BUS206 StudyGuide

BUS206
ManagingPeople
StudyGuide(5CU)
BUS206
Managing People
School of Business
SIM University
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ReleaseV1.1
CONTENTS
SECTION1:COURSEGUIDE
1.1Introduction....................................................................................................1
1.2CourseDescriptionandAims......................................................................2
1.3LearningOutcomes.......................................................................................2
1.4OverallAssessment.......................................................................................4
1.5LearningMaterials.........................................................................................6
SECTION2:STUDYUNITS
STUDYUNIT1
Chapter1:IntroductiontoManagementSU11
LearningOutcomes
WelcomeAboard,NewManager!
TheDefinitionofManagement
TheFourManagementFunctions
OrganisationalPerformance
ManagementSkills
WhenSkillsFail
ManagementTypes
WhatIsItLiketobeaManager?
InnovativeManagementfortheNewWorkplace
Chapter2:PlanningandGoalsettingSU113
LearningOutcomes
OverviewoftheGoalsettingandPlanningProcess
GoalsettinginOrganisations
OperationalPlanning
BenefitsandLimitationsofPlanning
PlanningforaTurbulentEnvironment
Chapter3:DecisionmakingSU122
LearningOutcomes
DecisionmakingisTough
DefinitionofDecisionmaking
TypesofDecisionsandProblems
DecisionmakingModels
DecisionmakingSteps
SuggestedAnswerstoReviewQuestionsSU132
ReferencesSU137
STUDYUNIT2
Chapter1:LeadershipSU21
LearningOutcomes
ToServeversustobeServed
TheNatureofLeadership
ContemporaryLeadership
FromManagementtoLeadership
LeadershipTraits
BehaviouralApproaches
ContingencyApproaches
CharismaticandTransformationalLeadership
Followership
PowerandInfluence
Chapter2:CorporateCultureSU217
LearningOutcomes
TheCultureatCrothallHealthcare
TheInternalEnvironment:CorporateCulture
TypesofCulture
ShapingCorporateCultureforInnovativeResponse
ReferencesSU227
STUDYUNIT3
Chapter1:MotivationSU31
LearningOutcomes
MotivationintheEyesofaCallAgent
TheConceptofMotivation
ContentPerspectivesonMotivation
ProcessPerspectivesonMotivation
ReinforcementPerspectiveonMotivation
JobDesignforMotivation
InnovativeIdeasforMotivating
Chapter2:TeamworkSU315
LearningOutcomes
TeamworkMakesShiftLessLonely
WhyTeamsatWork
HowtoMakeTeamsEffective
TypesofTeams
TeamCharacteristics
TeamProcesses
ManagingTeamConflict
WorkTeamEffectiveness
ReferencesSU334
STUDYUNIT4
Chapter1:DesigningAdaptiveOrganisationsSU41
LearningOutcomes
BestFitStructure
OrganisingtheVerticalStructure
Departmentalisation
Chapter2:QualityandPerformanceSU413
LearningOutcomes
ControlisGoodandNecessary
TheMeaningofControl
FeedbackControlModel
FinancialControl
TheChangingPhilosophyofControl
TotalQualityManagement(TQM)
ReferencesSU428
STUDYUNIT5
Chapter1:NatureofHumanResourceManagementSU51
LearningOutcomes
DefinitionsofHRMandHumanCapital
HumanCapitalinOrganisations
HRActivities
HRMRoles
CurrentHRMChallenges
Chapter2:RecruitingHumanResourcesSU510
LearningOutcomes
DefinitionsofRecruitmentandStrategicRecruitment
LabourMarkets
StrategicRecruitmentDecisions
InternalRecruitmentMethods
ExternalRecruitmentSources
InternetRecruitment
RecruitmentEvaluationandMetrics
Chapter3:SelectingHumanResourcesSU523
LearningOutcomes
SelectionandPlacement
SelectionResponsibilities
SelectionTesting
SelectionInterviews
BackgroundInvestigation
MakingtheJobOffer
ReferencesSU538
STUDYUNIT6
Chapter1:TrainingandDevelopingHumanResourcesSU61
LearningOutcomes
NatureofTraining
TrainingandOrganisationalStrategy
DevelopingHumanResources
Chapter2:CompensatingHumanResourcesandManagingEmployee
BenefitsSU67
LearningOutcomes
NatureofTotalRewardsandCompensation
BenefitsandHRStrategy
Chapter3:ManagingEmployeeRelationsSU612
LearningOutcomes
EmployeeRightsandResponsibilities
RightsAffectingtheEmploymentRelationship
AlternativeDisputeResolution
ReferencesSU622
BUS206
ManagingPeople
COURSEGUIDE
BUS206 MANAGING PEOPLE
COURSE GUIDE
SECTION1:COURSEGUIDE
1.1Introduction
WelcometoyourstudyofBUS206,ManagingPeople,a5creditunit(CU)course.
ThisStudyGuideisdividedintotwosectionstheCourseGuideandStudyUnits.
TheCourseGuideprovidesastructurefortheentirecourse.Asthephraseimplies,
the Course Guide aims to guide you through the learning experience. In other
words, it may be seen as a roadmap through which you are introduced to the
differenttopicswithinthebroadersubject.ThisGuidehasbeenpreparedtohelp
you understand the aim[s] and learning outcomes of the course. In addition, it
explainshowthevariousmaterialsandresourcesareorganisedandhowtheymay
beused,howyourlearningwillbeassessed,andhowtogethelpifyouneedit.
CourseSchedule
To help monitor your study progress, you should pay special attention to your
Course Schedule. It contains study unit related activities including Assignment,
selfevaluations, and examinations. Please refer to the Course Timetable in the
StudentPortalfortheupdatedCourseSchedule.
NOTE: You should always make it a point to check the Student Portal for any
announcementsandlatestupdates.
YouneedtoensureyoufullyunderstandthecontentsofeachStudyUnitlistedin
the Course Schedule. You are expected to complete the suggested activities either
independently and/or in groups. It is imperative that you read through your
Assignment questions and submission instructions before embarking on your
Assignment. It is also important you comprehend the Overall Assessment
Weightingofyourcourse.ThisislistedinSection1.4ofthisGuide.
Manageyourtimewellsoyoucanmeetgivendeadlinesanddoregularrevisions
after completing each unit of study. They will help you retain the knowledge
garnered and prepare you for any required formal assessment. If your course
requires an endofsemester examination, do look through the Specimen or Past
YearExamPaperwhichisavailableonMyUniSIM.
SIM UNIVERSITY
COURSE GUIDE
Although flexible learning learning at your own pace, space and time is a
hallmark at UniSIM, you are encouraged to engage your instructor and fellow
students in online discussion forums. A sharing of ideas through meaningful
debateswillhelpbroadenyourlearningandcrystalliseyourthinking.
1.2CourseDescriptionandAims
BUS206 Managing People provides students with an introduction into

management, organisational behaviour and human resource management. It
seeks to help students understand the key concepts in each of these areas of
management. It reviews the fundamentals of the four management functions
(Planning, Organising, Leading and Controlling); individual, group and
organisational processes in organisational behaviour; and the four functional
areas of human resource management (Staffing, Training and Development,
MotivationandMaintenance).
1.3LearningOutcomes
Knowledge&Understanding(TheoryComponent)
1. Giveanoverviewofmanagement,planningandgoalsetting.
2. Presentthedifferenttypesofdecisions,modelsofdecisionandthe
decisionmakingprocess.
3. Relateleadershipconcepts,theoriesandapproachestoaworkplace.
4. Examinecorporateculture,levelsandelementsofculture,typesofculture
andhowtheycanbeusedtoachieveorganisationalperformance.
5. Appraisetheroleofmotivationinachievingorganisationalgoals.
6. Developtheunderstandingofthetypesofteam,teamcharacteristicsand
teamprocesses;andstrategiesthatencourageteamcohesion,improve
teameffectivenessandmanageteamconflicts.
7. Summarisethecontextualdimensionsofstructureandthetypesof
organisationstructuresandtheadvantagesanddisadvantagesofeach
type.
8. Interpretthecontrolprocessandthemanagementofqualityand
performance.
SIM UNIVERSITY
COURSE GUIDE
9. Analysevariousrecruitmentmethods,selectionprocess,selectiontestsand
typesofinterviewsinemployment.
10. Explaintherolesoftraininganddevelopmentfordevelopingcapabilities
andcompetenciesofemployees.
11. Relatecompensationandbenefitstoemployeeattraction,employee
motivationandemployeeretention.
12. Discussalternativestoemployeerelations.
KeySkills(PracticalComponent)
1. Applymanagement,organisationbehaviourandHRconcepts,principles
andprocessestorealandhypotheticalsituations.
2. Demonstratetheessentialknowledgeandinterpersonalskillstowork
effectivelyasateam.
3. Illustrateproficiencyinoralandwrittencommunicationandabletomake
presentationsinareasrelatedtomanagement,organisationbehaviourand
humanresourcemanagement.
SIM UNIVERSITY
COURSE GUIDE
1.4OverallAssessment
The overall assessment weighting for this course for the Evening Cohort is as
follows:
Assessment
Description
WeightAllocation
PreClassQuiz1
6%
PreClassQuiz2
7%
PreClassQuiz3
7%
Assignment2
GroupbasedAssignment1
30%
Examination
WrittenExamination
50%
TOTAL
100%
Assignment1
The overall assessment weighting for this course for the Daytime Cohort is as
follows:
Assessment
Description
WeightAllocation
Assignment1
PreCourseQuiz
10%
Assignment2
ClassParticipation
10%
Assignment3
GroupBasedAssignment1
30%
Examination
WrittenExamination
50%
TOTAL
100%
UniSIMs assessment strategy consists of two components, Overall Continuous

Assessment(OCAS)andOverallExaminableComponent(OES)thatmakeupthe
overallcourseassessmentscore.
ForSBizcourses,bothcomponentswillbeequallyweighted:50%OCASand50%
OES.
(a)OCAS:Intotal,thiscontinuousassessmentwillconstitute50percentofoverall
student assessment for this course. The subcomponents are reflected in the table
above and are different for the daytime and evening cohort. The continuous
assignments are compulsory and are nonsubstitutable. It is imperative that you
read through your Assignment questions and submission instructions before
embarkingonyourAssignment.
(b)OES:TheExaminationis100%ofthiscomponent.
To be sure of a pass result, you need to achieve scores of at least 40% in each
component.Youroverallrankscoreistheweightedaverageofbothcomponents.
SIM UNIVERSITY
COURSE GUIDE
PracticalAdvice
UniSIM adopts activitybased learning, an approach that aims to help students to

becomecriticalthinkersandeffectivebusinessleaders.Withtheimplementationof
activitybased seminars, the facilitator and students are coproducers of the
learning outcome. In this context, the active participation and engagement of the
students are essential elements of the positive learning experience that activity
based seminar can become. In this respect, students are expected to put in
considerableefforttoperformwellinthecourse.
Below is a summary of the activities and tasks that students need to perform at
threestagespreseminar,duringseminarandpostseminar:
PreSeminar
DuringSeminar
PostSeminar
Althoughattendance Formsmallstudygroups
Readthespecific
oralearningcommunity
isnotcompulsory,
chaptersoutlined
tohelpeachotherlearn.
studentsarestrongly
inthecourse
encouragedtoattend
schedule.
Youmaytouchbase
classregularlyto
regularlytoencourage
Checkthe
benefitfromactivity
eachothertolearn
announcement
basedlearning.
together.
pageforweekly
updateof
Participateinclass
Participateindiscussion
activities.
activities.
forums.
Completethe
weeklyprescribed
activitiesgivenby
thefacilitator.
Theseactivities
mayinclude
discussion
questions,case
studies,research
topics.
Shareexperiences
withfellow
students.
Reviewandlearnfrom
feedbackfromGroup
BasedAssignment
Interactwithfellow
studentsandthe
facilitator.
Askquestionsto
clarify
concepts/theories
thatyoudonot
understand.Thisis
importantbecause
notonlydoyouclear
yourdoubts,you
alsohelpothersto
learn,too.
SIM UNIVERSITY
COURSE GUIDE
ResourcesAvailable
Asaparttimeadultlearner,youneedtoberesourcefulandknowwheretoobtain
information that will enable you toprogress well in the course. Belowis a list of
usefulresourceswhichyoushouldaccessinthecourseofstudy.
Resource
Accessibility
Blackboard,AnnouncementMenuBar
ImportantAnnouncements
Onlinequizinstructionsand
deadlines
GBAdeadline
Weeklyannouncementonclass
activities
Schoolannouncements
CourseSchedule
StudentPortal,Eservices
CourseGuide
Blackboard,CourseInformationMenu
ExaminationReportsbysemester
Bar
FormativeQuizzes
Blackboard,StudyUnitsMenuBar
WeeklySupplementaryMaterials
Blackboard,AdditionalResources
WeeklyActivities
MenuBar
GroupBasedAssignment
Blackboard,AssessmentsMenuBar
RevisionLecture
Blackboard,OnlineRevisionMenuBar
ExaminationTimetable
StudentPortal
1.5LearningMaterials
Thefollowingisalistoftherequiredlearningmaterialstocompletethiscourse.
RequiredTextbook
Author(s)
Lastname,First
name
SIMUniversity
Title
Year
BUS206ManagingPeople
2012
Publisher
Cengage
Learning
AsiaPte
Ltd,
Singapore
SIM UNIVERSITY
BUS206
ManagingPeople
STUDYUNIT1
CHAPTER1:IntroductiontoManagement
CHAPTER2:PlanningandGoalsetting
CHAPTER3:Decisionmaking
BUS206 STUDY NOTES
STUDY UNIT 1
CHAPTER1:INTRODUCTIONTOMANAGEMENT
LEARNINGOUTCOMES
AttheendofChapter1,youareexpectedto:
Explainbasicconceptsandprinciplesofmanagement,itsfourfunctionsandthe
typeofmanagementactivityassociatedwitheachfunction.
Differentiate the various categories of management skills and management

types.
Summarisethetenrolesthatmanagersperforminorganisations.
Examinethepersonalchallengesinvolvedinbecominganewmanager.
Appraisetheturbulentforcesthatrequireanewworkplaceandtheinnovative
managementcompetenciesneededtodealwithtodaysenvironment.
SIM UNIVERSITY
SU1-1
STUDY UNIT 1
BUS206 STUDY NOTES
WELCOMEABOARD,NEWMANAGER!
John is a very happy man. He has recently been promoted to manager. John is
pleasedthathispatience,perseveranceanddiligencehavefinallypaidoffandthat
theuppermanagementhasrecognisedhisvaluetothecompany.Imgoingtocall
mylovelywife,Helenandtellherthegoodnews,Johntellshimself.
John wants to be an effective manager. He knows a managerial role is different

fromaspecialistrole.Itcanbeespeciallychallengingtomanagepeoplewhowere
once his peers. John has many questions in his mind. What are the management
functions that he has to perform? What skills does he need to effectively perform
thesefunctions?Whatrolesdoesheneedtoplayasamanager?Howdoeshework
withpeople?Inshort,Johnwantstoknowwhatitisliketobeanewmanagerso
thathelearnswhatheneedstodotobesuccessful.
THEDEFINITIONOFMANAGEMENT
Management istheattainmentoforganisationalgoalsinaneffectiveandefficient
manner through planning, organising, leading, and controlling organisational
resources.
Therearetwoimportantideasinthisdefinition:
1) Thefourfunctionsofplanning,organising,leading,andcontrolling;and
2) Theattainmentoforganisationalgoalsinanefficientandeffectivemanner.
THEFOURMANAGEMENTFUNCTIONS
A. Planning
Planning is the management function concerned with identifying goals for

future organisational performance and deciding on the tasks and use of
resourcesneededtoattainthem.Itdefineswheretheorganisationwantstobe
inthefutureandhowtogetthere.Asanexample,Yokogawa,amanufacturer
and supplier of industrial automation control systems, field instruments and
avionic products annually plans its long and short term goals (Spring
Singapore,2012).
SU1-2
SIM UNIVERSITY
BUS206 STUDY NOTES
STUDY UNIT 1
B. Organising
Organising is the management function concerned with assigning tasks,

groupingtasksintodepartments,delegatingauthority,andallocatingresources
across the organisation. Organising follows planning and reflects how the
organisationpreparesitsresourcestoaccomplishtheplan.
C.Leading
Leading is the management function that involves the use of influence to

motivateemployeestoachievetheorganisationsgoals.Itincludesmotivating
entire departments and divisions as well as those individuals working
immediatelywiththemanager.Forexample,branchmanagersinalocalbank
are required to lead and motivate employees. They do so by having regular
meetings to discuss issues and allow employees to propose solutions. The
branch manager listens and guides employees towards the best possible
solutions.
D.Controlling
Controlling is the management function concerned with monitoring

employees activities, keeping the organisation on track and progressing
towards its goals, as well as making corrections as needed. Trends towards
employment and trust of employees have led many companies to place less
emphasis on topdown control and more emphasis on training employees to
monitorandcorrectthemselves.
READ:
Pages28ofthetextbook.
REFERTO:
Exhibit1.1showstheactivitiesofmanagers.
Exhibit1.2describestheprocessofmanagement.
REVIEW:
TheactivitiesofmanagersinExhibit1.1.Classifythemintothefourcore
managementfunctions.
SIM UNIVERSITY
SU1-3
STUDY UNIT 1
BUS206 STUDY NOTES
ORGANISATIONALPERFORMANCE
Anorganisationisasocialentitythatisgoaldirectedanddeliberatelystructured.
Socialentitymeanstwoormorepeople.
Goal directedmeans the organisation is designed to achieve some outcome or

goalsuchasmakeaprofit.
Deliberately structured means tasks are divided and responsibility for their
performance is assigned to organisation members. This is commonly seen in

factories where a job is broken into smaller tasks that are then distributed to
differentindividualsordepartmentsassignedtoperformthem.
Themanagersresponsibilityistocoordinateresourcesinaneffectiveandefficient
mannertoaccomplishtheorganisationsgoals.
Organisationaleffectivenessisthedegreetowhichtheorganisationachievesa
stated goal, or succeeds in accomplishing what it tries to do. In short,
effectivenessmeansdoingtherightthings.
Organisationalefficiencyreferstotheamountofresourcesusedtoachievean
organisational goal. It is based on the how much raw materials, money, and
people are necessary for producing a given volume of output. In short,
efficiencymeansdoingthingsright.
MANAGEMENTSKILLS
A. ConceptualSkills
1. Conceptual skill isthecognitiveabilitytoseetheorganisationasawhole

and the relationships linking its various parts. For instance, it involves
knowing where ones team fits within the organisation and how the
organisation fits into its environment. It also means having the ability to
thinkstrategicallytotakeabroad,longtermview.
2. Conceptualskillisespeciallyimportantfortopmanagers.
B. HumanSkills
1. Human skill is the managers ability to work with and through other
peopleandtoworkeffectivelyasagroupmember.Itisdemonstratedinthe
SU1-4
SIM UNIVERSITY
BUS206 STUDY NOTES
STUDY UNIT 1
wayamanagermotivates,facilitates,coordinates,leads,communicates,and
resolves conflicts. As globalisation, workforce diversity, uncertainty, and
societal turbulence increase, a managers human skills become even more
crucialtoensuringthatthingsaregettingdone.
2. Humanskillsareimportantformanagersatalllevels,andparticularlythose
whodirectlyworkwithemployeesonadailybasis.
C. TechnicalSkills
1. Technical skills refer to the understanding of and proficiency that an
employee can demonstrate in the performance of specific tasks. This
includes mastery of the methods, techniques, and equipment involved in
specific business functions such as engineering, manufacturing, or finance.
Technical skills also include specialised knowledge, analytical ability, and
competent use of tools and techniques to solve problems in that specific
discipline.
2. Technical skills are most important at lower organisational levels and

become less important than human and conceptual skills as managers are
promoted.
READ:
REFERTO:
Exhibit1.3showstherelationshipofconceptual,humanandtechnicalskillsto
management.
REVIEW:
ThinkaboutToyotashighlypublicisedsafetyproblems.Oneobserversaidthat
agoalofefficiencyhadtakenprecedenceoveragoalofqualitywithinToyota.
Doyouthinkmanagerscanimprovebothefficiencyandeffectiveness
simultaneously?Discuss.HowdoyouthinkToyotasleadersshouldrespond
tothesafetysituation?
DO:
Observehowamanagerinyourworkplaceuseshumanskillstogetthings
donethroughpeople.Identifytheactionshe/shetakesandassesstheresults
he/sheachieves.
SIM UNIVERSITY
SU1-5
STUDY UNIT 1
BUS206 STUDY NOTES
WHENSKILLSFAIL
1. Duringturbulenttimes,managersmustusealltheirskillsandcompetenciesto
benefittheorganisationanditsstakeholders.
2. Many companies falter because managers fail to listen to customers,

misinterpretsignalsfromthemarket,orcannotbuildacohesiveteambecause
ofpoorhumanskills.
3. Thenumberonereasonformanagerfailureisineffectivecommunicationskills
andpractices.
4. Other management missteps include treating people as if they were objects or

instruments instead of individuals; suppressing dissent, and the inability to
buildamanagementteamcharacterisedbymutualtrustandrespect.
READ:
DO:
SearchtheInternetforSMRTstrikeandidentifymanagementmisstepsin
treatingthedriversandthegapsincommunication.Whatkeylessonscan
managerslearnfromthissituation?
MANAGEMENTTYPES
A. VerticalDifferences
1. Top managers are at the top of the organisational hierarchy and are
responsible for the entire organisation, with titles such as chairperson,
president, managing director, chief executive officer (CEO), and executive
vicepresident.Topmanagersareconcernedwithlongrangeplanningand
theirresponsibilitiesinclude:
a. settingorganisationalgoals;
b. definingstrategiesforachievingthem;
c. monitoringandinterpretingtheexternalenvironment;
d. makingdecisionsthataffecttheentireorganisation;
e. communicatingasharedvisionfortheorganisation;
SU1-6
SIM UNIVERSITY
BUS206 STUDY NOTES
f.
STUDY UNIT 1
shapingcorporateculture;and
g. nurturinganentrepreneurialspirit.
2. Middle managers work at the middle levels of the organisation and are
responsibleforbusinessunitsandmajordepartments.Theyholdtitlessuch
asdepartmenthead,divisionhead,managerofqualitycontrol,anddirector
oftheresearchlab.Concernedwithnearfutureplanning,middlemanagers
aremainlyresponsibleforimplementingstrategiesandpoliciesdefinedby
topmanagers.
a. Researchshowsthatmiddlemanagersplayacriticalroleinfacilitating
change and enabling organisations to respond to rapid shifts in the
environment.
b. Successfulmiddlemanagersareconstructivelycriticalofthestatusquo,
have a significant personal power, are versatile, and rate high in
emotionalintelligence.
3. Projectmanagersareresponsiblefortemporaryworkprojectsthatinvolve
the participation of people from various functions and levels of the
organisation,andperhapsfromoutsidethecompanyaswell.Forexample,
the lead project manager oversees a factory construction project. Once the
factory has been built, the project is completed and the project team
dissolved.
4. Firstline managers are at the first or second management level and are
directly responsible for the production of goods and services. They hold
titles such as supervisor, line manager, section chief, and office manager.
Their focus is squarely on accomplishing the daytoday objectives that
middle managers have set for them and their subordinates. The
responsibilitiesoffirstlinemanagersinclude:
a. applyingrulesandprocedurestoachieveefficientproduction;
b. providingtechnicalassistance;and
c. motivatingsubordinates.
B. HorizontalDifferences
1. Horizontal differences in management jobs occur across the different
functional areas of the organisation such as advertising, sales, finance,
humanresources,manufacturing,andaccounting.
2. Functionalmanagersareresponsiblefordepartmentsthatperformasingle
functionaltaskandhaveemployeeswithsimilartrainingandskills.
SIM UNIVERSITY
SU1-7
STUDY UNIT 1
BUS206 STUDY NOTES
a. Line managers are responsible for employees who make or provide a

productorservice.
b. Staffmanagersareinchargeofdepartmentssuchasfinanceandhuman
resourcethatsupportlinedepartments.
3. General managers are responsible for several departments that perform
differentfunctions.
READ:
REFERTO:
Exhibit1.5showsthemanagementlevelsintheorganisationalhierarchy.
REVIEW:
Youareabright,hardworkingentrylevelmanagerwhofullyintendstorise
upthroughtheranks.Yourperformanceevaluationgivesyouhighmarksfor
yourtechnicalskillsbutlowmarkswhenitcomestopeopleskills.Doyou
thinkpeopleskillscanbelearned,ordoyouneedtorethinkyourcareerpath?
Ifpeopleskillscanbelearned,howwouldyougoaboutit?
WHATISITLIKETOBEAMANAGER?
A. MakingtheLeap:BecomingaNewManager
Becoming a manager involves a profound transformation of ones personal

identity, i.e. a radical change in the way one think of oneself. This
transformativeprocessinvolveslettinggoofdeeplyheldattitudesandlearning
newwaysofthinking.Specificaspectsofthistransformationincludechanging:
a. from a specialist who performs specific tasks to a generalist who

coordinatesdiversetasks;
b. fromdoingthingsoneselftogettingthingsdonethroughothers;
c. fromanindividualactortoanetworkbuilder;and
d. from working relatively independently to working in a highly

interdependentmanner.
READ:
REFERTO:
Exhibit1.6showsmakingtheleapfromindividualperformertomanager.
SU1-8
SIM UNIVERSITY
BUS206 STUDY NOTES
STUDY UNIT 1
B. ManagerActivities
1. Most new managers are unprepared for the variety of activities typical
managersroutinelyperform.
a. Managerial activity is characterised by variety, fragmentation, and

brevity.Astheaveragetimespentonanyoneactivityislessthannine
minutes, managers must be able to accomplish a great deal of varied
tasksandquicklyshift theirfocusfromoneto otheractivities.Forthat
reason,managersmustbeenergeticastheyhavetoperformagreatdeal
ofworkatanunrelentingpace.
C. ManagerRoles
1. A role is a set of expectations that characterise a managers behaviour.

Managers activities can be organised into ten roles. The ten roles are
dividedintothreecategories:informational,interpersonal,anddecisional.
2. Informationalrolesincludethefunctionsusedtomaintainanddevelopan
informationnetwork.
a. The monitor role involves seeking current information from many

sources.
b. Thedisseminatorrolecomplementsthemonitorrole.Inthedisseminator
role, the manager transmits information to others, both inside and
outsidetheorganisation.
c. The spokesperson role pertains to making official statements to people

outsidetheorganisationaboutcompanypolicies,actions,orplans.
3. Interpersonal roles refer to relationships with others and are related to

humanskills.
a. Thefigureheadroleinvolveshandlingceremonialandsymbolicfunctions
for the organisation. For example, the Chief Executive Officer of an
companyactsasafigureheadwhen,duringapubliceventorceremony,
s/hepresentsachequeinsupportofthePresidentStarCharity.
b. The leader role is being fulfilled when the manager develops and
maintains a relationship with his subordinates. It includes influencing,
motivating,andcommunicatingwiththem.
c. The liaison role concerns the development of information sources both

withinandoutsidetheorganisation.
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4. Decisionalrolescomeintoplaywhenmanagersmustmakechoices.These
rolesoftenrequirebothconceptualandhumanskills.
a. The entrepreneur role involves the initiation of change. Managers seek

waystosolveproblemsorimproveoperations.
b. The disturbance handler role involves resolving conflicts between

subordinates, managers, or even departments. For instance, the line
managersofthesalesandcustomerservicedepartmentshavetostepin
tomediateandnegotiateawinwinsolutiontoresolvetheconflictsthat
havearisenbetweenthesalesandcustomerservicestaff.
c. The resource allocator role pertains to allocating resources in order to

attaindesiredoutcomes.
d. The negotiator role involves formal negotiations and collective

bargainingtoattainoutcomesforthemanagersunitofresponsibility.
READ:
REFERTO:
Exhibit1.7describesthetenmanagerroles.
REVIEW:
Reviewtherolesofmanagers.Whattypeofmanagementskillswouldbe
criticalforamanagerwhoassumesaninterpersonalrole?
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INNOVATIVEMANAGEMENTFORTHENEW
WORKPLACE
A. TurbulentForces
1. Technological developments, globalisation, shifting social values, changes
in workforce composition and labour markets, as well as other contextual
shifts have all created a challenging environment for organisations. For
most people and organisations, a highspeed pace of life is the norm. In
general,largeandsmallcrisesseemtomultiplyandtodaysworldisboth
turbulent and unpredictable as events in one part of the world can
dramatically influence business all over the globe. The 20082009 financial
crisisinAmericaandEuropehasalsoaffectedsmallandmiddleenterprises
(SMEs) in Singapore and negatively impacted their ability to expand and
growtheirbusinessesinAsianmarkets.
B. Old&NewWorkplaceCharacteristics
1. The old workplace was characterised by routine, specialised tasks, and

standardisedcontrolprocedures.Theorganisationwascoordinatedthrough
a vertical hierarchy, with decisionmaking authority reserved almost
exclusivelytoupperlevelmanagers.
2. The new workplace is characterised by freeflowing work, flexibility, and

flatter structures. Empowered employees make decisions based on widely
availableinformation.Thevaluedworkerisonewholearnsquickly,shares
knowledge, and is comfortable with risk, change, and ambiguity. Work is
often virtual as managers must be able with supervising and coordinating
subordinateswhoneveractuallycometoworkinthetraditionalsense.
3. Teams in organisations may include outside contractors, suppliers,
customers, competitors, and interim managers who work on a projectby
projectbasisandarenotaffiliatedwithanyspecificorganisation.
C. NewManagementCompetencies
1. Managers must rethink their approach to organising, directing, and
motivatingemployees.Insteadofmanagementbykeepingtabs,managers
mustdevelopaleadershipstylethatempowersinsteadofdirectsemployees.
2. Successinthenewworkplacedependsonavarietyofcollaborationsacross
functions and hierarchical levels as well as with customers and other
companies.Teambuildingskillsarecrucialfortodaysmanagers.
3. An important challenge for todays managers is to build a learning

organisation by creating a climate that values experimentation and risk
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taking, applies current technology, tolerates mistakes and failure, and

rewardsnontraditionalthinkingandknowledgesharing.
READ:
REFERTO:
Exhibit1.9describesthetransitiontoanewworkplace.
REVIEW:
Someofthewaysorganisationsandjobschangedoverthepasttenyears.What
changesdoyouanticipateoverthenexttenyears?Howmightthesechanges
affectthemanagersjobandtheskillsamanagerneedstobesuccessful?
DO:
WatchavideofromYouTubetodiscoverthenewskillsofnewmanagerstoday.
Notethekeylearningpoints.
Formoreinformation,pleaseclickhere
(AccessvideoviaiStudyGuide)
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CHAPTER2:PLANNINGANDGOALSETTING
LEARNINGOUTCOMES
Differentiatethevarioustypesofgoalsandplans.
Explaintheconceptoforganisationalmissionanditsinfluencesongoalsetting
andplanning.
Discuss the characteristics of effective goals as well as the benefits and

limitationsofplanning.
Illustratefouressentialstepsinthemanagementbyobjectives(MBO)process.
Explain the importance, for todays managers, of contingency planning,

scenariobuilding,andcrisisplanning.
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APPLEINC.TheiCompany
Initially called Apple Computer Inc., the Cupertinobased company used to be

knownasapersonalcomputercompanyresponsiblefortherunawaysuccessofthe
AppleIIecomputers.Thisishistory.
Today, the company is called Apple Inc. after it started venturing beyond PC
manufacturing and successfully launched iTunes, the iPod, the iPhone, the iPad
and the Apple TV. Apples success in the first decade of the 21st century has
catapultedittotheverytopoftheworldsmostprofitableandvaluablecompanies.
Apples success did not happen overnight. Back in 2001, upon the return of Steve
Jobs, Apple introduced iTunes, an online service offering music downloads at a
fixedpriceandwithoutamonthlysubscription.iTuneswasahugesuccess.In2008,
AppleovertookWalMartasthelargestsellerofmusic.
Onekeymanagerialresponsibilityistosetlongtermgoalsfortheorganisationand
to devise plans detailing how it will get there. The quest for an enduring success
constantly pushes Apples managers to continuously plan ahead so as to position
thecompanytobecometheundisputedleaderoftheentertainmentbusiness(Daft,
2012).
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OVERVIEWOFTHEGOALSETTINGANDPLANNING
PROCESS
Agoalisdefinedasadesiredfuturestatethattheorganisationattemptstorealise.
Goalsareimportantbecausetheydefinethepurposeofanorganisation.Aplanisa
blueprintthatspecifiestheresourceallocations,schedules,tasks,andotheractions
necessary for goal achievement. Goals specify future ends; plans specify todays
means.Thewordplanning usuallyincorporatesbothideas;itmeansdetermining
theorganisationsgoalsanddefiningthemeansforachievingthem.
A. LevelsofGoalsandPlans
Top managers are responsible for establishing strategic goals and plans that
reflectacommitmenttobothorganisationalefficiencyandeffectiveness.Tactical
goals and plans are the responsibility of middle managers. Operational plans
identify the specific procedures or processes needed at lower levels of the
organisation. First line managers and supervisors develop operational plans
that focus on specific tasks and processes and that help to meet tactical and
strategicgoals.Planningateachlevelsupportstheotherlevels.
Yogokawa follows this systematic approach to planning. At the start of every

year,theManagingDirectorattendstheannualglobalstrategicmeetingheldat
thecompanysheadquarters.Hethenmeetsupwithdivisionalcentreheadsto
reviewthegroupstargetsthatwouldcontributetothecompanysperformance
andthenchartthedirectionfortheupcomingfinancialyear.
At Yogokawa as at most companies, the top management develops strategic

plans and strategic goals and divisional centre heads set tactical plans and
tacticalgoalsthatarelatertranslatedintooperationalplansandproceduresthat
will guide the work of first line managers and supervisors (Spring Singapore,
2012).
B. TheOrganisationalPlanningProcess
Theoverallplanningprocesspreventsmanagersfromthinkingmerelyinterms
ofdaytodayactivities.Theplanningprocessincludesfivesteps:1)developthe
plan; 2) translate the plan into action; 3) develop operational procedures and
identifyresourcesneededtoachievegoals;4)executetheplan;and5)monitor
resultsandreviewplanswhenresultsarebelowexpectations.
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GOALSETTINGINORGANISATIONS
A. OrganisationalMission
1. At the top of the goal hierarchy is the missionthe organisations reason

for existencethat describes the organisations values, aspirations, and
reason for being. The formal mission statement is a broadly stated
definition of purpose that distinguishes the organisation from others of a
similar type. The content of an organisation mission often focuses on its
market and customers and identifies desired fields of endeavour. Some
missionstatementsalsodescribecompanycharacteristicssuchascorporate
values, product quality, location of facilities, and attitude towards
employees. For instance, IKEAs mission is to offer a wide variety of home
furnishingitemsofgooddesignandfunctionatpricessolowthatthemajorityof
peoplecanaffordtobuy.(Daft,2013).Generally,themissionandcorevalues
are used to guide the planning process. For example, in Yogokawa, senior
managementusethecompanysmissiontouniteemployeesarounditscore
valuesanddevelopamoreeffectiveplanningframework(SpringSingapore,
2012).
B. GoalsandPlans
1) Strategic goals are broad statements describing where the organisation

wantstobeinthefuture.Sometimescalledofficialgoals,theypertaintothe
entire organisation rather than to specific divisions or departments.
Strategicplansdefinethestepsthatthecompanyintendstotaketoachieve
itsstrategicgoals.Astrategicplanisablueprintthatdefinesorganisational
activitiesandresourceallocations.Strategicplanningtendstobelongterm.
2) Tactical goals are the results that major divisions and departments within
theorganisationintendtoachieve.Tacticalgoalsaretheconcernofmiddle
management and help identify and describe what major subunits must do
in order for the organisation to achieve its strategic goals. Tactical plans
define what major departments and organisational subunits will do to
implement the organisations strategic plan. They tend to be for a shorter
timeperiod.Forexample,divisionalcentreheadsdeveloptacticalplansand
goals that are aligned with the Managing Directors strategic plan (Spring
Singapore,2012).
3. Operationalgoalsarethespecificresultsexpectedfromdepartments,work
groups, and individuals. Operational plans are developed at the lower
levels of the organisation and specify the action plans that should be
implementedtoachieveoperationalgoalsandsupporttacticalplans.
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READ:
STUDY UNIT 1
REFERTO:
Exhibit7.1showsthelevelsofgoalsandplans.
Exhibit7.2depictstheorganisationalplanningprocess.
REVIEW:
Categoriseandexplainthetypesofgoals.Whichtypeofgoalsissetbymiddle
managers?
OPERATIONALPLANNING
A. CriteriaforEffectiveGoals
1. Specific and measurable. Wherever possible, goals should be expressed in

quantitativeterms.Vaguelystatedandstrictlyqualitativegoalstendnotto
motivateemployees.
2. Definetimeperiod.Goals should specify the time period during which they

mustbereachedaswellasthedeadlinebywhichtheymustbeachieved.
3. Coverkeyresultareas.Keyresultareasarethoseitemsthatcontributemostto
company performance. Key result areas should include both internal and
external customers. For example, Conrad Centennial Singapores key
performance areas are defined as five value drivers that include customer
loyalty,brandmanagement,learningandgrowth,operationaleffectiveness
andrevenuemaximisation(SpringSingapore,2012).
4. Choiceandclarity.A few carefully chosen, clear, and direct goals can more
powerfullyfocusorganisationalattention,energy,andresources.
5. Challengingbut realistic. The best quality programmes start with extremely

ambitiousgoalsthatchallengeemployeestomeethighstandards.However,
overlychallenginggoalshaveanadverseeffectonmotivation.Whengoals
are unrealistic, they set employees up for failure and lead to decreasing
employeemorale.Ontheotherhand,ifgoalsaretooeasy,employeesmay
not feel motivated. Stretched goals are ambitious but realistic goals that
challenge employees to meet higher standards without demoralising or
demotivatingthem.
6. Linkedtorewards.Theimpactofgoalsdependsontheextenttowhichthey
are linked to outcomes that employees specifically want: salary increases,
promotions,andotherrewards.
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B. ManagementbyObjectives
1. Management by objectives (MBO) involves managers and employees

jointly defining objectives for every department, project, and person and
laterusingthemtomonitorsubsequentperformance.Four majoractivities
mustoccurinorderforMBOtobesuccessful.
a. Set goals. Setting goals is the most difficult step in MBO and should
involve employees at all levels. A good goal should be concrete and
realistic, provide a specific target and time frame, and assign
responsibility. Ideally, a mutual agreement about each goal should be
reached between employee and supervisor as it creates the strongest
commitmenttoachievinggoals.
b. Developactionplans.An actionplan definesthecourseofactionneeded

toachievethestatedgoals.Actionplansaremadeforbothindividuals
anddepartments.
c. Reviewprogress.A periodic progress review is important to ensure that

actionplansareworking.Thisreviewallowsmanagersandemployees
to see if they are on target and if corrective actions are needed. Most
organisations hold regular reviews to monitor progress and evaluate
performance. For example, Conrad Centennial Singapore reviews its
operational effectiveness during its monthly service quality meeting
(SpringSingapore,2012).

