Professional Documents
Culture Documents
Qualification
Table of Contents
:f Contents
The HRM Strategy 30
"3Die of Contents
5
Chapter 1: Business Ethics
Introduction — What is Ethics? 192
6 Business Ethics and Organizational Codes of Conduct
Business Ethics 194
Levels of Accountabi I ity 195
Fiduciary Responsibility 196
Ethical Standards in a Global Economy 196
197
Social and Eth ical Objectives of Companies
Ethical Stance 198
Absolutism and Relativism 199
Conflicts of interest 201
e ^r is Part
Chapter 1: The HRM Framework
Introduction
Introduction
Workforce Diversity
Corporate Downsizing
Chapter 1
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Learning Outcome By the end of this chapter you should be able to:
■ List and briefly explain five most important components of the HRM
framework
Introduction
Human Resource Management (HRM) is the organization and control of a firm’s employees. An
organization’s success is dependent on the effective management of its human resources. For success, it
is prudent that personnel policies and procedures of the firm are in line with and contribute greatly to
the achievement of the firm’s corporate goals and strategic plans.
HRM is an approach that manages, develops, trains and motivates an organization’s human resource. It
Concept of HRM
creates a proper corporate culture, ensures the company’s success and brings out programs reflecting
the organization’s core principles. HRM is proactive and believes in immediate actions in handling
employee relation problems and other tasks that come under HRM (recruitment, training). Manpower
planning, performance appraisal, selection, salary administration, management development and other
personnel management related functions are included in the implementation techniques of HRM and
will be executed through special programs designed to improve communication system, commitment
and productivity.
3. Human resource also highlights the social realities, units and processes in
an organization of an employee apart from him being an individual. This
incorporates the roles of an employee in the organization, the dyadic unit-
includes the person and his superior, many teams in which people work,
inter-team processes and the entity of the entire organization.
Apart from being the most innovative and excelling approach of managing ihc
people in workplace, and apart from being the best qualitative approach for the
improvement of human beings, HRM is a broader and a comprehensive version
of behavioral sciences and personnel management. It is a persistent cycle that
enables the employees to enhance their potential and skills in performing their
present as well as future roles in the organization, thus more efficiently
fulfilling the objectives of the organization and the needs of the employees.
3. It is more fruitful to groom oneself from the inside (self development) than from the outside.
4. The organization side by side goes through development with overall benefits and with development
of the members.
2. Top management takes the initiating step for HRM, devises crucial procedures and tactics and
finally creates an environment required for the implementation of those plans.
MaijLComponents of
An efficient HRM is a combination of flourishing partnership among line managers,
The HRM System
senior?nanagem^frt-arrd HR function and suitable HR policies, procedures and recruitment
Li. strategies. The following precisely highlights why these components are important:
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One of the most crucial and prudent components is line managers as they are practically involved
in all the HRM processes and lead a few as well.
Senior management consists of Executive Directors and members of the Management Team. They provide
both organizational leadership and management and act as role models for line managers and employees.
Their job involves making key HRM decisions which includes appointment and promotions related
decisions that majorly affect others in the organization.
HR Function includes regional HR advisers, their units and the HR staff. This needs to have HR
Professionals with the frame of mind, skills, structure and systems that collaborate and go in line with HR
policies and strategies and they should be more of client-oriented in order to effectively provide HR
services.
HR’s regulations, policies and tools should be rational, simple and consistent with the organization’s
values according to its contending commitment and should support the wider organization strategy.
Staffing/recruitment strategy provides a structure that ensures that the right staff is available at the right
place in the right quantity and follows the organization’s strategic priorities. It ensures that the workforce
hired is suitable, competent and possesses the skills required according to the needs of the organization.
Chapter 2
Role of HRM in financial
institutions
Learning Outcome By the end of this chapter you should be able to:
■ Explain how the role of HRM in a financial institution differs from its
role in other organizations
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Introduction As Human Resources represent the wealth of a country, they are the most
important natural resource for the economy and play a vital role in the
banking system. For a bank to be successful, efficient Human Resource
Management is essential. Human Resource Management is the employment
of human resources with proper strategic selection, training and
development.
Due to the major overall transformations in the world economy and in the
financial structure of economies, since rgyos, a large change has been seen in
the w'avs banks contend, shape their corporations and administer their
human resources. Banks, based on the new situation now' are revising its role.
The financial sector in various countries is now analyzing with deregulation
and liberalization, a collection of external and internal forces causing the
competition of the sector to build up, thus causing rivalry in the sector.
The essential reformation in the division of labor and the latest stress on the
decentralization of functions and administrative responsibilities are some of
the demands created by the pressures of external forces of change and the
means with which financial functions are presented to customers. Therefore,
it is generally observed that banks all around the world invest more in HRM
problems and school the employees to commence a wide range of errands,
especially the employees more inclined towards service delivery aiming to
provide their clients a high quality service to satisfy their needs.
