational goals are part of the business strategy

and must comprise the following:
The organizations competitive advantage
New Services
New Markets
Emphasis on products, services, markets
Investment on resources and expected returns

Organization Design
Organization Structure
Responsibilities, Functional Components
Relationships, Input/Output Connections

Organization Management
Corporate Goal Management
Resource Management
Interface Management

Process Goals
External process goals must derive from corporate

goals
Internal process goals must be driven by the needs of

internal customers
Functional goals must be integrated in key processes

Process Design
Logical process structure
Streamlines paths
Can processes meet the goals?
Are all necessary processes in place?

Process Management
Goal Management
Resource Management
Interface Management

Job Goals
Does the job contribute to key processes?
Are outputs and goals in line with requirements of key

processes?

Job Design
Optimum contribution to job goals
Boundaries and responsibilities

Job Management
Performance Specification
Task Support
Consequences
Feedback
Skills and Knowledge
Individual Capacity

20 Topics (1)
Delegation of Responsibility
Conflict Management
Learning Capabilities
New Leadership Paradigm
Delaying and Team Orientation

20 Topics (2)
Creativity
Just-in-Time Information
Reward and Evaluation
Management Development
Constraints and Policies

20 Topics (3)
Brain Drain
Training and Employee Orientation
Value Lens
Process Awareness
Speed vs Accuracy

20 Topics (4)
External Lens
Corporate Image
Solution Gap
Knowledge Management
Communications

Human Resource Management Human Resource Management

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Human Resource

01/2005 Thomas H. Jäkel 1

01/2005 Thomas H. Jäkel 2

 Performance Evaluation and Management

01/2005 Thomas H. Jäkel 3

01/2005 Thomas H. Jäkel 4

 Equal employment opportunity compliance

01/2005 Thomas H. Jäkel 5

The increased strategic importance of HRM means that:

 Human resource specialists must show that they

The actions, language, and performance of the HRM

01/2005 Thomas H. Jäkel 6

The new strategic

01/2005 Thomas H. Jäkel 7

 Analyzing and solving problems from a profit-oriented, not just a service-

 Assessing and interpreting costs or benefits of such HRM issues as

 Using planning models that include realistic, challenging, specific, and

 Preparing reports on HRM solutions to problems encountered by the firm

 Training the human resources staff and emphasizing the strategic

01/2005 Thomas H. Jäkel 8

If the HRM function is

01/2005 Thomas H. Jäkel 9

01/2005 Thomas H. Jäkel 10

 Helping the organization reach its goals

01/2005 Thomas H. Jäkel 11

01/2005 Thomas H. Jäkel 12

01/2005 Thomas H. Jäkel 13

01/2005 Thomas H. Jäkel 14

The HRM strategy will help aggregate and allocate a

 Its internal strengths and weaknesses

01/2005 Thomas H. Jäkel 15

Function A Function B Function C

Function A Function B Function C

Function A Function B Function C

01/2005 Thomas H. Jäkel 17

 HRM is action-oriented, individual-oriented, globally-oriented, and

 HRM is a necessary function - Effectively performed, it can make

 One of the challenges faced in HRM is that many decisions require

01/2005 Thomas H. Jäkel 18

01/2005 Thomas H. Jäkel 19

The diagnostic approach

 Can help operating managers focus on a set of relevant

 Offers a map that aids a person in seeing the whole

01/2005 Thomas H. Jäkel 20

01/2005 Thomas H. Jäkel 21

Human Resource Processes

Focus of each process is on people and results

Desirable End Results

Laws & Regulations Geographical Location Shareholders

Productivity Nature of Task

Competitiveness Work Group

Labor Force Corporate Environment Leadership

Older Employees Educational Factors Experience

01/2005 Thomas H. Jäkel 23

 Degree of knowledge and ability to use information

01/2005 Thomas H. Jäkel 24

01/2005 Thomas H. Jäkel 25

01/2005 Thomas H. Jäkel 26

LEVEL Employee Rewards (Pay Appraisal Development

01/2005 Thomas H. Jäkel 27

LEVEL Employee Rewards (Pay Appraisal Development

Develop approach to Set up retirement Encourage self-

Performance Evaluation and Management

Equal employment opportunity compliance

Human resource specialists must show that they

Analyzing and solving problems from a profit-oriented, not just a service-

Assessing and interpreting costs or benefits of such HRM issues as

Using planning models that include realistic, challenging, specific, and

Preparing reports on HRM solutions to problems encountered by the firm

Training the human resources staff and emphasizing the strategic

Helping the organization reach its goals

Its internal strengths and weaknesses

HRM is action-oriented, individual-oriented, globally-oriented, and

HRM is a necessary function - Effectively performed, it can make

One of the challenges faced in HRM is that many decisions require

Can help operating managers focus on a set of relevant

Offers a map that aids a person in seeing the whole

Degree of knowledge and ability to use information

Organizational effectiveness is critically influenced

Changes in staffing, training, and compensation

HR management systems must be in alignment

Both a process and a set of plans

Goals of the controlling interests in the organization

What it wants to accomplish (its mission)

HR planning is important for developing a strategic plan

The acknowledgement that HR policies and practices

Situation analysis or environmental scanning

Integrated approach to acquiring, storing, analyzing, and

Review information-gathering practices to determine the best way to collect

Methods and techniques all differ from organization to organization

An effective HR plan should work in partnership with a strategic plan

Human resource planning can be an integral part of the HRM program

It is directly related to: recruitment, selection, training, and promotion

By matching supply and demand, the organization can know:

Organizations must have a systematic way to determine

How much time is taken to complete important tasks?

Job analysis – A purposeful, systematic process for collecting information

Examine the total organization and the fit of each job