d. Appraiseoverallperformance.ThefinalstepinMBOistoevaluatewhether
annualgoalshavebeenachievedbothbyindividualemployeesaswell
as their departments. Success or failure to achieve goals can be part of
theperformanceappraisalsystemandtheattributionofsalaryincreases
andotherrewards.
2. TherearemanypotentialbenefitstotheMBOprocess.Corporategoalsare
morelikelytobeachievedwhentheyaretheresultofamutualagreement
betweenmanagersandemployeesandfocusontheirefforts.Problemswith
MBOoccurwhenacompanyfacesrapidchangeandMBOismosteffective
when the organisational environment and internal activities are relatively
stableasperformancecanthenmorepredictablybemeasuredagainstgoals.
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READ:
STUDY UNIT 1
REFERTO:
Exhibit7.6showstheModeloftheMBOProcess.
Exhibit7.7depictstheMBOBenefits.
REVIEW:
TheMBOactivities.Inyouropinion,whichactivitiesaremoreimportantfor
MBOtobeeffective?Why?
DO:
SearchtheInternetfortwolocalcompaniesthatusetheMBOprocessfor
planningandgoalsetting.
C. SingleUseandStandingPlans
1. Singleuse plans are developed to achieve objectives that are not likely to
be repeated in the future. Singleuse plans include both programmes and
projects.
2. Standing plans are used to provide guidance for tasks performed

repeatedly within the organisation. The primary standing plans are
organisational policies, rules, and procedures. Standard Operating
Procedures(SOPs)arecommonstandingplansusedinmanufacturingand
service organisations. The main benefits of using SOPs are employee
compliance and work consistency. Nowadays, an increasing number of
companiesarealsodiscoveringaneedtodevelopstandingplansregarding
theiremployeesuseofcorporateemailaccounts.
BENEFITSANDLIMITATIONSOFPLANNING
A. BenefitsofPlanning
1. Goals and plans provide a source of motivation and commitment. Planning can
reduceuncertaintyforemployeesandclarifywhattheyshouldaccomplish.
2. Goals and plans guide resource allocation. Planning helps managers decide
where they need to allocate resources, such as employees, money, and
equipment.
3. Goals and plans are a guide to action. Planning focuses attention on specific
targetsanddirectsemployeeeffortstowardsimportantoutcomes.
4. Goals and plans set a standard of performance. Because planning and goal
settingdefinedesiredoutcomes,theyalsoestablishperformancecriteriaso
managerscanmeasurewhetherthingsareonorofftrack.
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B. LimitationsofPlanning
1. Goals and plans can create a false sense of certainty. Having a plan can give
managersafalsesensethattheyknowwhatthefuturewillbelike.
2. Goals and plans may cause rigidity in a turbulent environment. A related

problemisthatplanningcanlocktheorganisationintospecificgoals,plans,
and time frames that may no longer be appropriate in a changing
environment.
3. Goals and plans can get in the way of intuition and creativity. Success often
comes from creativity and intuition, which can be hampered by too much
routineplanning.
PLANNINGFORATURBULENTENVIRONMENT
A. ContingencyPlanning
1. Contingency plans define company responses to be taken in case of

emergencies or setbacks. Contingency plans cover such situations as
catastrophicdecreasesinsalesorprices,andlossofimportantmanagers.
B. BuildingScenarios
1. Scenario building involves looking at trends and discontinuities and
imagining possible alternative futures to build a framework within which
unexpectedfutureeventscanbemanaged.
2. With scenario building, a broad base of managers mentally rehearses

different scenarios based on a variety of anticipated changes that could
impacttheorganisation.Scenariosarelikestoriesthatofferalternativevivid
picturesofwhatthefuturewilllooklikeandhowmanagerswillrespondin
eachsituation.Typically,twotofivescenariosaredevelopedforeachsetof
factors,rangingfromthemostoptimistictothemostpessimisticview.
C. CrisisPlanning
1. CrisisPrevention
a. Althoughunexpectedeventsanddisastersdohappen,managersshould
doeverythingtheycantopreventcrises.Acriticalpartoftheprevention
stage is to build trusting relationships with key stakeholders such as
employees, customers, suppliers, governments, unions, and the
community.Throughsuchfavourablerelationships,managerscanoften
prevent crises and respond more effectively to those that cannot be
avoided.Goodcommunicationhelpsmanagersidentifyproblemsearly
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sotheydonotturnintomajorissues.Toyotasglobalrecallofalmost8.7
million vehicles, including 437,000 of its Prius hybrid cars in February
2010wasanexampleofcrisismanagement.Toreassureandregaintrust
and confidence of its stakeholders, Akio Toyoda, President of the
company, launched a topbottom review of global operations aimed at
preventing the same problem from recurring and to exceed safety
standards(CNA,2010).
2. CrisisPreparation
a. Preparation includes designing a crisis management team and

appointingaspokesperson,creatingadetailedcrisismanagementplan,
andsettingupaneffectivecommunicationssystem.Somecompaniesare
setting up crisis management offices, with highlevel leaders reporting
directlytotheCEO.Inparticular,organisationsoperatingintheservices
sectorsuchastransport,healthcareandhotelshouldalwaysputinplace
a crisis management team to deal with crises that occur from time to
time.
b. Thecrisismanagementteamisacrossfunctionalgroupofpeoplewhowill
be activated when a crisis occurs and who are closely involved in
developingthecrisismanagementplanthattheywillimplementinsuch
circumstances.
c. The crisis management plan is a detailed written plan that specifies the
steps to be taken, and by whom, if a crisis occurs. The plan should
includethestepsfordealingwithvarioustypesofcrises,suchasnatural
disasterslikefiresorearthquakes,normalaccidentslikeeconomiccrises
orindustrialaccidents,andabnormaleventssuchasproducttampering
or acts of terrorism. The plan should be a living, changing document
thatisregularlyreviewed,practised,andupdatedasneeded.
READ:
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CHAPTER3:DECISIONMAKING
LEARNINGOUTCOMES
Explaindecisionmakinganditsimportancetoeffectivemanagement.
Distinguish the different types of decisions and the characteristics of certainty

anduncertainty.
Apply the ideal, rational model of decision making as well as the political
modelofdecisionmakingintheworkplace.
Discussthesixstepsusedinmanagerialdecisionmaking.
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DECISIONMAKINGISTOUGH
Whenwasthelasttimeyoumadeadecisionthathadasignificantimpactonyou
andyourfamily?Whatwerethekeyconsiderationsandhowdidyoucometothat
final decision? Was it easy for you to make that decision? If you generally find it
difficult to make personal decisions, then you need to know that making
organisational decisions is even tougher. The situation below involving ApexPal
Internationalisacaseinpoint.
Driving at top gear and taking a leap of faith that deliberately overlooked
increasing food costs, ApexPal International made a bold decision in December
2007 to invest $3 million in its first global outlet in Chrysler Building, the iconic
buildingin NewYork. ItalsoplannedtoopenanotheroutletinMay2008(Khoo,
2008).
ApexPal Chairman and CEO, Douglas Foo, was confident that his decision to
venture into the U.S. market would turn the local brand into a global brand
synonymoustoMcDonalds.However,allgoodplansandintentcametoendwith
the collapse of Wall Street in September 2008. In the midst of the financial crisis,
FoohadtomakeatoughdecisiontoclosedowntheNewYorkoutlet,writeoffthe
entire U.S. investment and take a loss of $3.8 million. Instead of retrenching
employees, Foo decided to retain them and instead chose to explore other cost
cuttingmeasurestosalvagethecompany(CNBC,2011).
In an interview with CNBC, Foo shared, Therewerealotoflessons.Ithinkitwasa

very valuable lesson for us, particularly how we should have entered a sophisticated
economy like the U.S. We were going into uncharted waters in that sense and so a lot of
thingswehadtodoitinhouse.Wehadtorelyonournetwork.Attheendoftheday,you
canplanallyouwant,butwhenunforeseenthingshappen,youneedtoreassesseverything
veryquickly.Youcanimagineyourenothavingcashflowincomebutyoustillhavetopay
allyourexpenditures,itsscary,scarythought(CNBC,2011).
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DEFINITIONOFDECISIONMAKING
Adecisionisachoicemadeavailablealternatives.Decisionmakingistheprocess
of identifying problems and opportunities and to then resolve them. Decision
involveseffortbothbeforeandaftertheactualchoice.IntheApexPalexample,the
CEOmadeadecisiontoentertheU.S.marketandwheneventstookaturnforthe
worse,hehadtodecidequicklytoexitthemarket.
TYPESOFDECISIONSANDPROBLEMS
A. ProgrammedandNonprogrammedDecisions
1. Programmeddecisionsinvolvesituationsthathaveoccurredoftenenough
to enable decision rules to be developed and applied in the future. Once
managersformulatedecisionrules,subordinatesandotherscanmakethese
decisions, freeing in the process the time that managers can use for other
tasks.
2. Nonprogrammed decisions are made in response to situations that are

unique, poorly defined, largely unstructured, and likely to have important
consequences for the organisation. Nonprogrammed decisions often
involve strategic planning because uncertainty is great and decisions are
complex. Swedish furniture giant, IKEA recently made a decision to enter
the untapped India retail sector. Investing 1.5 billion to open 25 stores in
Indiaisanexampleofanonprogrammeddecision(Bergen,2012).
B. FacingCertaintyandUncertainty
1. One difference between programmed and nonprogrammed decisions

relatestothedegreeofcertaintyoruncertaintythatmanagersdealwithin
makingthedecision.Inaperfectworld,managershavealltheinformation
necessaryformakingdecisions.Inreality,somethingsareunknowableand
somedecisionswillfail.Everydecisionsituationcanbeorganisedonascale
according to the availability of information and the possibility of failure.
The four positions on the scale are certainty, risk, uncertainty, and
ambiguity.
a. Certainty means that all the information the decision maker needs is
fullyavailable.Fewdecisionsarecertainintherealworld.Mostinvolve
acertaindegreeofriskoruncertainty.
b. Risk means a decision has clearcut objectives and good information

available. The future outcomes associated with each alternative are
subjecttochance;however,enoughinformationisavailabletoallowthe
probabilityofasuccessfuloutcomeforeachalternativetobeestimated.
IKEAs entry in the Indian retail sector is motivated by the potential
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market opportunity and business growth. Without a doubt, IKEA is

willing to take calculated risk, knowing that there are potentially very
attractivereturnsforthecompany.
c. Uncertainty means managers know which goals they wish to achieve,

but information about alternatives and future outcomes is incomplete.
Factors that may affect a decision, such as price, production costs,
volume, or future interest rates, are difficult to analyse and predict.
Managersmayhavetocomeupwithcreativeapproachestoalternatives
and use personal judgement to determine which alternative is best.
Many decisions made under uncertainty do not produce the desired
results, but such decisions are commonly made because managers face
uncertaintyeveryday.ApexPalmanagementstillmadethedecisionto
proceedwithitsinternationalventuredespiterisingfoodcostsandthe
uncertaintyofitssuccessinenteringtheUSmarket.
d. Ambiguity means that the goal to be achieved or the problem to be

solved is unclear, alternatives are difficult to define, and information
aboutoutcomesisunavailable.Ambiguityisawickeddecisionproblem
as it involves conflicts over goals and decision alternatives, changing
circumstances, fuzzy information, and unclear linkages between the
decision elements. Some managers come up with a solution only to
realise that they hadnt clearly defined the real problem. Ambiguity is
by far the most difficult decision situation that managers must
sometimesfacenonetheless.
READ:
REFERTO:
Exhibit9.1depictstheconditionsthataffectthepossibilityofdecisionfailure.
REVIEW:
Explainthedifferencebetweenriskanduncertainty.Howmightdecision
makingdifferforariskyversusanambiguoussituation?
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DECISIONMAKINGMODELS
Decisions are usually made using the classical, the administrative, or the political
decision making model. The decision making model choice depends on the
managers personal preference, whether the decision is programmed or non
programmed,andthedegreeofuncertaintyassociatedwiththedecision.
A. TheIdeal,RationalModel
1. The classical model of decision making is based on assumptions that

managers should make logical decisions that will be in the organisations
besteconomicinterests.Thefourassumptionsinclude:
a. The decision maker operates to accomplish goals that are known and
agreedupon.
b. The decision maker strives for conditions of certainty, gathering

completeinformation.
c. Criteriaforevaluatingalternativesareknown.
d. The decision maker is rational and uses logic to assign values, order
preferences, evaluate alternatives, and make the decision to maximise
goals.
2. The classical model is normative, defining how a decision maker should

makedecisions,andprovidingguidelinesforreachinganidealoutcomefor
the organisation. The classical model is valuable because it helps decision
makersbemorerational.
3. Theclassicalmodelrepresentsanidealmodelofdecisionmakingthatis
oftenunattainablebyrealpeopleinrealorganisations.Itworksbestwhen
applied to programmed decisions and to decisions characterised by
uncertaintyorriskasrelevantinformationisavailableandprobabilitiescan
be calculated. For example, new analytical software applications automate
many programmed decisions, such as preventing a credit card customer
from making credit card payments until the outstanding payment is fully
made.
B. HowManagersActuallyMakeDecisions
1. BoundedRationalityandSatisficing
a. Theadministrativemodelisconsideredtobedescriptive,meaningthat
itdescribeshowmanagersactuallymakedecisionsratherthanhowthey
should make them. Herbert A. Simon proposed two concepts
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instrumental in shaping the administrative model: bounded rationality

andsatisficing.
b. Bounded rationality means people have limits, or boundaries, on the

amount of information they can process in making a decision. Because
managers do not have the time or ability to process complete
information about complex decisions, they must satisfice. For example,
managers at Toyota faced a tough decision regarding accelerator
problemsthataffectedsomeofitscarmodelsandthatledtoseriouscar
accidents. Rather than admit its production defects, Toyota managers
chose to delay issuing a mass recall until more deaths occurred (Daft,
2012).
c. Satisficing means that decision makers choose the first solution

alternative that satisfies minimal decision criteria. Rather than identify
and analyse all possible alternatives, managers will opt for the first
solution that appears to solve the problem. The decision maker cannot
justifythetimeandexpenseofobtainingcompleteinformation.
d. Whentheadministrativemodelisused:
decisiongoalsarevague,conflictingandlackconsensus;
rationalproceduresarenotalwaysused,andwhentheyare,theyare
confined to a simplistic view of the problem that does not capture
theactualcomplexityofrealevents;
managers searches for alternatives are limited because of human,

informationandresourceconstraints;
most managers settle for a satisficing rather than a maximising

solution.
2. Intuition
a. Intuitionisanotheraspectofadministrativedecisionmaking.Intuition
represents a quick apprehension of a decision situation based on past
experience but without conscious thought. Intuitive decision making is
not arbitrary or irrational because it is based on years of practice and
handsonexperience.Forexample,policemenrelyontheirexperienceto
makedecisionsbyrecognisingwhatistypicalorabnormalaboutaloan
sharkcase.
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b. Intuition begins with recognition; when people build a depth of

experience andknowledgeinaparticulararea,therightdecisionoften
comes quickly and effortlessly. Research on the validity of intuition in
decisionmakingisinconclusive,suggestingthatmanagersshouldtakea
cautious approach to it, applying intuition only under the right
circumstancesandintherightway.
C. PoliticalModel
1. This model is more appropriate for nonprogrammed decisions where

conditions are uncertain, information is limited, and there is disagreement
aboutthegoalstopursueortheactiontotake.
Whenmakingcomplexorganisationaldecisions,managersoftenengagein
coalitionbuilding.Acoalitionisaninformalallianceamongmanagerswho
supportaspecificgoal.Coalitionbuildingistheprocessofformingalliances
amongmanagers.Theinabilityofmanagerstobuildcoalitionsoftenmakes
it difficult or impossible for them to get their decisions implemented. The
political model closely resembles the real environment in which most
managersanddecisionmakersoperate.Forexample,interviewswithCEOs
inhightechindustriesfoundthattheyattempttousesometypeofrational
decision making. However, the way they actually make decisions was
foundtobethroughacomplexnetworkofinteractionswithothermanagers,
subordinates,environmentalfactorsandorganisationalevents(Daft,2012).
Thepoliticalmodelbeginswithfourbasicassumptions.
a. Organisationsaremadeupofgroupswithdiverseinterests,goals,and
values.
b. Informationisambiguousandincomplete.
c. Managersdonothavetime,resources,ormentalcapacitytoidentifyall
dimensionsoftheproblemandprocessallrelevantinformation.
d. Managers engage in the push and pull of debate to decide goals and
discussalternatives.
2. Recent research has found rational, classical procedures to be associated

with high performance for organisations in stable environments.
Administrativeandpoliticaldecisionmakingproceduresandintuitionhave
been associated with high performance in unstable environments when
decisionsmustbemaderapidly.
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READ:
STUDY UNIT 1
REFERTO:
Exhibit9.2summarisesthecharacteristicsofClassical,Administrativeand
PoliticalDecisionMakingModels.
REVIEW:
Analysethreedecisionsyoumadeoverthepastsixmonths.
Whichofthesewereprogrammedandwhichwerenonprogrammed?Which
modeltheclassical,administrative,orpoliticalbestdescribestheapproach
youtooktomakeeachdecision?
DECISIONMAKINGSTEPS
A. RecognitionofDecisionRequirement
1. Managersconfrontadecisionrequirementintheformofeitheraproblemor
anopportunity.Aproblem occurswhenorganisationalaccomplishmentis
less than established goals and therefore, some aspect of performance is
unsatisfactory. An opportunity exists when managers see potential
accomplishmentsthatexceedcurrentgoals.
2. Problemoropportunityawarenessisthefirststepinthedecisionsequence
and requires monitoring the internal and external environment for issues
thatmeritexecutiveattention.Recognisingdecisionrequirementsisdifficult
becauseitoftenmeansintegratinginformationinnovelways.
B. DiagnosisandAnalysisofCauses
1. Diagnosis is the step in which managers analyse the underlying causal

factorsassociatedwiththedecisionsituation.Managersmakeabigmistake
if they jump right into generating alternatives without first exploring the
cause(s) of the problem more deeply. Studies recommend that a series of
questionsbeasked.
a. Whatisthestateofdisequilibriumaffectingus?
b. Whendiditoccur?
c. Wherediditoccur?
d. Howdiditoccur?
e. Towhomdiditoccur?
f. Whatistheurgencyofthesituation?
g. Whatistheinterconnectednessofevents?
h. Whatresultcamefromwhichactivity?
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C. DevelopmentofAlternatives
1. Once the problem or opportunity has been recognised and analysed,

decisionmakersbegintoconsidertakingaction.Thenextstepistodevelop
possiblealternativesolutionsthatwillrespondtotheneedsofthesituation
andcorrecttheunderlyingcauses.
2. Foraprogrammeddecision,feasiblealternativesareoftenavailablewithin
the organisations rules and procedures. Nonprogrammed decisions
require developing new courses of action that will meet the needs of the
company.
D. SelectionofDesiredAlternative
1. Thebestalternativeisthesolutionthatbestfitsthefirmsoverallgoalsand
values and achieves the desired results using the fewest resources. The
managertriestoselectthealternativeinvolvingtheleastamountofriskand
uncertainty.Makingchoicesalsodependsonmanagerspersonalityfactors
and willingness to accept risk and uncertainty. Risk propensity is an
individuals willingness to take risk after considering the increased payoff
oftheopportunityconsideredrisky.
E. ImplementationofChosenAlternative
1. Theimplementationofachosenalternativeinvolvestheuseofmanagerial,
administrative,andpersuasiveabilitiestoensurethatthechosenalternative
iscarriedout.Thesuccessofthechosenalternativedependsonwhetheror
notitistranslatedintoaction.Sometimes,analternativecannotberealised
because managers lack the resources or energy needed to implement it.
Communicationandleadershipskillsmustbeusedtoseethatthedecision
iscarriedout.
F. EvaluationandFeedback
1. In the evaluation step of the decision making process, decision makers

gather information or feedback to determine how well the decision was
implemented and whether it achieved its goals. Feedback is important
because decision making is a continuous, neverending process. Feedback
provides decision makers with information that can start a new decision
cycle.
2. By learning from their decision mistakes, managers turn problems into

opportunities.
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READ:
REFERTO:
Exhibit9.3depictstheSixStepsintheManagerialDecisionMakingProcess.
REVIEW:
Youareabusypartnerinalegalfirmandanexperiencedsecretarycomplains
ofheadaches,drowsiness,drythroat,andoccasionalspellsoffatigueandflu.
Shetellsyoushebelievesairqualityinthebuildingisbadandwouldlike
somethingdone.Howwouldyourespond?
DO:
SearchtheInternettodiscoverIKEAsprogressinstoreopeninginIndia.
SIM UNIVERSITY
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SUGGESTEDANSWERSTOREVIEWQUESTIONS
Chapter1:IntroductiontoManagement
ReviewtheactivitiesofmanagersinExhibit1.1.Classifythemintothefour
coremanagementfunctions.
Planning is setting objectives; Organising is organising activities and people;

Leading is motivating, communicating and developing people; Controlling is
settingandmeasuringtargets.
Think about Toyotas highly publicised safety problems. One observer said
that a goal of efficiency had taken precedence over a goal of quality within
Toyota. Do you think managers can improve both efficiency and
effectiveness simultaneously? Discuss. How do you think Toyotas leaders
shouldrespondtothesafetysituation?
Organisationaleffectivenessisthedegreetowhichtheorganisationachievesa
stated goal, or succeeds in accomplishing what it tries to do. Organisational
efficiency refers to the amount of resources used to achieve an organisational
goal.Itisbasedonhowmuchrawmaterials,money,andpeoplearenecessary
for producing a given volume of output. The ultimate responsibility of
managersistoachievehighperformance,whichistheorganisationsabilityto
attainitsgoalsbyusingresourcesinanefficientandeffectivemanner.
Althoughefficiencyandeffectivenessarebothimportantforperformance,most
people would probably say that effectiveness is the more important concept.
The reason is that internal efficiency has no value if it does not enable the
organisation toachieve its goals and respond tothe external environment. On
the other hand, an organisation that is effective does achieve its goals, by
definition.Oneofthesegoalsshouldinvolvecontinuouslyincreasingefficiency.
Youareabright,hardworkingentrylevelmanagerwhofullyintendstorise
upthroughtheranks.Yourperformanceevaluationgivesyouhighmarksfor
your technical skills but low marks when it comes to people skills. Do you
think people skills can be learned, or do you need to rethink your career
path?Ifpeopleskillscanbelearned,howwouldyougoaboutit?
Althoughsomepeopleseemtobenaturallymoreadeptatpeopleskills,justas
some are naturally more adept at technical skills or conceptual skills, people
skillscanbelearnedandthereisnoreasontorethinkonescareerpathunless
thereisanunwillingnesstoimproveinthisarea.Peopleskillscanbelearnedby
takingbehaviouralclasses,bymodellingonesinteractionsafterasupervisoror
colleague who has excellent people skills, by participating in role playing
exercises,andotheractivitiesthatimproveonesinteractionalskills.
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Review the roles of managers. What type of management skills would be

criticalforamanagerwhoassumesaninterpersonalrole?
The manager will need human skill if he assumes interpersonal role. As a

leader, he needs to communicate, motivate and influence his team members.
Human skill will enable him to work with and through other people and to
workeffectivelyasateamleader.Themanagercanusehumanskilltomotivate,
facilitate,coordinate,lead,communicate,andresolveconflicts.Asglobalisation,
workforcediversity,uncertainty,andsocietalturbulenceincrease,themanager
willneedhumanskillstodealwithsuchchallenges.
Review some of the ways organisations and jobs changed over the past ten
years. What changes do you anticipate over the next ten years? How might
thesechangesaffectthemanagersjobandtheskillsamanagerneedstobe
successful?
Inthenewworkplace,workisfreeflowingandflexibletoencouragespeedand
adaptation,andempoweredemployeesareexpectedtoseizeopportunitiesand
solve problems. The workplace is organised around networks rather than
vertical hierarchies, and work is often virtual. These changing characteristics
have resulted from forces such as advances in technology and ebusiness,
globalisation, increased diversity, and a growing emphasis on change and
speedoverstabilityandefficiency.Managersneednewskillsandcompetencies
inthisnewenvironment.Leadershipisdispersedandempowering.Customer
relationships are critical, and most work is done by teams that work directly
with customers. These changes will continue over the next 10 years, driven
largelybytherapidlyincreasingrateoftechnologicaladvancement.Inthenew
workplace,managersmustfocusonbuildingrelationships,whichmayinclude
customers, partners, and suppliers. In addition, they must strive to build
learning capability throughout the organisation in order to keep up with
technologicaldevelopments.
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Chapter2:PlanningandGoalsetting
Categorise and explain the types of goals. Which type of goals is set by
middlemanagers?
Goals can be strategic, tactical and operational. Strategic goals are broad
statementsdescribingwheretheorganisationwantstobeinthefuture.Tactical
goals are the results that major divisions and departments within the
organisation intend to achieve. Operational goals are the specific results
expectedfromdepartments,workgroups,andindividuals.
Middle managers work at the middle levels of the organisation. They are
responsiblefortheperformanceofbusinessunitsormajordepartmentsunder
their charge. Middle managers are also involved in implementing business
strategies set by top management. Therefore, they set operational goals to
supporttheoverallbusinessstrategyoftheirbusinessunitsordepartments.
Review the MBO activities. In your opinion, which activities are more
importantforMBOtobeeffective?Why?
Management by objectives (MBO) is a method whereby managers and

employeesdefineobjectivesforeverydepartment,project,andpersonanduse
them to monitor subsequent performance. The four activities of MBO include
setting goals, developing action plans, reviewing progress and appraising
overallperformance.
Ofthefouractivities,reviewingprogressandappraisingperformancearemore
important.Actionplansaredocumentedandremainasaplanunlesstheyare
implemented properly. The effectiveness of the plan can be evaluated by
reviewingprogress.Thisactivityindicatesifactionsaretakentimely,carefully
and effectively. At the review stage, corrective actions can be taken to ensure
the plan is on track. There should be an overall appraisal of the overall
performance to ascertain if objectives are fully achieved. This is an important
activitybecauseitservesasfeedbacktothedepartmentandtheteam.
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Chapter3:Decisionmaking
Explain the difference between risk and ambiguity. How might decision
makingdifferforariskyversusanambiguoussituation?
Riskmeansthatthedecisionmakerhasmostofthenecessaryinformation.The
objectives of the decision are clearcut, and alternatives can be identified.
However, the future outcome of each alternative is not known for certain,
althoughtheprobabilityofoutcomescanbecalculated,whichisthesourceof
risk. Ambiguity means the almost complete absence of information pertaining
to a decision. Managers do not agree on the objectives to be achieved by the
decision, alternatives are difficult to find, and outcomes cannot be predicted.
Decisionmaking approaches differ considerably for each situation. For
decisions under risk, a rational, calculative approach is preferred. The
managers responsibility is to obtain the available information and run
necessary computations in order to predict outcomes and select the best
alternative. Decisions under ambiguity are more difficult. In these cases
managers do not have sufficient information to perform computations. They
must rely on personal judgement and experience to define alternatives and to
anticipate possible outcomes of each alternative. Under ambiguity, managers
have to take a chance and push ahead with decisions, even though they have
poorinformationandwillbewrongasubstantialpercentageofthetime.
Analyse three decisions you made over the past six months. Which of these
were programmed and which were nonprogrammed? Which modelthe
classical,administrative,orpoliticalbestdescribestheapproachyoutookto
makeeachdecision?
A programmed decision would refer to a situation that has occurred often

enoughsothatastudentcanusepastexperienceandsimilardecisionrulesover
and over again. Programmed decisions are considered routine. A non
programmeddecisionwouldrefertoanovel,unique,andlargelyunstructured
decisionsituationthatrequiresastudenttosearchforpossiblealternativesand
information and to make a decision that has not been made previously. An
exampleofaprogrammeddecisionmightbewheretogotolunchorwhereto
parkthecar.
A nonprogrammed decision could be the choice of a major field of study, a

decision that the student may have made after taking aptitude tests and
investigatinganumberofcareerchoices.Althoughthestudentmayalreadybe
studyingforthechosencareerfield,whetherthedecisionwascorrectstillmay
notbeperfectlyclear.
Thespecificdecisionsstudentschoose,andthedecisionmakingprocessesthey
use, will determine their answers to the last part of this question, but they
should be able to explain why they believe a particular model best describes
theirapproach.
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Youareabusypartnerinalegalfirmandanexperiencedsecretarycomplains
ofheadaches,drowsiness,drythroat,andoccasionalspellsoffatigueandflu.
She tells you she believes air quality in the building is bad and would like
somethingdone.Howwouldyourespond?
Students should apply the decisionmaking steps to solve this problem. The
firststepisrecognitionofdecisionrequirement.Themanagermustdetermineif
theretrulyisaproblemwiththeairqualitythatneedstobesolved.Discussions
with others and, if warranted, testing the air quality should help make this
determination.Ifaproblemdoesindeedexist,thenextstepisthediagnosisand
analysis of the causes of the poor air quality. The testing may reveal this. If
needed, further tests by experts in the field should be made to determine the
cause.Oncethecausehasbeendetermined,thedevelopmentofalternativesto
eliminatethecauseshouldbedeveloped.Theselectionofdesiredalternativesis
thenextstepduringwhichtheriskmustbeconsideredandtheprosandconsof
each alternative must be weighed. After an alternative has been chosen, the
chosen alternative should be implemented. After an appropriate time,
evaluation of the alternative should be made and feedback provided.
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REFERENCES
Bergen,M.(2012).IKEAInIndia:HeadingIntoUntappedRetailTerrain[online]
Available:
http://www.forbes.com/search/?q=Ikea+in+India%3A+heading+Into+Untapped+
Retail+Terrain[Accessed29December2012].
ChannelNewsAsia.(2010).ToyotaannouncesmassPriusrecall[online]Available:
http://www.channelnewsasia.com/stories/afp_world_business/view/1036462/1/
html[Accessed29December2012].
CNBC.(2011).5questionswithSakaeHoldingsCEO[online]Available:
http://www.cnbc.com/id/41882006/5_Questions_With_Sakae_Holdings_CEO
[Accessed29Dec202].
Daft,R.L.(2012).NewEraofManagement,China,CengageLearning.
Khoo,L.,(2008).ApexPaloutletstohit100byyearend.[online]Available:
http://www.timesdirectories.com/hotel_restaurant_catering/news/xxx/164908
[Accessed29Dec2012].
SpringSingapore.2012.ConradSQAExecutiveSummaryReport[online]
Available:
http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_Conrad
_2007_Summary_Report.pdf[Accessed29Dec2012].
SpringSingapore.2012.YogokawaSQAExecutiveSummaryReport[online]
Available:
http://www.spring.gov.sg/QualityStandards/be/Documents/BEAW/SQA_Yokog
awa_Electric_2011_Summary_Report.pdf[Accessed29Dec2012].
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ManagingPeople
STUDYUNIT2
CHAPTER1:Leadership
CHAPTER2:CorporateCulture
BUS206 STUDY NOTES
STUDY UNIT 2
CHAPTER1:LEADERSHIP
LEARNINGOUTCOMES
Explainleadershipandhowitischangingintodaysorganisations.
Applyleadershiptraitstodevelopyourleadershipskills.
Comparebetweentaskorientedbehaviourandpeopleorientedbehaviourand
explainhowthesecategoriesareusedtoevaluateandadaptleadershipstyle.
Relate contingency approaches to leadership and their application to

subordinateparticipationintheworkplace.
Appraise how leadership fits the organisational situation and how

organisationalcharacteristicscansubstituteforleadershipbehaviours.
Distinguishbetweencharismaticandtransformationalleadership.
Explainhowfollowershipisrelatedtoeffectiveleadership.
Identifysourcesofleaderpowerandthetacticsleadersusetoinfluenceothers.
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TOSERVEVERSUSTOBESERVED
Askanyonewhathe/shewouldprefertoserveortobeserved?Manywouldlike
to be served. It often feels better to have people serving you than to have you
servingpeople.
Consideraconversationthattookplaceinaninterview.TheinterviewerwasaVice
President(VP)inalogisticscompanyandtheinterviewee(I)wasanapplicantfora
jobreportingdirectlytotheVP.
I:Whatisyourmanagementstyle?
VP:Ilikepeopletodothingsforme.Whenaproblemoccurs,Iexpectmystafftosay:VP,
dontworry.Letmesolvetheproblemforyou.Idontneedtostepintosolvetheproblem.
Thinkofwhatwentthroughtheintervieweesmindafterhearingthereply.Ifyou
were the interviewee, would you like to work with this VP if he offered you the
job?Ishealeaderwholikestoserveoronethatpreferstobeserved?
What does service have to do with leadership? According to Frei and Morriss,
authors of Uncommon Service, leadership is all about the act of serving. It is also
aboutmakingotherpeoplebetterasaresultofyourpresenceandmakingsurethat
theimpactlastsinyourabsence(FreiandMorriss,2012).Contemporaryleadership
theorists called this servant leadership. Servant leaders are people who use their
influence,driveandskillstoserveothers.Inshort,theyhelpothersshine.
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THENATUREOFLEADERSHIP
There is probably no topic more important to business success than leadership

because it occurs among people, involves influence, and is used to attain goals.
Influence means that the relationship among people is not passive. Influence is
designedtoachievesomeendorgoal.
Leadership isdefinedastheabilitytoinfluencepeopletowardstheattainmentof
goals.Leadershipisreciprocal,occurringamongpeople.Itisdynamicandinvolves
theuseofvariouskindsofpowertogetthingsdone.
CONTEMPORARYLEADERSHIP
Theturbulenceanduncertaintyoftheenvironmentinwhichmostcorporationsare
operatingintodaysworldhavehadasignificantinfluenceonleadershipthinking
and styles. Ethical and economic difficulties, corporate governance concerns,
globalisation, changes in technology, new ways of working, shifting employee
expectations,andsignificantsocialtransitionshavecontributedtoashiftinpractice
leadershipthinking.Duringthe1980sand1990s,leadershipbecameequatedwith
largerthanlife personalities, strong egos, and personal ambitions. In contrast, the
postheroic leaders major characteristic is humility. Humility means being
unpretentiousandmodestratherthanarrogantandprideful.
A. Level5Leadership
A key characteristic of Level 5 leaders is an almost complete lack of ego,

coupledwithafierceresolvetodowhatisbestfortheorganisation.Incontrast
to the view of great leaders as largerthanlife personalities with strong egos
andbigambitions,Level5leadersoftenseemshyandunpretentious.Although
they accept full responsibility for mistakes, poor results, or failures, Level 5
leadersgivecreditforsuccessestootherpeople.
B. ServantLeadership
Servant leaders operate on two levels: for the fulfilment of the subordinates
goals and for the realisation of the larger purpose or mission of their
organisation. Servant leaders give things awaypower, ideas, information,
recognition,andcreditforaccomplishment.Servantleadersbringthefollowers
highermotivestotheworkandconnectthemtotheorganisationalmissionand
goals.Forexample,theCEOofahealthcaregroupgivescredittohisteamand
employees whenever one of its hospitals won a national award. When that
hospitalstartedaninitiativecalledNooneshoulddiealone,itwaspublished
in thenational newspapers. Whenpeople congratulated him, his reply was: I
have nothing to do with this initiative. The nurses started it. They should be
recognised.Ionlygavethemthesupport.
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Servant leaders often work in the nonprofit sector because it offers a more
naturalwaytoapplytheirleadershipdriveandskillstoserveothers.
C. AuthenticLeadership
Authentic leadership refers to individuals who know and understand

themselves, who espouse and consistently act within higherorder ethical
values, and who empower and inspire others with their openness and
authenticity.
a. Authenticleaderspursuetheirpurposewithpassion.Whenleadersdemonstrate
a high level of passion and commitment to purpose, they inspire
commitmentfromfollowers.
b. Authentic leaders uphold solid values. People come to know what the leader
standsfor,whichinspirestrust.
c. Authenticleadersleadwiththeirheartsaswellaswiththeirheads.Theymaintain
compassionforothersaswellasthecouragetomakedifficultdecisions.For
example,MichaelSengol,chiefexecutiveofficerofMeritusMandarinHotel
stronglybelievesinthevalueofintegrity.Tohim,doingtherightthingfor
thecompanyandemployeesismoreimportantthanbeingalikeableCEO.
WhenhebecameCEOin2010,Michaelhadtomakeadifficultdecisionof
lettingsomepeoplego.Hesays:Iknewmyintegrityishigh.Isawtheseguys
astorturingthebusinessandthe800to1000employeesarestrugglingtoachieve
somethingandyettheseguysaretellingthemthatthingscannotbedone.Ifeelthat
Iwassavingtherestofthestafffromdeterioration.Whataboutthestaffwhose
livelihooddependsontomorrowswork?Hestronglybelieves:Asaleader,
as long as your heart and mind are in the right place and you are doing things
rationally,thereisjustificationforyouractions.Thetoughdecisionmakersappear
ruthless or heartless. The reality is that they have bigger hearts. These leaders are
notconcernedwithhowtheyarebeingperceivedastheyfeeltheyaredoingtheright
thing.(Nunis,2012).
d. Authentic leaders establish connected relationships. They surround themselves

withgoodpeopleandworktohelpothersgrowanddevelop.Forexample,
SengolimplementedaMeritusDifferenceTrainingtohelpeveryemployee
reachhigherlevelsofperformance(Nunis,2012).
e. Authenticleadersdemonstrateselfdiscipline.Theyavoidexcessiveorunethical
risks that could harm others and the organisation, and openly admit their
mistakes.
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D.GenderDifferences
1. Some of the characteristics associated with Level 5 leaders and authentic

leadersarealsohallmarksofinteractiveleadership,whichhasbeenfoundto
be associated with female leaders. Interactive leadership means that the
leader favours a consensual and collaborative approach, and derives
influence from relationships rather than position power and formal
authority.
2. According to surveys, women rate higher than men on motivating others,

fostering communication, producing highquality work, and listening to
others,whilemenandwomenrateaboutequallyonstrategicplanningand
analysingissues.
READ:
REFER:
Exhibit15.1showsLevel5Hierarchy,Exhibit15.2depictstheComponentsof
AuthenticLeadership.
Exhibit15.3summarisestheGenderDifferencesinLeadershipBehaviours.
FROMMANAGEMENTTOLEADERSHIP
Management and leadership are both important to organisations. Effective

managersshouldalsobeleadersandconversely,leadersalsoneedtobemanagers
as each one of these two roles requires distinctive qualities that provide different
strengthsfortheorganisation.Thedistinctivesetsofqualitiesandskillsrequiredof
managersandleadersfrequentlyoverlapwithinasingleindividual.Apersonmay
haveastrongersetofmanagerialorleadershipqualitiesthananother,butideallya
managershouldaimtodevelopagoodbalanceofbothmanagerialandleadership
qualities.
A primary distinction between management and leadership is that management