Due to the increasing new entries of private sector banks in the financial
market and the emerging global developments, the banking pattern has gone
through various qualitative changes thus making it prudent for banks to
recruit, train and organize people at all the stages of an organization for a
V .J/Q more effective performance and success. This function is what HRD is all
about and is derived from HRM.
rr Recently, the political scenario and situation has drastically changed, causing
the banking industry to anticipate heavy changes in the near future. After all
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the mergers and amalgamations, only a few banks will be left behind in the
banking sector. This change will not only be seen in the Pakistani market but
also in the world market having a global affect.
For banks. Human Resource Management has become a crucial need due to
the emergence of new private banks, disintermediation, competition and self-
direction in supervision of banking.
The following processes are followed by the HRM in banks for further
development:
Practice Chief Guest address at the National Conference on Human Resources held at
Karachi on October iS, 2003
‘Without being self serving, I would like to share the lessons we have learnt
during the last four years in bringing about changes in the HR policies and
practices at the State Bank of Pakistan (SBP). I hope that these will provide
food for thought for all of you.
First, Human Resource Management should be derived from the vision, mission
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statement and Strategy andflowfrom the business plan of the organization. In
absence of such integration and flow there is bound to be a tension between the
achievement of business objectives and optimal utilization of human resources.
In the SBP, the vision. mission statement, values and business plan were
formulated collectively through a bottom-up approach. This has led to
f/ie assumption of the ownership of the change program by the rank and file,
thus improving the chances of successful implementation of the new Human
Resource policies and programs.
Third, the attraction, retention and motivation of high caliber persons are key to
,vJ Li L success. SBP recruits 50 young men and women from all over Pakistan out of
11,0 applicants through a highly competitive process. Middle
V.
level managers and professionals such as Chartered Accountants have also been
inducted in the organization. New skills for which there is emerging demand are
C-A appointed on fixed-term contracts and external advisers and consultants are hired for
short durations to set up systems and train the staff. The retention and motivation of
the staff is a difficult challenge as the market offers higher remuneration to those who
have acquired experience at the SBP.
Fourth, a process of continuous trainine and skill up-eradation has been put in place whereby all
yr officers receive post-induction, foundation, intermediate, advanced training in
central banking, management and soft skills. About 300 officers out of 800 have
'.W so far been sent abroad for overseas training, attachment, study tours,
seminars, etc. On their return, each participant is expected to share and disseminate his learning
with the larger group to which he/she belongs. Liberal policies for study leave, deputation, advanced
degree courses encourage the staff to acquire knowledge and keep themselves abreast of
developments in their professional fields.
Fifth, the Performance Management System (PMS) has been completely revamped incorporating a
competencies based model in which achievements, behavior, professional growth and assessment of
.A potential are the essential ingredients for measuring uejformance and career progression
path. The \p appraisal is carried out by two supervisors on the basis of an objective scoring
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^ model and the findings aredfsafssed with the staff member. The PMS is utilized
5
^ for the individual’s development plan in which the training needs are identified
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and planned.
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Sixth, the compensation policies have been revised to reflect the comparator norms and
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align closely with the market practices. Although as a public sector
organization, we cannot pay as much as the private sector does, the relative security and prestige
of thinking at the Central Bank do, to some extent, make up the shortfall. A reward and recognition
system has also been put in place which ranges from a simple thank you note to a monetary reward
for innovative ideas, product development and process re-engineering.
Seventh, a pro-active succession-planning program has been introduced under which managerial
jobs are internally posted and applicants are screened, interviewed and short-listed. Those who
make the final list are sent for on-the- job training, rotational assignment and managerial training.
The successful candidates from this process are then given management positions. This plan is
essential for preparing the managers of the future.
Eighth, the SBP has a severance package for early retirement that allows the individuals to exit the
organization with full monetary benefits. This package enables us to recharge the organization
with new skills that are needed and to let go those whose skills are no longer in demand. This
continuous rebalancing of skills will keep the organization in good shape in responding to new
challenges.
Ninth, an HR audit was carried out by an externaljconsulting firm under which job descriptions
were prepared for each job describing the content and competencies required. This was followed by
the preparation of an inventory of skills present in the SBP. Jobs and skills were matched and
mismatches identified. .4 rotation policy has attempted to reduce these mismatches but a more
aggressive policy can result in disruption of the Bank’s business and operational activities.
Tenth, each organization has to develop and practice its own value system. The SBP staff has
adopted integrity, trust, teamwork, openness, courage, commitment to excellence and problem
solving approach as its rallies and each staff member is committed to practice these values in every
day work. But for these values to sink in, the top leadership has to demonstrate the role model
behavior which can than be followed down the line. If there is a disconnect between the values and
behavior of the Head of the organization. the results are an abandonment of the value system by
the staff and reversal of the change process.
Eleventh, it is incumbent upon the head of the organization to keep in touch with the staff on the
shop floor and communicate with them at regular intervals. I meet with the staff of every
department each quarter, listen to their problems, issues, grievances, suggestions and respond to
their questions, concerns and reservations. I try to explain to them the rationale and logic behind
the decisions taken or policies adopted. At the same time, any staff member can send me an email
or come and see me. The easy accessibility of the top leader to the ordinary staff member, even if it
is not used, reinforces confidence and trust in the organization. Internal stakeholder surveys are
conducted every year to ascertain the views of the staff members in a more systematic manner.
Twelfth, we have delegated powers to various tiers of the organization and institutionalized
decision-making process. A Corporate Management Team (CMT), with the Governor as its
Chairman, meets every Monday morning, considers and makes decisions on policy matters and the
minutes of the Meeting are posted on the internal electronic notice board for the information of all
staff. Similarly, Group Management Teams and Departmental Management Teams act as the
collective decision making vehicles at the lower tiers. Individual discretion has, therefore, been
curtailed and consensus building given more scope.
Thirteenth, regular monitoring of policy implementation, business plans and other decisions taken
by the organization does provide a strong feedback to the managers and enables them to take
corrective actions. The CMT meets at six-monthly intervals to monitor the progress in the
implementation of business plans while the CMT and Heads of Departments meet once a month. A
Change Management Conference is held every year at which the managers take stock of the
progress and set the goals for the next year.
Fourteenth, the use of information technology across the spectrum has improved the efficiency of
our operations. There was no PC with any of our staff members in /999- Today, we have at least
Soo workstations with desktops. E-mailing and access to internet, use of website and electronic
data have become the ordinary tools of business. When data warehousing is completed, the banks
will no longer have to send thousands of pages of reports and returns to the SBP. Data acquisition
will be done electronically and the required variables will be downgradedf rom the data marts to
generate the reports. The real time on-line surveillance of banks will improve the enforcement
capability of SBP and detect weaknesses and variances promptly.
Finally, we had to remodel our offices to upgrade the physical environment in which the staff
spends most of their day. Almost all the floors of the SBP will be remodeled by end of December this
year. The staff who has occupied the new floors report that their morale has gone up and they
eagerly look forward to coming to work.
The above cataloging of changes that have been introduced in the last few years, by no means,
suggests that we have reached the state of perfection. We have a long way to go in changing the
organizational culture that is strongly entrenched in history and traditions but the human beings
are quite rational in thinking and approach. /15 long as they are convinced that the change is in
their larger interest the resistance breaks down and a slow and gradual movement begins. This
Case Study of SBP shows that, contrary to the popular belief that
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the public sector organizations are hard to turn around, it is possible to bring about transformation
- structural and behavioral - provided there is a broad- ftased ownership.
We would like the human resource practitioners to look at the SBP and make suggestions as to how
we can do a better job.'
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Global view of HRM
All over the world, organizations arc going through immense operational
changes. The most common changes experienced are deregulation,
internationalization and the prevailing use of information technology.
-
Business conformation and other aspects ranging from the production of
services to customer support, sales and product development experience
sweeping implications of the changes mentioned above. Such functions stress
on the continuous restructuring in the division of labor together with the
focus on decentralization of functions and decision making power. However,
the capability of a corporation's human resources in dealing with and
promoting internal change is the key to a firm’s capacity in effecting changes
and striving in such a wavering environment.
What is The Due fo increasing multinational and transnational corporations, new Global
7
The employees thus need to be trained by HR to face the various perils of the
global village. Primarily, the language barrier should be removed by providing
language training to the employees, making them learn the language of the
place they will work in. There have been many problems faced due to
language differences, major one being misinterpretation of message thus
creating embarrassing situations and loss of important business deals.
19
prudent that the message is understood completely thus ensuing the necessity
of learning the required languages. When employing a person apt in communication, it must be made
sure that he\she can speak and understand the required foreign languages for effective „ N global
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communication. Moreover, if a foreigner possessing the required •yf \^V skills for a job is
employed, HR must make sure that they are assisted
in learning the local language. For more effective communication, ^ messages
sent to employees must be in more than one language and in
the languages spoken and understood by the employees ensuring the 5
message seeps through.
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Every country has a different culture, values, laws, customs and moral
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standards. For employees of a company going overseas, it is crucial that
^ 'V' they understand and know the culture of the host-country. This is highly
/ X* essential as the employees would need to be aware of their cultural
/ issues,
?> ^. 1 taboos, their rules, regulations and how their society functions in order
y \» to comfortably work in that environment. This training would help
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NJ y increase the adaptability of employees. It is also prudent that human
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V. i
. r\ n/.- resource managers must understand how the host country would react to
these mobile emplovees.