promotes stability, order, and problem solving within the existing organisational
structures and systems. Leadership promotes vision, creativity, and change. It
means questioning the status quo so that outdated, unproductive, or socially
irresponsiblenormsandpracticescanbereplaced.
Leadershipcannotreplacemanagement.Goodmanagementhelpstheorganisation
meet current commitments, while good leadership helps the organisation move
towardsthefuture.
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LEADERSHIPTRAITS
Early efforts to understand leadership focused on the leaders personal

characteristics or traits. Traits are the distinguishing personal characteristics of a
leadersuchasintelligence,values,selfconfidence,andappearance.
Generally, research found only a weak relationship between personal traits and
leadersuccess.Physical,social,andworkrelatedcharacteristicsofleadershavealso
been studied. The appropriateness of a trait or set of traits depends on the
leadership situation and may not be applicable to every situation. For example,
DouglasFoo,ChairmanandCEOofApexPalInternationalisconscientious,goal
orientedandisknownforhisstrongdriveforsuccess.Growingupinafamilywith
modestfinancialmeans,Foolearntatatenderagethevalueofmoney,hardwork
and frugality. These values have guided and helped him become a successful
entrepreneurandaneffectiveleader(Encyclopedia,2013).
Rather than just understand their traits, the best leaders also recognise and hone
theirstrengths.Strengthsarenaturaltalentsandabilitiesthathavebeensupported
and reinforced with learned knowledge and skills and that provide individuals
with the best tools they need to accomplish their goals and achieve personal
satisfaction.
READ:
REFERTO:
Exhibit15.4comparesthequalitiesofamanagerwiththoseofaleader.
Exhibit15.5describesthepersonalcharacteristicsofleaders.
REVIEW:
Suggestsomepersonaltraitsthatyoubelievewouldbeusefultoabusiness
leadertoday.Arethesetraitsmorevaluableinsomesituationsthaninothers?
Howdoyouthinktraitsdifferfromstrengths?
BEHAVIOURALAPPROACHES
A. TaskversusPeople
The inability to define effective leadership based solely on traits led to an

interest in looking at the behaviour of leaders and how it might contribute to
leader success. Two basic leadership behaviours that have been identified as
important for leadership are taskoriented behaviour and peopleoriented
behaviour.
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1. Studies of leader behaviour at The Ohio State University identified two

majorleadershipbehaviourscalledconsiderationandinitiatingstructure.
Consideration is the extent to which the leader is sensitive to

subordinates, respects their ideas and feelings, and establishes mutual
trust. Considerate leaders are friendly, provide open communication,
develop teamwork, and are oriented towards their subordinates
welfare. For example, the general manager (GM) of a manufacturing
company holds lunchtime dialogues with his employees who are then
offered an opportunity to bring up to the GM the more difficult issues
that they face at work. This has worked well because employees are
morerelaxedandmorewillingtosharetheirthoughtswiththegeneral
managerinaninformalsetting.
Initiating structure istheextenttowhichaleaderistaskorientedand

directssubordinateactivitiestowardsgoalattainment.Leaderswiththis
style typically give instructions, spend time planning, emphasise
deadlines,andprovideschedulesofworkactivities.Forexample,asales
managerexpectshissalesteamtosubmitaweeklyactivityandrevenue
reportsoastomonitortheirsalesperformanceandgoalattainment.
2. Studies at the University of Michigan compared the behaviour of effective

andineffectivesupervisors.
Employeecentred leaders were the effective leaders who established

high performance goals and displayed supportive behaviour towards
their subordinates. Such leaders often set higher goals for high
performers, knowing that the latter can reach them. At the same time,
theymotivateandguidethesehighperformerstoachievetheirgoals.
Jobcentred leaders were ineffective and less concerned with goal

achievementandhumanneedsinfavourofmeetingschedules,keeping
costslow,andachievingefficiency.Forexample,ageneralmanagerofa
division holds weekly meetings with his team. The meeting agenda
focuses more on cost cutting measures, increases in productivity and
less on the employees concerns, the challenges they face and the
supportorsolutionstheyseektohelpthemovercomechallenges.
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B. TheLeadershipGrid
ResearchersattheUniversityofTexasdevelopedtheLeadershipGrid,atwo
dimensional model that measures a leaders concerns for people and for
production. Each axis on the grid is a ninepoint scale, with 1 meaning low
concernand9meaninghighconcern.
a. Team management (9,9) is often considered the most effective style for all
managers; organisation members work together to accomplish tasks and
reachsetoutcomes.
b. Countryclubmanagement(1,9)occurswhenprimaryemphasisisgivento
peopleratherthanworkoutputs.
c. Authoritycompliance management (9,1) occurs when efficiency in

operationsisthedominantorientation.
d. Middleoftheroad management (5,5) reflects a moderate concern for both

peopleandproduction.
e. Impoverished management (1,1) means the absence of a management

philosophy;managersexertlittleefforttowardsinterpersonalrelationships
orworkaccomplishment.
READ:
REFERTO:
Exhibit15.6showstheLeadershipGridFigure.
DO:
SearchtheInternetanddeterminehowpeopleperceiveDouglasFooasa
leader.Basedonyourresearch,applyoneofthebehaviouralapproachesto
leadershiptoevaluateFoosleadershipstyle.
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CONTINGENCYAPPROACHES
A. TheSituationalModelofLeadership
1. The situational model of leadership, developed by Hersey and Blanchard,

is a contingency approach to leadership that describes the relationship
between leadership styles and specific organisational situations. A
situational theory is a contingency approach to leadership that links the
leadersbehaviouralstylewiththetaskreadinessofsubordinates.
2. The focus of this theory is that subordinates vary in their readiness level.
Peoplewithlowtaskreadinessneedadifferentleadershipstylethanthose
with high task readiness. People may have low task readiness because of
limitedorinsufficientskills,lackoftraining,orinsecurity.Peoplewithhigh
taskreadinesstendtohavetheabilities,skills,confidence,andwillingness
to work. According to situational theory, a leader can adopt one of four
leadership styles, based on relationship (concern for people) and task
(concernforproduction)behaviours.Thefourstylesinclude:
a. Tellingstyleahighconcernfortasksandalowconcernforpeopleand
relationships.
b. Sellingstyleahighconcernforbothpeopleandtasks.
c. Participating stylea combination of high concern for people and

relationshipsandlowconcernforproductiontasks.
d. Delegatingstylealowconcernforbothrelationshipsandtasks.
3. Followersmaybeatalow,moderate,orhighlevelofreadiness.
a. LowReadinessLevel.Atellingstyleisappropriatewhenfollowersareat
alowreadinesslevelbecauseofpoorabilityandskills,littleexperience,
insecurity,orunwillingness.Theleadertellsfollowerswhattodo,how
to do it, and when to do it. For example, a manager would apply the
telling style to a new employee who is fresh out of school and has no
workexperience.
b. Moderate Readiness Level. A selling style works best with moderate

levelsofreadinesswhensubordinatesareunablebutwillingtofollow.
Inthiscase,subordinatesmightlacksomeeducationandexperiencefor
thejob.Thesellingstylegivesdirectionbutincludesseekinginputfrom
others andclarifying tasks. For example, amanager has some ideas on
how to improve service level in the department. However, in a staff
meeting,heseekssuggestionsfromhisteamtogetinputs.
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c. Moderate Readiness Level. A participating style is effective with

moderate levels of readiness whensubordinates areable but unwilling
tofollow.Thesesubordinateshavethenecessaryeducation,experience,
and skills. For these followers, the leader provides a general goal,
delegates sufficient authority to do the task, and expects followers to
completethetaskastheyseefit.Forexample,amanagergivesaquiet
and hardworking supervisor the responsibility to lead a quality
improvementproject.Themanagergivessomedirectionbutempowers
thesupervisortotakefullchargeoftheprojectandcompleteitwithina
deadline.
d. High Readiness Level. When followers have high levels of education,

experience, and readiness to accept responsibility for their own task
behaviour, the delegating style is effective. For example, a team leader
whoisabletodeputiseforhismanagerwhenthelatterisonleave.The
manager is comfortable using the delegating style because this team
leader is educated, skilful and experienced. He has handpicked this
teamleadertobehissuccessorwhenhemovestoanotherposition.
e. ThecontingencymodeliseasiertounderstandthanFiedlersmodel,but
it incorporates only the characteristics of followers, not those of the
situation.
B. FiedlersContingencyTheory
The cornerstone of Fiedlers contingency theory is the extent to which the

leaders style is relationship or task oriented. A relationshiporiented leader is
concerned with people. A taskoriented leader is primarily motivated by task
accomplishment.
1. Situation:FavourableorUnfavourable?
Thesuitabilityofapersonsleadershipstyleisdeterminedbywhetherthe
situation is favourable or unfavourable. Since leadership styles are
considered to be difficult to change, the basic idea is to match the leaders
style with the situation most favourable for his or her effectiveness. The
favourability of a leadership situation can be analysed in terms of three
elements.
Leadermemberrelationsrefer to the quality of relationships between the

leaderandfollowers.
Task structure refers to tasks performed by the group that are defined,
involvespecificprocedures,andhavecleargoals.
Position power refers to the extent to which the leader has formal
authorityoversubordinates.
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2. MatchingLeaderStyletotheSituation
Combiningthethreecharacteristicsyieldseightleadershipsituations.
The taskoriented leader excels in the two most favourable situations

becauseeveryonegetsalong,thetaskisclear,andtheleaderhaspower.
The taskoriented leader also excels in the two most unfavourable
situationsbecauseagreatdealofstructureandtaskdirectionisneeded.
Therelationshiporientedleaderperformsbetterinthefoursituationsof
intermediatefavourabilitybecausehumanrelationsskillsareimportant
inachievinghighgroupperformance.
C. SubstitutesforLeadership
1. The contingency leadership approaches considered so far have focused on

the leaders style, the subordinates nature, and the characteristics of the
situation.Thefinalcontingencyapproachsuggeststhatsituationalvariables
can be so powerful that they can substitute, or neutralise, the need for
leadership.
a. A substitute is a situational variable that makes a leadership style

redundant or unnecessary. Highly professional subordinates do not
needaleadertotellthemwhattodo.Forexample,doctorsdonotneed
tobesupervisedunlesstheyareundertraining.
b. A neutraliser is a situational variable that prevents a leader from

displaying certain behaviours. Situational variables include
characteristicsofthesubordinate,task,andtheorganisation.
2. Leadersshouldadoptastylecomplementarytotheorganisationalsituation
toensurethatbothtaskneedsandpeopleneedsoftheworkgrouparemet.
For example, in a production plant, production operators follow the
standard operating procedures to deliver a task. Adopting a taskoriented
style will make the plant manager ineffective. In fact, he should be more
peopleorientedtobemoresuccessful.
READ:
REFERTO:
Exhibit15.8showsHowLeaderStyleFitstheSituation.
Exhibit15.9outlinesSubstitutesandNeutralisersforLeadership.
REVIEW:
Doyouthinkleadershipstyleisfixedandunchangeableforaleaderorflexible
andadaptable?Discuss.
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CHARISMATICANDTRANSFORMATIONALLEADERSHIP
Researchhasfoundthatsomeleadershipapproachesaremoreeffectivethanothers
forbringingaboutchangeinorganisations.Twotypesofleadershipthatcanhavea
substantial impact are charismatic leadership and transformational leadership.
Thesearebestunderstoodincomparisontotransactionalleadership.
A.CharismaticandVisionaryLeadership
1. Thecharismaticleaderhastheabilitytoinspireandmotivatepeopletodo
morethantheywouldnormallydo,despiteobstaclesandpersonalsacrifice.
2. Charismatic leaders are often skilled in the art of visionary leadership. A

visionisanattractive,idealfuturethatiscredibleyetnotreadilyattainable.
Charismaticleadershaveastrongvisionforthefuture,almostanobsession,
and they can motivate others to help realise it. Among the charismatic
leaders include Steve Jobs, Barack Obama, Mother Teresa and Aung San
SuuKyi.
B. TransformationalversusTransactionalLeadership
1. Transformationalleadersaredistinguishedbytheirspecialabilitytobring
about innovation and change. They recognise followers needs and
concerns,helpthemlookatoldproblemsinnewways,andencouragethem
toquestionthestatusquo.
2. Transformationalleaderscreatesignificantchangeinbothfollowersandthe
organisation. They have the ability to lead changes in the organisations
mission, structure, and human resource management. They focus on
intangibles such as vision, shared values, and ideas to build relationships,
givelargermeaningtoactivities,andenlistfollowersinchange.CapitaLand
CEO,Mr.LiewMunLeongisagoodexampleofatransformationalleader.
Under his leadership, CapitaLand became one of Asias largest real estate
companies, with a presence in over 110 cities and over 12,000 staff. While
manypeoplescoffedathisstrategytotakerealestateoutofthelocalmarket
toventureintoChina,Liewignoredthenaysayersandwentaheadwithhis
plan. Today, about 60% of Capitalands operating profit of $1.05 billion
comesfromventuresabroad(Long,2012).
3. A recent study confirmed that transformational leadership has a positive

impact on follower development and follower performance.
Transformational leadership skills can be learned and are not ingrained
personalitycharacteristics.
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4. Transactional leaders clarify subordinates role and task requirements,

initiate structure, provide appropriate rewards, and try to meet the social
needsofsubordinates.Transactionalleadersexcelatmanagementfunctions,
are hardworking, tolerant, and fairminded. They stress the impersonal
aspectsofperformance,suchasplans,schedules,andbudgets.
READ:
Page92ofthetextbook.
REVIEW:
Whatistransformationalleadership?Giveexamplesoforganisational
situationsthatwouldcallfortransformational,transactional,orcharismatic
leadership.
FOLLOWERSHIP
Many of the qualities that define a good leader are the same as those of a good
follower.Onemodeloffollowershipinvolvesfivefollowerstyles,definedalongtwo
dimensions.
A. The first of these two dimensions refer to the quality of independent, critical
thinking versus dependent, uncritical thinking. Independent critical thinkers
are mindful of the effects of their own and others behaviour on achieving
organisational goals. They can weigh the impact of their bosss and their own
decisions and offer constructive criticism, creativity, and innovation. A
dependent,uncriticalthinkerdoesnotconsiderpossibilitiesbeyondwhatheor
she is told, does not contribute to the cultivation of the organisation, and
acceptsthesupervisorsideaswithoutthinking.
B. The second dimension is active versus passive behaviour. An active follower

participatesfullyintheorganisation,engagesinbehavioursthatarebeyondthe
limits of the job, demonstrates a sense of ownership, and initiates problem
solving and decision making. In contrast, a passive follower needs constant
supervisionandproddingbysupervisors.
C. The combinations of critical thinker/uncritical thinker and active/passive

behaviourresultinfivetypesoffollowers.
1. The alienated follower is a passive but independent, critical thinker.

Alienated employees are often effective followers who have experienced
setbacks and obstacles, perhaps promises broken by their superiors.
Alienated followers are plentiful at a workplace. You can spot one if this
personwastestimecomplainingabouthis/herbossandofferingnosolution
orsuggestionforimprovement.
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2. The conformist participates actively in a relationship with the boss but

doesnt use critical thinking skills. A conformist typically carries out any
andallordersregardlessofthenatureoftherequest.Itiseasytoidentifya
conformist at a workplace. He is often termed as a Yes person who is
happytotakeandfollowinstructionsfromhis/herboss.
3. The pragmatic survivor has qualities of all four extremes depending on

the followership style that best fits the situation considered. This type of
person uses whatever followership style that is more likely to maximise
benefits that are relevant to his or her own position while minimising the
risksofadverselyaffectingit.Heissomeonewhobelievesinthedontfixit
ifitisntbrokenphilosophyandwhodoesnotliketorocktheboat.
4. The passive follower exhibits neither critical, independent thinking nor

active participation. Being passive and uncritical, such followers show
neither initiative nor a sense of responsibility. A passive follower, on the
otherhand,willdowhatisnecessarytogetthejobdonebutwouldnotgo
theextramileorputinextraefforttoshowcasehis/herwork.
5. Theeffectivefollowerisacritical,independentthinkerwhoisalsoactivein
the organisation. Effective followers behave the same way towards
everyone,regardlessoftheirpositionintheorganisation.Theyareconfident
and competent and committed people who know their strengths and
weaknesses.
READ:
REFERTO:
Exhibit15.10showstheStylesofFollowership.
DO:
Identifythefivetypesoffollowersatyourworkplace.Notetheirbehaviour,
workperformanceandinteractionswiththeirbossesandcolleagues.
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POWERANDINFLUENCE
Poweristheabilitytoinfluencethebehaviourofothers.Influenceistheeffectofa
personsactionsontheattitudes,values,beliefs,orbehaviourofothers.Ifpoweris
the capacity to cause a change in a person, influence should be thought of as the
degree of actual change effected in that person. Power results from interactions
betweenleaderandfollowers.
Sometimes,powercomesfromapersonspositionintheorganisation,whileother
sourcesofpowerarebasedonpersonalcharacteristics.Withinorganisations,there
are typically five sources of power: legitimate, reward, coercive, expert, and
referent.
A. PositionPower
The traditional managers power comes from the organisation. The managers
position gives him/her power to reward or punish subordinates so as to
influencetheirbehaviourinthedirectiondesired.Examplesofpositionpower
include:
a. Legitimate power comes from a formal management position in an

organisationandtheauthoritygrantedtoit.Subordinatesacceptthissource
ofpoweraslegitimate,whichiswhytheycomply.
b. Reward power stems from the managers authority to bestow rewards on

other people. Legitimate power and reward power are most likely to
generatecompliance.
c. Coercivepoweristheoppositeofrewardpower.Here,themanagerhasthe
authority to punish or recommend punishment, which often generates
resistance. Resistance means workers tend to try to avoid carrying out
instructionsorwillattempttodisobeythem.
B. PersonalPower
Personal power often comes from internal sources, such as a persons special
knowledgeorpersonality.Examplesofpersonalpowerinclude:
a. Expert power results from a leaders special knowledge or skill regarding

thetasksperformedbyfollowers.
b. Referent power comes from a leaders personality characteristics with

which subordinates can relate and that command their respect and
admiration to such an extent that they wish to emulate the leader. The
subordinatesresponsetoreferentpowerisoftenadedicationandastrong
commitmenttoenthusiasticallycarryouttheirleadersinstructions.Leaders
canincreasetheirreferentpowerwhentheysharepowerandauthoritywith
employees.Asignificanttrendistoempowerloweremployees.
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C. OtherSourcesofPower
a. Personaleffortresultsingainingpowerwhenpeopleshowinitiative,work
beyond what is expected of them, take on undesirable but important
projects,andshowinterestinlearningabouttheorganisationandindustry.
b. People who are enmeshed in a network of relationships have greater

power.
c. Informationisaprimarybusinessresource,andpeoplewhohaveaccessto
information and control over how and to whom it is distributed are
typicallypowerful.
D. InterpersonalInfluenceTactics
Leaders often use a combination of influence strategies, and people who are
perceivedtohavegreaterpowerandinfluencetypicallyuseawidervarietyof
tactics.Therearesevenprinciplesforassertinginfluence.
a. Use rational persuasion. Use facts, data, and logical argument to persuade
others.
b. Makepeoplelikeyou.Peoplewouldrathersayyestosomeonetheylikethan
tosomeonetheydontlike.
c. Relyontheruleofreciprocity.Takeadvantageoftheexchangeofbenefitsand
favours.
d. Develop allies. Develop networks of allies people who can help you
accomplishyourgoals.
e. Askforwhatyouwant.Makeadirectandpersonalrequest.
f.
Make use of higher authority. Gain the support of people at higher levels to
backyouup.
g. Reward the behaviours you want. Use organisational rewards and

punishmentstoinfluenceothersbehaviour.
READ:
REFERTO:
Exhibit15.11showsSevenInterpersonalInfluenceTacticsforLeaders.
REVIEW:
Whichtacticsdoyouthinkareeffectivetoinfluencepeople?Why?
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CHAPTER2:CORPORATECULTURE
LEARNINGOUTCOMES
Explaincorporateculture.
Relate organisational symbols, stories, heroes, slogans and ceremonies to

corporateculture.
Differentiatethefourtypesofcorporateculture.
Appraisehowcorporatecultureisusedtoshapeorganisationalperformance.
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THECULTUREATCROTHALLHEALTHCARE
GostickandEltonaretheauthorsoftheNewYorkTimesbestsellingbookAllIn:
How the Best Managers Create a Culture of Belief and Drive Big Results. They
related the following story about the culture of Crothall Healthcare, a hospital
cleaningcompanythatemploys30,000employeeswhogenerateannualrevenuesof
morethanabilliondollars.
HalfwaythroughGostickandEltonspresentationtotheseniorleadershipteamof
CrothallHealthcare,averysuccessfulhospitalcleaningcompany,Kutteh,theChief
Executive Officer (CEO) of the company, made an unexpected dash for the door,
onlytocomebacktothemeetingroomafewsecondslatertohandthemthebottles
ofwaterthathehadjustpickedupfromthepantry.GostickandEltonwerebaffled
as they had never expected to, one day, see a CEO carry out such a simple yet
thoughtfulgesture.
Kuttehs action symbolises the kind of corporate culture that he created and that
everyone in the organisation followed. He also created a humble, sincere and
serviceorientedenvironmentwherepeoplearehappytoworkandthecompanyis
reapingthefruitsfromsuchadifferentculture.Kuttehhaslearntthatifhisculture
works,theneverythingworksbetter(GostickandElton,2012)
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THEINTERNALENVIRONMENT:CORPORATECULTURE
The internal environment includes: corporate culture, production technology,

organisation structure, and physical facilities. Corporate culture is extremely
importantinorganisationsseekingtodevelopormaintainacompetitiveadvantage.
The internal culture must fit the needs of the external environment and company
strategy.
Culture is defined as the set of key values, beliefs, understandings, and norms
shared by members of an organisation. Culture is a pattern of shared values and
assumptionsabouthowthingsaredonewithintheorganisation.Itcanbeanalysed
attwolevels.Atthesurfacelevel,onefindsvisibleartefactsallthethingsonecan
see,hear,andobservebywatchingmembersoftheorganisation.Atadeeperlevel
aretheexpressedvaluesandbeliefs,whicharenotobservablebutcanbediscerned
fromhowpeopleexplainandjustifywhattheydo.Somevaluesbecomesodeeply
embedded in a culture that members are no longer consciously aware of them.
These basic, underlying assumptions and beliefs are the essence of culture and
subconsciouslyguidebehaviouranddecisions.
A. Symbols
A symbol is an object, act, or event that conveys meaning to others. Symbols

associatedwithcorporatecultureconveytheorganisationsimportantvalues.
B. Stories
Astory isanarrativebasedontrueeventsthatisrepeatedandsharedamong
organisational employees. Stories are told to new employees to keep the
organisations primary values alive. Companies with a longstanding history
often tell new employees how the company started in the orientation
programme.Inthisregard,thedaytheystartworkatIKEA,newemployeesare
toldaboutthecompanyshumblebeginnings.
C. Heroes
A hero is a figure who exemplifies the deeds, character, and attributes of a

strong corporate culture. Heroes are role models for employees to follow. For
example, the founder of IKEA Ingvar Kamprad is a hero of the company
becauseheisarolemodeltohisemployees.
D. Slogans
Asloganisaphraseorsentencethatsuccinctlyexpressesakeyorganisational
value.Forexample,thesloganofSIAis:Agreatwaytofly.
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E. Ceremonies
Aceremonyisaplannedaffairthatmakesupaspecialeventandisconducted
for the benefit of an audience. For example, hospitals celebrate nurses day to
recognise and honour their contributions to the welfare of the patients and
successofthehospital.
READ:
REFERTO:
Exhibit3.6showsLevelsofCorporateCulture.
REVIEW:
Culturalsymbolsareusuallynoticedthroughsight,sound,touch,andsmell.
Whyaresymbolsimportanttoacorporateculture?
TYPESOFCULTURE
In considering what cultural values are important for an organisation, managers

consider the external environment as well as the companys strategy and goals.
Studiessuggestthattherightfitbetweenculture,strategyandtheenvironmentis
associatedwithfourcategoriesortypesofculture,basedontwodimensions:1)the
extenttowhichtheexternalenvironmentrequiresflexibilityorstability;and2)the
extenttowhichacompanysstrategicfocusisinternalorexternal.
A strong corporate culture alone does not ensure business success unless that
culture also encourages sufficient flexibility to adapt to the external environment.
Healthy cultures help companies adapt to the environment. A strong, but
unhealthy, culture may encourage the organisation to march resolutely in the
wrongdirection.
A. AdaptiveCulture
The adaptability culture is characterised by values that support a companys

ability to rapidly detect, interpret, and translate signals from the environment
into new behaviour responses. This culture emerges in an environment that
requiresfastresponseandhighriskdecisionmaking.
B. AchievementCulture
The achievement culture is a resultoriented culture that values

competitiveness, aggressiveness, personal initiative, and willingness to work
long and hard to achieve results. It is suited for organisations concerned with
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servingspecificcustomersintheexternalenvironmentbutwithouttheintense
needforflexibilityandrapidchange.
Anemphasisonwinningandachievingspecificambitiousgoalsisthegluethat
holdsthisorganisationtogether.
C. InvolvementCulture
Theinvolvementcultureplaceshighvalueonmeetingtheneedsofemployees
andvaluescooperationandequality.Thisculturehasaninternalfocusonthe
involvement and participation of employees to rapidly meet changing needs
from the environment. Managers emphasise values such as cooperation,
considerationofbothemployeesandcustomers,andavoidreferencestostatus
differences.
D. ConsistencyCulture
Theconsistencyculturevaluesandrewardsamethodical,rational,orderlyway
ofdoingthings.Thisculturehasaninternalfocusandaconsistencyorientation
forastableenvironment.
READ:
Pages8082ofDaft(2012).
REFERTO:
Exhibit3.7showstheFourTypesofCorporateCulture.
REVIEW:
GeneralElectricisfamousforfiringthelowestperformingtenpercentofits
managerseachyear.Withitsstrictnolayoffpolicy,ValeroEnergybelieves
peopleneedtofeelsecureintheirjobstoperformtheirbest.Yetbotharehigh
performingcompanies.Howdoyouaccountforthesuccessofsuchopposite
philosophies?
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SHAPINGCORPORATECULTUREFORINNOVATIVE
RESPONSE
Research shows that people, and how an organisation treats them, have the most
impactonacompanysvalue.Corporateculturehasbecomeincreasinglyimportant
tomanagersastheyrecogniseitsimportanceinattracting,motivating,andkeeping
goodemployees.Cultureplaysakeyroleincreatinganorganisationalclimatethat
enables learning and innovative responses to threats from the external
environment,challengingnewopportunities,ororganisationalcrises.
A. ManaginginAHighPerformanceCulture
Companiesthatsucceedinaturbulentworldarethosethatpayattentionboth
to cultural values and to business performance. Cultural values can energise
and motivate employees by appealing to higher ideals and unifying people
around shared goals. Values boost performance by shaping and guiding
employee behaviour, so that everyones actions are aligned with strategic
priorities. Four organisational outcomes are possible based on the relative
attentionmanagerspaytoculturalvaluesandbusinessperformance.
a. Companies that pay little attention to either values or business results are
unlikelytosurviveinthelongterm.
b. Companies that focus on values but pay little attention to business results
arelikelytomissimportantenvironmentalchanges,eventuallyresultingin
marketsharelosses.
c. Companies that focus primarily on business results but pay little attention
toorganisationalvalueswillfinditdifficulttosurviveintimesofcrisis.
d. Companies that emphasise both values and business performance will

develop a strong organisational culture that gives employees a sense of
identity, holds the company together during tough times, and helps it
respond and adapt quickly to a changing environment. These companies
representthehighperformanceculturethat:
isbasedonasolidorganisationalmissionorpurpose;
embodies shared adaptive values that guide decisions and business

practices;and
encourages individual employee ownership of both bottomline results

andtheorganisationsculturalbackbone.
Crothall Healthcare exemplifies an organisation that practises high

performance culture. The company is not wellknown in the marketplace
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buteveryfiveyears,Crothalldoublesinsizeanditisoneofthelargestand
fastestgrowingcompaniesinU.S.(GostickandElton,2012).
CulturalLeadership
1. One of the most effective ways for managers to change a companys obsolete
norms and values in order to build a highperformance culture is through
cultural leadership. A cultural leader defines and uses signals and symbols to
influencecorporatecultureby:
a. articulatingavisionfortheorganisationalculturethatgeneratesexcitement
andthatemployeescanbelievein,and
b. heedingthedaytodayactivitiesthatreinforcetheculturalvision.
2. Managerswidelycommunicatetheculturalvaluesthroughwordsandactions.
Value statements that arent reinforced by management behaviour are
meaningless. Cultural leaders also uphold their commitment to values during
difficult times or crises. Maintaining consistent cultural values helps
organisationsweatherthestormandcomeoutstrongeraftertheturbulencehas
passed.Culturalleadersleteveryoneknowwhatreallycounts.Forexample,the
credoandmottoofRitzCarltonarethecornerstoneofitssuccess.ItsmottoWe
are ladies and gentlemen serving ladies and gentlemen enables and empowers its
employeestodeliveritscredoofprovidingthefinestpersonalserviceandfacilities
for guests who will always enjoy warm, relaxed yet refined ambience. RitzCarlton
managers consistently apply the credo and motto which are integral to the
hotels gold standards so as to continuously motivate and energise the ladies
andgentlementhatworkinRitzCarlton.
READ:
Pages8586ofDaft(2012).
REFERTO:
Exhibit3.8showstherelationshipbetweencultureandperformance.
REVIEW:
Inwhatwaysdoescultureaffectorganisationalperformance?
DO:
DoaminiresearchonRitzCarltontofindoutwhatmakeitsemployeestick.
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Chapter1:Leadership
Suggestsomepersonaltraitsthatyoubelievewouldbeusefultoabusiness
leadertoday.Arethesetraitsmorevaluableinsomesituationsthaninothers?
Howdotraitsdifferfromstrengths?
Students may mention good communication, human relations skills, or other

traitsasbeingvaluabletraitsforaleader.Uponreflection,theymayrealisethat
these traits may not be useful with difficult, immature employees who do not
wish to cooperate. Traits are the distinguishing personal characteristics of a
leadersuchasintelligence,values,selfconfidence,andappearance.Generally,
research found only a weak relationship between personal traits and leader
success.Strengthsarenaturaltalentsandabilitiesthathavebeensupportedand
reinforcedwithlearnedknowledgeandskillsandprovideeachindividualwith
hisorherbesttoolsforaccomplishmentandsatisfaction.
Doyouthinkthataleadershipstyleisfixedandunchangeableforaleaderor
flexibleandadaptable?Discuss.
Theissueofwhetherleadershipstyleisfixedorflexiblehasbeenafundamental
debate in the literature. Trait theories assume that leadership style is fixed
people with the correct traits will be good leaders. Fiedlers work on least
preferredcoworkeralsotakesatraitapproachbyassumingthatthesituation,
rather than the leader, must be changed to suit the leaders style. Most other
theories,however,assumethatleadersareflexibleenoughtoadoptmorethan
onetypeofleadershipbehaviour.Thetwodimensionaltheories,thepathgoal
theory, and substitutes for leadership all assume that leaders can tailor their
leadershipbehaviourtofittheorganisationalsituation.Ingeneral,theweightof
evidence suggests that leader behaviour can be flexible. However, it may be
that transactional leadership behaviours can be flexible but that inspirational
leaderbehaviourisfixed.
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What is transformational leadership? Give examples of organisational

situations that would call for transformational, transactional, or charismatic
leadership.
Transformational leadership goes beyond the traditional ideas for influencing

people.Transformationalleaderscanmotivatepeoplebeyondwhatisnormally
expected.Theymotivatepeopletotranscendtheirowninterestsforthesakeof
the organisation. They have a special ability to bring about innovation and
changebecausetheyhavevisionaryideasthatexciteandstimulateotherpeople
toworkhardandattainthevision.Anorganisationalsituationthatwouldcall
for transformational leadership would be when an organisation is trying to
changefromahierarchicalstructuretoateambasedstructure,orchangefroma
directive culture to an innovative, risktaking culture. An organisational
situationthatwouldcallfortransactionalleadershipwouldbewhenacompany
is struggling to simply manage itsdaily operations and tomaintain the status
quo. An organisational situation that would call for charismatic leadership
would be a company that is trying to move from being a local or domestic
company to a multinational company. Charismatic leadership primarily
involves the setting forth and vigorous pursuit of an exciting vision for the
future.
Whichtacticsdoyouthinkareeffectivetoinfluencepeople?Why?
Leadersusesevenprimarytacticstoinfluenceothers.
Userationalpersuasion.
Makepeoplelikeyou.
Relyontheruleofreciprocity.
Developallies.
Beassertiveaskforwhatyouwant.
Makeuseofhigherauthority.
Rewardthebehavioursyouwant.
Perhaps, the most effective tactics used to influence individuals are rational
persuasion, developing allies and making people like you. These tactics are
easilyacceptablebymostpeople.
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Chapter2:CorporateCulture
Culturalsymbolsareusuallynoticedthroughsight,sound,touch,andsmell.
Whyaresymbolsimportanttoacorporateculture?
Symbols are important to corporate culture because they are tangible objects,
acts, or events that embody deeper values shared by organisation members.
Astute managers create symbols to help reinforce key values. For example,
Mary Kay Cosmetics uses a golden rule marble that is given to senior
employeestosymbolisethatthegoldenrulewillbeusedinalloftheirdealings.
Almost anything can serve as a symbol. Thus, stories, heroes, slogans, and
ceremonies all serve their own purpose, but also have symbolic value by
indicating to employees the values and understandings that are especially
significantfortheorganisation.
General Electric is famous for firing the lowestperforming 10 percent of its

managers each year. With its strict nolayoff policy, Valero Energy believes
people need to feel secure in their jobs to perform their best. Yet both are
highperforming companies. How do you account for the success of such
oppositephilosophies?
Themostlikelyanswertothisquestionisthat,whilethecompanieshavevery
different philosophies about the impact of employees sense of job security,
both companies probably place strong emphasis on organisational values and
businessperformance.Theirviewsaboutemployeessecuritydonothavetobe
the same, as long as the culture of each is based on a solid organisational
missionorpurpose,embodiessharedadaptivevaluesthatguidedecisionsand
business practices, and encourages individual employee ownership of both
bottomlineresultsandtheorganisationsculturalbackbone.
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REFERENCES
Bergen, M. (2012). IKEA In India: Heading Into Untapped Retail Terrain [online]
Available:
http://www.forbes.com/search/?q=Ikea+in+India%3A+heading+Into+Untapped+
Retail+Terrain[Accessed29December2012].
ChannelNewsAsia.(2010).ToyotaannouncesmassPriusrecall[online]Available:
http://www.channelnewsasia.com/stories/afp_world_business/view/1036462/1/
html[Accessed29December2012].
CNBC.(2011).5questionswithSakaeHoldingsCEO[online]Available:
http://www.cnbc.com/id/41882006/5_Questions_With_Sakae_Holdings_CEO
[Accessed29Dec202].
Daft,R.L.(2012).NewEraofManagement,China,CengageLearning.
Encyclopedia.(2013).LeadershipatApexPal[online]Available:
http://www.encyclopedia.com/article1G23293500012/leadershipapexpal.html
[Accessed29December2012].
Frei, F. and Morriss A. (2012). Uncommon Service, USA, Harvard Business
ReviewPress.
Gostick, A. and Elton, C. Its the culture, stupid: how getting the culture right
enablestransformationandbigresults,MWorld(Summer2012),p.10.
Long, S. Antielite chieftain from the proletariat, The Straits Times, August 4
2012[online] Available: http://ifonlysingaporeans.blogspot.sg/2012/08/liew
munleongantielitechieftain.html[Accessed29December2012]
Nunis,S.J.Changemanagementneedsgutsyleaderwithintegrity,TodaysManager,
JuneJuly2012,p.33.
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ManagingPeople
STUDYUNIT3
CHAPTER1:Motivation
CHAPTER2:Teamwork
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STUDY UNIT 3
CHAPTER1:MOTIVATION
LEARNINGOUTCOMES
Explaintheconceptofmotivation.
Differentiatebetweenintrinsicandextrinsicrewards.
Applythecontent,processandreinforcementperspectivesonmotivationinthe
workplace.
Examinemajorapproachestojobdesignandhowtheyinfluencemotivation.
Illustrateinnovativeideastomotivateemployees.
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MOTIVATIONINTHEEYESOFACALLAGENT
WhenJohnjoinedacallcentrethreeyearsago,hedidnotexpecttostayonthejob
for long. He recalls: I was a call agent. My role was to answer calls and pacify
customers.Mostcallswereunpleasant.Ihadtodealwithcomplaintsallthetime.
Whilemostofmycolleaguesresignedwithinsixmonthsonthejob,Iwasamong
theveryfewwhostayedonformorethantwoyears.
The former call centre manager, Tim did not know what to do with the high
turnoverofcallagents.Hetriedtohelpusstaypositivebutintheend,hegaveup
andresignedlessthanayearaftertakingonthecallcentremanagersposition.
Cindy is my current manager. She is quite different from Tim. Although she has
littleexperienceincallcentreoperations,sheisagreatleader.Whenshetookover
fromTim,thefirstthingCindydidwastoconductonetooneconversationswith
every call agent because she wanted to know each one of us and understand our
concerns.Shethenlisteddownthetoptenconcernsandstartedworkingwithusto
address them. She listened to our suggestions and significantly improved our
situations.
Cindymakesusworkhardbutshealsoworkshardwithusandforusbecauseshe
clearlywantstohelpusshineinourjob.Makingpeoplefeelgoodaboutthemselves
and bringing out the best in others seem to come naturally to her. For example,
Cindyinvitedanagentoutforcoffeeandachatwhenshelearntthattheagentwas
feeling miserable. Everyday, she goes around and gives us a pat on the back and
shealwaysgivesasympatheticearandmotivatesuswhenweencounterdifficult
customers.Tofosterteamwork,Cindyorganisesquarterlygettogethersothatwe
can get to know one another in a relaxed atmosphere and as a result, people are
happy working together; furthermore, teamwork effectiveness has never been
higher.
SinceCindytookover,theturnoverratehasgonedowndramaticallyasmostcall
agentshavemorethanoneyearofseniorityatthecompany.Itisnotsurprising:the
call centre is now a fun place to work; we have great colleagues and bosses.
Personally,Ilovetalkingwithpeopleandhelpingthem.Thismotivatesme.
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THECONCEPTOFMOTIVATION
Motivation refers to the forces either within or external to a person that arouse
enthusiasm and persistence to pursue a certain course of action. Employee
motivationaffectsperformance.Theroleofthemanageristomotivateemployees
to achieve organisational goals. The study of motivation helps managers and
leadersunderstandwhatpromptsindividualstoinitiateaction,whatinfluencesthe
action(s)theychoose,andwhytheypersistincarryingoutsuchaction(s)overtime.
There is a wide variety of human needs: need for food, need for achievement, or
need for money for instance. In an organisational context, the rewards that
employeescanobtainfromtheirjobrepresentanopportunitytosatisfytheseneeds.
For that reason, individuals tend to exhibit behaviours in their job that are
susceptibleofleadingtothesatisfactionoftheirneedsbutinthatquest,theywant
feedback to better understand whether and to what extent such employeerelated
behaviourwillindeedhelpthemfulfiltheirneeds.
Intrinsic rewards are the internal satisfactions a person derives while or after
performing a particular action. Extrinsic rewards, on the other hand, are external
andconcreterewardsgiven,typicallybyamanager;theyusuallytaketheformof
promotions,payincreases,timeoffandotherthingsthatemployeesvalue.
Motivation is important to organisations because it leads to behaviours that yield
high work performance. Managers have to apply a combination of motivational
techniques and rewards to keep workers satisfied and productive in a variety of
organisational situations. For example, the management of RitzCarlton, Millenia
Singaporehasworkedhardtocreateanddevelopanenvironmentoftrust,honesty,
respect, integrity and commitment where employees feel empowered and their
contributionarerecognised.Thisisanexampleofintrinsicrewardsthatemployees
value. On the other hand, to recognise star performers, the same managers have
alsolinedupanumberofpromotionsandpayincreases(extrinsicrewards)suchas
First Class recognition cards, quarterly FiveStar awards, and annual Gold
Standardsawards(Soon,2011).
READ:
REFERTO:
Exhibit16.1showsasimplemodelofmotivation.
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CONTENTPERSPECTIVESONMOTIVATION
Content theories emphasise the needs that motivate people; people have basic
needs such as food, achievement, or monetary reward. These needs translate into
an internal drive that motivates specific behaviours in an attempt to satisfy the
needs.Totheextentthatmanagersunderstandemployeesneeds,theycandesign
reward systems that meet them direct employees energies and priorities towards
attainingorganisationalgoals.
A. TheHierarchyofNeeds
Abraham Maslows hierarchy of needs theory proposes that humans are
motivatedbymultipleneeds,existinginahierarchicalorder.
a. Physiological needs. The most basic human physical needs that must be
satisfiedtoensureapersonsphysicalsurvival.Theyincludeoxygen,water,
food,sleep,andexcretion.Inanorganisationalsetting,someoftheseneeds
canbesatisfiedbyprovidingemployeeswithadequateaircirculation,free
orcheapfood,andabasesalarysufficienttoensurethattheycanaffordto
satisfythesesamebasichumanneedsoutsideoftheworkplaceaswell.
b. Safetyneeds.Theseincludetheneedsthathumanshaveforasafeandsecure
physical and emotional environment, free from actual aswell as threats of
violence. In an organisational workplace, safety needs can be met by
offering jobs that employees can safely carry out, by providing them with
fringebenefitsandjobsecurity.Forexample,constructionworkerswantto
beassuredofasafeconstructionsitewheresafetystandardsareadheredto
andequipmentormachinesaresafetouse.
c. Belonging needs. These needs are the desire to be accepted by ones peers,
have friends, be part of a group, and be loved. On the job, this translates
into a desire for good and positive relationships with colleagues and
engagementinaworkgroup.
d. Esteemneeds.Esteemneedsrelatetothedesireforapositiveselfimageand
the need to receive attention, recognition, and appreciation from others.
Managers can help employees satisfy their esteem needs by empowering
them,grantingthemincreasedresponsibilityandhigherstatusaswellasby
commendingthemfortheircontributionstotheorganisation.Forexample,
a manager raises the esteem needs of a staff member by praising him in
public.
e. Selfactualisation needs. The highest need category in the hierarchy, self