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v'- . .\P Therefore, successful global businesses are highly dependent on cultural
[f considerations. However, we do not expect to provide the complete range
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\j of cultural issues addressed enabling an employee to go to any country,
^ but we do admit that there are certain likenesses. Through research,
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^ 'A \ we were able to make sets of countries according to the variables like
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. h The final point related to globalization stems from the following idea.
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JL As already mentioned, the key to an organization's operational success
.. ."o' is the understanding of cultural environments. However, to achieve the
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desired results, training employees in understanding these environments
Forty years back, human resource management was a simple task considering
the available homogenous workforce available at that time. Human resource
management was then a simple task of getting the employees in the door,
signing them up, informing them about the uniform benefit program and
workforce
organizing the corporation’s annual function. At the time of
Diversity
retirement, HRM was responsible to present the retiring
plications Due to an increase in the organization’s female workforce, and them for HRM becoming
the dominant part of the workforce, HRM had to change its practices and struggle
harder to maintain and appeal a diversified workforce. This can be achieved
through the corporation’s benefit bundle that incorporates the HRM offerings of a
family-friendly organization. This is a type of an organization that provides
flexible working conditions and other employee benefits to workforce like
childcare. For these groups to be productive and remain committed to an
organization, family-friendly benefits are necessary, even in organizations that
use part time workers.
Age differences in the workforce apart from nationality and gender also donate
diversity and ought to be recognized by HRM. Our workforce can be divided
into four groups:
1. Mature workers: They are committed to work ethics and are security-
oriented. They are conventionally considered the basis of the workforce.
However, young generation considers them to be inflexible and have
obsolete expertise.
2. Baby Boomers: This is the largest group of the workforce. The organizational
growth during the commencing years of baby boomers’ employment was
unparalleled reflecting the rapid advancement in their careers, thus making
them career-climbers. Despite this, they are considered workhorses and are
said to have naive views.
3. Generation X: This generation came into being after the Western post
Second World War baby boom ended. With them came some new
perceptions into the workforce. They were less committed, less rule-bound,
more into self fulfillment and personal gratification and prejudiced towards
baby boomers and their attitudes.
4. Generation Y: This is the current generation. They arc said to be the children
of baby boomers. The individualities ofthis generation differ according to the
region, liable to the social and economic conditions. On the other hand they
are more accustomed to communications, media and digital technologies.
Additionally, the increase in a neoliberal methodology towards economics
and politics has largely affected the upbringing of this generation.
On the other hand, when in such situations work attitude conflict occurs, due to
the diverse views, participative approach to FIRM is the most effective as it helps
keep the problem to the minimum.
Changing Skills
Every discussion of the changing world of work focuses on the problems
Requirements
related to the skill requirements. In the early stage of this world, our ancestors
worked hard on the lands growing food for themselves and
of the workforce are computer illiterate. Visualize a future aerospace ^ engineer who
is unable to decipher a blue print and elucidate how the wind icing affect lifts an
airplane. This could have severe consequences and connotations for many of the
industries and public services future operational safety and efficiency.
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positions were produced. The cost of these measures was transferred to the consumers in the
form of hidden cost additions who took them for granted. However, the changed corporate
industry milieu can now be seen due to wavering world economies, increasing inflation at
home and reducing profit levels. This compelled the organizations like NAFA, PTCL and
Indus Motors to reduce the number of jobs and reassign 'employees for efficient functioning
of their firm.
Span of control is the amount of employees a manager can efficiently handle. A simple related
assumption could be that an efficient manager is apt at handling a greater number of
employees. Figures 3-1 and 3-2 highlight two types of span of control-prior economization and
post downsizing. Figure 3-1 shows a span of control of four employees showing that four
employees come under each manager’s control, thus making it six layers of management,
total 1,365 managers and 4096 employces-people producing goods and services. However, this
indicates an inefficient span of control as can be seen through the managers to employees’
ratio, thus signifying the company’s decision to double the span to eight.
4096 Employees
Although downsizing helps the organization in cost saving, it brings out certain issues with it
as well. Downsizing has caused the job of the managers to double as now the managers who
prior th is change handled four employees now have eight employees under their
responsibility. Moreover, downsizing does not only affect the managers but also influence the
employees. Consequently, it is plausible that majority employees nowadays are expected to
generate an output equal to the output produced by three employees in the past. So,
restructuring of the organization (downsizing) without proper revamping of jobs and training
of employees is more of an expense increaser than a cost saver, resulting in failure to achieve
the goal of cost saving. Moreover, this change is implemented by Lhe companies without
considering the interests of the people working.
What about the people who had been let go? How have they been compensated for being let
go? Were they already informed about this decision or were they grouped into a place,
informed and ushered out of the organization there and then? Was the organization prepared
to handle the reaction of the remaining employees over their dismissed friends? Did the
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employees fear their own expulsion from the organization? W ould the remaining employees
undergo high levels of stress from the extra work now imposed on them? These are the
common issues that the human resource management goes through while the restructuring of
the organization.
So how can The HRM Human Resource Management make downsizing
successful? Human Implications resources should provide their input into the downsizing
process if they are related to the organization's premeditated direction.
Appropriate communications should be ensured during this period. They should ensure the
minimization of negative effects caused by rumors and the availability of all the related factual
information to the people. Moreover, HRM must also handle the actual layoffs and should
conduct and commence programs for helping the employees been laid off. For instance, when
employees are delivered the news of their lay off, they usually face the aroma of uncertainty
and are struck with the concern of coping with this change. In such a situation, anticipating
the answers of the following questions might help the organization in achieving and
implementing such assisting programs successfully:
In short, neither can an organization ignore human resource management when conducting
the downsizing discussion nor can it abandon its obligation towards employees. However,
when human resource managers are themselves influenced by the cutback, this becomes
difficult to happen. Despite being susceptible to this action, HR managers should remain
poised during the whole process.
Although downsizing has been quite rampant in the past years, it is still anticipated that
significant reduction in this cutback policy will be seen in the future. In fact, certain
organizations, after the current progress in economic conditions, have hired some employees
back due to the profound implementations by the corporations of this cutback. Although not
across the board, the new positions arise in the service sector organizations and contain
professional-level skilled jobs. In such a situation, employing full-time staff for accomplishing
the organization’s goals and employing without any deleterious effects on the company’s
productivity becomes crucial. This can then ensure the re-hiring of the lost jobs on the
condition that these positions are efficient enough to achieve the company’s goals. To
conclude, the executive body of the organization must ensure to entice and retain highly
capable and dedicated employees.
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Learning Outcome By the end of this chapter you should be able to:
Selection and The HR department is responsible for enticing the qualified candidates for a job
Placement
with the required skills through job postings and different types of advertising as
well as screening the resumes of those candidates and short listing the candidates most suitably
qualified for the interview. l ine managers usually take the final employment decision of the
candidates. Planning of the new and changing positions and evaluating the current job analysis
and job description to make sure that they precisely reflect the current position are some other
continuing recruitment responsibilities.
For staff selection process, job specifications and job descriptions are the most
useful tools. The need to employ a new worker is identified by someone (like
the department manager) or by some event (like resignation of an employee)
within an organization. Large corporations carry out this process by
submitting an employee requisition to the HR department mentioning the job
title, the department and the date the employee is required. This requisition
can then be helpful in creating the job description which can be referred for
the specific job-related qualifications for advertising the details of the position
both internally and externally.
Performance Another role of HRM after the employment ofthe suitable candidates is to create a
Appraisals
motivating and acknowledging environment, where employees’ exemplary
performance is rewarded. The employee performance is
2. Above average, average and below average performance assessed using rating
scales
4. MBO-Managing By Objectives
Compensation (hourly wage and annual salary payment) and benefits •eaefits
insurance, pensions, vacation, modified workweek, sick leaves, stock options, etc.)
can have a major influence on a personnel’s performance. When an employee is
satisfied with his/her pay scale, believes that he/ she gets enough benefits and are
to some extent intrinsically satisfied good work environment, interesting work,
etc.), it is considered an ideal situation. Compensation must be authorized and
ethical, passable, encouraging, just and impartial, cost-effective, and able to offer
employment security.
The difference between training and development can be explained in the following way: major
focus of training is learning the skills, knowledge and attitudes needed for the initial
performance of a job or improving one’s performance in the current position. On the other
hand, development focuses on broadening the employees’ horizons and is not job related.
Training and development also includes education acquired to learn new skills, knowledge and
attitudes to be used in future works.
As current jobs are the major highlight here, we will discuss only training and development.
Training can be utilized in the following
ways:
The learning material, the time period learners have and the financial resources available reflect
the type of training employees will go through. Training concentrates on the current job while
development’s main focus is on providing the employees with activities that help them enhance
their current knowledge and facilitate growth. Some of the
30
types of development opportunities are mentoring, career counseling, management and
ious supervisory development, and job training.
for
ams
heir Workers within an organization may create groups called union.' v
Employee and -
ts of communicate and resolve employee related problems in the same way as
abor Relations
in of HR developers ensure proper employee training. People join unions for
two reasons; to increase salaries and/or to exterminate unjust working conditions. Improved
medical plans, augmented wages and extended vacation time are a few ending products of
lined
union involvement. HR managers handle the contracts, collective bargaining issues, along
skills,
with the responsibility to deal with the unions. This contract covers aspects like compensation
a job
and benefits, working conditions, job securit;.. disciplinary procedures, individuals’ rights,
other
management’s rights, and contract length. Collective bargaining is a peaceful resolution of
is
employee related issues before the employees retaliate or besiege and or the management
and
administer a shut out.
catio
n sed
in
s
only
lowin
g
Effects of smoking, alcohol and drug/ substance abuse, AIDS, stress. and
burnout are some of the problems experienced at the workplace. .According
to employee assistance programs (EAPs), emotionally distressed employees
_
r ;.rr? are given as much attention as physically disabled employees.
done for '
updated
•esource Organizations not only identify workplace perils but also track health- Isscarch
accidents
related and security problems and report the findings to the suitable sources.