actualisationrepresentsanindividualsneedforselffulfilmentdeveloping
ones full potential, increasing ones competence, and becoming a better
person. These needs can be met in an organisational setting by providing
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employeesavarietyofopportunitiestogrow,encouragingtheircreativity,
and providing training for challenging assignments and advancement. For
example,anemployeessenseofselfworthandselffulfilmentareincreased
whenhissuperiorsselecthimforamanagementtraineeprogrammeasthis
meansthathewilleventuallybeconsideredforapotentialpromotion.
Asthenameimplies,Maslowshierarchyofneedsexplainsthatthelowerorder
needs take priority over the others and must be sufficiently satisfied before
higherorder needs are activated. The needs are satisfied in sequence; once a
need category is satisfied, it declines in importance in the mind of the
individual who will then start to seek the satisfaction of a higher need. If a
lowerlevel need ceases to be satisfied, however, it will reemerge and take
precedenceoverhigherorderneedsuntilitisonceagainsatisfied.
READ:
REFERTO:
Exhibit16.2showsMaslowsHierarchyofNeeds.
REVIEW:
Ifyouwereaplantmanager,howwouldyoumotivateagroupofproduction
workerstoimprovetheirjobperformance?
B. ATwoFactorApproachtoMotivation
Frederick Herzberg asserted that work characteristics associated with

dissatisfaction were different from those pertaining to satisfaction. This
prompted the idea that two different factors influenced work motivation and
employees behaviour at work, leading to his development of the twofactor
theory.
a. Hygiene factors are extrinsic to the job, relate to lowerorder needs and
include things such as working conditions, pay and security, company
policies,supervisors,andinterpersonalrelationships.Whenhygienefactors
arepoor,workisdissatisfyingbutontheotherhand,goodhygienefactors
may decrease and eventually remove job dissatisfaction; they cannot,
however,causejobsatisfactionormotivation.Inthebestofsituationswhere
all the hygiene factors are favourable to them, employees can only be
neutral,i.e.theyareneithersatisfiednordissatisfiedtowardswork.
b. Motivators,ontheotherhand,areintrinsictothejob.Theyrelatetohigher
order needs and include things such as achievement, recognition,
responsibility,theworkitself,andtheopportunityforpersonalgrowth.For
example, Marriot Singapore provides equal development and training
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opportunities to all existing and potential associates to motivate them.

When motivating factors are present, workers are highly motivated and
satisfied. The absence of motivating factors removes satisfaction, but does
notcausedissatisfaction.Instead,employeesareneutraltowardswork.
The managers role is to ensure that the jobs hygiene factors are sufficient to
meettheemployeesbasicneedsandusemotivatorstomeethigherlevelneeds
toenhancejobsatisfactionandpropelemployeestowardshigherperformance.
READ:
REFERTO:
Exhibit16.4showsHertzbergsTwoFactorTheory.
REVIEW:
Whatarethehygienefactorsifnotmetwoulddemotivateanemployeeand
causehim/hertoleave?
PROCESSPERSPECTIVESONMOTIVATION
Process theories explain how employees select behaviours that meet their needs
and determine if their behaviour choices were successful. Two basic process
theoriesofmotivationincludeequitytheoryandexpectancytheory.
A. EquityTheory
Equity theory, developed by J. Stacy Adams, focuses on individuals

perceptionsabouthowfairlytheyaretreatedrelativetoothers.Peopleevaluate
equitythrougharatioofoutcomestoinputs.Inputstoajobincludesuchthings
aseducation,experience,effort,andability.Outcomesfromajobincludesuch
thingsaspay,recognition,benefits,andpromotions.
The ratio may be compared with another person in the work group or to a
perceived group average. Equity exists in the mind of an employee when he
perceivesthattheoutcometoinputratioofhisworkisequaltotheoutcometo
input ratio of another person doing the same or equivalent work. In such a
scenario, the employee will conclude that he is fairly treated by his employer.
Conversely,inequityexistswhenratiosarenotequal.
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Themostcommonmethodsusedtoreduceaperceivedinequityare:
Foremployees:
tochangeworkeffort, such as decreasing the level of effort or increasing

absenteeism. For instance, an employee who thinks he earns less than
hiscolleaguewhodoesthesamejobmaydecidetoputinlesseffortor
totakemoretimetocompleteatask.
to change outcomes, such as by demanding a salary increase or other

benefitsorperks.Forexample,unionisedmembersmayasktheirUnion
tonegotiateforahighersalaryinthenextbargainingagreement.
toleavethejobif equity cannot be restored through any of the previous

methods.
Formanagers:
tochangeperceptions,suchasbyartificiallyincreasingthestatusattached
toonesjob.Forexample,givingajobholderamanagerialtitlewhenthe
responsibilitiescanbeperformedbyanadministrativeofficer.
The implication of the equity theory for managers is that employees evaluate
theperceivedequityoftherewardstheyreceivefortheeffortstheyputintheir
job, when compared to others. An increase in salary or promotion will not
motivate an employee if it is perceived to be inequitable relative to the other
employees with whom he makes a comparison. Smart managers try to keep
employeesfeelingsofequityinbalancetokeeptheirworkforcemotivated.
READ:
REVIEWTO:
Ifanexperiencedexecutivediscoveredthatshemadethesameamountof
moneyasajuniorofficer,howdoyouthinkhe/shewouldreact?Whatinputs
andoutcomesmightsheevaluatetomakethiscomparison?
DO:
Reflectonanexperienceorsituationinwhichyouperceivedyouwereunfairly
treated.Whatdidyoudotoreducetheperceivedinequity?
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B. ExpectancyTheory
The expectancy theory, developed by Victor Vroom, suggests that employee
motivation depends on satisfying individuals expectations that their efforts
and job performance will lead to rewards that they value. It focuses on the
thinkingprocessindividualsusetoobtainrewards.Expectancytheoryisbased
on the individuals effort, performance, and the desirability of outcomes
associatedwiththatperformance.
a. E P expectancy involves determining whether putting effort into a task

will lead to high performance. The individual must have the ability,
previousexperience,andnecessaryresourcesandopportunitytoperform.
b. P O expectancy involves determining whether successful performance

willleadtothedesiredoutcome.Itisthebeliefthathighperformancewill
leadtoadesiredreward.
c. Valence refers to the subjective value that an individual attaches to the

rewardshegetsforexertingeffort,reachingacertainlevelofperformance
andachievingspecifiedoutcomesforthecompany.Ifanemployeedoesnot
value the outcomes available from high effort and good performance,
motivation will be low. If outcomes have a high value, motivation will be
higher. Expectancy theory attempts to establish that needs and rewards
existandmaybedifferentforeveryindividual
Themanagersresponsibilityistohelpsubordinatesmeettheirneedsandatthe
sametimeattainorganisationalgoals.Managerstrytofindamatchbetweena
subordinates skills and abilities, job demands, and available rewards.
Companies use expectancy theory principles by designing incentive systems
thatidentifyorganisationaloutcomesandgiveeveryoneachanceforrewards.
The trick is to design a system that fits employees abilities and needs. For
example,managersmayassignchallengingprojectstoemployeeswhobelieve
thatiftheyperformwell,theywillbegivenrecognition,rewardandpromotion.
READ:
REFERTO:
Exhibit16.5showsmajorelementsofExpectancyTheory.
REVIEW:
WhatarethekeystoExpectancyTheory?Inyourview,isthereakeythatis
moreimportantthananother?
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REINFORCEMENTPERSPECTIVEONMOTIVATION
A. ReinforcementTheory
Reinforcement theory looks at the relationship between behaviour and its

consequences.Thefocusisonchangingormodifyingtheemployeesonthejob
behaviourthroughtheappropriateuseofimmediaterewardsorpunishments.
ReinforcementTools
Behaviourmodificationisatechniquethatusesreinforcementtheorytochange
an employees behaviour. The basic assumption underlying behaviour
modificationisthelawofeffect,whichstatesthatbehaviourthatispositively
reinforcedtendstoberepeated,andbehaviourthatisnotreinforcedtendsnot
to be repeated. Reinforcement is defined as anything that causes a certain
behaviour to be repeated or inhibited. There are four common reinforcement
tools.
a. Positive reinforcement is the application of a pleasant and rewarding

consequence following a desired behaviour. Praise for a job well done
increases the likelihood that the employee will repeat the work behaviour
thatledtothatperformancelevelandearnedhimthepraise. Studiesshow
that positive reinforcement improves performance. For example, Ritz
CarltonsharesWowstorieswiththeiremployeesintheirdailybriefingsto
reinforcetheserviceexcellencecommitmentofthehotel(Soon,2011).
b. Avoidancelearningistheremovalofanunpleasantconsequencefollowing
a desired behaviour, sometimes called negative reinforcement. Employees
learntoavoidunpleasantsituationsbydoingtherightthing.Forexample,
an accounts supervisor stops requesting that his staff stays after working
hour to correct the careless errors he made in accounting reports once the
latterhasdemonstratedthathenowcheckshisworkbeforesubmittingitto
thesupervisor.
c. Punishment is the application of unpleasant consequences following

undesirable behaviour. The use of punishment in organisations is
controversial because it fails to indicate the correct behaviour. Almost all
managers find the need to impose punishment occasionally, from
reprimands to employee suspensions or dismissal. For example, an
employeewhoisalwayslateforworkisgivenawarningletterthatiskept
inthepersonalemployeefile.Theemployeespunctualitywillbemonitored
foraperiodoftime.
d. Extinction is the withdrawal of a positive reward following undesirable

behaviour. Extinction involves withholding pay raises, praise, and other
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positive outcomes with the idea in mind that behaviours that are not
positivelyreinforcedwillbelesslikelytooccurinthefuture.Forexample,a
line manager no longer assigns major projects to a staff member who
constantlyfailstomeetdeadlineseventhoughhemaybecompetent.
READ:
REFERTO:
Exhibit16.6showsthechangingbehaviourwithreinforcement.
REVIEW:
Onesmallcompanyrecognisesanemployeeofthemonth,whoisgivena
parkingspotnexttothepresidentsspacenearthefrontdoor.Whattheories
wouldexplainthepositivemotivationassociatedwiththispolicy?
JOBDESIGNFORMOTIVATION
A job in an organisation is a unit of work under the responsibility of a single

employee. Jobs are important because performance of their components may
provide rewards that meet employees needs. Job design is the application of
motivational theories to the structure of work for the purpose of improving
productivityandsatisfaction.Thefollowingareapproachestojobdesign.
JobEnrichment
Jobrotationsystematicallymovesemployeesfromonejobtoanother,increasingthe
number of different tasks that an employee performs. Job enlargement combines a
series of tasks into one new, broader job. The primary trend is towards job
enrichment,whichincorporateshighlevelmotivatorsintotheworkincludingjob
responsibility, recognition, and opportunities for growth, learning, and
achievement.
Injobenrichment,employeeshavecontrolovertheresourcesnecessaryforthejob,
makedecisionsonhowtodothework,experiencepersonalgrowth,andsettheir
own work pace. Job enrichment increases employees motivation and job
satisfaction.Forjobenrichmenttobesuccessful,managersneedtoempowerstaff.
JobCharacteristicsModel
HackmanandOldhamsresearchconcernsworkredesign,definedasalteringjobs
toincreaseboththequalityofemployeesworkexperienceandtheirproductivity.
The job characteristics model that Hackman and Oldham developed comprises
core job dimensions, critical psychological states, and employee growthneed
strength.
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CoreJobDimensions
The more a job satisfies the following core characteristics, the higher the
motivation, quality of performance, and satisfaction there will be. A jobs
motivationalpotentialincludes:
Skillvariety.Thenumberofdiverseactivitiesthatcomposeajobandthenumber
ofskillsusedtoperformit.
Task identity. The degree to which an employee performs a job that has an
identifiable and recognisable beginning and end. For example, a management
consultantwhosinglehandedlycompletedamajorchangemanagementproject
hasmoretaskidentitythanamemberofaprojectteam.
Tasksignificance.Thedegreetowhichajobisperceivedasimportantandhaving
animpactonthecompany,customersorotherpeople.Forexample,amedical
social worker helping a patient obtain social medical funding from the
government will feel that his/herjob is meaningful because ofthe significance
ofitsimpactonthelivesofpatientsfromhumblefinancialbackground.
Autonomy. The degree to which the worker has freedom, discretion, and self
determination in planning and carrying out tasks. For example, an architect is
giventhefreedomtodesignanewhotel.
Feedback. The extent to which doing the job provides information to the
employeeabouthis/herperformance.
CriticalPsychologicalStates
This model states that core job dimensions are more rewarding when individuals
experiencethreepsychologicalstatesinresponsetojobdesign.
Meaningfulness of work. The work itself is satisfying and provides intrinsic

rewards.
Responsibility.Autonomyinfluencestheexperienceofresponsibility.
Knowledgeofactualresults.Feedbackprovidesinformationaboutresults.
Employees know how they are performing and can change work performance to
increasedesiredoutcomes.
PersonalandWorkOutcomes
Theimpactofthefivejobcharacteristicsonthepsychologicalstatesofexperienced
meaningfulness, responsibility, and knowledge of actual results leads to the
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personal and work outcomes of high work motivation, high work performance,
highsatisfaction,aswellaslowabsenteeismandturnover.
EmployeeGrowthNeedStrength
Employee growthneed strength is the final component of the model. It means that
people have different needs for growth and development. If a person wants to
satisfy lowlevel needs, such as safety and belongingness, the job characteristics
modelhaslesseffect.Forsituationswhereapersonhasahighneedforgrowthand
development and the desire for personal challenge, achievement, and challenging
work,themodelisthenmoreeffective.
READ:
REFERTO:
Exhibit16.7summariestheJobCharacteristicsModel.
INNOVATIVEIDEASFORMOTIVATING
Organisationsareincreasinglyusingvarioustypesofincentivecompensationasa
waytomotivateemployeestohigherlevelsofperformance.Variablecompensation
andformsofatriskpaysuchasbonusplansarekeymotivationaltoolsandare
becomingmorecommonthanfixedsalariesatmanycompanies.Theprogrammes
can be effective if they are used appropriately and used in combination with
motivationalideasthatalsoprovideintrinsicrewardsandmeethigherlevelneeds.
Manyorganisationsgiveemployeesachancetoexpresstheirviewsandpreferences
towards the design of pay and incentive systems, an approach that increases
employeemotivationbyencouragingtheirinvolvement.Motivationalprogrammes
thathavethegreatestimpacttypicallyinvolvemuchmorethanmoney.Tworecent
motivationaltrendsareempoweringemployeesandframingworktohavegreater
meaning.
EmpoweringPeopletoMeetHigherNeeds
Empowerment is power sharing, the delegation of power or authority to

subordinatesinanorganisation.Increasingemployeepowerheightensmotivation
for task accomplishment because people can use their creativity to improve their
own effectiveness by choosing how to do a task. Empowering employees means
givingthemfourelementsthatenablethemtoactmorefreelytoaccomplishtheir
jobs:information,knowledge,power,andrewards.
a. Employees receive information about company performance. In companies where

employeesarefullyempowered,allemployeeshaveaccesstoallfinancialand
operationalinformation.
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b. Employeeshaveknowledgeandskillstocontributetocompanygoals.Companies use
trainingprogrammestohelpemployeesacquiretheknowledgeandskillsthey
needtocontributetoorganisationalperformance.
ConradCentennialSingaporeempowersstafftoservetheircustomerswelland
provideservicerecoverywhennecessary(InsightstoBusinessExcellence,p.16).
Similarly, CapitalLand empowers employees to explore solutions that work
through problem solving, synthesis and reflection. This process not only
energises employees but also motivates them to take charge of their work
(CapitaLandInstituteofManagementandBusiness).
GivingMeaningtoWorkthroughEngagement
Anotherwaytomeethigherlevelmotivationalneedsandhelppeoplegetintrinsic
rewardsistoattachtotheirworkasenseofimportanceandmeaning.Forexample,
people who work for a social cause or mission are often more highly motivated.
Employee engagement means that people enjoy their jobs and are satisfied with
their working conditions, contribute enthusiastically to meeting team and
organisational goals, and feel a sense of belonging and commitment to the
organisation.
Smartmanagersseethathavingengaged,motivatedemployeeshaslesstodowith
extrinsicrewardsthanwithfosteringanenvironmentinwhichpeoplecanflourish.
The behaviour of managers is what makes the biggest difference in employee
motivation and whether employees flourish at work. The managers role is to
organise the workplace in such a way that each person can learn, contribute, and
grow.
a. Peopleexperienceasenseofmeaningfulnesswhentheybelievetheyareworking
towardssomethingofimportanceandhaveachancetoaccomplishsomething
thatprovidesrealvaluetotheworld.
b. Engagedemployeesfeelconnectedtothecompany,tooneanother,andtotheir
managers.
c. Tobefullyadvanced,peopleneednotonlyfeelthattheyarecompetenttocarry
outtheworkrequiredofthem,butalsothattheyhaveachancetolearn,grow,
andadvancewhiledoingit.
SuzanneWink,operationsdirectorofChilis,arestaurantchain,bestsumsuphow
the restaurant motivates its staff. Wink said that Chilis motivates their staff by
providing training, having competitions and giving rewards such as delicious
dessertsorvouchers.Thecompanycontinuouslyseekstoidentifyemployeeswith
high potential and develop them so that they can rise through the ranks (Nunis,
2012).
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READ:
REFER:
Exhibit16.8describestheNewMotivationalCompensationProgrammes.
REVIEW:
Howcanempowermentleadtohighermotivationofemployees?
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CHAPTER2:TEAMWORK
LEARNINGOUTCOMES
Explaintheconceptofteam.
Differentiatebetweengroupsandteams.
Discusstheeffectivenessofteamleadership.
Categorisethetypesofteamsinorganisations.
Apply the Work Team Effectiveness Model and Tuckmans Model of Team
Developmenttotheworkplace.
Contrastthetypesofconflict.
Examinethedifferentconflictmanagementstyles.
Discussteameffectiveness.
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TEAMWORKMAKESSHIFTLESSLONELY
Manyofusthinkthatshiftworkislonelyandweoftenperceivethatpeoplewho
work shifts do not have a choice. However, we would be surprised to learn that
shiftworkcanbeenjoyableifthereisteamwork.
IsmailOsmanisthebranchmanageroftheTimestheBookstoreoutletsatMarina
Square and Suntec City. He is selfmotivated and positive about shift work. He
feelsthatitisimportantforhimtobearolemodeltohisstaffbyshowingthemthat
heenjoysworkingshifts.Hispositiveenergyisthentransferredtotheteam(Nunis,
2012).
Team bonding and fairness are equally important. Osman said: If team A is
workingtheafternoonshiftandateammemberhassomethingpersonaltoattend
to, we encourage him to discuss it with his team mates. They can settle it among
themselvesandthisisfairtothewholeteam.Thesameappliestothosewhowish
totakeleaveduringtheholidayseasons(Nunis,2012).
Teamwork is evident at Chilis too. Suzanne Wink, the operations director,

explainedthatFridayandSaturdaynightsarebusiestattherestaurants.According
toher,Chiliscreatesafamilyorientedenvironmentanddespitethefactthatsheis
inthemanagementteam,shestillheadsdowntotherestauranttogiveherstaffa
boostandahelpinghand.Themanagementdoesnottellstaffwhattodo,managers
coachstafftodotherightthingfortheguestandmanagementteammembersoften
jump in to help and work alongside the restaurant staff. Ranks and titles are
irrelevantandinsignificant,butwhileguestssatisfactionisatoppriorityatChilis,
thatoftheteammembersisalsoimportant(Nunis,2012).
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WHYTEAMSATWORK?
Muchworkinorganisationsisinterdependent,whichmeansthatindividualsand
departments rely on other individuals and departments for information or
resourcestoaccomplishtheirwork.Whentasksarehighlyinterdependent,ateam
canbethebestapproachtoensuringthelevelofcoordination,informationsharing,
andexchangeofmaterialsnecessaryforsuccessfultaskaccomplishment.
A. WhatIsaTeam?
Ateamisaunitoftwoormorepeoplewhointeractandcoordinatetheirwork
toaccomplishaspecificgoal.Thisdefinitionhasthreecomponents:twoormore
peoplearerequired;peopleinateamhaveregularinteractions;andmembersof
ateamshareaperformancegoal.
Although a team is a group of people, the two terms are not interchangeable.
An employer can put together a groupof people and never build a team. The
teamconceptimpliesasenseofsharedmissionandcollectiveresponsibility.
B. TheDilemmaofTeams
Therearethreeprimaryreasonsteamspresentadilemmaformostpeople.
a. Theyhavetogiveuptheirindependence.Whenpeoplebecome partofateam,
theirsuccessdependsontheteamssuccess;therefore,theyaredependent
on how well other people perform, not just on their own individual
initiativeandactions.
b. They have to put up with free riders. The term free rider refers to a team
memberwhoderivesbenefitsfromteammembershipbutdoesnotactively
participateinnorcontributetotheteamswork.
Teams are sometimes dysfunctional. Many teams have great success, but others
experiencesignificantfailure.Thewaythatteamsaremanagedplaysthemost
criticalroleindetermininghowwelltheyfunction.
READ:
REFERTO:
Exhibit18.1summarisesthedifferencesbetweengroupsandteams.
Exhibit18.2presentsfivecommondysfunctionsofteams.
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HOWTOMAKETEAMSEFFECTIVE
A. ModelofTeamEffectiveness
Work team effectiveness is based on three outcomes: productive output the

quality and quantity of task outputs as defined by team goals; personal
satisfaction the teams ability to meet the personal needs of its members to
maintaintheirmembershipandcommitment;andcapacitytoadaptandlearn
the ability of teams to bring greater knowledge and skills to job tasks and
enhance the potential of the organisation to respond to new threats or
opportunities.
The factors that influence team effectiveness begin with the organisational
context in which the team operates the structure, strategy, environment,
culture, and reward systems. Managers define teams within that context.
Importantteamcharacteristicsarethetypeofteam,theteamstructure,andthe
teamcomposition.Theseteamcharacteristicsinfluenceprocessesinternaltothe
team,whichaffectoutputandsatisfaction.Goodteamleadersunderstandand
manage the team development stages, cohesiveness, norms, and conflict to
establishaneffectiveteam.
B. EffectiveTeamLeadership
Team leaders play an important role in shaping team effectiveness. They can
contributetothesuccessoftheirteaminthreespecificways.
a. Rally people around a compelling purpose. It is the leaders responsibility to

articulateaclear,compellingpurposeanddirection,oneofthekeyelements
ofeffectiveteams.
b. Sharepower.Goodteamleadersembracetheconceptofteamworkindeeds
aswellasinwordsbysharingpower,information,andresponsibility.
c. Admit ignorance. Good team leaders arent afraid to admit that their
teammates know more than they do about some things and ask for their
help.
READ:
REFERTO:
Exhibit18.3showstheWorkTeamEffectivenessModel.
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TYPESOFTEAMS
A. FormalTeams
Formalteamsarecreatedbyanorganisationaspartofitsformalstructure.
a. A vertical team is composed of a manager and subordinates in the formal

chainofcommand.Theteamisalsocalledafunctionalorcommandteamand
may include three or four levels within a single functional department. A
financial analysis department, a quality control department, and an
accountingdepartmentareallverticalorcommandteams.Crossfunctional
teamsandcommitteesallowmemberstoexchangeinformation,coordinate
units,developnewideasandsolutions,andhelpdevelopnewpracticesand
policies.
b. A horizontal team is composed of employees from about the same

hierarchical level but from different areas of expertise. The most common
horizontalteamsarecrossfunctionalteamsandcommittees.
A crossfunctional team, or task force, is a group of employees from

differentdepartmentsformedtodealwithaspecifictask,existingonly
untilthetaskiscompleted.Forexample,Teckwahusescrossfunctional
teams to pursue breakthrough improvement projects, continuous
improvement projects and company events such as Company Day
celebrations(SpringSingapore,2012).
Acommitteeisgenerallylonglivedandmaybeapermanentpartofthe
organisations structure. Committees typically are formed to deal with
tasks that recur regularly. At Teckwah, Staff Committees are set up to
implementstaffengagementstrategies(SpringSingapore,2012)
c. Specialpurpose teams, also called project teams, are created outside the
formal organisation structure to undertake a project of special importance
or creativity. Companies use specialpurpose teams to speed up
development of a special project. These fastcycle teams are given the
freedom and resources to complete projects. For example, Tata Motors of
IndiaformedaspecialprojectteamtodesignthenewWorldTruck(Harish,
etal.,2010,p.223).
B. SelfdirectedTeams
Employeeinvolvementthroughteamsincreasestheparticipationoflowerlevel
workerswhendecisionsaremadeabouttheirjobs,withthegoalofimproving
performance. Initial employee involvement techniques include sharing
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informationwithemployeesandaskingthemforsuggestionstoimprovework
andworkprocesses.
Selfdirected teams consistoffiveto20multiskilledworkerswhorotatejobs

and produce an entire product or service. The team works with minimum
supervision,perhapselectingoneofitsownastheteamsupervisor,eitherona
permanent or on a rotation basis. The most effective selfdirected teams are
thosethatarefullyempowered.
Selfdirectedteamstypicallyhavethefollowingcharacteristics:
The combined team members skills are sufficient to perform a major

organisationaltask.
Theteamhasaccesstotheresourcesnecessarytoperformandcompletethe
assignedtask.
Theteamisgivendecisionmakingauthoritytocompletethetask.
The team assumes managerial duties such as work scheduling, ordering

materials,andhiringnewmembers.
READ:
REVIEW:
Volvowenttoselfdirectedteamstoassemblecarsbecauseoftheneedtoattract
andkeepworkersinSweden,wherepayraisesarenotamotivator(hightaxes)
andmanyotherjobsareavailable.Arethesefactorsgoodreasonsforusinga
teamapproach?
DO:
SearchtheInternetandfindouthowMicrosoftusesselfdirectedteamsin
softwaredesign.
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TEAMCHARACTERISTICS
The next issue of concern for managers is designing the team for greater
effectiveness. One factor is team characteristics, which affect team dynamics and
performance. Characteristics of concern include team size, diversity, and member
roles.
A. Size
Numerous studies have found that smaller teams perform better than larger
ones, although most researchers also say its impossible to specify an optimal
team size. Teams need to be large enough to incorporate the diverse skills
needed to complete a task, enable members to express good and bad feelings,
and aggressively solve problems. However, they should also be small enough
to allow each member to feel like an intimate part of the team and to
communicateeffectivelyandefficiently.Ingeneral,asateamincreasesinsize,it
becomesharderforeachmembertointeractandinfluencetheothers.
B. Diversity
Research shows that diverse teams are more innovative. In addition, diversity
maycontributetoahealthylevelofconflictthatleadstobetterdecisionmaking.
Recentresearchalsoshowsthatbothfunctionaldiversityandgenderdiversity
canhaveapositiveimpactonworkteamperformance.
Racial,nationalandethnicdiversitycanalsobegoodforteamsalthoughinthe
short term, these differences might hinder team interaction and performance.
Teamsofraciallyandculturallydiversememberstendtohavemoredifficulty
learning to work well together, but with effective leadership, such problems
tendtofade.
C. MemberRoles
For a team to be successful, it must maintain its members social wellbeing

whiletheyaccomplish theirtasks.Therequirementsfortaskperformanceand
social satisfaction are met when some of the team members can assume two
typesofroles:thetaskspecialistroleandthesocioemotionalrole.
Peoplewhoplaythetaskspecialistrolehelptheteamreachitsgoalbymaking
thefollowingcontributions:
a. Initiateideas
b. Giveopinions
c. Seekinformation
d. Summarise
e. Energise
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Employees who adopt a socioemotional role support team members emotional

needsandtendtodothefollowing:
a.
b.
c.
d.
e.
Encourage
Harmonise
Reducetension
Follow
Compromise
READ:
REVIEW:
Whenyouareamemberofateam,doyouadoptataskspecialistorsocio
emotionalrole?Whichroleismoreimportantforateamseffectiveness?
TEAMPROCESSES
A. StagesofTeamDevelopment
1. Forming
The forming stage of team development is a period of orientation and
getting acquainted. Uncertainty is high at thisstage, and members usually
acceptwhateverpowerorauthorityisofferedbyeitherformalorinformal
leaders.Theteamleadershouldprovidetimeformemberstogetacquainted
with one another and encourage them to engage in informal social
discussions.
2. Storming
Duringthestormingstage,individualpersonalitiesemergeandconflictand
disagreementcreateagenerallackofunity.Peoplemaydisagreeovertheir
perceptions of the teams mission, members may jockey for position, or
coalitionsandsubgroupsbasedoncommoninterestsmayform.Theleader
shouldencourageparticipationbyeachteammember.
3. Norming
During the norming stage, conflict is resolved, team harmony and unity
develop, and team norms and values evolve. Consensus develops about
whohasthepower,whoistheleader,andmembersroles.Memberscome
to accept and understand one another. Leaders should emphasise unity
withintheteamandhelpclarifyteamnormsandvalues.
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4. Performing
Duringtheperformingstage,themajoremphasisisonproblemsolvingand
accomplishingtheteamtask.Membersarecommittedtotheteamsmission.
They are coordinated with one another and handle disagreements in a
mature way. They confront and resolve problems in the interest of task
accomplishment. The leader should concentrate on managing high task
performance.
5. Adjourning
The adjourning stage occurs in teams that have a limited task to perform
andaredisbandedupontaskcompletion.Theemphasisisonwrappingup
and gearing down. Task performance is no longer a high priority. The
leader may wish to disband the team with a ritual or ceremony, perhaps
givingoutplaquesandawardstosignifyclosureandcompleteness.
The five stages of team development typically occur in sequence. In teams under
timepressureorthatexistforashortperiodoftime,thestagesmayoccurrapidly.
READ:
REFERTO:
Exhibit18.6depictsthefivestagesofteamdevelopment.
REVIEW:
Supposeyouaretheleaderofateamthathasjustbeencreatedtodevelopanew
registrationprocessatyourcollegeoruniversity.Howcanyouusean
understandingofthestagesofteamdevelopmenttoimproveyourteams
effectiveness?
B. TeamCohesiveness
Teamcohesivenessconcernstheextenttowhichmembersareattractedtothe
team and motivated to remain in the team. High cohesiveness is normally
consideredapositivefeatureofteams.
Determinantsofteamcohesiveness
a. Teaminteraction.Thegreaterthecontactamongmembers,themorecohesive
theteamwillbe.
b. Sharedgoals.Agreeingonpurposeanddirectionbindstheteamtogether.
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c. Personal attraction to the team. Members have similar attitudes and values
andenjoybeingtogether.
d. Presenceofcompetition.Thiscausesthegrouptowanttowin.
e. Teamsuccess.Successisafavourableevaluationoftheteambyoutsiders.
Microsoftisasuccessstoryonteamcohesiveness.Intheearlydays,itorganised
itself in small teams. Every team shared a common goal and members
interactedandcollaboratedwithoneanother.Eachteammemberwasproudto
beintheteamasitsignifiedimportance.AsMicrosofthiressmartpeople,there
wasstrongcompetitionamongteamsandeachcompetedstronglyforresources
and attention from the then CEO, Bill Gates. Undoubtedly, team cohesiveness
resultedinteamsuccessasevidentinitsstrongfinancialperformanceaswellas
market share in the early years of Microsoft. Today, Microsoft is still deemed
one of the most successful companies in the world (Cusumano and Selby,
pp.7396).
ConsequencesofTeamCohesiveness
a. Moraleishigherincohesiveteams.
b. Productivity tends to be more uniform. Productivity depends on the

relationshipbetweenmanagementandtheteam;cohesiveteamsattaintheir
goals and enforce norms that can result in very high or very low
productivity.
C. TeamNorms
A team norm is a standard of conduct that is shared by team members and

guides their behaviour. Norms are informal and valuable because they define
boundariesofacceptablebehaviour.Theymakelifeeasierforteammembersby
providing a frame of reference for what the team considers to be right and
wrong behaviour. Norms identify key values, clarify role expectations, and
facilitateteamsurvival.
Normsbegintodevelopinthefirstinteractionsamongmembersofanewteam.
Norms that apply to daily behaviour, employee output, and performance do
evolve,lettingeveryoneknowwhatisacceptableanddirectinghis/heractions
towardsexpectedperformance.Fourcommonwaysthatnormsaredeveloped
forcontrollinganddirectingbehaviourinclude:
a. Criticalevents.Criticaleventsestablishprecedentandleadtothecreationof
a norm. For instance, one critical event occurred when an employee at a
forestproductsfactorywasinjured.Thisledtothenormthatteammembers
regularlymonitoroneanother.
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b. Primacy.Primacymeansthatthefirstbehavioursthatoccurinateamoften
set team expectations. The team leader at a company raised an issue and
thenledteammembersuntilhegotthesolutionhewanted.Thisbecame
apatternofunproductivebehaviour.
c. Carryoverbehaviours.Carryoverbehavioursbringnormsintotheteamfrom
outside. An example is the strong norm against smoking in many teams,
whichisacarryoverbehaviourdevelopedoutsidetheteam.
d. Explicit statements. With explicit statements, team leaders or members

establishnorms.Thiscanbeahighlyeffectivewayforleaderstoinfluence
orchangeteamnorms.
READ:
REFERTO:
Exhibit18.7depictsfourwaysteamnormsdevelop.
REVIEW:
Somepeoplearguethatthepresenceofanoutsidethreatcorrelateswithahigh
degreeofteamcohesion.Wouldyouagreeordisagree?Explainyouranswer.
MANAGINGTEAMCONFLICT
Conflict refers to antagonistic interactions during which one party attempts to

blocktheintentionsorgoalsofanother.Ofalltheskillsrequiredforeffectiveteam
management, none is more important than handling the conflicts that inevitably
rise amongteam members. When people worktogether inteams, some conflict is
inevitable;conflictcanariseamongteammembersorbetweenteams.Competition,
whichisrivalryamongindividualsorteams,canhaveahealthyimpactbecauseit
energisespeopletowardshigherperformance.
A. TypesofConflict
Task conflict refers to disagreements among people about the goals to be

achieved or the content of the tasks to be performed. Relationship conflict
refers to interpersonal incompatibility that creates tension and personal
animosityamongpeople.
Ingeneral,researchsuggeststhattaskconflictcanbebeneficialbecauseitleads
tobetterdecisionmakingandproblemsolving.Ontheotherhand,relationship
conflict is typically associated with negative consequences for team
effectiveness.
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B. BalancingConflictandCooperation
Ahealthylevelofconflicthelpstopreventgroupthink,whichisthetendency
for people to be so committed to a cohesive team that they are reluctant to
expresscontraryopinions.However,conflictthatistoostrongandfocusedon
personal rather than work issues, or not managed appropriately can be
damaging to the teams morale. Too much conflict can be destructive, tear
relationships apart, and interfere with the healthy exchange of ideas and
informationthatisthehallmarkofaneffectiveteam.
Team leaders have to find the right balance between conflict and cooperation.
Too little conflict decreases team performance because there are no mixed
opinions. Too much conflict prevents the team from cooperative efforts and
decreasesemployeesatisfactionandcommitment,hurtingteamperformance.
C. CausesofConflict
a. Scarceresources.Resourcesincludemoney,information,andsupplies.When
employeesorteamsmustcompeteforscarceresources,conflictswilloccur.
b. Goal differences. Conflicts often occur because people are pursuing

incompatiblegoals.Goaldifferencesarenaturalinorganisations.Individual
salespeoplestargetsmayputtheminconflictwithoneanotherorwiththe
salesmanager.
c. Communication
breakdown.
Faulty
communications
result
in
misunderstandings among teams. Poor communication results in
misperceptionsandmisunderstandingsofotherpeopleandteams.Insome
cases,informationisintentionallywithheld,whichcanjeopardisetrustand
leadtoalonglastingconflict.
d. Trust issues. If team members believe they are being left out of important
communication interactions, conflict can arise due to a perceived lack of
trust.
D. StylestoHandleConflict
Teamsaswellasindividualsdevelopspecificstylesfordealingwithconflicts,
derived from the desire to satisfy their own concern versus the other partys
concern.Themajordimensionsaretheextenttowhichindividualsareassertive
orcooperativeintheirapproachtoconflictsandtheirresolution.Thefollowing
arestylestohandleconflict:
a. Competing style. Reflects assertiveness to get ones own way. It should be

usedwhenquick,decisiveactionisvitalonimportantissuesorunpopular
actionssuchasduringemergenciesorurgentcostcutting.
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b. Avoidingstyle.Reflects neither assertiveness nor cooperativeness. It should

be used when the issue is trivial, there is no chance to win, a delay is
needed,andadisruptionwouldbeverycostly.
c. Compromising style. Reflects a moderate amount of both assertiveness and

cooperativeness. It should be used when goals on both sides are equally
important, opponents have equal power and want to split the difference,
andeachsideneedsatemporaryorexpedientsolution.
d. Accommodatingstyle.Reflectsahighdegreeofcooperativeness.Itshouldbe
used when people realise they are wrong, an issue is more important to
others than to oneself, and one is building social credits for use in later
discussions.Maintainingharmonyisimportant.
e. Collaborating style. Reflects a high degree of assertiveness and

cooperativeness.Itshouldbeusedwhenbothpartiesneedtowin,bothsets
of concerns are too important to be compromised, and insights from
differentpeopleneedtobemerged.Commitmentofbothsidesisneededfor
aconsensus.
Researchsuggeststhatseveraltechniquescanbeusedasstrategiesforresolving
conflict.
a. Superordinate goals. Superordinate goals require the cooperation of the

conflicting parties for team effectiveness and achievement. They are goals
that cannot be reached by a single party. Conflicting parties realise they
must work together to achieve the goal; a powerful future vision of the
organisationcompelspeopletoresolveconflict.
b. Mediation.Mediationistheprocessofusingathirdpartytosettleadispute
or conflict. If a solution satisfactory to both sides cannot be reached, the
partiesmaybewillingtoturntheconflictovertoamediatorandabideby
thedecision.
E. Negotiation
Typesofnegotiation
Negotiation means that the parties engage in giveandtake discussions and

considervariousalternativestoreachajointdecisionthatisacceptabletoboth
parties.
a. Integrativenegotiationisbasedonawinwinassumptionthatimpliesthat
allpartieswanttocomeupwithacreativesolutiontotheconflictthatcan
benefitallofthem.Peoplelookattheissuesfrommultipleangles,consider
tradeoffs,andtrytoexpandthepieratherthandivideit.
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b. Distributive negotiation assumes the size of the pie is fixed and the
parties attempt to get as much of it as they can. This winlose approach is
competitive and adversarial rather than collaborative, and does not
typicallyleadtopositivelongtermrelationships.
Rulesforreachingawinwinsolution
a. Separatethepeoplefromtheproblem.Stayfocusedontheproblemanddontattack
eachother.
b. Focus on interests, not current demands. Demands are what the parties want;
interestsarewhytheywantthosethings.
c. Generatemanyalternativesformutualgain.
d. Insistthatresultsbebasedonobjectivestandards.Successfulnegotiationfocuseson
objectivecriteriaratherthansubjectivejudgements.
READ:
REFERTO:
Exhibit18.8showsbalancingconflictandcooperation.
Exhibit18.9depictsamodelofstylestohandleconflict.
REVIEW:
Ifyouweretheleaderofaspecialpurposeteamdevelopinganewcomputer
game,andconflictsaroserelatedtopowerandstatusdifferencesamongteam
members,whatwouldyoudo?Howmightyouusethevariousconflict
resolutiontechniquesdescribedinthechapter?
WORKTEAMEFFECTIVENESS
Thepositiveoutcomesofteameffectivenessincludethefollowing:
A. ProductiveOutput
One aspect of effectiveness relates to whether the teams output meets the
requirements of customers or clients in terms of quality, quantity, and
timeliness. Effective teams unleash enormous energy and creativity from
workers.Socialfacilitationreferstothetendencyforthepresenceofothersto
enhance ones motivation and performance. This team benefit is often lost in
virtual and global teams because people are working in isolation from their
teammates.
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B. SatisfactionofMembers
Effective teams provide multiple opportunities for people to satisfy their

individual needs and to develop both personally and professionally.
Participative teams can also reduce boredom, increase individuals feelings of
dignityandselfworth,andcontributetoskilldevelopmentbecausethewhole
person is employed. People who have a satisfying team environment cope
better with stress, enjoy their jobs, and have a higher level of organisational
commitment.
C. CapacitytoAdaptandLearn
In effective work teams, members can anticipate one anothers actions and
respond appropriately. Over time, effective teams learn from experience and
usethatlearningtorevitaliseandregeneratethemselves,smoothlyadaptingto
shiftingorganisationalandcompetitivedemands.
READ:
REVIEW:
Onecompanyhad40percentofitsworkersand20percentofitsmanagers
whoresignedduringthefirstyearafterreorganisingintoteams.Whatmight
accountforthisdramaticturnover?Howmightmanagersensureasmooth
transitiontoteams?
DO:
Observehowteameffectivenessisdemonstratedinyourworkplace.Whatkey
performanceindicatorsareusedtomeasureteameffectiveness?
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Chapter1:Motivation
Ifyouwereaplantmanager,howwouldyoumotivateagroupofproduction
workerstoimprovetheirjobperformance?
Production workers may be motivated through extrinsic rewards such as pay

increasesorperformancebonus.Themanagermayprovideasafeandpleasant
work environment for production workers. To improve performance,
production workers may be given relevant training such as operating a new
machine for production. Appropriate recognition for job well done is another
considerationbythemanagers.
Whatarethehygienefactorsifnotmetwoulddemotivateanemployeeand
causehim/hertoleave?
Basichygienefactorsincludegoodworkingconditions,jobsecurity,reasonable
salary and friendly interpersonal relationships with colleagues. If these needs
are not met, an employee will experience job dissatisfaction and eventually
leavethecompany.
If an experienced executive discovered that she made the same amount of

moneyasajuniorofficer,howdoyouthinkhe/shewouldreact?Whatinputs
andoutcomesmightsheevaluatetomakethiscomparison?
Thiscomparisonisbasedonequitytheory,inwhichpeoplecomparetheinputs
theybringtoajobandtheoutcomestheyreceivefromit withthoseofothers
doingthesameorasimilarjob.Chancesaretheexecutivewillreactnegatively
to the comparison. The junior officer is newly hired and may have less
experience than the executive. The executive may have more education and
bring greater training and ability to the job. The executive may have certain
outcomes unavailable to the junior officer, such as a pleasant office, more
satisfying work, and a more prestigious position. However, these outcomes
probably will not offset an identical salary, which will create a perceived
inequity.Iftheperceivedinequityisgreat,theexecutivemightbeexpectedto
change her inputs by exerting less effort, attempting to change outcomes by
seekingasalaryincrease,orbyperhapsevenleavingthejob.
WhatarethekeyelementsoftheExpectancyTheory?Inyourview,istherea
keyelementthatismoreimportantthantheothers?
ThekeyelementsoftheExpectancyTheoryarereliabilityoftheexpectancythat
an employee can have over the relationships between his effort, the resulting
performanceandjobaswellaspersonaloutcomesandthesubjectivevaluethat
theindividualplacesonthesepersonaloutcomes.
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The importance or significance of one key expectancy over another varies

accordingtotheindividualsmotivationlevel.Forexample,iftheindividualis
motivated by valence or the attraction of the outcome, he/she may probably
placehighvaluetothiskey.ItisimportanttonotethattheExpectancyTheory
doesnotdefinespecifictypesofneedsorrewardsbutonlytoestablishthatthey
existandmaydifferfromindividualtoindividual.
One small company recognises an employee of the month, who is given a

parkingspotnexttothepresidentsspacenearthefrontdoor.Whattheories
wouldexplainthepositivemotivationassociatedwiththispolicy?
Using Maslows theory, this is an appeal to the higherlevel need of esteem.

Herzberg would call it recognition. It could also be called positive
reinforcement. In expectancy theory language, the valued reward of the
reserved parking space increased motivation. Linking performance to the
rewardincreasedtheprobabilityofhighperformance.
Howcanempowermentleadtohighermotivationofemployees?
Empowerment means the delegation of power or authority to subordinates in
an organisation. Increasing employee power heightens motivation for task
accomplishment because people improve their own effectiveness by choosing
howtodoataskandusingtheircreativity.Mostpeoplewithinanorganisation
havethedesiretodoagoodjob,andempowermentreleasesthemotivationthat
isalreadythere.
Chapter2:Teamwork
Volvo went to selfdirected teams to assemble cars because of the need to

attract and keep workers in Sweden, where pay raises are not a motivator
(hightaxes)andmanyotherjobsareavailable.Arethesefactorsgoodreasons
forusingateamapproach?
Thisseemstobeavalidreasonforusingateamapproach.Theteamapproach
canprovideamotivatorbygivingworkerssatisfactionforparticipatinginthe
team. Social facilitation as a team will provide motivation and lead to higher
performance.Participationonateamcanalsoimproveselfesteem,resultingin
improved work quality. People enjoy being part of an effective team, and this
mayhelptoattractandkeepworkersinSweden.
When you are a member of a team, do you adopt a task specialist or socio
emotionalrole?Whichroleismoreimportantforateamseffectiveness?
You may see yourselves as adopting either role or both. As to which role is
more important, you may argue that the task specialist role makes a greater
contribution to the team than the socioemotional role because the task
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specialist actually accomplishes the task of the team by initiating solutions,

givingopinions,andstimulatingtheteamintoaction.Thesocioemotionalrole
often seems secondary because it is used to reconcile team conflicts, reduce
tension, and help maintain team harmony. The best answer is that the task
specialist role is more important for helping the team attain one type of
outcome,whichisproductiveoutput.Thesocioemotionalroleismoreeffective
for helping the team attain another type of outcome, which is personal
satisfactionofteammembers.
Supposeyouaretheleaderofateamthathasjustbeencreatedtodevelopa
new registration process at your college or university. How can you use an
understanding of the stages of team development to improve your teams
effectiveness?
As a leader of an employee group charged with development of a new

registrationprocesswouldbechallenging.Asaleaderofthisproject,itwillbe
important to initiate and complete the forming stage by ensuring that the
team members get to know one another and that their questions about the
purposeoftheteamandtheprojectareclarified.Instagetwostorming,the
group members will each start to find their niche and whenever a position is
solicited by more than one member, the leader should expect clashes,
disagreementsandpoliticalmanoeuvring.Byendofstagethreenorming,the
team members know their respective place and role, they start to participate
activelytothediscussion,shareideas,agreeanddisagreeonissuesrelatingto
student registration but come together and seek innovative ideas to solve
problems and improve the student registration process. In stage four
performing,theteammembersarefullycollaboratingwithoneanother,they
workverywelltogetherandfunctioningasaneffectiveteam,theydelivertheir
highest levels of performance. Recommended operating procedures are
forthcoming to improve the effectiveness of student registration. Finally, in
stage five adjourning, this team is disbanded once it has accomplished its
purposeofrecommendingstrategiesforimprovingtheregistrationprocess.
Some people argue that the presence of an outside threat correlates with a
high degree of team cohesion. Would you agree or disagree? Explain your
answer.
Youwillprobablyagreethatanoutsidethreatdoescorrelatewithahighdegree
of team cohesiveness. The reason is that people tend to draw together when
threatened by an outside force, just as with family members who may fight
amongthemselvesbutstandtogethertofightsomeonefromoutsidethefamily
whothreatensthem.
As a general rule, team cohesiveness is associated with higher performance.

However, an interesting finding from research is that a cohesive team can
definehighbutalsolowperformance.Ifthegoalofacohesiveteamistoreduce
performance because of a poor relationship with management, the cohesive
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team will perform terribly. When teams have a good relationship with
managementandtheperformancenormsarehigh,thenhighlycohesiveteams
willoutperformteamsthatarelowerincohesiveness.
Ifyouweretheleaderofaspecialpurposeteamdevelopinganewcomputer
game, and conflicts arose because of power and status differences among
teammembers,whatwouldyoudo?Howmightyouusethevariousconflict
resolutiontechniquesdescribedinthechapter?
The leader of a special purpose team tasked with creating and developing an
innovativenewcomputergamewouldevolvefromthecreativityofthisgroup.
The intuition and idea generation would come from individuals whose brain
has a particularly productive right hemisphere. Team members will have
different views and ideas and a power struggle may result among the team.
Conflicts are a natural consequence of that situation. The healthy method of
managingconflictisachallengetomanagement.Amanagermayberequiredto
stimulate conflict when the team is complacent. However, conflict must be
resolvedwhenthereisapowerstruggleorstatusgiventocertainmembersof
the team. The way to resolve this conflict is either to force, accommodate,
compromise, and/or collaborate with the members of the team. The means of
reducingconflictwillvary,basedonthesituationorenvironmenttheleaderis
exposedto.
One company saw 40 percent of its workers and 20 percent of its managers
resignduringthefirstyearafterreorganisingtheentireworkforceintoteams.
Whatmightaccountforthisdramaticturnover?Howmightmanagersensure
asmoothtransitiontoteams?
Oneofthedifficultexperiencesforcompaniesthatbegintherevolutiontowards
empowermentandteamworkisthatmanyemployeesarenotcomfortablewith
the new teambased culture. Approximately onethird of employees embrace
the change enthusiastically, onethird will go along, and onethird will resist.
Resisterstypicallyareemployeeswhodonothavethesocialandpersonalskills
toworkinpartnershipwithothersonteams,andwhowantnarrowlydefined
jobswithlittledecisionmakingresponsibility.Theseemployeespreferworking
alonewithintheverticalhierarchytoworkinginateam.Companiesthatspend
too much time trying to convert the resisters threaten the smooth transition
process; instead, they should accept that the resisters may have to leave, as a
naturalpartofthechangeprocess.
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REFERENCES
Cusumano,M.A.andSelby,R.W.,1995,MicrosoftSecrets,TheFreePress,
UnitedStatesofAmerica,pp.7396.
CapitaLandInstituteofManagementandBusiness,
http://www.capitaland.com/people/lnd/climb.php?&sub=1,accessed31August
2011.
Harish,M.,Singh,S.,andSinghK.,2010,TataMotors(B):Integrationof
DaewooCommercialVehicleCompany,BusinessStrategyinAsia:ACasebook,
CengageLearningAsiaPteLtd,Singapore,p.223.
InsightstoBusinessExcellence,SpringSingapore,
http://www.spring.gov.sg/QualityStandards/be/Documents/Insights_to_Busine
ss_Excellence.pdf,accessed31August2011.
Nunis,S.J.Misconceptionsaboutshiftwork,TodaysManager,Dec2011Jan2012,
pp.4446.
Soon,J.Conceptofmotivationandtheroleofrewards,TodaysManager,August
September2011[online]Available:
http://www1.sim.edu.sg/mbs/pub/gen/mbs_pub_gen_content.cfm?ID=3059&m
nuid=92[Accessed29December2012].
SpringSingapore,2012,TeckwahSQAExecutiveSummaryReport[online]
Available:
http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_TeckW
ah_2006_Summary_Report.pdf[Accessed29December2012].
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CHAPTER1:DesigningAdaptiveOrganisations
CHAPTER2:QualityandPerformance
BUS206 STUDY NOTES
STUDY UNIT 4
CHAPTER1:DESIGNINGADAPTIVEORGANISATIONS
LEARNINGOUTCOMES
Explainorganisation,organisationalstructureandorganisationalchart.
Apply the fundamental characteristics of organising, including concepts of

workspecialisation,chainofcommand,spanofmanagementandcentralisation
versusdecentralisationinanorganisation.
Distinguishthedifferenttypesoforganisationalstructures andsummarisethe
advantagesanddisadvantagesofeachtype.
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BESTFITSTRUCTURE
WhenBreadTalkopeneditsfirstoutletinBugisJunctionin2000,itsorganisational
structurewasfairlysimpleastherewasoneownerandafewoperationemployees.
By2002,BreadTalkhadexpandedto20outletsandthemanagementcametorealise
that the simple structure of its humble beginnings needed to change as it was no
longer relevantnor effective to support the companys growth. The question then
was: what type of structure would be the most suitable for a growing enterprise?
Many suggested that a functional structure with tight controls exercised through
clearandspecificrulesandprocedureswasthemostappropriate.This,infact,may
haveappearedlogicalasproductqualitywasoneofBreadTalkskeysuccessfactors
andfollowingstandardoperatingprocedureswouldcertainlyhelpproductionand
ensure both product consistency (for instance, a cheese bread at outlet A would
tastethesameasacheesebreadsoldatoutletB)andstandardisationofproducts.
FastforwardtotodayandonerealisesthatBreakTalkGroupisnolongerasingle
businessbutratheramultibrandcompanywithdiversifiedbusinessesprimarilyin
the food and beverage (F&B) industry. With a network spanning 16 countries,
including Singapore, Mainland China, Hong Kong and Indonesia, BreadTalk now
employs 6000 employees worldwide and manages 500 F&B outlets. In its current
state,wouldafunctionalstructurebeabletosupportthesizeandthegrowthofthe
Group? Operating in different countries increases complexity and diversity and
thatsuggeststhatBreadTalkmayneedtorestructureitsorganisationtoensureitis
both adaptable and flexible. But then again, what type of organisation structure
wouldbestfitBreakTalkgivenitsambitiontoscaleevenhigherheights?
(Source:BreadTalkAnnualReport2011)
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ORGANISINGTHEVERTICALSTRUCTURE
Organisingisthedeploymentoforganisationalresourcestoachievestrategicgoals.
It is important because it follows from strategy. Strategy defines what to do, and
organisingdefineshowtodoit.Theprocessoforganisingleadstothecreationofan
organisational structure, which defines how tasks are divided, resources are
deployed,anddepartmentsarecoordinated.
Organisationalstructurerefersto:
Formaltasksassignedtoindividualsanddepartments;
Formal reporting relationships including lines of authority, decision

responsibility,numberofhierarchicallevelsandspanofmanagerscontrol;and
Designofsystemsforcoordinationacrossdepartments.
Theorganisationalchartisthevisualrepresentationofanorganisationsstructure
that portrays the characteristics of vertical structure. It delineates the chain of
command, indicates departmental tasks and how they fit together, and provides
orderandlogicfortheorganisation.
Thereareseveralimportantfeaturesoftheverticalstructure:
A. WorkSpecialisation
a. A fundamental organising principle is that work can be performed more

efficiently if employees are allowed to specialise. Work specialisation,
sometimes called division of labour, is the degree to which organisational
tasks are subdivided into separate jobs. Production is efficient because
employeesperformsmall,welldefinedtasks.
b. Organisations are moving away from this principle because too much
specialisation leads to employees being isolated and doing only a single
boringjob.Manycompaniesareenlargingjobstoprovidegreaterchallenges
or assigning teams to tasks so employees can rotate among the jobs
performedbytheteam.
B. ChainofCommand
a. Thechainofcommandisanunbrokenlineofauthoritythatlinksallpersons
in an organisation and shows who reports to whom. It is associated with
two underlying principles: unity of command that stipulates that each
employeeshouldbereportingtooneandonlyonesupervisor.Forexample,
30 refinery workers report to one team leader in the shift. The scalar
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principle,thesecondunderlyingprincipleofthechainofcommand,refersto
a clearly defined line of authority in the organisation that includes all
employees.
Authority,Responsibility,andDelegation
a. Thechainofcommandillustratestheauthoritystructureofanorganisation.
Authorityistheformalandlegitimaterightofamanagertomakedecisions,
issue orders, and allocate resources to achieve organisational outcomes.
Authorityisdistinguishedbythreecharacteristics.
Authority is vested to organisational positions, not people. Once an

individualnolongeroccupiesaposition,s/helosestheauthoritythatis
attachedtoitandthelatteristakenoverbyhis/herreplacement.
Authority flows down the vertical hierarchy. Positions at the top have
more formal authority than those at the bottom. For example, a line
manager has authority to hire and fire his subordinates, but he cannot
dothatforhisownsuperior.
Authority is accepted by subordinates. The acceptancetheoryofauthority

argues that a manager has authority only if subordinates choose to
accept the commands. For example, a line manager may have the
authoritytodelegateworktosubordinates;butthesubordinatemaynot
bewillingtodothework.
Responsibility isthedutytoperformthetaskoractivityanemployeehas
been assigned. Managers are assigned the authority commensurate with
responsibility.
Accountability is the mechanism through which authority and

responsibility are brought into alignment. Those with authority and
responsibilityaresubjecttojustifyingtaskoutcomestothoseabovethemin
thechainofcommand.
Delegation is another concept related to authority; it is the process

managers use to transfer authority and responsibility to positions below
them in the hierarchy. For example, a line manager mayassign projects to
his/herteammembers.
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READ:

REFERTO:
Exhibit10.1showstheorganisationchartforawaterbottleplant.
REVIEW:
SandraHolt,managerofElectronicsAssembly,askedHectorCruz,hersenior
technician,tohandlethingsinthedepartmentwhilesheworkedonthebudget
assheneededpeaceandquietforatleastaweektocompleteherfigures.After
tendays,SandradiscoveredthatHectorhadhiredaseniorsecretary,not
realisingthatSandrahadpromisedinterviewstotwootherpeople.Evaluate
Sandrasapproachtodelegation.
LineandStaffAuthority
a. Linedepartmentsperformtasksthatreflecttheorganisationsprimarygoal
and mission. In a software company, line departments develop software
applications and sell them. Line authority means that managers have
formalauthoritytodirectandcontrolimmediatesubordinates.Forexample,
asalesmanagerwholinemanagesateamofsalesexecutiveshasauthority
toeithercoachordisciplinehisstaff,dependingonthesituation.Coaching
is required when a sales person lacks selling skills. Disciplinary action is
neededwhen,forinstance,thesalespersonisrudetocustomers,isawareof
itandrefusestochangehiswaysdespitereceivingfeedbackaboutit.
b. Staffdepartmentsincludeallthosewhoprovidespecialisedskillsinsupport
of line departments. The finance department of software firm has staff
authority. Staff authority is narrower than line authority and includes the
right to advise, recommend, and counsel in the staff specialists area of
expertise.Humanresourcemanagersaregivenstaffauthoritybecausethey
play an advisory role in providing human resource services to line
managers.
C. SpanofManagement
The span of management, or span of control, is the number of employees

reporting to a supervisor. This characteristic of structure determines how
closelyasupervisorcanmonitorsubordinates.
Factorsthatdeterminethespanofmanagementinclude:
a. Workperformedbysubordinatesisstableandroutine;
b. Subordinatesperformsimilarworktasks;
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c. Subordinatesareconcentratedinasinglelocation;
d. Subordinatesaretrainedandneedlittledirectioninperformingtasks;
e. Rulesandproceduresdefiningtaskactivitiesareavailable;
f. Supportsystemsandpersonnelareavailableforthemanager;
g. Littletimeisrequiredinnonsupervisoryactivitiessuchascoordinationwith
otherdepartmentsorplanning;and
h. Managerspersonalpreferencesfavouralargespan.
The average span of control used in an organisation determines whether the

structure is tall or flat. A tall structure has an overall narrow span of
managementandmorelevelsinthehierarchy.Forexample,thespanofcontrol
ofaconsultancyteamcanbesevento10members.Aflatstructurehasawide
span, is horizontally dispersed, and has fewer hierarchical levels. The trend is
towards wider spans of control as a way to facilitate delegation. For example,
thespanofcontrolforaplantmanageris30factoryworkers.
D. CentralisationandDecentralisation
Centralisation and decentralisation pertain to the hierarchical level at which

decisionsaremade.Centralisationmeansthattheauthoritytomakedecisions
islocatedatornearthetopoftheorganisation.Smallandmediumenterprises
and familyowned businesses are likely to adopt centralised decision making.
With decentralisation, decision authority is pushed down the chain of
commandtolowerorganisationlevels.
The trend is towards decentralisation, especially in situations where a quick

responseisneeded,wellinformedpeopleareavailableinternallytorelievetop
managers from the task of making most decisions and workers can be
empoweredastheyhavetheskillstomakelowerleveldecisions.Forexample,
RitzCarltonallowsitsfrontlinestafftomakedecisionsthatenhancetheservice
deliveryandstandardsofthehotel.
Factors that influence the decision of an organisation to centralise or

decentraliseinclude:
a. Greater change and uncertainty in the environment are usually associated

withdecentralisation.
b. The amount of centralisation or decentralisation should fit the firms

strategy.
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c. Intimesofcrisisorriskofcompanyfailure,authoritymaybecentralisedat
thetop.
DEPARTMENTALISATION
Departmentalisation is the basis for grouping individuals into departments,
departments into divisions and ultimately, divisions into the entire organisation.
Managersmakechoicesregardingtheuseofthechainofcommandtogrouppeople
together to perform their work. Five approaches to structural design reflect
differentusesofthechainofcommandindepartmentalisation.
A. VerticalFunctionalApproach
WhatItIs
a. Functionalstructurereferstogroupingpositionsintodepartmentsbasedon
similar skills, expertise, and resource use. People, facilities, and other
resources representing a common organisational resource are grouped
togetherintoasingledepartment.
HowItWorks
a. The major departments under the president are groupings of similar

expertise and resources, such as accounting, human resources, production
and marketing. Each of the functional departments is concerned with the
organisationasawhole.Thefunctionalstructureisastrongverticaldesign.
Information flows up and down the vertical hierarchy, and the chain of
commandconvergesatthetop.
b. People in a department communicate primarily with others in the same

department to coordinate work and accomplish tasks or implement
decisions. On the technical side, managers and employees are compatible
because of similar training and expertise. Finance and Information
Technology departments are good examples of a functional structure.
Employees in these departments have special skills and knowledge and
theycancommunicatewellwithoneanother.
B. DivisionalApproach
WhatItIs
a. The divisional structure occurs when departments are grouped together

basedonorganisationaloutputs.Diversedepartmentsarebroughttogether
to produce a single organisational output. The divisional structure is
sometimes called a product structure, programme structure, or selfcontained
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unitstructure.Mostlargecorporationshaveseparatedivisionsthatperform
differenttasks,usedifferenttechnologiesorservedifferentcustomers.Most
banks would use divisional structure. Multinational corporations such as
Apple,SonyandMicrosoftadaptdivisionalstructure.
HowItWorks
a. Divisions are created as selfcontained units with separate functional

departments for each division. For example, separate engineering
departments are created within each division, and each department is
similar and focuses on a single product. The primary difference between
divisionalandfunctionalstructuresisthatthechainofcommandfromeach
functionconvergeslowerinthehierarchy. Differences of opinion would be
resolved at the divisional level rather than by the president.

GeographicorCustomerBasedDivisions
a. Grouping company activities by geographic region is an alternative for
assigning divisional responsibility. In this structure, all functions in a
specific country or region report to the same division manager. The
structurefocusescompanyactivitiesonlocalmarketconditions;competitive
advantagecomesfromsellingaproductadaptedtoagivencountry.
READ:
REFERTO:
Exhibit10.3showsthefiveapproachestostructuraldesign.
REVIEW:
The divisional structure is often considered almost the opposite of a
functional structure. Do you agree? Briefly explain the major
differences in these two approaches to departmentalisation.
C. MatrixApproach
WhatItIs
The matrix approach combines aspects of both functional and divisional

structuressimultaneouslyinthesamepartoftheorganisation.Thematrixhas
dual lines of authority. The functional hierarchy of authority runs vertically,
providing traditional control within functional departments. The divisional
hierarchy runs horizontally, providing coordination across departments. The
matrix structure provides a formal chain of command for both the functional
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(vertical) and divisional (horizontal) relationships. Multinational corporations

applythematrixapproachwheredualreportingisnecessary.Forexample,the
marketingmanagermayreporttothemarketingdirector inSingaporeaswell
astheBusinessDirectorinAsiaPacific.
HowItWorks
Theduallinesofauthoritymakethematrixstructureunique.Thesuccessofthe
matrixstructuredependsontheabilitiesofpeopleinvolvedinkeymatrixroles.
Twoboss employees report to two supervisors simultaneously and must

resolveconflictingdemandsfromthematrixbosses.
Thematrixbossistheproductorfunctionalbosswhoisresponsibleforone
sideofthematrix.
Thetopleaderoverseesboththeproductandfunctionalchainsofcommand
andisresponsiblefortheentirematrix.
READ:
REFERTO:
Exhibit10.6showsthedualauthorityinmatrixorganisation.
REVIEW:
Some people argue that the matrix structure should be adopted only as a
last resort because the dual chains of command can create more
problems than they solve. Do you agree or disagree with their position?
Defend your position as well as the opposite position.
D. TeamApproach
WhatItIs
The team approach is probably the most widespread trend in
departmentalisation. The vertical chain of command is a powerful means of
control, but passing all decisions up the hierarchy takes too long and keeps
responsibility at the top. Managers can delegate authority, push responsibility
to lower levels, and be more flexible and responsive in the competitive global
environment.
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HowItWorks
a. Crossfunctional teams consist of employees from various functional
departments, responsible to meet as a team and resolve mutual problems.
Teammembersreporttotheirfunctionaldepartments,butalsototheteam.
These teams provide the horizontal coordination needed to complement
existingfunctionalordivisionalstructures.
b. Permanent teams are groups of employees brought together in a way

similar to a formal department. Emphasis is on horizontal communication
and information sharing because representatives from all functions
coordinate to complete a specific task. Authority is pushed down to lower
levels, and frontline employees are given the freedom to make decisions
andtakeactionontheirown.
c. With a teambased structure, the entire organisation is made up of

horizontal teams that coordinate activities and work with customers to
accomplishtheorganisationsgoals.
E. TheVirtualNetworkApproach
WhatItIs
a. The most recent approach to departmentalisation extends the idea of

horizontal coordination beyond the boundaries of the organisation.
Outsourcing, which means farming out certain activities, has become a
significant trend. For example, many organisations outsourced their call
centrestoathirdpartythathastheexpertisetoperformthefunctionmore
competently and cost effectively. Partnerships, alliances and other
collaborativeformsarenowtheleadingapproachesthatcompaniestaketo
accomplishstrategicgoals.
b. Someorganisationstakethisnetworkingapproachtotheextremetocreatea
new kind of structure. The virtual network structure disaggregates major
functionstoseparatecompaniesthatarebrokeredbyasmallheadquarters
organisation.
HowItWorks
a. Theorganisationmaybeviewedasacentralhubsurroundedbyanetwork
of outsider specialists. Services such as accounting are outsourced to
separateorganisationsthatareconnectedelectronicallytothecentraloffice.
Networked computer systems, collaborative software, and the Internet
enable organisations to exchange data and information rapidly and
seamlessly.Networksallowacompanytoconcentrateonwhatitdoesbest
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and contract out other activities to companies with distinctive competence

inthoseareas.
b. In a similar networking approach called the modular approach, a

manufacturing firm uses outside suppliers to provide large chunks of a
product,whicharethenassembledintoafinalproductbyafewworkers.
READ:
REFERTO:
Exhibit10.8showsthenetworkapproachtodepartmentalisation.
REVIEW:
Whatisthevirtualnetworkapproachtostructure?Istheuseof
authorityandresponsibilitydifferentcomparedwithotherformsof
departmentalisation?Explain.
F. AdvantagesandDisadvantagesofEachStructure
FunctionalApproach
a. Grouping employees by common task permits efficient resource use and

economies of scale. Departments enhance indepth skill specialisation and
development, and centralised decision making at the top provides unified
direction.
b. Disadvantages include barriers that exist across departments resulting in

poor communication and coordination and slow response to changes.
Innovationandchangerequiretheinvolvementofseveraldepartments,and
adelayoccursasdecisionspileupatthetopofthehierarchy.
DivisionalApproach
a. The organisation is flexible and responsive to change because each unit is

smallandtunedintoitsenvironment.Concernforcustomersneedsishigh
andcoordinationacrossfunctionaldepartmentsisbetterbecauseemployees
aregroupedandcommittedtoaproduct.
b. Coordination across divisions is often poor. The organisation loses

efficiencyandeconomiesofscale,andtheremaybealackoftechnicaldepth
andspecialisation.
MatrixApproach
a. The matrix can be highly effective in a complex, rapidly changing

environment in which flexibility and adaptability are important. Conflicts
and frequent meetings allow new issues to be raised and resolved. The
matrix makes efficient use of human resources because specialists can be
transferredfromonedivisiontoanother.
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b. Frustrationandconfusionarisingfromthedualchainofcommandcanbea
significant problem, as there can be high conflict between the two sides of
thematrix,andtimelostinmeetings.Managersspendagreatdealoftime
coordinatingmeetings,takingtimeawayfromcoreworkactivities.
TeamApproach
a. The team approach reduces barriers across departments, increases

cooperation and compromise, and enables the firm to quickly adapt to
requests and changes.Another advantage is better morale and enthusiasm
asaresultofincreasedemployeeinvolvement.
b. Disadvantagesincludedualloyaltiesandconflict,timeandresourcesspent
onmeetings,andtoomuchdecentralisation.Teammemberscanoftenlose
sightofthebigpictureoftheorganisation.
VirtualNetworkApproach
a. Thebiggestadvantagesareflexibilityandcompetitivenessonaglobalscale,
drawing on resources and expertise worldwide. The virtual network
structure is the leanest of all because little supervision is required. There
maybeonlytwoorthreelevelsofhierarchy,comparedwithtenormorein
traditionalfirms.
b. Lackofhandsoncontrolisasignificantdisadvantage.Eachpartnerinthe
networkactsinhis/herownselfinterest.Weakandambiguousboundaries
create higher uncertainty and greater demands on managers for defining
shared goals, coordinating activities, managing relationships, and keeping
people focused. Employee loyalty can weaken; employees may feel
concernedthattheycanbereplacedbycontractservices.
READ:
REFERTO:
Exhibit 10.9 summarises the advantages and disadvantages of structural
approaches.
DO:
Selectatravelagency,bakeryoranSMEinSingaporeanddesignarelevant
organisationstructurethatbestfitsthecompany.Justifywhythestructureis
mostsuitable.
OrganisationalStructureandDesign(Part1),pleaseclickhere
OrganisationalStructureandDesign(Part2),pleaseclickhere
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CHAPTER2:QUALITYANDPERFORMANCE
LEARNINGOUTCOMES
Explainthemeaningofcontrol.
Usethebalancedscorecardtotrackperformanceandcontroltheorganisation.
Discussthefeedbackcontrolmodel.
Apply financial statements, financial analysis and budgeting as management

control.
Distinguishbetweenhierarchicalanddecentralisedapproachestocontrol.
DescribetheconceptoftotalqualitymanagementandmajorTQMtechniques.
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CONTROLISGOODANDNECESSARY
Tan Jin Yee is a newly promoted branch manager at a local bank and in his new
responsibilities, he oversees the branch operations and is accountable for the
branchsresults.
Thebankusesthebalancedscorecardtomeasuretheperformanceofeachbranch.
Itreliesonsuchkeyperformanceindicatorsasrevenue,numberofnewcustomers
andnewaccounts,customersatisfaction,productivitytoevaluateoutcomes.
Theheadquartersimplementedanumberofcontrolmechanismsatallbranchesto
ensureresultswouldconformtosetplansandobjectives.Asabranchmanager,Jin
Yee is given the authority to approve payments, staff leave applications, training
and special incentives for selected customers. Given the limited staff budget he is
given,JinYeealsohastomanagethefinancialandhumanresourcesallocatedtohis
branch. Like all organisations, the bank continually looks at new ways to cut
operatingcostsandJinYeealwaystriestoensurethatthemoneythebranchspends
doescontributetoincreasingrevenues.
Tomeasurehisstaffperformance,JinYeesetscleartargetsandexpectshisteamto
meet them. For instance, last year, the branch received the highest number of
complaints and fared poorly in customer satisfaction. To correct the situation, Jin
Yee decided to hold regular dialogues with his staff and to set up work
improvementteamstofigureoutnewwaystoimprovecustomersatisfactionatthe
branch.Healsoputinplaceafeedbacksystemthatmonitorshisteamperformance
and sends customer feedback directly to him. The feedback is valuable because it
identifiestheservicelapsesandhelpstheteamclosethem.
Jin Yee knew that any control measure he implemented could initially generate a
negative reaction from the team members. However, once Jin Yee explained the
rationalebehindit,thestaffacceptedthemeasuresandbegantoworkwithhimto
improve customer satisfaction at the branch. They were convinced in particular
when Jin Yee explained that well implemented, control measures lead to a fairer
wayofassessingemployeeperformanceandtorewardthemaccordingly.
Sixmonthsafterimplementingthenewcontrolmeasures,JinYeerealisedthathis
teamhadmadenotableimprovements:theywerenowmuchmoreconcernedabout
ensuringgoodcustomerserviceatalltouchpointsthroughoutthebankingservice
delivery process, including in their facetoface and telephone interactions.
Comparing the currentsituation with what itwaswhen he was firstpromoted to
thebankmanagerposition,JinYeefeltveryproudofhisteam.
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THEMEANINGOFCONTROL
Control, including quality control, also involves office productivity, such as

improvedcustomerservice,eliminationofbottlenecks,andreductioninpaperwork
mistakes. Lack of effective control can seriously damage an organisations health
andthreatenitsfuture.
Organisationalcontrolisthesystematicprocessthroughwhichmanagersregulate
organisationalactivitiestomakethemconsistentwiththeexpectationsestablished
in plans, targets, and standards of performance. To effectively control the various
activities, processes and outcomes of an organisation, managers (or workers)
requireinformationaboutperformancestandards,actualperformance,andactions
tocorrectdeviationsfromthestandards.
A. ChoosingStandardsandMeasures
Most organisations focus on measuring and controlling financial performance,

but managers increasingly recognise the need to measure other intangible
aspects of performance to manage the valuecreating activities of the
contemporary organisation. Key performance indicators such as customer
satisfaction,turnaroundtime,responsetimeandproductivitymetricsareused.
B. TheBalancedScorecard
The balanced scorecard is a comprehensive management control system that

balancestraditionalfinancialmeasureswithoperationalmeasuresrelatingtoa
companys critical success factors. A balanced scorecard contains four major
perspectives:
a. The financial performance perspective reflects a concern that the