[property,
Every single detail stemming from evaluating the company'; high turnover
i quantity i
and identifying the present number of workers in the corporation and
pruden:
leading to making the statistics of the percental of women, minorities and
Managen
other demographic characteristics in th organization is with the human
Is training
resource department of the firn thus rightfully calling HRD the warehouse of
a company’s histon The research data can be collected from various sources
e financial like survey questionnaires, observations, interviews and case studies. The
will go
elopment's
help then:
>me of the
researc thus assists an organization to anticipate the recurring trends o:
future as well as make educated and pertinent decisions when r. 'in
candidates.
Part 3
The HRM Strategy
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In This Part
Chapter 1: Planning and Budgeting
Resource Plans
Introduction
Outcome
By the end of this chapter you should be able to:
Resource
Human resource planning (HRP) involves the methodical anticipation of the
Planning
organization’s definite future demand and supply of employees. The HR
department’s plans of recruitment, selection, training, career planning, and
other activities are highly dependent on the estimation of the number and type
of employees required by the organization. The human resource planning
permits the organization to employ the most appropriate people required at the
right time. An efficient HRP system not only helps the organization to achieve
their affirmative targets but also assists the HR department’s capability to
proactively respond to the various challenges it faces.
However, the organization’s plans may turn out to be a failure if the people
hired are not the right type and in the right number. Some other foundation
plans for an organization's appropriate strategy planning are the production,
marketing and financial plans. Thus, majority of the managers agree that well-
envisaged HRPs are the foundation stone as competent people can make the
accomplishment of any area's goals easier with efficient plans. For instance,
high technology firms like IBM and Motorola when decide to develop a new
product or enter a new market highly consider the availability of qualified
technical and support people. The prospective markets can be lost to
organizations with more competitive and appropriate workforce if ample
engineering talent is not available.
In Karachi, one of the fast food chains recruits 20 workers and is expanding at a
rate of 10 percent annually, meaning the addition of two new employees every
year. On the other hand, the contending franchise employs around 8000
employees and is growing at a rate of 5 percent, meaning 400 new employees in
addition to the surrogates of leaving workers. Considering that hiring one usual
employee costs around 5000 rupees, the local restaurant for hiring 2 new
employees will spend
10,0 rupees. So for just adding new employees, the franchise will
spend around 2,000,000 rupees. Therefore, detailed planning efforts for 2.500
rupees cannot he rationalized by the local food chain manager if the
employment planning saves 25 percent. On the other hand, the organization
can still afford an expert for 500,000 rupees and after removing the planning
expenses can still save a large amount of money.
/
Yet for HR specialists, human resource planning is still crucial in both the small
and large organizations. HRP shows small employers the importance of human
resource consideration in case they expand rapidly. For large organizations,
HRP is beneficial as it helps organizations like IBM, which struggles to avoid
layoffs, to identify the different ways of making personnel function more
efficient. This chapter focuses on two aspects of human resource planning;
starting from the ways organizations find and identify future job opportunities
and concluding with the way FIR experts recognize the prospective sources of
employees to match with the vacancies available.
Causes of demand
The crucial challenges affecting the human resource demand include the
changing environment, organization and workforce. These factors not only
affect the short-range plans but also influence long-range plans of employment.
Moreover the organization is able 10 manage some of these factors while is
unable to handle the others.
External challenges
The anticipation by HR specialists of an organization’s environmental
developments is hard in the short run while sometimes immensely impossible
in the long run. On the other hand, the estimation of other economic
developments is difficult yet has obvious affects. Examples of such
developments are inflation, unemployment and interest rates that restrain
construction and the relative need of construction workers.
In contrast, social, political and legal challenges have rarely clear connotations
while are easily predictable. For better understanding and elucidation of these
challenges, majority organizations have affirmative action plans and
compliance departments.
Technological changes are hard to anticipate and assess. For example, people
believed the technology to be replacing people. However, now
I
ive can see that information technolog)’ is the fastest growing industry and
employs a huge number of employees both directly and indirectly.
Technology makes human resource planning intricate as it tends to reduce
employment in one department (like bookkeeping) while i ncrcase
employment in another department (1 ike computer operations).
One other external challenge that influences the organization’s demand for
human resources is competitors. Foreign competition is partially responsible
for hardly any growth in employment in the automobile and steel industries.
However, electronic industries experience lower prices, larger markets and
increasing employment due to competition.