organisations activities contribute to improving short and longterm
financial performance. Net income and return on investment are common
keyperformanceindicatorsusedtomeasurefinancialperformance.
b. Customerserviceindicatorsmeasuresuchthingsashowcustomersviewthe
organisation,aswellascustomerretentionandsatisfaction.Thenumberof
complaints and compliments, and response time are key indicators of
customerservice.
c. Businessprocessindicatorsfocusonproductionandoperatingstatistics.Key
performanceindicatorssuchascostperorder, accuracyandtimelinessare
usedtomeasurebusinessprocess.
d. Potentialforlearningandgrowthindicators focuson how well resources and

human capital are being managed for the companys future. Employee
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retention and the number of new products launched are indicators for
measuringlearningandgrowth.
Managers focus on various elements of the scorecard to set targets, evaluate

performance, and guide discussion about what further actions to take. The
balancedscorecardisnotrightforeveryorganisation.Theapparentsimplicity
of the system often makes managers underestimate the time and commitment
neededtoimplementit.Akeytoitssuccessfulimplementationisaperformance
managementorientationratherthanaperformancemeasurementorientation.
Many organisations, such as Conrad Centennial Singapore, use the balanced

scorecardtomeasuretheirperformance(SpringSingapore,2012).
READ:
REFERTO:
Exhibit19.1showsthebalancedscorecard.
REVIEW:
Describetheadvantagesofusingabalancedscorecardtomeasureand
controlorganisationalperformance.Supposeyoucreatedabalanced
scorecardforNTUCFairPrice.Whatspecificcustomerservicemeasures
wouldyouinclude?
FEEDBACKCONTROLMODEL
Managers set up control systems to measure performance against standards. A

usefulcontrolsystemfollowsthesesteps:
A. StepsofFeedbackControl
1. EstablishStandardsofPerformance
Within the organisations overall strategic plan, managers define goals for
organisational departments in specific, operational terms. These include
standards of performance against which organisational activities can be
compared.
To effectively reward employees for the achievement of standards,

managers need clear standards that reflect activities that contribute to the
organisations strategy. Standards should be defined clearly and precisely
soemployeesknowwhattheyneedtodoandcandeterminewhethertheir
activitiesareontarget.Forexample,salesstaffarerewardedforachieving
salestargets.Therewardcanbeinmonetaryornonmonetaryformssuchas
apaidholidayforthestaffandhisfamily.
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2. MeasureActualPerformance
Most organisations prepare formal reports of quantitative performance

measurements that managers review daily, weekly, or monthly. These
measurementsshouldberelatedtothestandardssetinthefirststepofthe
control process. Managers should not rely exclusively on quantitative
measurements;theyshouldalsoobserveforthemselveswhetheremployees
are participating in decision making and have opportunities to share their
knowledgeandaddtothecollectivelearningoftheorganisation.
3. ComparePerformancetoStandards
The third step in the control process compares actual activities to

performance standards. When performance deviates from a standard,
managersmustinterpretthedeviation,digbeneaththesurfaceandfindthe
problems causing the deviation. Effective management control involves
subjective judgement and employee discussions, as well as objective
analysisofperformancedata.
4. TakeCorrectiveAction
Managers also determine what changes are necessary; managers may

encourage employees to work harder, redesign the production process, or
fire employees. Managers in a participative control approach collaborate
withemployeestodeterminethecorrectiveactionnecessary.Managersmay
take corrective action to change performance standards. Performance
standards may need to be altered to make them realistic and provide
motivation.
READ:
REFERTO:
Exhibit19.2showsthefeedbackcontrolmodel.
DO:
Examinethecontrolmechanisminyourcompanyandexplainhowitworks.
B. ApplicationtoBudgeting
1. Budgetary control sets targets for an organisations expenditures, monitors
results, compares themto the budget, and makes changesas needed.As a
controldevice,budgetsarereportsthatlistplannedandactualexpenditures
forcash,assets,rawmaterials,salaries,andotherresources.Budgetreports
usuallylistthevariancebetweenthebudgetedandactualamountsforeach
item.Abudgetisnormallycreatedforeverydivisionordepartmentwithin
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an organisation, as long as it performs a distinct project, programme, or

function.
2. The fundamental unit of analysis for a budget control system is called a

responsibility centre. A responsibility centre is any organisational
department or unit under the supervision of a single person who is
responsible for its activities. The types of budgets that managers use may
includeexpensebudgets,revenuebudgets,andcapitalbudgets.
a) Expense budget. An expense budget includes anticipated and actual

expensesforeachresponsibilitycentreandforthetotalorganisation.It
may show all expenses or focus on a particular category such as
materialsorresearchanddevelopmentexpenses.Whenactualexpenses
exceedbudgetedamounts,thedifferencesignalstheneedformanagers
toidentifywhetheraproblemexistsandifso,takeaction.
b) Revenuebudget.Arevenuebudgetlistsforecastedandactualrevenues
oftheorganisation.Revenuesbelowthebudgetedamountsignalaneed
toinvestigatetheproblemtoseewhethertheorganisationcanimprove
revenues.Revenuesabovethebudgetrequiredeterminingwhetherthe
organisation can obtain the resources to meet the higher demand for
products.
c) Cash budget. A cash budget estimates receipts and expenditures of

money on a daily or weekly basis to ensure that an organisation has
sufficientcashtomeetitsobligations.Itshowstheleveloffundsflowing
through the organisation and the nature of cash disbursements. If the
cashbudgetshowsthatthefirmhasmorecashthannecessarytomeet
its needs, the company can invest the excess funds. If the cash budget
showsapayrollexpensethatexceedstheamountofmoneyinthebank,
theorganisationmustborrowcashtomeetthepayroll.
d) Capital budget. A capital budget lists planned investments in major

assets such as buildings, trucks, and heavy machinery, often involving
expenditures over more than a year. A capital budget is necessary to
plantheimpactoftheseexpendituresoncashflowandprofitability.
Budgeting is an important part of organisational planning and control.

Manytraditionalcompaniesusetopdownbudgeting,meaningthatthe
budgeted amounts for the coming year are imposed on middle and
lowerlevel managers. Others are beginning to adopt bottomup
budgeting,inwhichlowerlevelmanagersanticipatetheirdepartments
resourceneedsandpassthemuptotopmanagementforapproval.
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FINANCIALCONTROL
A. FinancialStatements
1. Financialstatementsprovidethebasicinformationusedforfinancialcontrol
of an organisation. Two major financial statementsthe balance sheet and
theincomestatementarethestartingpointsforfinancialcontrol.
a) The balance sheet shows the firms financial position with respect to
assetsandliabilitiesataspecificpointintime.Itprovidesthreetypesof
information:assetswhatthecompanyownsincludecurrentassetsand
fixed assets; liabilities the firms debts include both current debt and
longterm debt; and owners equity the difference between assets and
liabilitiesisthecompanysnetworthinstockandretainedearnings.
b) The income statement, also called a profitandloss statement or P &

L, summarises the firms financial performance for a given time
interval, usually one year. The bottom line indicates the net income
profitorlossforthegiventimeperiod.
READ:
REVIEW:
Whattypesofanalysiscanmanagersperformtohelpthemdiagnosea
companysfinancialcondition?Howmightareviewoffinancialstatements
helpmanagersdiagnoseotherkindsofperformanceproblemsaswell?
A. FinancialAnalysis:InterpretingtheNumbers(Exhibit19.5)
1. Financial analysis allows managers to evaluate financial reports that

compare their organisations performance with earlier data or industry
norms.Themostcommonfinancialanalysisfocusesonratios,whichexpress
therelationshipsbetweenperformanceindicatorssuchasprofitsandassets,
sales, and inventory. Managers decide which ratios reveal the most
importantrelationshipsfortheirbusinesses.
a) A liquidity ratio indicates an organisations ability to meet its current

debt obligations. The current ratio (current assets divided by current
liabilities) tells whether there are sufficient assets easily convertible in
cashtopayoffdebts,ifneeded.
b) An activity ratio indicates an organisations ability to meet its current

debt obligations. Inventory turnoveris calculated by dividing the total
sales by average inventory; this tells how many times the inventory is
used to meet the sales figure. The conversion ratio is purchase orders
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divided by customer inquiries; this ratio measures the sales force

effectivenessinconvertingcustomerinquiriesintoactualsales.
c) Aprofitabilityratioexpressesprofitsrelativetoasourceofprofits,such
assalesorassets.Theprofitmarginonsalesiscalculatedasnetincome
divided by total sales. The gross marginis the gross (beforetax) profit
dividedbytotalsales.
Another profitability measure is return on total assets (ROA), a

percentage representing company earnings from assets, computed as
net income, divided by total assets. ROA is a valuable yardstick for
comparing a companys ability to generate earnings with other
investment opportunities. A company should earn more by using its
assetsthanitcouldbyputtingitsinvestmentinthebank.
d) Leveragereferstofundingactivitieswithborrowedmoney.Acompany
usesleveragetomakeitsassetsproducemorethantheycouldontheir
own. Too much borrowing can put the organisation at risk such that it
will be unable to keepup with itsdebt repayment. Managers track the
debtratio,ortotaldebtdividedbytotalassets,tomakesurethatitdoes
notexceedaleveltheyconsideracceptable.
THECHANGINGPHILOSOPHYOFCONTROL
A. HierarchicalversusDecentralisedApproaches(Exhibit19.6)
1. Hierarchical control involves monitoring and influencing employee

behaviour through rules, policies, hierarchy of authority, written
documentation, and reward systems. Hierarchical methods define explicit
rules, policies, and procedures for employee behaviour. Controls rely on
centralisedauthority,theformalhierarchy,andclosepersonalsupervision.
The responsibility for quality control rests with quality control inspectors
and supervisors rather than with employees. Hierarchical control
techniquescanenhanceorganisationalefficiencyandeffectiveness.
2. Decentralisedcontrolreliesonsharedvaluesandgoalstocontrolemployee
behaviour. Managers operate on the assumption that employees are
trustworthyandwillingtoperformeffectivelywithoutextensiverulesand
close supervision. The organisation places great emphasis on the selection
and socialisation of employees to ensure that workers have the values
needed to influence behaviour that contribute to meeting goals. With
decentralised control, the culture is adaptive, and managers recognise the
importanceofcultureforunitingindividual,team,andorganisationalgoals
forgreateroverallcontrol.
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B. OpenBookManagement
1. Openbook management allows employees to see the financial

condition of the company for themselves through charts, computer
printouts, meetings, and so forth. Openbook management shows the
individual employee how his or her job fits into the big picture and
affects the financial future of the organisation. In addition, it ties
employee rewards to the companys overall success. The goal of open
book management is to get every employee thinking and acting like a
businessownerratherthanlikeahiredhand.
2. In some countries, managers have trouble running an openbook

companybecausetheprevailingnationalattitudesandstandardsfoster
confidentiality and secrecy. Many business people in countries like
China, Russia, and South Korea are not accustomed to publicly
disclosingfinancialdetails.
3. The Opacity Indexindicates the degree to which various countries are
open regarding economic matters. The higher the rating, the more
opaque,orhidden,istheeconomy.TheU.S.hasanopacityratingof36,
whichisfairlylow.Incountrieswithhigherratings,financialfiguresare
typically closely guarded and managers do not share information.
Globalisation has an impact on economic opacity by encouraging a
convergence towards global accounting standards that supports
accuratecollection,recording,andreportingoffinancialinformation.
READ:
REFERTO:
Exhibit19.6showsthehierarchicalanddecentralisedmethodsofcontrol.
TOTALQUALITYMANAGEMENT(TQM)
One of the more popular decentralised control approaches is total quality

management (TQM). TQM infuses quality into every activity in a company. The
TQM philosophy focuses on teamwork, increasing customer satisfaction, and
lowering costs. Organisations implement TQM by encouraging managers and
employees to collaborate across functions and departments, as well as with
customersandsuppliers,toidentifyareasforimprovement,nomatterhowsmall.
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A. TQMTechniques
1. QualityCircles(a.k.a.WorkImprovementTeamsWITs)
A quality circle is a group of 6 to 12 volunteer employees who meet

regularlyduringworkinghourstodiscussandsolveproblemsaffectingthe
quality of their work and find solutions to them. Managers use quality
circles or WITs to push decision making down to the level where quality
improvement recommendations are most likely to be accepted and hence
implemented by those who do the job. The National Library Board is an
advocateofWITs.Itusesthemtoengagestaffaswellasmeasurethestaff
performance, especially in the area of quality and service improvement
2. Benchmarking
Benchmarking is the continuous process of measuring products, services,

and practices against the toughest competitors or those companies
recognised as industryleaders. The keyto successful benchmarking lies in
analysis. A company must honestly analyse its current procedures and
determineareasforimprovement.Acompanycarefullyselectscompetitors
worthy of copying and emulates their internal processes and procedures.
ConradCentennialSingaporeusesguestcommentcards(GCC)togetguest
feedback. The GCC is used to measure guest satisfaction. The hotel
benchmarked its GCC scoring with other Conrad sister hotels in Asia
3. SixSigma
SixSigmaisahighlyambitiousqualitystandardthatspecifiesagoalofno
morethan3.4defectspermillionparts.SixSigmahasbecomeagenericterm
for a quality control approach that takes nothing for granted and
emphasises higher quality and lower costs. The discipline is based on
DMAIC (Define, Measure, Analyse, Improve, and Control). This
methodology provides a structured way for solving problems. Effectively
implementing Six Sigma requires a major commitment from top
managementbecauseitrequiresthatwidespreadandsignificantchangesbe
made.
4. ReducedCycleTime
Cycletimereferstothestepstakentocompleteacompanyprocess,suchas
teachingaclass,publishingatextbook,ordesigninganewcar.Thefocusis
on improved responsiveness and acceleration of activities into a shorter
time. Reduction in cycle time improves overall company performance as
wellasquality.
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5. ContinuousImprovement
Continuous improvement is the implementation of a large number of

small,incrementalimprovementsinallareasoftheorganisationonanon
goingbasis.Allemployeesareexpectedtocontributebyinitiatingchanges
in their own job activities. There is no end to the process. Innovations can
start simply, and employees can build on their success. For example, the
National Library Board uses staff suggestion scheme and WITs projects to
reinforceandstrengthentheinnovationcultureoftheorganisation(Spring
Singapore,2012).
B. TQMSuccessFactors
Many organisational contingency factors influence the success of a TQM

programme.Someofthesefactorsinclude:
Qualitycirclesaremostbeneficialwhenemployeeshavechallengingjobs.
TQM is most successful when it enriches jobs and improves employee

motivation.
When participation improves

productivityislikelytoincrease.
Quality programmes have the greatest chance of success in corporate

culturesthatvaluequalityandstresscontinuousimprovementasawayof
life.
employees
problemsolving
skills,
READ:
REFERTO:
Exhibit19.9qualityprogrammesuccessfactors.
REVIEW:
Whyisbenchmarkinganimportantcomponentoftotalqualitymanagement
(TQM)programmes?DoyoubelieveacompanycouldhaveasuccessfulTQM
programmewithoutusingbenchmarking?
DO:
SearchtheInternettofindouthowXeroximplementedbenchmarkingin1979.
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Chapter1:OrganisationalStructureandDesign
SandraHolt,managerofElectronicsAssembly,askedHectorCruz,hersenior
technician, to handle things in the department while Sandra worked on the
budget. She needed peace and quiet for at least a week to complete her
figures. After ten days, Sandra discovered that Hector had hired a senior
secretary, not realising that Sandra had promised interviews to two other
people.EvaluateSandrasapproachtodelegation.
An evaluation of Sandras approach to delegation can be made by using the

Managers Shoptalk box entitled How to Delegate. The guidelines provided
thereincludedelegatingthewholetask.ItappearsthatSandradidnotwantto
delegate the hiring of the senior secretary, which violates this guideline. The
second guideline of selecting the right person seems to have been complied
with,sinceSandrachoseherseniortechnicianwhowasapparentlycapableand
not afraid of making decisions. The requirement of Delegating responsibility
andauthorityseemstohavebeenmetaswell,sinceHectorhadnoproblemin
completingthehiringprocess.Givingthoroughinstructionsseemstohavebeen
lacking in this situation however. If Sandra wanted the other two people
interviewed before the decision was made, she should have told Hector.
Feedback seemingly has not been maintained, since Sandra did not find out
aboutthehiringuntilsometimelater.ThereisnomentionofhowwellSandra
evaluatedandrewardedHectorsperformance.
The divisional structure is often considered to be the almost complete

oppositeofthefunctionalstructure.Doyouagree?Brieflyexplainthemajor
differencesinthesetwoapproachestodepartmentalisation.
The focus of a functional structure is on similarity of skills, expertise, work

activities, and resource use. Human resources are grouped together in large
functional departments to achieve economies of scale and indepth skill
specialisation and development. The underlying purpose of the functional
structure is the efficient use of resources and a concern to avoid their
duplication. The divisional structure is not necessarily the opposite of a
functional structure, but its focus is on the product and division goals rather
than functional skills and expertise. The divisional structure does, however,
make use of functional departments within each division, hence duplicating
these functions. Efficiency and economy of scale are less important than
coordinationacrossdepartmentsandeffectivenessinservingcustomersneeds.
The functional structure provides great internal efficiency but poor
responsiveness, and the divisional structure provides excellent responsiveness
butpoorinternalefficiency.
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Somepeoplearguethatthematrixstructureshouldbeadoptedonlyasalast
resort because the dual chains of command can create more problems than
theysolve.Discuss.Doyouagreeordisagree?Why?
Many experts would agree that the matrix structure should be adopted only
afterotherstructureshavebeenconsidered.Iftheorganisationhasafunctional
structure that doesnt work and reorganises into a divisional structure that
doesnt work either, a matrix structure may be appropriate. The matrix
structure requires extensive training to help people understand the dual
hierarchies,anditmaytakeoneortwoyearstocompletetheimplementation.
Often, after the matrix structure has been implemented, it evolves back into
eitherafunctionalordivisionalstructureifonesideofthematrixbecomesmore
powerful than the other. Dual chains of command create more problems than
they solve if the matrix structure is not suited to the situation. The situation
must demand equality along the two lines of authority, the sharing of
functional resources across divisions, and a rapid response to a changing
environment.Recentthinkingonorganisationstructuresuggeststhatthematrix
isappropriateinonlyafewsituations.Mostorganisationscangetbywithother
forms, such as a functional structure with lateral relationships, to meet the
needsforcoordination.
Whatisthevirtualnetworkapproachtostructure?Istheuseofauthorityand
responsibility different compared with other forms of departmentalisation?
Explain.
In the virtual network approach, the organisation becomes a small central

broker, electronically connected to other organisations that perform vital
functions.Eachdepartmentisanindependentcontractingservicetothebroker
foraprofit andcanbelocatedanywhere.Thecentralbroker,orheadquarters,
has only contractual arrangements with the departments and, therefore, very
littleauthority.Totalresponsibilityforthecomponentoftheproductorservice
is given to each department, and each has complete authority over its own
operation.Themajordifferenceisthattheheadquartershaveverylittlecontrol
overthedepartmentsandcannotexerciseauthorityoverthemverywell.
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Chapter2:QualityandPerformance
Describetheadvantagesofusingabalancedscorecardtomeasureandcontrol
organisational performance. Suppose you created a balanced scorecard for
NTUC FairPrice. What specific customer service measures would you
include?
The balanced scorecard is a comprehensive management control system that

balancestraditionalfinancialmeasureswithoperationalmeasuresrelatingtoa
companys critical success factors. A balanced scorecard contains four major
perspectives: financial performance, customer service, internal business
processes,andtheorganisationscapacityforlearningandgrowth.Withinthese
four areas, managers identify key performance metrics the organisation will
track.
The financial perspective reflects a concern that the organisations activities

contributetoimprovingshortandlongtermfinancialperformance.Itincludes
traditional measures such as net income and return on investment. Customer
serviceindicatorsmeasuresuchthingsashowcustomersviewtheorganisation,
aswellascustomerretentionandsatisfaction.Businessprocessindicatorsfocus
on production and operating statistics, such as order fulfilment or cost per
order. The final component looks at the organisations potential for learning
and growth, focusing on how well resources and human capital are being
managed for the companys future. Metrics may include such things as
employee retention, business process improvements, and the introduction of
newproducts.Thecomponentsofthescorecardaredesignedinanintegrative
manner. The balanced scorecard helps managers focus on key performance
measures and communicate them clearly throughout the organisation. It has
becomeacoremanagementcontrolsystemformanyorganisationstoday,and
canbeappliedtoalmostanybusiness.
SomespecificcustomerservicemeasuresinrelationtoNTUCFairPriceinclude
lengthofwaitincashierlines,easeoffindingdesiredproducts,availabilityof
desiredproducts,storecleanliness,andinstoreservices.
What types of analysis can managers perform to help them diagnose a

companys financial condition? How can a review of financial statements
helpmanagersdiagnoseotherkindsofperformanceproblemsaswell?
Managerscanperformafinancialanalysisofanincomestatementandbalance
sheetofacompanytoascertainitsstrengthsandweaknesses.Thebalancesheet
shows the firms financial position with respect to assets and liabilities at a
specific point in time. The balance sheet provides three types of information:
assets,liabilities,andownersequity.Assetsarewhatthecompanyowns,and
theyincludecurrentassets(thosethatcanbeconvertedintocashinashorttime
period)andfixedassets(suchasbuildingsandequipmentthatarelongtermin
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nature).Liabilitiesarethefirmsdebts,includingbothcurrentdebt(obligations
that will be paid by the company in the near future) and longterm debt
(obligations payable over a long period.) Owners equity is the difference
between assets and liabilities and is the companys net worth in stock and
retainedearnings.
The income statement, sometimes called a profitandloss statement or P&L

forshort,summarisesthefirmsfinancialperformanceforagiventimeinterval,
usually one year. The income statement shows revenues coming into the
organisationfromallsourcesandsubtractsallexpenses,includingcostofgoods
sold, interest, taxes, and depreciation. The bottom line indicates the net
incomeprofit or lossfor the given time period. Financial statements are
indicators of performance problems. For example, a sales decline may signal
problemswithproducts,customerservice,orsalesforeffectiveness.
Managers need to be able to evaluate financial reports that compare their

organisations performance with earlier data or industry norms. These
comparisons enable them to see whether the organisation is improving and
whetheritiscompetitivewithothersintheindustry.
Whyisbenchmarkinganimportantcomponentoftotalqualitymanagement
(TQM) programmes? Do you believe a company could have a successful
TQMprogrammewithoutusingbenchmarking?
Benchmarkingisanimportantcomponentoftotalqualitymanagementbecause
it is defined as the continuous process of measuring products, services, and
practices against the toughest competitors or those companies recognised as
industryleaders.BenchmarkingisamajorTQMcomponentandwithoutitthe
programme is not going to be successful. The key to successful benchmarking
lies in analysis. Starting with its own mission statement, a company should
honestlyanalyseitscurrentproceduresanddetermineareasforimprovement.
As a second step, a company carefully selects competitors worthy of copying.
Companiescan emulate internal processesand procedures of competitors, but
must take care to select companies whose methods are compatible. Once a
strong, compatible programme is found and analysed, the benchmarking
companycanthendeviseastrategyforimplementinganewprogramme.
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REFERENCES
BreadTalkAnnualReport2011[online]Available:
http://breadtalk.listedcompany.com/misc/ar2011.pdf,[Accessed:14January
2013]
SpringSingapore,2012ConradSQAExecutiveSummaryReport[online]
Available:
http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_Conrad
_2007_Summary_Report.pdf[Accessed29December2012].
SpringSingapore,2012NationalLibraryBoardSQAExecutiveSummaryReport
[online]Available:
http://www.spring.gov.sg/QualityStandards/be/Documents/BEAW/SQA_NLB_
2011_Summary_Report.pdf[Accessed29December2012]
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ManagingPeople
STUDYUNIT5
CHAPTER1:NatureofHumanResource
Management
CHAPTER2:RecruitingHumanResources
CHAPTER3:SelectingHumanResources
BUS206 STUDY NOTES
STUDY UNIT 5
CHAPTER1:NATUREOFHUMANRESOURCE
MANAGEMENT(HRM)
LEARNINGOUTCOMES
Explain human resource management (HRM) and human capital and its
importance.
CategoriseHRMactivities.
DifferentiatebetweentheoperationalandstrategicrolesofHR.
DiscussthechallengesofHRM.
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DEFINITIONSOFHRMANDHUMANCAPITAL
HRM is the act of designing management systems to ensure that human talent is
used effectively and efficiently to accomplish organisational goals. The goal of
effectiveHRMistohaveproductive,creativepeopleworkinginaflexible,effective
organisation that provides rewarding work with an earned reputation as an
excellentemployer.
An excellent example is McDonalds Singapore, a winner for Best Employers in

Asia Pacific 2011. The organisation found out that people want to work in a job
wheretheyfeelvaluedsoitcreatedaworkenvironmentthatisbothenergisingand
enjoyable where employees are given learning opportunities to learn, grow and
developafulfillingcareer(Dobrian,2011).
Human capital is the collective value of capabilities, knowledge, skills, life

experiences, and motivation of an organisational workforce. It also refers to the
intellectualcapitalthatreflectsthethinking,knowledgeandcreativitythatpeople
bringtotheorganisation.
HUMANCAPITALINORGANISATIONS
A. OrganisationalAssets
Organisationshavefourtypesofassets.Theyare:
Physical:Buildings,land,furniture,computers,vehicles,equipment,etc.
Financial:Cash,financialresources,stocks,financialsecurities,etc.
Intangible: Specialised research capabilities, patents, information systems,

designs,operatingprocesses,etc.
Human: Individuals with talents, capabilities, experience, professional

expertise,relationships,etc.
B. MeasuringHumanCapitalValue
Is human capital a strategic asset to an organisation? Does it build superior

business performance and shareholder value? These are questions that
organisationsask.ResearchbyWatsonWyattaffirmsthatbetterhumancapital
practices are a leading indicator of increased shareholder value. It further
advocates that hiring the right people, supporting creative thinking and
productivityandleveragingontherighttechnologybearpositiveperformance
resultsandenhanceshareholdervalue.
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Although chief financial officers recognise that human capital is a key success
factorforbusinessgrowth,veryfewmeasureitsvalue.Thiscanbeexplainedby
thefactthathumanresourcesaretraditionallyviewedasoperatingcoststoan
organisationratherthananassetthatappreciatesinvalueifproperlyharnessed
andexploited.
C. HumanResourcesasaCoreCompetency
Core competency is a unique capability that creates high value and

differentiates an organisation from its competition. Citibank N.A. is one such
example. Hiring the right people with the right jobability and person
organisation fit is just the beginning. Putting in place HRM practices of
leveragingtalentandcontinuallydevelopingpeopledifferentiateCitibankfrom
its competitors. Every new relationship manager undergoes extensive training
and assessment before being allowed to advise or sell financial products.
Working in Citibank is demanding, but the satisfaction and rewards that
bankersgainarewhatkeepthemmotivatedandchargedup.
Federal Express (FedEx), a global packaging company openly acknowledges

that people strategies have always been a major competitive advantage. The
companystronglybelievesthatmotivated,committedteammembersproviding
the highest level of service is what separates FedEx from its competitors.
Followingthefounder,FredSmithsmaximofPuttingpeoplefirstmakesgood
businesssenseandistherightthingtodo,FedExtranslatesthisintoaction.Its
people philosophy of PeopleServiceProfit (PSP) has worked well for the
companyandithasgainedinternationalrecognitionforoutstandingcustomer
satisfactionandexperience(Kaur,2009).
READ:
REVIEW:
WhatisHRM?WhatisthegoalofHRM?
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HRACTIVITIES
Successful organisations invest in human capital and gain most out of their
peoples contributions. All HRM activities are centred around a strategic fit
between people and performance, and HRM activities are designed and
implemented to adapt to the external environment which includes changes in
economic,political,social,technologicalandglobalforces.
HRMcanbecategorisedintoseveninterlinkedactivities.
Strategic HR Management: This is about maintaining organisational

competitiveness,HReffectiveness,useofHRmeasurementandHRtechnology.
ItalsoinvolvesHRplanningwhichforecaststhedemandforfutureemployees.
HRretentioniscriticaltostrategicHRmanagementashumantalentisrareand
notalwayseasilyavailable.
Legal Framework and Practices:Thissetofactivitiesisaboutcomplyingwith

employmentlaws,managingthechallengeofworkforcediversityanddealing
withnegativeperceptionoffreeflowofforeigntalent,whoisseenascompeting
withandtakingawayjobsoflocaltalent.
Staffing: Staffing is concerned with matching talents with the relevant

competenciestopositionsintheorganisation.Thisisdonethroughjobanalysis,
recruitmentandselection.
TalentManagementandDevelopment:Itbeginswithstafforientationfornew
employees. Existing employees are trained to improve performance. Line
managers assess employee performance through performance management.
Organisationsretainandmotivateemployeesbyofferingdifferentcareerpaths.
Theseareactivitiesoftalentmanagementanddevelopment.
Total Rewards: Total rewards take a holistic approach to designing an

attractiveandfairrecognitionandrewardsystem.Thesystemlooksintobasic
compensation,incentivesandbenefitstomotivateandretaintalent.
Risk Management and Worker Protection:Healthandwellnessofemployees

isamajorconcernofemployersbecauseitaffectsproductivity.Providingasafe
and secure workplace for employees is another activity. In recent times,
employerspaycarefulattentionandputinefforttoensuretheyhaveinplacea
disaster and recovery planning mechanism to prepare for unforeseeable
circumstances.
Employee and Labour Relations: This set of activities focuses on addressing

rights and privacy of employees, and having robust HR policies that help to
deal with such issues. In addition, fostering harmonious relationship between
unionandmanagementisanotherkeyactivitytoensureworkersconcernsare
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well represented and presented to management by unions. Similarly,

management works alongside unions to resolve problems and negotiate win
winoutcomes.
READ:
REFERTO:
Figure11showsHRManagementActivities.
HRMRoles
The type of role HRM takes on is dependent on the expectations of management

team.Primarily,HRMcanassumethreeroles:
A. AdministrativeRole
The administrative role focuses on HR clerical administration and record

keeping.Forexample,atNokiaSiemensNetworks(NSN),theHRdepartment
is divided into two functions, HR connection and HR consulting. HR
connection is transactional and serves the administrative needs of the
employees. It deals mostly with issues related to payslips, benefits and leave
(ShuklaPandey,2011).
People perceive that the administrative role of HR adds little value to the
organisationbecausesucharolecanbeeasilyoutsourced.However,technology
andoutsourcinghavetransformedthisrolesignificantly.
TechnologyTransformingHR
TechnologyallowsHRtomoreefficientlycarryouttheadministrativetasks
ofHR.Forexample,jobapplication,leave,payrollandexpenseclaimscan
be done through webbased technology. To a great extent, technology is
replacing the work of lowlevel HR employees and over time, very little
manpowerisneededtoperformHRadministration.
OutsourcingofHR
Outsourcing of HR has become a common practice particularly in

organisationswhichseeitcosteffectivetoengageathirdpartytocarryout
administration activities of HR. While outsourcing has itsmerits, there are
issues relating to costsavings which may not materialise. The NUS case
citedinthetextbookisoneexample.
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B. OperationalandEmployeeAdvocateRole
The operational and employee advocate role focuses on aligning HR activities

tostrategyandservingasthevoiceandchampionofemployees.Theaimisto
ensureafairandequitabletreatmentofalllevelsofemployees.
The operational role requires the HR professional to cooperate with line

managers to identify and implement policies and programmes needed in the
organisation. For instance, the operational HR role is responsible for the wide
spectrum of activities including recruitment, selection, compensation and
benefitsandtraininganddevelopmentofemployeesforlinemanagers.
C. StrategicRole
The strategic role of HR is different from the administrative and operational

roles.StrategicHRpartnersareinterestedinteamingupwithlinemanagersto
deliver business results in the strategic business unit (SBU), as well as
contribute to organisational goals and objectives. In this way, they take on a
strategic and proactive approach to understand the business strategy of the
SBU, and develop HR strategies, practices and policies susceptible of
supportingit.Whenassumingastrategicrole,HRprofessionalscontributemost
valuetothestakeholdersoftheorganisation.
For example, in NSN, the HR professionals provide strategic HR consulting

servicessuchaseducation,consultingandadvisorytolinemanagers.Theydeal
mostlywithissuesrelatedtopersonaldevelopment,incentivesandpromotions
(ShuklaPandey,2011).
Some examples of the strategic foci that HR professionals can assume may
include:
Evaluating mergers and acquisitions for organisational compatibility,

structuralchanges,andstaffingneeds.
Conductingworkforceplanningtoanticipatetheretirementofemployeesat
alllevelsandidentifyworkforceexpansioninorganisationalstrategicplans.
Leadingsiteselectioneffortsfornewfacilitiesortransferringoperationsto
internationaloutsourcinglocationsbasedonworkforceneeds.
Instituting HR management systems to reduce administrative time and

staff.
Working with executives to develop a revised sales compensation and

incentivesplanasnewproducts/servicesarerolledouttocustomers.
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READ:

REFERTO:
Figure14showsoperationaltostrategictransformationofHR.
REVIEW:
WhatarethedifferencesbetweenoperationalHRandstrategicHRroles?
CURRENTHRMCHALLENGES
The external environment poses challenges toHRM. For instance, globalisation of

businessandeconomicandtechnologicalchangesareforcesfromtheenvironment.
HRMpracticesandstrategieshavetobereviewedandrevampedsothattheyare
relevantandrobusttomeetthedemandsoftheexternalenvironment.
As more countries open their doors to foreign talents, the need to manage
workforcediversityhasbecomecriticaltoHRM.HRprofessionalsalsohavetodeal
withthepressureofcostcuttingandrestructuring.
A. GlobalisationofBusiness
The globalisation of business has shifted from trade and investment to

integration of global operations, management and strategic alliances which
affectHRMsignificantly.
As it is increasingly common for organisations to consider offshoring, in

shoring and outsourcing whichever that fits well with the organisations cost
structure and costsavings plan, moving operations to lower cost countries,
suchasChina,India,andVietnam,isalsoconsidered.HRMprofessionalsneed
toknowhowtohandlethecomplexityofrecruitment,selection,compensation
andrewardandotherHRMactivitiesincountriesotherthanthehostcountry..
Offshoring: Singapore businesses contracting out activities to unaffiliated

companiesortheiraffiliatesinanothercountry.
Inshoring:ForeignbusinessesshiftingactivitiestoSingapore.
Outsourcing:Businessescontractingoutactivitiestounaffiliatedcompanies
eitherathomeorabroad.
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B. EconomicandTechnologicalChanges
Severalchangesarediscussedasfollows:
Occupational composition: More people are working in the service sector

than in the manufacturing sector. This is in line with the shift towards
service industries in developed economies such as the U.S. and most of
WesternEurope.
Workforce Availability and Quality Concerns: As Singapore progresses,

thestandardoflivingimprovesandjobattitudeschange.Singaporeansshy
awayfromjobsthataredirty,dangerousordemeaningandforeignworkers
whoarelowskilledarewillingtotakeonthesejobs.
At the same time, highly skilled labour is not easily available locally. For
instance, Singapore lacks climate change expertise and thus has to engage
foreigntalentstofillupthesejobs.Withjobscreatedatthehigherlevelof
the value chain, Singaporeans needto acquire the skills set to fill up these
jobs.
GrowthinContingentWorkforce:Theemergenceoftemporarylabourand
independent contractors forms the contingent workforce. Contingent
workforce is flexible and less costly to an organisation and can be made
available just in time. While contingent workforce works well for
organisations,itmaynotbetotheadvantageoftheworkers.Workersmay
not get a fair deal, especially when they are constantly dependent on
organisations to offer them jobs. Also, these workers do not enjoy benefits
fromtheorganisation.
TechnologicalShiftsandtheInternet:TheuseoftechnologyandInternet
hasdrivenchangesinjobsandorganisationsofallsizes.Witheasyaccessto
technology,employeesarenowworking24/7.Theyareeasilyavailableand
accessible. This does not sit well with organisation that emphasises work
lifebalance.
Technology also allows people to work from home. It has been observed
that people who work from home tend to be more productive than those
whoworkattheoffice.ThechallengeisforHRMprofessionalstomanage
virtualemployeeswhogenerallyworkoffsite.
C. WorkforceDemographicsandDiversity
The demographic composition of workers evolves over time. HR managers

need to appreciate the diverse workforce and know how to manage their
expectations.
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Racial/EthnicDiversity:Singaporeisbothamultiracialandamultiethnic
society.Thelocalgovernmentistakingstepstomaintainracialharmony.It
also sets out guidelines for recruitment practices that provide equal
opportunitytoallraces.
Women in the Workforce: More women are entering or reentering the

workforce.Thegovernmentencouragesthismove.ForHRM,itmeansHR
policies have to be familyfriendly and flexible. Child care facilities are
availableeitherattheworkplaceorneartotheworkplace,andfamilyleave
andjobsharingcanbearranged.
AgeingWorkforce:Thelocalworkforceisageing.Tostayrelevant,workers
aretoinvestinlifelonglearningandreceivetrainingtoupgradetheirskills
andknowledge.Thiswillenablethemtotakeonnewjobsthatarecreated.
D. OrganisationalCostPressuresandRestructuring
Cost cutting and restructuring are always in the minds of management.
Pressuresfromglobalcompetitionhaveforcedfirmstoclosetheirfacilitiesand
move to countries that are labour intensive and have low cost of operation.
China,IndiaandthePhilippinesarepreferredcountriesthatorganisationsare
likelytoshifttheiroperationsto.
As part of organisational changes, organisations have rightsized by

eliminating layers of managers, closing facilities, merging with other
organisations and outplacing workers. Job redesign is an initiative which can
help reduce costs and increase productivity. Some banks are restructuring
themselves.Theyclosebranchesthatareunprofitablebutexpandtheirpresence
intheAsiaPacificregionwheretheyseepotentialgrowthopportunities.
READ:

REVIEW:
WhatarethecurrentchallengesofHRM?
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CHAPTER2:RECRUITINGHUMANRESOURCES
LEARNINGOUTCOMES
Explainrecruitmentandstrategicrecruitment.
Identifythecomponentsoflabourmarkets.
DiscusskeystrategicrecruitmentdecisionsHRmanagersmake.
Examinethedifferentinternalrecruitmentmethods.
Discussmajorexternalrecruitmentsources.
Explainthepopularityofinternetrecruitmentandhowemployersuseit.
Discussrecruitmentevaluationandmetrics.
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DEFINITIONS OF RECRUITMENT AND STRATEGIC

RECRUITMENT
Recruitment is the process of generating a pool of qualified applicants for

organisationaljobs.Itisaboutmatchingqualifiedapplicantstothejob.Often,itisa
straightforwardapproachthatfocusesonreplacingnormalworkforceattrition.
Strategic recruitment starts with human resource planning and decisions about
organisational recruitment responsibilities. It is about aligning HR strategies with
business strategies. For example, service excellence is a strategic goal of SIA. The
companywillselectpeoplewhohaveaservicemindsetandapassiontoserve.
Strategic recruitment goes beyond just filling up jobs. It actively focuses on

discovering talent and exploring creative ways to attract people to join the
organisation.Thisisamoredeliberateapproachthatrequiresmoreefforttofinally
engagethebesttalenttotheorganisation.
READ:
REFERTO:
Figure71showsstrategicrecruitmentstages.
LABOURMARKETS
Labour markets are the external supply pool of potential workers from which
employers attract employees. Labour markets are made up of three components.
Theyare:
LabourForcePopulation:Thisismadeupofallindividualswhoareavailable
forselectionifallpossiblerecruitmentstrategiesareused.Employersusemedia
sources,jobfairs,internetjobboards,corporatewebsitesandwordofmouthto
reach out to potential employees. For example, an organisation places a job
advertisementonJobStreet.com,itscorporatewebsitesandinlocalnewspapers
tofillinseveraljobopenings.
Applicant Population: This is a subset of the labour force that isavailable for
selectionusingaparticularapproach.Forexample,anorganisationmightlimit
its recruitment for management trainees to MBA graduates from major
universities.
Applicant Pool: The applicant pool consists of all persons who are actually
evaluated for selection. For example, six applicants were shortlisted from a
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labour force population for the job of a particular position in an organisation.

The organisation will select the most suitable applicant from the pool of six
candidates.
READ:
REFERTO:
Figure72showslabourmarketcomponents.
REVIEW:
YouaretheHRmanagerforaMNC.Themarketingmanagerwantsyoutofill
upamarketinganalystpositioninhisdepartment.Thepersondoesnotneedto
havemarketingexperiencebuthe/sheneedstohaveknowledgeinmarketing
researchandstatisticsaswellasstronganalyticalskills.Thelinemanageris
preparedtocoachtherightperson.Whichlabourmarketcomponentwouldyou
tapontofindpotentialcandidatesforthatposition?Why?
STRATEGICRECRUITMENTDECISIONS
An employer has to make key strategic recruitment decisions based on the needs
identified in the HR planning. The key strategic recruitment decisions are
discussed.
A. OrganisationBasedvs.OutsourcedRecruitment
Organisationbased recruitment is performed by the employer. Outsourced

recruitmentoccurswhentheemployerengagesasearchfirmtoundertakethe
entire recruitment process. However, the decision need not be an eitheror
decisionentirely.
SomeorganisationsprefertousetheirHRstafftohandletheentirerecruitment
process, while others may choose to handle the selection interview and leave
thejobadvertisement,initialscreeningofresumes,shortlistingofcandidatesfor
interviewstoasearchfirm.ThisfreesuptheHRstafftimetofocusonotherHR
activities.Giventheexpertiseofasearchfirm,outsourcingrecruitmenthasthe
advantageoffillinguppositionsmorequicklyanditismorecosteffectivethan
organisationbasedrecruitment.
B. RecruitmentPresenceandImage
Recruitment efforts can be continuous or intensive. Organisations that put in

continuouseffortsinrecruitmentwanttobeperceivedasactiverecruitersinthe
job market. For example, Shell Eastern Petroleum (a.k.a. Shell) participates
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regularly in campus recruitment exercises in major universities in Singapore

andoverseastorecruitthebesttalent.
Organisations that need to fill a number of positions within a short period of

timemayresorttointensiverecruitmentefforts.HospitalsandtheMinistryof
Education(MOE)areexamplesofsuchorganisations.Tofillupalargenumber
of nursing positions, hospitals organise job fairs to attract potential applicants
whowishtoshifttoanursingcareer.Similarly,theMOEencouragespeopleto
jointheteachingprofessionbyhavingrecruitmentdrivesthatpromoteteaching
as a noble career. TV advertisements have also been used to strengthen this
messageduringtherecruitmentperiod.
The brand and image of an employer are paramount to potential applicants.

Peopleliketoworkinreputableandrespectedorganisations.Ifemployerswant
to attract talented employees, they have to invest time, money and effort
towards building a strong brand. Shell is no stranger to branding. It enjoys a
formidablereputationwhenitcomestoattractingthepeopleitwants.Shellis
also widely accepted as a leading employer of choice. To attract outstanding
talent, it offers a compelling employee value proposition to hire and keep the
bestandbrightesttalent(Hyett,2009).
C. TrainingRecruiters
Thecompetencyofrecruitersiscriticaltothesuccessofaninterview.Thus,the
employer needs to decide the amount and nature of the appropriate training
that recruiters need to become effective interviewers. Ideally, interviewers
should be trained on interviewing techniques and communication skills. They
shouldalsohaveagoodknowledgeofthejobbeingfilledandmustalsobeable
toanswerquestionsrelatingtoit.
Oneofthebestinterviewpracticesistoavoidaskingsensitiveordiscriminatory
questions. For example, age, religion and marital status are not asked during
the interview. Equal opportunities employers often apply evidencedbased
interviewtodeterminethefitandcompetencyofpotentialcandidates.
D. Regularvs.FlexibleStaffing
Another strategic decision relates to the proportion of regular fulltime and

parttimeemployeeswhoshouldberecruitedtosatisfythestaffingneedsofthe
organisation. In recent times, employers are very careful about increasing
headcountunlessitisabsolutelynecessary.Relyingonapoolofflexiblestaffis
analternativeapproachtofillingpositions.Flexiblestaffingusesworkerswho
arenottraditionalemployees.Thisapproachiscostsavingasemployersdonot
have to pay fulltime benefits to flexible employees. Temporary staff and
independentcontractorsformthebulkofflexiblestaff.
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E. RecruitmentandDiversityConsiderations
Employers do their utmost to conform to fair employment practices. To be

perceivedasafairandinclusiverecruiter,employershavetotakeintoaccount
theseconsiderations:
EmploymentAdvertising:TheMinistryofManpower(MOM),theNational
Trades Union Congress (NTUC) and the Singapore National Employers
Federation (SNEF) have jointly issued the Tripartite Guidelines on Non
Discriminatory Job Advertisement for employers in Singapore. Although
notlegallybinding,theGuidelineshavebeenendorsedbythethreeparties
asgoodpractice.TheGuidelinesadviseemployerstohireindividualsbased
onjobabilityfitandnotonotherfactorsthatareirrelevanttothejob.
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Recruiting Nontraditional Workers: Employers increasingly find it

difficult to attract and retain talented individuals who fit the traditional
profile of an employee. They are now more open to hiring nontraditional
workers.Theseincludetheelderlyandretirees,stayathomemoms,single
parents, workfare workers, exconvict/substance abuse individuals and
people with disabilities. Thai Express, a nationallyrecognised employer
brand in the food and beverage industry is one employer who has no
qualmsabouthiringnontraditionalworkers.
Inthemidstofcompetition,ThaiExpressexperiencedahighattritionrateof
50% almost every year. Given the pervasive labour shortage it faced, Thai
Express decided to employ people from all walks of life including senior
citizens,exconvictsandpeoplewithdisabilities.Peopleinthesecategories
wereoftenrejectedbyemployers.ThaiExpressnotonlyemployedthembut
provided equal training opportunities to help them improve job
performance and retain them. The hiring of nontraditional workers has
helped Thai Express reduce its attrition rate. More importantly, it gives
senior workers, exconvicts and disabled workers a sense of purpose and
worthiness(Selvaretnam,2010).
RecruitmentSourceChoices:Internalvs.External
Thedilemmaofrecruitingfromwithinoroutsideoftheorganisationhasto
be considered. The final decision is made in accordance to the recruitment
strategyandpolicyoftheorganisation.
Recruiting from within or outside of the organisation presents advantages

anddisadvantages.Itisseenasanadvantageifinternalrecruitmentisused
for promotion and motivation. But, on the other hand, those who did not
get promoted will be demoralised and may perceive such decision as
favouritism. Recruiting from outside the organisation is generally
consideredtobeagoodalternativeasitbringsinnewbloodandnewideas.
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On the flip side, the new employee may take a long time to fit into the
culture and the organisation. Figure 75 lists down the advantages and
disadvantagesofinternalandexternalrecruitmentsources.
Generally, organisations tend to bring in new blood if they operate in a

highly competitive and unstable environment. At the same time, they also
develop internal staff to sharpen their skills. Some organisations have a
policy of promoting from within, unless there is no suitable candidate
availableinternally.
READ:
REFERTO:
Figure73showsthetypicaldivisionofHRresponsibilities:Recruitment.
Figure74outlinestherecruitmentanddiversityconsideration.
Figure75liststheadvantagesanddisadvantagesofinternalandexternal
recruitmentsources.
REVIEW:
Whatarethebenefitsofhiringnontraditionalworkers?
INTERNALRECRUITMENTMETHODS
Commonly used internal recruitment methods include organisational databases,

job postings, promotions and transfers, currentemployee referrals and the re
recruitmentofformeremployeesandapplicants.
A. InternalRecruitmentProcesses
Theuseofdatabases,jobpostings,promotionsandtransfersaremeanstoretain
andmotivateemployees.Organisationsfindthesemethodsvaluable.
Employee Databases: HR management systems store information on

existing employees. HR staff can access this information to match job
opening with candidates who meet the requirements. The advantage of
usingdatabasesisthattheycanbelinkedtootherHRactivities.Thehiring
manager can review these activities which may include the projects the
existingemployeeundertook,thetypesoftraininghe/sheparticipated,the
contributionshe/shemadetotheorganisation.Thisisusefulinformationas
it helps the hiring manager determine the suitability of the existing
employee.
JobPosting:Jobpostingisasystemthatanemployerusestopostnoticesof
job openings and through which employees respond by applying for a
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specificjob.Mostorganisationsannouncejobopeningsontheirintranetand
inviteexistingemployeestoapply.Usingnoticeboardstopostjobopenings
mayseemoldfashionedbutitisactuallyveryeffective.Theintentofajob
postingistoprovideopportunitiesforexistingemployeestomovetoother
jobseitherlaterallyorvertically.
Forajobpostingsystemtobeeffective,thefollowingquestionshavetobe
addressed:
Whathappensifnoqualifiedcandidatesrespondtothepostings?
Must employees inform their supervisors that they are applying for
anotherjob?
Arethererestrictionsonhowlonganemployeemuststayinajobbefore
applyingforanotherjob?
Howmuchnoticeshouldanemployeeberequiredtogivebeforebeing
transferredtoanewdepartment?
Whattypesorlevelsofjobswillbeposted?
When an employees application is rejected, it is necessary for the hiring

managertogetherwiththeHRmanagertoexplainandadvisetheemployee
abouttheknowledge,skillsandabilitiesthats/helackedandthatwouldbe
neededforthenextjobopeningopportunity.
PromotionsandTransfers:Wheneverpossible,mostorganisationspreferto
promote from within or to transfer existing employees to jobs becoming
vacant recently. It makes sense because promotions help to motivate
employees. Transfers help to expose employees to different roles and
responsibilities.Bothpresentnewchallengesforemployeeswhomaywant
totakethem.Whenexistingemployeestakeupanewjob,theirjobshaveto
be filled either internally or externally depending on HR strategy and
policy.
B. EmployeeFocusedRecruitment
Currentemployee referrals and rerecruitment of former employees and

applicantsaretwomethodsofemployeefocusedrecruitment.
CurrentEmployee Referrals: It is a practice for employers to encourage
existing employers to recommend their friends and relatives to apply for
jobs.Usingthissourceofrecruitmenthasproventobeefficientandeffective
becausesuitableandqualifiedapplicantsareinvitedtoapply.
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In a tight labour market, employers offer incentives to get existing

employees to refer potential applicants to fill up jobs. Incentives can be
monetaryorinotherforms.
Rerecruitment of Former Employees and Applicants: Former employees

and applicants are another source of recruitment. The employer knows
something about these two groups of people and feels comfortable re
recruitingthemwithouthavingtowastetimelookingfornewpeoplewho
arenotfamiliarwiththeorganisation.Also,iftheemployerneedstofillup
thepositionurgently,itpreferstousethissourceofrecruitment.
Employers can look into the records of former applicants who were
unsuccessful in their applications. Recontacting these former applicants is
inexpensiveandlesstimeconsuming.Moreover,theformerapplicantmay
behappytoknowthathe/shehasbeenconsideredforadifferentpostinthe
sameorganisationwherehe/shehadpreviouslysubmittedanapplication.
READ:
REVIEW:
What are the internal recruitment methods organisations can use to fill up
theirjobvacancies?
EXTERNALRECRUITMENTSOURCES
A number of external recruitment sources are available to employers. The major

sourcesarediscussedbelow.
A. CollegeandUniversityRecruitment
Everycollegeanduniversityprovidescareerservicestoitsstudents.Employers
can partner with the university to tap on the talent of undergraduates or
graduates.Thereareanumberofconsiderationsthatpotentialemployershave
tothinkaboutwhentappingoncollegeanduniversityrecruitment:
Currentandanticipatedjobopenings
Reputationofcollegesanduniversities
Experienceswithcareerservicesandpreviousgraduates
Organisationalbudgetconstraint
Marketcompetitionforgraduates
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Costofavailabletalentandtypicalsalaries
University recruitment can be expensive and as such, employers should

consider whether the benefits of recruiting a fresh graduate are significantly
more important than those of filling up a specific job opening with a non
graduate.
Universityrecruitmentcanalsobecompetitive.Thishappenswhenmorethan
one employer is aggressively recruiting from the same universities. Under
graduates who are keen to join the workforce have several options to choose
from.
Whenanemployerbuildsstrongrelationshipswithfacultymembers,thelatter
will recommend good students to that employer and in that scenario, the
successofuniversityrecruitmentishigh.
SomeemployerssuchasBayerisheMotorenWerkeAG(BMW)setupgraduate
trainee programme targeted at the recruitment of top university and college
graduates. BMW is keen to find young management trainees who have rare
talentsandinterculturalskills,languageskills,highlevelofcommitmentanda
naturalsenseofsocialresponsibility.Thismayrepresentatallorderformany
other employers but thanks to this programme, BMW Group is perceived by
young graduates to be an attractive employer with exciting entrylevel and
careeropportunities(Mukherjee,2010).

B. EmploymentAgenciesandHeadhunters
For a fee, a private employment agency can offer recruitment services.

Dependingontheagreedarrangement,theprivateemploymentagencymaydo
some preliminary screening and connect the shortlisted candidates with the
employer.
A headhunter is sometimes known as an executive search firm. Its role is

targetedinthatitisengagedtohelpemployersrecruitaspecificcandidatefora
specific role. Generally, an employer uses headhunters to fill up middle and
seniorlevelmanagementpositions.
Adedicatedsearchconsultantworkscloselywiththeemployertounderstand
its needs and expectations. Thereafter, the search consultant accesses the
executive search firm and other databases to search for potential candidates
whomayfittheprofilesought.Itthenundertakesotheractivitiestoensurethe
rightcandidatefillsupthespecificposition.
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C. CompetitiveSources
Professional and trade associations, trade publications and competitors are

other sources for recruitment. Many professional societies publish newsletters
andmagazinesandhavewebsitestoadvertisetheirjobvacancies.Suchsources
areusefulforrecruitingspecialisedprofessionalsneededintheindustry.
If the labour market is tight, employers may consider extending their

recruitmenteffortstowardstheirowncustomers.Itiscommontoseecustomers
joinasupplierfirmandviceversa.
D. MediaSources
Awiderreachrepresentsthemainadvantageofusingpaidadvertisementsin
variousmedia.Somefirmshaveuseddirectmailtoreachtheirtargetaudience.
When mass media is used for advertisements, recruiter must always evaluate
the advertisement before it goes to print or on air. In addition, the recruiter
shouldalsotracktheresponseratetothespecificadvertisement.
E. JobFairsandSpecialEvents
Employersinatightlabourmarketusejobfairsandspecialeventstofillalarge
number of positions. As part of their recruitment drive, the two integrated
resortsinSingaporeorganisedjobfairsatvariouslocationspriortotheirofficial
openings. If they are planned properly, job fairs and special events can be
effectiveinattractingtherightpeopletotherightjob.Peoplewhoareemployed
orunemployedareattractedtojobfairstoexploresuitablejobopportunities.
READ:
REFERTO:
Figure76offerstipsonwhattoincludeinaneffectiverecruitment
advertisement.
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INTERNETRECRUITMENT
The Internet has become the primary means for employers to search for job
candidatesandforjobseekerstoapplyforjobs.
A. ERecruitmentPlaces
The popular sites used for Internet recruitment include Internet Job boards,
professional/careerwebsitesandemployerwebsites.
Internet Job Boards: JobStreet.com, JobsDB.com, Monster, Yahoo! And

HotJobs provide places for employers to post job openings or search for
suitable candidates. This form of internet recruitment may not be highly
successfulbecausecandidatesmayjustbecheckingoutthesiteandarenot
too serious in wanting to leave a job. Despite this, HR professionals find
generaljobboardsusefulforgeneratingresponses.
Professional/Career Websites: Professional/career websites are a useful

source of internet recruitment. Job opportunities are industryspecific and
candidates from the industry are more likely to apply for the job. For
instance,CertifiedPublicAccountantsaremorelikelytojoinaprofessional
body and through the latters website, they will be able to view the job
vacanciesthataredirectlylinkedtotheirprofessionandqualifications.
Employer Website: This is by far the most effective Internet recruitment

approach.Onthelandingpageofmostcompanywebsites,employershave
included a tab that says, Join Us or Careers to encourage potential
candidates to submit their rsums online. Many employers also include
other useful information such as career paths and details about their
recruitmentprocesstoinformandbettermarkettopotentialemployeesthe
jobvacanciesthatneedtobefilled.
One major advantage of Internet recruitment is cost and time savings. Since
everythingisdoneonline,individualscansubmittheirapplicationsanytimeand
from anywhere, without requiring the attention or time ofan HR officer in the
process.
OnedisadvantageofInternetrecruitmentisthatpotentialcandidatesmayhave
limitedaccesstoInternet.Someapplicantsmaynotfeelcomfortablesubmitting
their rsums online for fear of releasing confidential information that is
accessibletopeopletheydonotknow.Otherlesstechsavvyorolderapplicants
maynotbefamiliarorarereluctanttousetheInternetwhileothersstillmaynot
haveaccesstoitatalloratleastnotfromaconvenientplacesuchastheirhome.
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RECRUITMENTEVALUATIONANDMETRICS
Howdoesafirmknowifitsrecruitmentmethodsandsourceshavebeeneffective?
Thebestwaytofindoutisbyevaluatingtherecruitmentprocessanditsoutcomes.
One could evaluate it using specific criteria such as: quantity of recruited
applicants, quality of recruited applicants, time required to fill a vacant position,
costperunitrecruitedandsatisfactionofpartiesinvolved.
A. EvaluatingRecruitmentQuantityandQuality
Metricsusedforevaluatingthequantityandqualityofrecruitmentincludethe
following:
Quantityofrecruitedapplicants:Themoreapplicantsapplyforaspecific,
themoreoptionstheemployerhastoselectamongthemthebestcandidate
forthejob.Thebasicmeasureiswhetherthenumberofrecruitsissufficient
tofilljobvacanciesornot.
Quality of recruited applicants: Another key evaluation consideration is

whethertheapplicants arequalifiedtofillthespecificjob.Inotherwords,
doapplicantshavetheskillsettoperformthespecificjobwell?Willthese
applicants do well once they have been selected to join the organisation?
The measures that can be used include performance appraisal scores,
monthsuntilpromotion,output,andsalesvolumeforeachsaleshire.
B. EvaluatingtheTimeRequiredtoFillJobOpenings
Thetimerequiredtofillanopeningisanevaluationcriterionusedtomeasure
theeffectivenessofarecruitmentexercise.Generally,itisusefultocalculatethe
averageamountoftimeittakesfromcontacttohire.Ifanagencytakes25days
from contact to hire, compared to 7 days for walkins and 12 days when the
recruitment is done via Internet, the hiring company can safely say that the
walkinapproachisthemostproductiveandeffectiverecruitmentapproachof
thethreeconsidered.
C. EvaluatingtheCostofRecruitment
Yearly recruitment expenses divided by the number of hired recruits will

provide the cost of recruitment. This may look like a straightforward formula
but an accurate assessment of recruitment costs is far from being an exact
science simply because not everyone agrees as what should be counted as a
recruitmentexpense.
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D. EvaluatingRecruitmentSatisfaction
Whenemployersgettherightcandidatesandthelatterareveryhappyintheir
job, then we can safely conclude that the two parties are satisfied with the
recruitment outcome. Another way of evaluating recruitment satisfaction is to
examinethequalityofthetalentpoolandwhetherthetimelineforeachactivity
wasrespectedaftertakingintoaccountthevariousproblemsfacedduringthe
recruitment process. It would also be worthwhile to ask the candidates how
theyweretreatedthroughouttheprocess.
E. GeneralRecruitmentProcessMetrics
Employerscanuseyieldratios,selectionrate,acceptancerateandsuccessbase
ratetoevaluaterecruitmentefforts.
Yield Ratios: Yield ratios compare the number of applicants at the

beginning of one stage of the recruitment process with the number of
applicantsremainingatthebeginningofthenextstage.
Selection Rate: Selection rate refers to the percentage of applicants finally

hiredfromagivengroupofcandidates.
AcceptanceRate:Acceptanceratereferstothepercentageofthenumberof
applicants finally hired divided by the total number of applicants offered
jobs.
Success Base Rate:Thesuccessbaseratecanbedeterminedbycomparing

the number of past applicants who have become successful employees
against the number of applicants who competed for their jobs, using
historicaldata.
READ:
REFERTO:
Figure77showsthesamplerecruitmentevaluationpyramid.
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CHAPTER3:SELECTINGHUMANRESOURCES
LEARNINGOUTCOMES
Explainselectionandplacement.
Diagramthesequenceofatypicalselectionprocess.
Discussthekeyresponsibilitiesandactivitiesoftheselectionprocess.
Identifythreetypesofselectiontestsandconcernsabouttheiruse.
Examinemajortypesofinterviewsandkeyconcernsabouttheiruse.
Relatethekeyconcernsderivedfrominterviewstobackgroundinvestigations.
Explainmethodsofmakingjoboffer.
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SELECTIONANDPLACEMENT
Selection is the process of choosing individuals with qualifications needed to fill

jobs in an organisation. Effective selection anchors on two beliefs Hire hard,
manageeasyandGoodtrainingwillnotmakeupforbadselection.
Placementisfittingapersontotherightjob.Placementofhumanresourcesshould
beconductedwithcareasitcanaffectdifferentemploymentoutcomes.Ifthereisa
goodfitbetweenthejobandthepersonselectedandhiredtodoit,thatindividual
willperformwellandhis/hermoralewillbe high.However,ifthefitispoor,the
individualwillnotbeabletoperformathis/heroptimumcapabilityandthiswill,
inturn,dampenhis/hermorale.
Selection and placement activities focus on applicants knowledge, skills and

abilities(KSAs).Aneffectiverecruitershouldconsidertheapplicantsattractionto
the work and the intention to accept or reject the job. Additionally, the recruiter
should also take into account the relationship between personal and job
characteristics.Twoimportantconceptsareperson/jobfitandperson/organisation
fit.
Person/job fit is important because it matches the individuals KSAs with the
characteristicsofthejobtheyarehiredtoperform.Agoodfitimpliesthatthe
individualhaswhatittakestoperformthejobwell.
Person/organisation fit looks at the congruence between individuals and

organisationalfactors.Forexample,aretheapplicantspersonalvaluesaligned
withtheorganisationalvalues?Ifindeedtheyarealigned,thenthereisahigh
probabilitythattheindividualwillblendwellintheorganisation.
READ:
REVIEW:
Ifyouarethehiringmanagerofacompany,whatfactorsorcriteriashouldyou
considertofindthemostsuitableapplicant?Explainyouranswer.
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SELECTIONRESPONSIBLITIES
The HR manager and line managers each have responsibilities in the selection
process.
Line managers want to hire the right candidates because they are fully aware of
theirimpactonthepeopletheywillworkwithandontheoveralltheperformance
of the department that hired them as well as, ultimately, the performance of the
organisationasawhole.Thelinemanagertakespersonalresponsibilitytoselectthe
mostsuitableapplicanttofilltherole.
Figure 83 describes the respective responsibilities of the HR Unit and the Line
Managerintheselectionprocess.
Ingeneral,theHRUnitinanyorganisationmaybeconcernedwithsomeorallof
thefollowingactivities:
Receivingapplications
Interviewingtheapplicants
Administeringteststoapplicants
Conductingbackgroundinvestigations
Arrangingforphysicalexaminations
Placingandassigningnewemployees
Followingupwiththeseemployees
Conductingexitinterviews
Maintainingappropriaterecordsandreports
A. TheSelectionProcess
Figure94outlinestheactivitiestypicallyfoundinaselectionprocess.Theyare
listedasfollows:
ApplicantJobInterest
PreEmploymentScreening
ApplicationForm
TestandInterview
BackgroundInvestigation
AdditionalInterview,ifnecessary
ConditionalJobOffer
MedicalExam/DrugTest
JobPlacement.
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B. ApplicantJobInterest
Applicants can express their interest in a job opportunity by submitting

rsums either electronically or by completing the rsum online. Prior to
submitting the job application, the applicant may conduct a realistic job
preview. This is a process through which a job applicant receives an accurate
picture of a job. At this stage, the employer is expected to project a positive
imagebybeinghelpful,politeandnondiscriminatorytotheapplicant.
C. PreEmploymentScreening
Employers conduct preemployment screening to shortlisted applicants. The

minimum requirement for the job is often used as a baseline criterion.
Employers use electronic screening software to sift out applicants. Only the
mostsuitableapplicantsareinvitedforaninterview.
D. ApplicationForms
Applicantsmaybeaskedtocompleteanapplicationformbeforeattendingan
interview.Adulyandneatlycompletedapplicationformservesfourpurposes:
Itisarecordoftheapplicantsdesiretoobtainaposition.
Itprovidestheinterviewerwithaprofileoftheapplicantthatcanbeused
duringtheinterview.
Itisabasicemployeerecordforapplicantswhoarehired.
Itcanbeusedforresearchontheeffectivenessoftheselectionprocess.
Employers may use different application forms for different levels and
categoriesofjobs.Forexample,theapplicationformusedformanagementstaff
isdifferentfromtheoneusedfortechnicalstaff.
Application forms should contain disclaimers and notices so that appropriate

legalprotectionsareclearlystated.Forexample,thereferencessectionfound
on application forms should explicitly state that any references or past
employers that the applicant indicated can be contacted by the prospective
employerwhoisthenallowedtoseektheirconfirmation,inputand/orfeedback
aboutthecandidatesperiodofemployment,attitude,overallperformance,etc.
Employersmustensurethattheemployeetheyintendtohirehasthelegalright
toworkinSingapore.Thisappliesspecificallytoforeignapplicantswhomust
have a valid employment pass / work permit and/or other workrelated
documentstoworkintheRepublic.Otherwise,itisillegaltohirethem.
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The application form and theselection processas a wholeshould observe fair

employmentpractices.Thismeansthatemployersshouldtreatallapplicantsin
the same manner regardless of their age, race, religion, language, gender and
marital status. In fact, the Tripartite Guidelines on NonDiscriminatory Job
AdvertisementstheMinistryofManpowerissuedin1979discourageemployers
fromaskingsensitivequestionsthatmakeanapplicantuncomfortable.
Employees submit their rsums together with the application at their own
initiative.Theemployershoulddutifullyanddiligentlycheckthevalidityofthe
information provided in the rsum and the application form to ensure it is
true. Hence, if an applicant stated in his/her rsum that he/she is a scholar,
thentheemployermustcheckwiththerespectiveauthorityororganisationthat
suchaclaimisaccurate.
READ:
REFERTO:
Figure83describesthetypicaldivisionofHRresponsibilities:Selection.
Figure84showstheselectionprocessflowchart.
REVIEW:
Whatisthepurposeofconductingpreemploymentscreening?
SELECTIONTESTING
Employeesusedifferentteststoassessthesuitabilityofapplicantsforaparticular
position. When they are both reliable and valid, employment tests also allow
employers to predict which applicants will likely be successful in their job. The
major types of tests conducted are designed to assess the ability, personality and
honesty/integrityofanapplicant.
A. AbilityTests
Teststhatmeasureanindividualsabilitytoperforminaspecificmannerfallin
theabilitytestcategory.Thesearefurtherdifferentiatedintoaptitudetestsand
achievementtests.
Abilitytestscanbegroupedintofivecategories:
CognitiveAbilityTests:Thesearetestsmeasuringanindividualsthinking,
memory, reasoning, verbal, and mathematical abilities. Managers
administertheseteststoassessjobrelatedcognitiveabilities.
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PhysicalAbilityTests:Theseareteststhatmeasureanindividualsabilities
suchasstrength,enduranceandmuscularmovement.Managersadminister
theseteststoassessthephysicalstrengthsofanapplicantthatareneededto
performthejob.
Psychomotor Tests: These are tests that measure dexterity, handeye

coordination,armhandsteadinessandotherfactors.
Work Sample Tests:Theseareteststhatrequireanapplicanttoperforma

simulated task that is a specified part of the target job. For example, a
secretarymaybeaskedtotakeminutesofmeetingbecauseitispartofthe
job.
Situational Judgement Tests: These are tests that measure a persons

judgementinworksettings.
Employersmayuseassessmentcentresintheselectionprocesstofillmanagerial
job openings. An assessment centre is composed of a series of evaluative
exercises and tests that are used for selection, career development and
promotion.Multipleratersevaluatethecandidatesperformanceonthevarious
exercises and tests they take. The results can subsequently be used as a road
mapfortheindividualdevelopmentofthenewlyhiredcandidate.
B. PersonalityTests
Employers use personality tests to gauge the degree to which an applicants

attributes match specific job criteria and how a person interacts with his/her
work environment. MyersBriggs Type Indicator (MBTI) and the Big Five
PersonalityTraitsarecommonpersonalitytests.
It is worth nothing that personality test results may not be accurate because
applicantsmayfaketheanswer.Employersshouldbemindfulofthepotential
flaw in using personality tests as applicants may not answer truthfully but
provideanswersthatmakethemlookgoodandsuitabletofillthejobvacancy.
C. Honesty/IntegrityTests
Companiesvalueapplicantswithahighlevelhonestyandintegrity.Theyuse
honesty/integrity tests as a screening mechanism to weed out applicants who
are weak on these values. However, these tests present shortcomings. For
example,itmayputanapplicantoffbecausesomequestionscanbeconsidered
as overly invasive, insulting and not job related. The accuracy of
honesty/integrity tests is also challenged because a genuinely honest person
maybefoundtobedishonestbythesetests.
READ:
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SELECTIONINTERVIEWS
The purpose of selection interviews is to obtain additional information that is

missing and clarify the information that the applicant provided in his/her rsum
and/or application form. Two levels of interviews take place. The first is to
determine if the person meets the minimum requirements. The second is an in
depthinterviewinvolvingtheHRmanagerandthehiringmanager.
Interviews can take various forms. They can be structured, less structured and
stressed.
A. StructuredInterviews
A structured interview uses a set of standard questions asked of all

interviewees.Thistypeofinterviewisusefulbecauseitallowstheinterviewers
topreparejobrelatedquestions.Itisalsousefulintheinitialscreeningprocess
becausemanyapplicantscanbecompared,evaluatedandeliminated.
Structured interviews can be flexible in that they allow applicants to provide

information that is not found in the rsum or application form. Interviewers
can also ask probing questions to seek clarification. In this way, structured
interviewscanbeseenasreliable.
There are several forms of structured interviews, namely, biographical

interview, behavioural interview, competency interview, and situational
interview.
Biographical Interview: It focuses on a chronological assessment of the

candidatespastexperience.
Behavioural Interview: Interviewees give specific examples of how they

haveperformedacertaintaskorhandledaprobleminthepast.Thishelps
the interviewer ascertain how the interviewee will handle similar tasks in
thefutureanddeterminehis/hersuitabilityforthejob.
CompetencyInterview:Competencyinterviewissimilartothebehavioural
interview,exceptthatthequestionsaredesignedtoprovidetheinterviewer
withsomethingtomeasuretheapplicantsresponseagainstacompetency.
Acompetencyprofileorframeworkisusedinsuchinterviews.
Situational Interview: Situational interview contains questions pertaining

to the way applicants might handle specific job situations. This type of
interview is highly recommended because of its predictive capabilities,
reliabilityandaccuracy.
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B. LessStructuredInterviews
An unstructured interview is usually conducted by line managers. No pre

prepared questions are set but broad questions are asked throughout the
discussion.
Lessstructuredinterviewscanbenondirective.Anondirectiveinterviewuses
questionsdevelopedfromtheanswerstopreviousquestions.Onedisadvantage
of using nondirective interview is that it is difficult to focus on jobrelated
questions and getting comparable data on various applicants. As a result, the
comparisonandrankingofcandidatesmaybesubjective.
C. StressInterview
A stress interview is designed to create anxiety and put pressure on the

candidatesandthenseehowtheyrespondinthatcontext.Employersusethis
type of interview to assess the suitability of candidates to fill highly stressed
jobs.Theywanttoseehowtheapplicantcopeswithandhandlesstressinajob
situation. Stress interviews can be a turnoff for the interviewee who, in turn,
may develop a negative opinion of the company. As a result, the interviewee
mayturndownthejoboffer.
D. WhoConductsInterviews?
Interviews can be conducted individually or in a group. Panel interviews and

teaminterviewsareconductedbyagroupofinterviewers.
Panel interviews are interviews where a group of interviewers meet with an

interviewee at the same time. They hear the same responses to questions and
theymakejudgementabouttheintervieweesperformance.
Inateaminterview,theintervieweeisinterviewedbytheteammemberswith
whom he/she will work. This approach can improve team success. However,
team members must be trained to ask relevant questions and build consensus
overthehiringdecisionandthecriteriasupportingit.
E. EffectiveInterviewing
Effective interviewing requires skills, practice and experience. Training can

developonesinterviewingskills.Belowaresuggestionstomakeinterviewing
effective:
Plantheinterview
Controltheinterview
Useeffectivequestioningtechniques
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Interviewersshouldavoidasking:
Closedquestionssuchasyes/noquestions
Obviousquestions
Leadingquestions
Inappropriatequestions
Nonjobrelatedquestions
F. InterviewRelatedProblems
LinemanagersandsometimesHRmanagerswhoarenotadequatelytrainedin
selectioninterviewingskillsmaycreateproblemsduringoraftertheinterview.
Theseproblemsinclude:
Making snappy judgements about an interviewee within the first few

minutes.
Placing an unnecessary emphasis on unfavourable information over

positiveorfavourableinformation.
Developinganhaloeffect,aphenomenonthatoccurswhentheinterviewer
allows a positive characteristic of the interviewee such as agreeableness to
overshadowotherlessfavourableevidence.
Being biased and stereotype an interviewee. For example, an interviewer

stereotypes a mature interviewee if s/he immediately concludes that
becauseofhisage,thelattermustbeslowandunwillingtolearn.
Being unable to handle cultural noise that arises from what applicants
believeissociallyacceptableratherthanwhatisfactual.
READ:
REFERTO:
Figure87presentsthebigfivepersonalitycharacteristics.
Figure88showsthetypesofselectioninterviews.
Figure89depictsquestionscommonlyusedinselectioninterviews.
REVIEW:
Whattypeofinterviewwouldyouusetoselectanengineer?Whichformof
interviewwouldyouadoptandwhydoyouthinkitissuitableasaselection
toolforanengineeringposition?
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BACKGROUNDINVESTIGATION
Background investigation may take place either before or after the indepth
interview.Sourcesofbackgroundinformationmayincludethefollowing:
Previousemploymentrecords
Criminalrecords,ifany
Credithistory
Honestytests
Education/degreedocumentation
Professionalcertifications/licences
Workerscompensationrecords
Militaryrecords
A. LegalConstraintsonBackgroundInvestigations
Employers must be mindful of legal constraints when conducting background

investigations. They have to seek permission from the applicant before
conductingit.Theemployermustalsorespectthedecisionofanapplicantwho
does consent to a background investigation. An applicant may not want the
potential employer to reference check his/her former employers about his/her
performance.
Besides looking into their prior employment, prospective employers may also
checkthecredithistoryofapplicants.Therationaleisthatapoorcredithistory
may signal either correctly or incorrectly a certain level of irresponsibility.
Credithistoryshouldbecheckedforcandidatesapplyingforjobswhereaccess
toand/ormanagementofmoneyisanessentialjobduty.
B. MedicalExaminationsandInquiries
Medicalexaminationsandfurtherenquiriespertainingtotheoverallhealthof
applicants may be warranted. Generally, employers perform two medical
checks,onehealthscreeningandtwo,drugtestingbeforemakingajoboffer.
MedicalInquiries:Onceaconditionalofferofemploymenthasbeenmade,
anapplicantisaskedtocompleteapreemploymenthealthchecklistorthe
employerpaysforaphysicalexaminationoftheapplication.Upongivinga
clearhealthcheck,theapplicantisthenofferedthejob.
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Drug Testing: Drug testing may be conducted as part of the medical

examinations.Employersarecarefulnottoemployapplicantwhoisadrug
addict or drug abuser. However, some employers are open to employ ex
drugaddictswhohavegonethroughsuccessfuldrugrehabilitation.
MAKINGTHEJOBOFFER
The final step of the selection process is the job offer. This can be done over the
telephoneandfollowedbyanofficialappointmentletter.Theappointmentletteris
alegaldocumentstipulatingthetermsandconditionsofemployment.
Someemployersgiveanemploymenthandbooktotheapplicantandthisformsthe
complete contract of employment. The employment handbook contains contract
relatedrulesandproceduresthattheapplicantmustobserveandfollowifhe/she
acceptsthejoboffer.
The applicant is given some time to review the appointment letter and other
documentsbeforeacceptingthejoboffer.Oncetheappointmentletterissignedand
returnedtotheemployer,alegallybindingemploymentcontractisformed.
READ:
REFERTO:
Figure810showsthesourcesofbackgroundinformation.
REVIEW:
Howdoyouconductabackgroundcheckonanapplicant?
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Chapter1:NatureofHumanResourceManagement(HRM)
WhatisHRM?
HRMistheactofdesigningmanagementsystemstoensurethathumantalent
isusedeffectivelyandefficientlyintheaccomplishmentoforganisationalgoals.
WhatisthegoalofHRM?
The goal of HRM is to have productive, creative people working in a flexible,

effective organisation that provides rewarding work and has earned the
reputationofbeinganexcellentemployer.
WhatarethedifferencesbetweenoperationalHRandstrategicHRroles?
Students should refer to Figure 14 as it gives a concise explanation of the

differencesbetweenoperationalHRandstrategicHRroles.
WhatarethecurrentchallengesofHRM?
Globalisation of business, economic and technological changes, workforce

demographicsanddiversityandorganisationalcostpressuresandrestructuring
arecurrentchallengesofHRM.
Thesechallengesareexplainedonpages239to245ofthetextbook.
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Chapter2:RecruitingHumanResources
You are the HR manager for a MNC. The marketing manager wants you to
fill up a marketing analyst position in his department. The person does not
need to have marketing experience but he/she needs to have knowledge in
marketingresearchandstatisticsaswellasstronganalyticalskills.Theline
manager is prepared to coach the right person. Which labour market
component would you tap on to find potential candidates for that position?
Why?
Considering the requirements stated by the marketing manager, the HR

managerismorelikelytorecruitfromtheapplicantpopulation.
Themarketingmanagerisnotlookingforanexperiencedmarketinganalystbut
rather for someone with strong analytical skills and competent knowledge of
marketing research and statistics. As coaching will be provided to the right
person, this implies that the job is an entry level position. Thus, the HR
manager is more likely to work with career services of major universities to
recruitpotentialcandidates.Inaddition,theHRmanagermayadvertisethisjob
opportunityonthecorporatewebsitetoattractapplicants.
Whatarethebenefitsofhiringnontraditionalworkers?
Nontraditional workers such as senior citizens, exconvicts and disabled

peopleareseenastheleastpreferredworkersintheworkplaceandtheyhave
difficulty getting hired. Employers who hire them benefit because these
workers are usually more hardworking, more loyal and more willing to learn
and more importantly, they are grateful to be given an opportunity to
demonstrate their ability to deliver results. They are more likely to take their
jobsseriouslyandremaininthejobforalongtime.
What are the internal recruitment methods that organisations can use to fill
uptheirjobvacancies?
The internal recruitment methods include the use of employee databases, job
posting, promotions and transfers from within. Other internal recruitment
methods are currentemployee referrals and rerecruitment of former
employees and applicants. As each method has its advantages and
disadvantages, employers must decide which works best for them in a given
situation.
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Chapter3:SelectingHumanResources
If you are the hiring manager of a company, what factors or criteria should
youconsidertofindthemostsuitableapplicant?Explainyouranswer.
A hiring manager should consider the following factors to find the most
suitableapplicant:
Knowledge, skills and abilities (KSAs). In a nutshell, these form the

overallcompetenciesoftheindividualwhichareimportanttodetermineif
he/sheisabletoperformtheresponsibilitiesrequiredofthejobanddeliver
the desired outcomes. This is the attempt to determine the person/job fit
whichmatchestheKSAsoftheapplicantwiththejobcharacteristics.
Person/organisation fit is equally important. Person/organisation fit looks

at the congruence between individuals and the organisational factors. For
example,ahiringmanagershouldfindoutasmuchabouttheindividuals
beliefs and values and ascertain if they match with organisational values
and principles. If there is a close match, then it is more likely that the
applicant can blend well in the organisation setting. If it does not match,
there is a high probability of a misfit and the applicant if selected will
struggletofitintheorganisation.
Whatisthepurposeofconductingpreemploymentscreening?
The purpose of conducting preemployment screening is to determine if

applicants meet the minimum job requirements. It is useful to employers,
particularlytosiftoutunqualifiedapplicantsfromthosewhoarequalified.Pre
employment screening is an effective method for shortlisting potential
applicants. Therefore, employers do not need to interview applicants who do
notmeettheminimumrequirementsofthejob.
Whattypeofinterviewwouldyouusetoselectanengineer?Whichformof
interviewwouldyouadoptandwhydoyouthinkitissuitableasaselection
toolforanengineeringposition?
Structured interviews can be used to select an engineer. In a structured

interview, the interviewer poses standardised questions to all applicants. S/he
compares and evaluates fairly the quality of the answers presented by each
candidate. Also, questions in structured interviews are jobrelated, leaving no
roomforinappropriatequestions.
The interviewer may use behavioural, situational and competency interviews.