Organizational decisions
The demand for human resources is largely affected by major organizational
decisions. The corporation’s strategic plan is the most prominent in this area
as it helps the organization achieve its long-range objectives like growth rates
and new products, markets or services. The type and number of employees
required in the future are anticipated using these objectives. In order to
achieve the long-term objectives, HR experts need to develop long-range
human resource plans in order to accommodate and match the strategic plan.
Planners have discovered that strategic plans operate in the form of budgets
in short run. The
W* Vwi W&an Te'sovvcce requirements are
budget increases and cuts
Sales and production forecasts help identify the short-run changes faster
despite the fact that they are not as accurate as budgets.
Changing human resource demands stem from a new venture. The planners
might produce a short-run and long-run employment plan in the lead time at
the very beginning of the project. However new ventures formed by mergers
and acquisitions may instantly modify human resource demands and may
lead to a new corporation and job design. After the merger or acquisition,
restructuring the organization will bring a drastic change in human resource
needs. In the same way, the revamping of jobs would alter the required
expertise for future employees. During the continuous change in the
organization’s structure, caused by obtaining, merging, and spinning off
divisions, entering new businesses, and leaving old ones, the administration
must
keep the foundation of its strategic decisions on the HR considerations which
Workforce factors
Employee actions like retirement, resignation, termination, death, and annual
leave causes the human resource demand to change. Past experience is a very
powerful tool that can be used as a trainer when an organization has a huge
workforce. Although, this means that HR officials using this tool might be
susceptible to changes that caused disruption in the past.
f*r?cisting The organization’s efforts of anticipating the future demand of "♦S-TT- cues
employees is called human resource forecasts. As shown in Figure 3-1, the
forecasting techniques range from informal to sophisticated and proper
techniques. However, the sophisticated needs are not always precise and are
thus considered estimations. Majority of the firms carry out estimations in an
informal way. The organizations may possibly use more sophisticated
techniques (if they can use specialized staff) using their experience of
forecasting human resource needs. The forecasting methods mentioned in
Figure 3-r are explained below.
• Delphi technique
Expert forecasts
People who are erudite in identifying the future human resource
requirements pass judgments based on which expert forecasts are carried out.
Human resource planners must identify the employment needs of the line
managers as they pass the final employment decisions. The operations
directors or the personnel managers are fully equipped with this information
in small organizations. While in large organizations, 'urveys are conducted as
these managers arc the most knowledgeable about their department’s future
employment needs.
As:
A survey can be in various forms; it can be an informed poll, a written questionnaire or a
nominal group technique (NGT) being used for a focused discussion. NGT is a technique that
presents a group of managers with a problem statement, for instance “What will result in a
change in our future staffing needs?” After this all the members write down the answers to this
question that he/she can think of. Following this, these ideas are presented in front of everyone
in a round-robin manner until the written ideas and the newly discovered ideas are recorded.
These ideas are further discussed and categorized by getting the five most important ideas
voted by the members in the meeting.
In case the nominal group technique turns out to be a failure, the organization could add more
classiness to the survey by using the Delphi technique. This technique implores estimation
from a group of professionals, typically managers. After this the H R department planners act as
intermediaries, abridge the numerous responses and report the discoveries back to
connoisseurs. The experts are surveyed again even after the receiving feedback from employees.
These summaries and surveys are continuously conducted until the experts consent with the
idea of future development (mostly four or five surveys) for instance, HR might continuously
survey production supervisors and administrators until they sign an agreement on the number
of substitutes required in the coming year.
Extrapolation is the expansion of the past gradient into the future. For instance, an
organization usually hiring 20 workers into the organization when extrapolate this rate into the
future would append approximately 240 new employees in the coming year.
Indexation, on the other hand, involves approximating the future employment needs by
bringing employment growth in line with some type of index. The usually example of this
matching is the ratio of employees to sales. For instance, planners may identify the production
department’s need of ten new assemblers on every million dollars increase in sales.
These two methods are just basic estimations in the short run on the assumption that the
causes of demand, like external, organizational and workforce factors, remain unchanged,
which happens rarely. However, these methods are not suitable for long-ranged human
resource projections. More sophisticated statistical analysis creates a situation for changing
basic and core foundations of demand.
Planners use the new-venture analysis technique in the situations where employment planning
is made complex by new ventures. New-venture analysis allows an organization to estimate its
future human resource demand by comparing the organization with other firms carrying out
'imilar operations. For instance, a petroleum company opening up a coal mine can estimate its
employment needs by looking at other coal mining firms.
Computers make the forecasting techniques more sophisticated and intricate. This is because
computer models contains a string of formulae that can be used for estimating the future
employment needs and attempt to do this by concurrently using extrapolation, indexation,
survey results, and estimates of workforce changes. The real changes in human resource
demands are update the computer formulae as time passes by.