Theseformatsaresuitablebecauseeachisdesignedtoassessthesuitabilityof
the applicant in given contexts and situations. For example, in behavioural
interviews, the applicant is assessed on how he/she handled a problem in the
past.Incompetencybehaviour,theapplicanthastodemonstratehis/herability
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toperformataskthatisjobrelated.Inasituationalinterview,theapplicantis
givendifferentsituationstotesthowhe/shemighthandspecificjobsituations.
HowdoesanHRManagerconductabackgroundcheckonanapplicant?
Background checks can be conducted by telephone or through email. For
example,theHRmanagercancontacttherefereesprovidedbytheapplicantto
verifytheinformationgivenonhis/herrsum,theapplicationformorduring
the interview. A checklist should be used to verify facts such as employment
dates, salary history, type of job responsibilities, and attendance records.
Sensitive information such as reason for leaving the previous job and
disciplinary actions received by the applicant may be included as part of the
referencecheck.
Alternatively,writtenmethodsofreferencecheckingmaybeused.Forinstance,
anemployermaysendpreprintedreferenceformstorefereesoftheapplicant.
The referees complete the form and return it to the employer within a given
period.
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REFERENCES
Dobrian,J.,2011,Goodmanagersputtoppriorityonengagingtheirpeopleand
creating opportunities, The Wall Street Asia Journal, June 23 2011, sponsored
section.
Hyett,S.,2009,HRtotherescue,HRM,issue7.9,p.15.
Kaur,B.,2009,FedEx:Peoplefirst,HRM,issue9.1,p.43.
Mukherjee,A.,2010,Thepeoplewhosteertheultimatedrivingmachine,HRM,
issue10.9,p.15.
Selvaretnam,S.V.,2010,HRexpress,HRM,issue10.11,pp.1416.
ShuklaPandey,S.,2011,Unitingcommunities,HRM,issue11.5,p.26.
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ManagingPeople
STUDYUNIT6
CHAPTER1:TrainingandDevelopingHuman
Resources
CHAPTER2:CompensatingHumanResourcesand
ManagingEmployeeBenefits
CHAPTER3:ManagingEmployeeRelations
BUS206 STUDY NOTES
STUDY UNIT 6
CHAPTER1:TRAININGANDDEVELOPING
HUMANRESOURCES
LEARNINGOUTCOMES
Explaintraininganddevelopment.
Categorisethetypesoftraining.
Relatestrategictrainingtoorganisationalcompetitiveness.
Distinguishbetweendevelopmentandtraining.
Discuss options for developing specific capabilities and competencies of

individuals.
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NATUREOFTRAINING
Training is a process through which people acquire capabilities to perform jobs.

Training can seek to develop hard skills or soft skills. Hard skills are typical
technical skills that aredirectly related to the job. Soft skills refer to interpersonal
andpeoplemanagementskillsandincludecommunicating,mentoring,managinga
meetingandworkingasateam.
A. TrainingCategories
Trainingisdesignedtomeetanumberofobjectivesandfallsunderanumberof
categories: required and regular training, job/technical training, interpersonal
andproblemsolvingtraininganddevelopmentalandcareertraining.
Required and Regular Training: Courses comply with various legally

mandated requirements such as Singapores Workplace Safety and Health
Act.
Job/Technical Training: These are specific jobrelated courses that enable

employees to perform their jobs well. For example, all staff members at
Amara Singapore attend inhouse and external customer service training
programmestoimprovethequalityoftheirservicedelivery.
Interpersonal and ProblemSolving Training: This type of training

addresses operational and interpersonal problems. It aims to improve
organisational working relationships. Examples of courses falling in that
category include communications skills, interpersonal skills and
managerial/supervisoryskillscourses.
Developmental and Career Training: Such training is longterm focused

and aims to enhance individual and organisational capabilities for the
future. Examples include training on business trends, strategic thinking,
leadershipandchangemanagement.NTUCFirstCampusrecognisedearly
thatpeopleexpectmorethanjustpayandbenefitstostayonthejob;they
also want a career. The organisation also acknowledged that it needs to
develop its centre principals to be effective leaders. The GrowthWithUs,
programme was set up to meet these expectations by seeking to equip
teachersandprincipalswithleadershipandbusinessskillssothattheycan
takeonmorechallengingrolesinthefuture(HRM,p.50).
B. LegalIssuesandTraining
Companiesmustconsiderlegalissueswhendesigninganddeliveringtraining.
Employersmustensurethatalltheiremployeesreceivethetrainingmandated
by law or they may be found guilty of noncompliance. Mandatory training
includes safety training for construction workers and other industries such as
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shipbuilding, oil and petrochemical where the work environment tends to be

pronetosafetyhazards.
Some employers invest heavily in staff training, specialised training in

particular, although it is expensive and only benefits a smaller number of
selected employees. To prevent the latter from leaving the company after
receivingthetraining,employersmakethemsignatrainingcontractthatmay
includeabondperiodrequiringthetrainedemployeetoworkforthecompany
for a specific period of time immediately following the end of the specialised
training. Employers should ensure that such bonds are legallybinding in
Singapore.
READ:
REFER:
Figure91showsthetypesoftraining.
TRAININGANDORGANISATIONALSTRATEGY
Traditionally,traininghasbeenviewedasanexpenditurethataddslittlevalueto
organisationalgoalsandobjectives.Evenifitisvaluable,trainingisoftenseenasa
tactical and not as a strategic tool, and that relegates it to the status of a minor
contributortobusinessresultsandorganisationalsuccess.
A. StrategicTraining
The contemporary view of training has changed significantly in recent time.

Training which is referred to as learning is becoming strategic because of its
linkagetobusinessstrategy.Inotherwords,HRandtrainingprofessionalshave
reinvented themselves. They are strategic business partners who work
alongside with line managers to help them solve problems and achieve their
businessgoals.
BradyCorporationmanufacturesfacilityidentificationproductslikesigns,tags,
labels and printers. During the financial crisis of 2009, the Bradys training
manager decided to revise all of the companys training and development
programmes.Evenwithlimitedresources,thetrainingmanagercameupwith
innovative ways to tailor Bradys training programmes to cater to employees
from all levels. The company sees training and development as a strategy to
nurture employees and improve their competencies to enable them to deliver
positivebusinessresultsfortheorganisationinbothgoodandbadtimes(HRM,
pp.4245).
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B. OrganisationalCompetitivenessandTraining
Training helps to build up the organisation core competency and creates

competitive advantage. Companies that see human talents as a strategic asset
continue to invest in them in good or bad times. For example, Brady spent
US70,000inafivedaycoursecalledEffectiveBradyProgrammetoupskillits
managersduringthe2009financialcrisis(HRM,p.43).AndSingaporeAirlines
spendsS$215millionayeartotrainitsworkforce.Globalandlocalcompanies
including Microsoft, General Electric, NTUC First Campus, Amara Singapore,
Thai Express emphasise the importance of training and recognise that human
talentdevelopmentisakeyfactorforlongtermsuccess.
Trainingisintegraltostrengtheningorganisationalcompetitivenessasevident
in Carlson Wagonlit Travel (CWT). The company takes a holistic approach to
training by embracing an interactive learning strategy that delivers the right
solutions to consistently achieve profitable business results. Apart from
addressing the training needs of individuals, CWT also focuses on its
developmental needs as well so as to retain the more talented employees.
Developmentneedsareidentifiedthroughregulartalentaswellasperformance
reviews(Mukherjee,pp.5960).
Tangible assets such as physical capital used to be a measure for competitive

advantage.However,attheturnofthecentury,strategicthinkersandbusiness
leaders recognised that knowledge is power and from that realisation, the
concept of knowledge management (KM) was born. KM is the way an
organisation identifies and leverages on knowledge to stay competitive. This
capability can be developed as seen in CWT, a company that set up CWT i
win,aglobalrepositoryofcorporateknowledgeandmemorythatemployees
canaccessthroughawiderangeoftools.ResourcesavailableinCWTiwin
include corporate presentations, industry benchmarks, research papers, case
studiesandtrainingmanuals(Mukherjee,pp.5960).
Training can be a revenue generator. Microsoft, Cisco, HewlettPackard and

IBM bundle training with the products and services that they sell to their
customers. Manufacturers of heavy equipment do likewise. In that context,
training is both a source of revenue and a measure of customer satisfaction.
Customertraininghelpsuserslearnhowtouseacompanysproductandwhen
they are properly trained, their perception and experience of the companys
product quality increases and along with it, their satisfaction. In the long run,
customerloyaltyandretentioncanbeachieved.
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READ:
STUDY UNIT 6
REFERTO:
Figure92showsthelinkagebetweenorganisationalstrategiesandtraining.
REVIEW:
Howdoorganisationslinktrainingtocompetitiveadvantage?Givean
example.
DEVELOPINGHUMANRESOURCES
In an organisational context, development refers to efforts to improve employees

abilitiestohandleavarietyofassignmentsandtocultivateemployeescapabilities
beyondthoserequiredbythecurrentjob.
Organisations and individuals benefit from development. Highly developed

employeesandmanagersenhanceorganisationalcompetitiveness.Theyareflexible
and adaptable. Developed employees have a higher chance of pursuing different
careerpathseitherlaterallyorvertically.
A. Developmentvs.Training
Development is different from training. Development aims to build employee

capabilitiesandcompetenciesandpreparethemtotakeonbiggerchallenges.It
hasalongtermfocusandtobeeffective,itrequirescontinuousinvestmentsin
time, effort and money. Developmental needs cover areas such as leadership,
decision making and judgement, problem solving and analytical skills,
management skills, corporate governance and ethics. Development is tied to
strategicplans.
Training, on the other hand, is jobrelated and aims to help employees learn
specific behaviours and take specific actions. Employees who are trained are
able to apply specific techniques and processes in their current jobs. In most
cases,trainingisseenasasolutiontonarrowingskillsandperformancegaps.It
is focused on the short term, i.e. on meeting the immediate needs of an
employeewhohastoperformbetterinthetaskss/heisassignedtodo.Forthat
reason, management expects to see immediate improvement after training.
Becauseofitsshorttermfocus,trainingislinkedtooperationalortacticalplan.
Figure 106 distinguishes between development and training. Students should

refertoit.
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B. DevelopingSpecificCapabilities/Competencies
How do employers help people remain relevant and competitive so that they
continuetodeliverresults?Theanswerislearninganddevelopment.Toretain
human talent, employers invest indeveloping the capabilities/competencies of
theiremployees.
Employees should take the initiative and invest in themselves as while their
skills,knowledgeandabilitiesarevaluable,theyshouldbeawarethattheKSAs
have an expiry date. Thus, many embark in lifelong learning and re
development.
Lifelong Learning: Lifelong learning may mean meeting continuing

education requirements to retain ones educational and/or professional
qualification. For example, doctors, lawyers, teachers, certified public
accountants and nurses need to attend a certain number of continuing
educationsessionsandworkshopsinordertocontinuepractisingtheir
professions.Forotherprofessions,learninganddevelopmentmaymean
getting additional qualifications to expand their skills set and prepare
fornewcareermovesandpromotions.
ReDevelopment: People may shift jobs in midlife or midcareer and

redeveloping themselves will allow for that shift by giving them the
relevantcapabilitiestoeffectit.Forexample,peopleabove35yearsold
are more likely to return to school to pursue a degree. Similarly, child
care centres are willing to recruit and develop midcareer individuals
and homemakers who want to join this employment sector. Re
development provides options for people to venture into growing
industriesthatareinneedofmanpower.Thehealthcareindustryisone
example. With the raise of ageing population, hospitals and healthcare
providersareactivelyrecruitingpeopletojointheindustry.
READ:
REFERTO:
Figure106outlinesthekeydifferencesbetweendevelopmentandtraining.
REVIEW:
Whataretheareasofcapabilities/competenciesthatyoushoulddeveloptostay
relevantandcompetitive?Whydoyouthinkthoseareastobemoreimportant
thanothers?
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CHAPTER2:COMPENSATINGHUMAN
RESOURCESANDMANAGINGEMPLOYEE
BENEFITS
LEARNINGOUTCOMES
Explaintotalrewardsandbenefits.
Differentiatethethreegeneralcomponentsoftotalrewards.
Discusstwobasiccompensationphilosophies.
Identifythedifferentbenefitcoststoanorganisation.
Debate how benefits can be used as a competitive advantage to attract and

retainatalentedworkforce.
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NATUREOFTOTALREWARDSANDCOMPENSATION
Totalrewardsaremonetaryandnonmonetaryrewardsprovidedtoemployeesin
ordertoattract,motivateandretainthem.
Because total rewards represent a significant expenditure, organisations need to

ensurethatthetotalcompensationpackagemeetsthefollowingobjectives:
Itcomplieswithallappropriatelawsandregulations.
Itiscosteffectivefortheorganisation.
Itrespectsinternal,externalandindividualequityforallemployees.
Itenhancesperformancethroughouttheorganisation.
Itservestorecogniseemployeeperformanceandhelpmanagetheirtalent.
Employersmustrecogniseandrewardtalentsbasedontheskills,knowledgeand
abilities that employees bring to the organisation. World at Work, a leading
professional association, has developed a simple framework to categorise the
components of total rewards. Broadly, they are grouped into compensation,
benefits as well as performance and talent management. Figure 121 provides
detailsrelevanttoeachofthesecomponents.
A. TypesofCompensation
Rewards can be intrinsic and extrinsic. Intrinsic rewards are intangible and
may include praise, compliments for a job well done or for meeting
performancetargets.Ontheotherhand,extrinsicrewardsaretangibleandcan
be in monetary or nonmonetary form. One tangible component is direct
compensation such as base pay and variable pay whereas indirect
compensationconsistsofbenefits.
BasePay:Thisisthebasiccompensationthatanemployeereceives,usually
asawageorasalary.Basepaycanbehourlyorsalaried.Hourlycalculated
pay is often called wages. They are payments directly calculated on the
amountoftimeworked.Contractualworkersreceivewagesforthenumber
of hours they work. Salaries are consistent payments made each period
regardlessofthenumberofhoursworked.Peopleprefertoreceivesalaries.
Variable Pay: This is compensation linked directly to individual, team or

organisationalperformance.Commontypesofvariablepayincludebonuses
and incentive programme payments. Stock options are offered to
managementstaffmemberstoattract,motivateandretainthem.
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Benefits:Benefitsareindirectrewardsgiventoanemployeeoragroupof
employees not for performance but as a result of organisational
membership. They include health insurance, vacation pay, educational
assistanceandretirementpension.
B. CompensationPhilosophies
How should employees be compensated fairly and equitably? This is a main

concernofHRprofessionals.Twoopposingcompensationphilosophiessurface
inthedeliberation.Thefirstistheentitlementphilosophyandthesecondisthe
performancephilosophy.
Entitlement Philosophy: The entitlement philosophy assumes that

individualswhohaveworkedforayearareentitledtopayincreases,with
little regard for performance differentials between employees.
Organisations that automatically increase their employee pay every year
practisethisphilosophyandthepayincreaseisusuallyconsistentfromyear
to year. They do this to take inflation into account, i.e. the costofliving
increases. The entitlement philosophy is not a true measure of employee
performanceanddoesnotmotivateemployeestoworkhard.
Performance Philosophy: The payforperformance philosophy requires

that compensation changes reflect performance differences. With this
philosophy, employees are given performance bonuses only if they
achieved business objectives or set targets agreed at the beginning of the
year. Also, the amount of bonus varies according to performance levels.
Thus, employees who perform satisfactorily maintain or advance their
compensation levels more than marginal performers, but less than top
performers.Bonusesandincentivescanbebasedonindividual,teamor/and
organisationalperformance.Forexample,civilservantsreceivetwoandhalf
monthperformancebonusforachievingoutstandingeconomicgrowth.
READ:
REFERTO:
Figure121showstotalrewardscomponents.
Figure122showsthecontinuumofcompensationphilosophies.
REVIEW:
Whatarethetwocompensationphilosophiesemployerscanuse?Whichis
moreappropriateformotivatingsalesteamsandwhy?
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BENEFITSANDHRSTRATEGY
Figure141showsasampleofbreakdownofanemployerstotalcompensationand
benefit costs. These benefit costs are rising and can be a burden to employers.
However, this should not deter them from incentivising employees for good
performance. Employers now have to think of innovative ways to use benefits to
attract,motivateandretainhumantalent.
Theapproachthatatotalrewardsstrategyshouldtaketowardsemployeebenefits
depends on factors such as workforce competition, the life cycle stage of the
organisationaswellasitscorporatestrategies.Forexample,Microsoftmayprovide
competitive salaries and benefits to attract the best talent in the market. On the
other hand, Motorola Electronics and OCBC may choose to put in place more
familyfriendly benefits so working mothers can experience a better worklife
balance.Forinstance,OCBCintroducedtwodaysofFamilyLeaveforemployees
who are not eligible for childcare leave. The intent is to provide employees with
opportunitiestospendqualitytimewiththeirfamilies(ShuklaPandey,p.43).
A. BenefitsasCompetitiveAdvantage
In bad times, organisations review and reduce benefits as part of their cost
cuttingmeasures.Theyviewsuchmeasuresasnecessarybecausebenefitsoften
represent a significant component of their operating costs. On the other hand,
othersarguethatcompaniesshouldmaintaintheirbenefitsprogrammebecause
theyserveasacompetitiveadvantagetoattract,motivateandretainemployees.
Employers who offer attractive benefits are generally perceived positively by

their employees when they compare to other organisations that do not offer
competitivebenefitpackages.Forexample,anemployerdecidestocutmedical
benefits because of a recession will be perceived as not taking care of its
employeeswelfare.Furthermore,thelackofcompetitivebenefitsmayresultin
recruitment difficulty. In a survey conducted by an international consulting
firm, 48% of executives saw benefits as being extremely important to a
companys competitive effectiveness and another 41% saw benefits as
somewhatimportant.Thissurveyandothersconfirmthatbenefitsareviewed
byemployersandemployeesasapartofbeinganemployerofchoicewhen
attractingandretainingindividuals.
B. TheRoleofBenefitsforWorkforceAttractionandRetention
Benefitsareacompetitiveadvantagebecausetheyhavethepowertoattractand
retainhumantalent.Theweightthatemployeesallocatetothesignificanceofa
specific benefit may vary according to their individual needs. For instance, a
young employee who just entered the workforce value flexible and portable
benefits which can be transferred. Senior employees may see retirement and
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medical benefits as being more important to them because these more closely
meettheirforeseeableneeds.
Inordertoattractandretaintherightcalibreofemployees,companieshaveto
designbenefitprogrammesandpackagesthatmeettheexpectationsofalllevels
of employees. It is also worthy to note employees sometimes prefer receiving
benefits than cash because the former is taxfree and the latter is subject to
taxation.
READ:
REFERTO:
Figure141showsasamplebreakdownofanemployeestotalcompensation
andbenefitscosts.
REVIEW:
Whyarebenefitsseenasacompetitiveadvantagetoanorganisation?
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CHAPTER3:MANAGINGEMPLOYEERELATIONS
LEARNINGOUTCOMES
Differentiatebetweenstatutoryrightsandcontractualrights.
Discusstherightsaffectingtheemploymentrelationship.
Recommenddifferentdisputeresolutionalternatives.
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EMPLOYEERIGHTSANDRESPONSIBILIITES
Rightsarepowers,privilegesorinterestthatbelongstoapersonbylaw,natureor
tradition.Rightsaresensitiveandaresubjecttointerpretationandarguments.For
example,doesanemployeehavetherightoffreedomofspeechintheworkplace?
And the question of what constitute a freedom of speech is an issue that has
drawn much debate and interests in the past. Moreover, legal rights may or may
notcorrespondtocertainmoralrightsandviceversa.
Responsibilities are obligations to perform certain tasksand duties. Employment

isareciprocalrelationshipinwhichbothsideshaverightsandresponsibilities.For
example,employeeshavetherighttoexpect asafeworkingenvironmentandthe
employerhastheresponsibilitytoprovideitforthem.Similarly,anemployerhas
therighttoexpectemployeestoputin40hoursofqualityworkinaweekandthe
employeehasthecontractualresponsibilitytomeetthisobligation.Thereciprocal
nature of rights and responsibilities implies that both parties to an employment
relationship should regard the other as having rights and should treat the other
withrespect.
A. StatutoryRights
Employees statutory rights are rights based on laws or statutes passed by

federal, state, or local government. Various laws have granted employees
certain rights at work such as minimum employment conditions, collective
bargainingandworkplacesafety.
B. ContractualRights
Contractualrightsarerightsbasedonaspecificcontractbetweenanemployer
and an employee. For example, an employment contract for a sales person
shouldstipulatehis/herresponsibilities,expectedtimelinetodeliverresultsand
specific details concerning his/her compensation package. It should also spell
outiftheemploymentrelationshipisforanindefiniteperiod,aspecificperiod
oftimeonlyorwhetheritissubjecttorenewalnearitsexpiry.Inaddition,the
employment contract may spell out the terms of a severance agreement,
continuation of benefits and other issues that need to be addressed when an
employee leaves an organisation. Employment contract may include non
competeagreements.
NonCompeteAgreements:Theseareagreementsthatprohibitindividuals
who leave an organisation from competing with an employer in the same
line of business for a specified period of time. For example, Star Cruises
paiditsexexecutivedirectorColinVeitchS$10millioninexchangeforhis
agreeing not to engage, for a fiveyear period, in a business venture or be
employedbyanexistingornewcompanycompetingwithStarCruises.
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Employmentcontractsmayalsocontainnonpiracyagreements,i.e.specific
clauses that bar past employees from soliciting business from former
customers and clients for a specified period of time. This is a common
practice in the banking as well as the telecommunication industries. For
example, DBS Bank paid its exchief executive officer, Jackson Tai
S$1millionfornonsolicitation.
Employers may also include clauses requiring nonsolicitation of current

employees in the employment contract. These clauses prevent a former
employeefromcontractingorencouragingcoworkersattheirformerfirm
tojoinadifferentcompany,oftenacompetitor.
IntellectualProperty:Companieswanttoprotecttheirintellectualproperty.
They can include a clause that prevent employees from stealing their
intellectual property during the employment period as well as when they
leavethecompany.Beyondcontractualclausestothateffect,locallawsalso
protectcompaniesagainstintellectualpropertytheftfromexistingorformer
employeesbutalsofromanyotherparty.
C. ImpliedContracts
Impliedcontractsarerightsandresponsibilitiesthatarenotwrittenbutdeemto
existandareequallyenforceable.Therightsandresponsibilitiesofanemployee
may exist only as unwritten employer expectations about what is acceptable
behaviour or performance on the part of the employee. For example, an
employercannotacceptemployeestousevulgarityattheworkplace.Although
thisisnotwrittenintheemploymentcontract,itisimpliedthatemployeesare
expectedtoupholdthevalueofrespectintheworkplace.Theuseofvulgarityis
seenasdisrespectfultotheorganisationaswellastocolleagues.
READ:
REVIEW:
Explainthedifferencebetweenstatutoryrightsandcontractualrights.
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RIGHTSAFFECTINGTHEEMPLOYMENTRELATIONSHIP
Severalconceptsfromlawandpsychologyinfluencetheemploymentrelationship.
A. EmploymentatWill(U.S.)andContractofService(Singapore)
EmploymentatWill (EAW) is an American commonlaw doctrine stating that

employers have the right to hire, fire, demote, or promote whomever they
choose,unlessthereisalaworcontracttothecontrary.
InSingapore,anindividualemploymentrelationshipisgovernedbyacontract
ofservicebetweenanemployerandemployee.Foraunionisedsector,agroup
of employees represented by a labour union can enter into a collective
agreementwiththeiremployer.Acontractofserviceoperatesonthecommon
law principle and it allows the employee to sell his/her labour and/or skills
andworktimetotheemployerforaconsiderationintheformofwagesand
benefits.
ForindividualsthatarecoveredbytheEmploymentActofSingapore,acontract
of service can be written, oral or implied. The notice of termination can be
incorporated in the contract of service. However, if it is not, the Act provides
thatthenoticeofterminationshallbeonedayforlessthan26weeksofservice;
oneweekforbetween16weeksandlessthantwoyearsofservice;twoweeks
for between two years and less than five years of service; and four weeks for
fiveyearsormoreofservice.
IfanemployeecoveredbytheActfeelsthathe/sheisunjustlydismissed,he/she
cancomplaintotheMinistryofManpowerorsuetheemployerinacivilcourt.
Itislesscostlytousetheformerthanthelatter.
B. WrongfulDischarge/Dismissal
Whenanemployerdismissesanemployeetoavoidpayingcompensationtothe
latter, the court may hold that the employee is wrongfully
discharged/dismissed. To help avoid wrongful discharge/dismissal lawsuits,
the employer should have a wellwritten employee handbook; he should also
train managers and maintain an adequate documentation of all disciplinary
procedures and actions taken against an employee. Figure 162 offers
suggestions for preparing a defence against wrongful discharge/dismissal
lawsuits.
Constructive discharge is closely related to wrongful discharge. Constructive

discharge is a process of deliberately making conditions intolerable to get an
employee to quit. In a normal situation, an employee who resigns on his/her
accord cannot later claim damages for violation of his/her legal rights.
However, an exception to this rule exists and will be upheld when the courts
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find that the working conditions were made so intolerable as to force a

reasonableemployeetoresign.Thereareanumberoffactorsthatmayamount
toconstructivedischarge.Theyinclude:
Intolerableworkingconditions
Dangerousduties
Demeaningassignments
Failuretoprovideworktodo
Conditionsunderwhichareasonableemployeewouldquit.
C. JustCause
Just cause is reasonable justification for taking employmentrelated action. A

good reason or just cause for disciplinary actions such as dismissal can
usuallybefoundinunioncontracts.Theoverallconcernofjustcauseisfairness.
Noemployeewantstobeunfairlydismissed.
D. DueProcess
Dueprocessisalsoaboutfairness.Itistherequirementthattheemployerusesa
fair process to determine employee wrongdoing and that the employee has
beengivenanopportunitytoexplainanddefendhisorheractions.Figure163
shows the criteria that are used to evaluate whether justcause and dueprocess
have been respected in a given situation. How HR managers address these
criteriadetermineswhetherthecourtsperceiveemployersactionsasfair.
Theperceptionoffairnessorjusticeinthetreatmentthatorganisationsextend
totheiremployeesdependsontwofactors,distributivejusticeandprocedural
justice.
Distributive justice is the perceived fairness in the distribution of

outcomes.Itquestionedwhethertheoutcomesweredistributedfairly.
Procedural justice is the perceived fairness of the process used to make

decisions about employees. It questioned whether the decision making
processwasfair.
Dueprocessisakeyproceduraljusticewhenmakingpromotion,pay,discipline
andotherHRdecisions.
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READ:
REFER:
Figure162showskeysforpreparingadefenceagainstwrongful
discharge/dismissal:Thepapertrail.
ALTERNATIVEDISPUTERESOLUTION
Three alternative dispute resolution methods are used by companies to resolve

disputesquicklyandcheaply.
A. Arbitration
Arbitrationisaprocessthatusesaneutralthirdpartytomakeadecisionina
conflictsituationinvolvingtwoormoreparties.InSingapore,unionscanrefer
to the Industrial Arbitration Court to resolve grievances and disputes that
employees may have against their employer. However, nonunionised sectors
may need to engage an independent law firm with lawyers proficient in
arbitrating employment cases to act for them. The Singapore International
Arbitration Centre could also be the place to start a search for an effective
arbitrator.
B. PeerReviewPanels
Employers may allow employees to appeal disciplinary actions taken against

them to an internal committee composed of existing employees. This panel
reviewsthe actionsandmakesrecommendationsordecisions.Panelmembers
are specially trained volunteers who, after signing confidentiality agreements,
areempoweredbytheircompanytohearsuchappeals.
Peer review panels use fellow employees and a few managers to resolve
employmentdisputes.Theadvantagesofusingreviewpanelsare:
Fewerlawsuits
Provisionofdueprocess
Lowercosts
Managementandemployeedevelopment
Basichowtoconsiderationsincludethefollowing:
Recruitandtrainvolunteerswhoareinterestedinservingonthepanel.
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Use a five or sevenperson panel with no more than one or two

managementmembers.
When dealing with a bias issue, members of the affected protected group
mustbeonthepanel.
The panel must be objective either side should be able to remove any
individualbelievedtobebiased.
Managementmustnotattempttoalterorappealthedecision.
Peerreviewpanelscanserveasthelaststageofaformalcomplaintprocessfor
nonunionemployees.Theuseofpeerreviewpanelshasreducedthenumberof
lawsuits.
C. Ombuds
Ombuds are individuals outside the normal chain of command who act as
problem solvers for both management and employees. Organisations use
ombuds to ensure a process of fairness in resolving disputes and grievances.
Ombuds address employees complaints such as unfair treatment, conflicts
between employee andsupervisors with a high degree of confidentiality. Any
followuptoresolveproblemsisoftenhandledinformally.
READ:
REVIEW:
Whatarethethreealternativemethodsofresolvingdisputesandgrievances.
Suggesttheappropriatenessofuseforeachmethod.
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STUDY UNIT 6
Chapter1:NatureofTraining
How do organisations link training to competitive advantage? Give an

example.
Figure92providesagoodoverviewofhoworganisationalstrategiesarelinked
to training activities. For example, an organisation that operates in a highly
dynamic and unstable environment would want its employees to embrace
changeandencouragethemtodothingsdifferently.Trainingcansupportthis
outcome with courses targeted at helping people adapt to change, enabling
managerstoleadandmanagechange.
Manyorganisationsundergochange,andstudentscangiveexamplesofglobal
orlocalcompanies.
What are the areas of capabilities/competencies that you should develop to

stay relevant and competitive? Why do you think those areas to be more
importantthanothers?
Managers need to have higher level skills. These may include leadership and
management skills, business skills, problem solving and decision making and
teammanagementskills,andcriticalthinkingskills.Theseskillsaretacitinthat
you can bring with you even if you leave your current employer. These skills
are valuable and applicable in all organisations and business environment.
Thus,ifyouwanttostayrelevantandcompetitive,youneedtostartdeveloping
thesecapabilities/competencies.
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Chapter2: CompensatingHumanResourcesandManagingEmployee
Benefits
What are the two compensation philosophies employers can use? Which is
moreappropriateformotivatingsalesteamsandwhy?
The two compensation philosophies are entitlement philosophy and payfor

performancephilosophy.
The entitlement philosophy assumes that individuals who have worked for a
yearareentitledtopayincreases,withlittleregardforperformancedifferences.
The payforperformance philosophy requires that compensation changes
reflectperformancedifferences.
Thepayforperformanceismostappropriatetomotivatesalesteamsbecauseit
is a fair approach for recognising and incentivising sales personnel who meet
and exceed sales targets. Also, the payforperformance compensation
philosophy encourages marginal performer to work hard to achieve sales
performance.
Whyarebenefitsseenasacompetitiveadvantagetoanorganisation?
Benefitsareindirectrewardsgiventoanemployeeoragroupofemployeesfor
organisationalmembership.
Benefits are viewed as a competitive advantage because they can be used to

attract, motivate and retain human talent. Human talent is a strategic asset
which is not easily available or replaceable. This is one reason why successful
organisations leverage on benefits to recruit and retain employees. To them,
benefitsarenotcostsbutinvestmentsintheorganisationalsuccess.
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Chapter3:ManagingEmployeeRelations
Explainthedifferencebetweenstatutoryrightsandcontractualrights.
Statutoryrightsarerightsbasedonlawsorstatutespassedbyfederal,state,or
local government. On the other hand, contractual rights are rights based on a
specificcontractbetweenanemployerandanemployee.
Whatarethethreealternativemethodsofresolvingdisputesandgrievances.
Suggesttheappropriatenessofuseforeachmethod.
Arbitration, peer review panels and ombuds are three alternative methods for
resolvingdisputesandgrievancesinaworkplace.
Arbitration isusedinunioncontracts.Peerreviewpanelsarecommonlyused
in resolving employment disputes such as decisions in recruitment and
promotion.Ombudsarecommonlyusedtoaddressemployeecomplaintsabout
unfairtreatment,employee/supervisorconflictsandotherworkplacebehaviour
issues.
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REFERENCES
Developingtheranks,HRM,issue11.5,pp.4245.
Trainingtocare,HRM,issue9.1,p.50.
Mukherjee,A.,2009,Dynamictraining,HRM,issue9.1,pp.5960.
ShuklaPandey,S.,2010,Familyfirst,HRM,issue10.9,p.43.
SU6-22
SIM UNIVERSITY

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BUS206

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BUS206 MANAGING PEOPLE

BUS206 MANAGING PEOPLE

BUS206 Managing People provides students with an introduction into

BUS206 MANAGING PEOPLE

BUS206 MANAGING PEOPLE

UniSIMs assessment strategy consists of two components, Overall Continuous

BUS206 MANAGING PEOPLE

UniSIM adopts activitybased learning, an approach that aims to help students to

BUS206 MANAGING PEOPLE

BUS206 STUDY NOTES

Differentiate the various categories of management skills and management

BUS206 STUDY NOTES

John wants to be an effective manager. He knows a managerial role is different

Planning is the management function concerned with identifying goals for

BUS206 STUDY NOTES

Organising is the management function concerned with assigning tasks,

Leading is the management function that involves the use of influence to

Controlling is the management function concerned with monitoring

BUS206 STUDY NOTES

Goal directedmeans the organisation is designed to achieve some outcome or

performance is assigned to organisation members. This is commonly seen in

1. Conceptual skill isthecognitiveabilitytoseetheorganisationasawhole

BUS206 STUDY NOTES

2. Technical skills are most important at lower organisational levels and

BUS206 STUDY NOTES

2. Many companies falter because managers fail to listen to customers,

4. Other management missteps include treating people as if they were objects or

BUS206 STUDY NOTES

BUS206 STUDY NOTES

a. Line managers are responsible for employees who make or provide a

Becoming a manager involves a profound transformation of ones personal

a. from a specialist who performs specific tasks to a generalist who

d. from working relatively independently to working in a highly

BUS206 STUDY NOTES

a. Managerial activity is characterised by variety, fragmentation, and

1. A role is a set of expectations that characterise a managers behaviour.

a. The monitor role involves seeking current information from many

c. The spokesperson role pertains to making official statements to people

3. Interpersonal roles refer to relationships with others and are related to

c. The liaison role concerns the development of information sources both

BUS206 STUDY NOTES

a. The entrepreneur role involves the initiation of change. Managers seek

b. The disturbance handler role involves resolving conflicts between

c. The resource allocator role pertains to allocating resources in order to

d. The negotiator role involves formal negotiations and collective

BUS206 STUDY NOTES

1. The old workplace was characterised by routine, specialised tasks, and

2. The new workplace is characterised by freeflowing work, flexibility, and

3. An important challenge for todays managers is to build a learning

BUS206 STUDY NOTES

taking, applies current technology, tolerates mistakes and failure, and

BUS206 STUDY NOTES

Discuss the characteristics of effective goals as well as the benefits and

Explain the importance, for todays managers, of contingency planning,

BUS206 STUDY NOTES

Initially called Apple Computer Inc., the Cupertinobased company used to be

BUS206 STUDY NOTES

Yogokawa follows this systematic approach to planning. At the start of every

At Yogokawa as at most companies, the top management develops strategic