Human resource forecasting involves four levels of intricacies summarized in Figure 3-2. These
stem from informal discussions and eadingto the use of largely complex computerized
forecasting systems. Large organizations with a huge human resource planning experience the
most sophisticated and intricate techniques. While small firms or firms just beginning to
estimate human resource requirements mostly begin with stage 1 and then progress to further
stages as planners attempt to achieve precision.
HH STAGE« m
Managers discuss goals, Annual planning and
HHHHI
Using computer-
stage tv m
Online modeling and
plans, and the type and budgeting include generated analyses, computer simulation
number of people needed human resource needs examine causes of of talent needs, flows
in short term
problems and future trends and costs to aid in a continuing
program plans
Highly informal and Specify quantity and Use computer to relieve Provide best possible
vacancies or turnover)
Identify problems Exchange data with
individual or general
government (such as
social data)
Human Resource
Requirements
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111
Ofgnni;3lionai Trend Demand For
Expert
Cteman'd - Human
Resources
Other
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sMNi
Considering the accuracy of the fundamental forecast, the recording of the human resource
needs may be in a form of a specific number .T a particular range. Staffing tables are not
considered completely accurate and reliable, they are simple estimations. However these help
~ matching the short-range supply and demand of employment, assist me operating
departments to carry out its functions efficiently and help -'.prove HR department’s image.HR
officials will be more positive and rganized if then approximations of human resource needs
are explicit.
Human Resource Human resource aud its and replacement charts are some other i mportant Audits
information sources that have been added for HR department’s assistance. HR
department can plan out activities like recruiting, training, and career
Figure 9 -4: Factors that determine the future supply of Human Resources
planning more effectively with greater knowledge of the employees. By finding
internal applicants for the job vacancies, this knowledge can help employees
achieve and implement their affirmative action plans. Audits and replacement
charts are crucially essential for the proactive personnel work and thus are
expla ined below. Human resource audit is responsible for summarizing every
employee’s skills and capabilities. Skills inventories are the audit of non-
managers while management inventories are the audit of managers. Ibis
signifies that the inventory catalogues the skills and capabilities of employees.
The summary helps the planners comprehend the potential of an
organization's workforce.
Replacement charts is a visual illustration of who will replace whom when certain job openings arise.
Human resource audit provide the information needed to construct the charts. An ordinary
replacement chart might demonstrate only certain jobs’ status in administration. Usually these charts
include minimum information despite the fact that different firms might summarize different
information in their replacement charts. Just like an organizational chart, this chart represents various
jobs and shows the status of probable employees.
Two variables are highlighted in replacement; present performance and promotion. Supervisory
evaluations are the major component in determining present performance. Views of other managers,
peers and 'ubordinates also donate to the evaluation of present performance. Present performance
and the approximations by a superior of the future success in a new job are the key pillars of future
promotions. Psychological tests, interviews, and other methods of assessment may be used by the HR
department to contribute to these estimates.
A claim of age discrimination can be made if the replacement charts nclude the ages of the
candidates. This has caused the omission of this ietail from the charts. For HR and management
decision makers, these charts supply a quick reference. Due to its limitation of containing imited
information, HR experts have developed replacement -cmmaries as supplements to replacement
charts. These supplements provide a list of probable replacements for each job and specify their -
:rengths and weaknesses. These help the decision makers to make more
• rowledgeable decisions as they provide a considerably greater amount of information than the
replacement charts.
Yost sophisticated companies that use detailed human resource planning usually computerize their
personnel records, including reman resource inventories. This helps planners update and assemble
replacement summaries when required. They also help the companies 'ce uhat positions lack human
resource backups.
For instance, a convenience store chain-one of-thuse'"that made exceptionally quick career progress -
computerized its search for fast trackers. The managers of the store semi-annually file the names of
the employees most worthy of promotion. By consolidating the reports on a computer, “we find out
whether there will be a deficit of people coming up through the ranks,” says the manager of HR
research. A separate development program assists in producing career development plans,
pinpointing weaknesses and suggesting solutions (for instance university courses, in-house training, a
different job, or a special assignment).
With the help ofth is, in long run, HR department motivates its employees to enhance their abilities
and be prepared for future vacancies. In short- run, in case a suitable job replacement is not available
for the vacancy that has arisen, people belonging to the external labor market arc hired. The
information of whether replacement charts and summaries are used while hiring from an external
source is confidential. This confidentiality helps safeguard the privacy of employees as well as avoid
disappointment for people not immediately promotable.
External needs
The requirement of the external supply of human resources is mainly determined by the employer
growth and efficiency of HR department. Growth mainly determines the number of entry-level job
vacancies, particularly in case the company promotes the job vacancies to be filled from within the
organization. The ability of the HR department to help the employees enhance their skills and
capabilities is one factor affecting the number of non-entry-level jobs available. If the organization
does not encourage its employees to enhance their abilities, lesser amount of replacements will be
available for future jobs, thus creating a necessity to fill these jobs externally.
Demographics
These trends are long-term development trends that influence the availability
of external supply of employees. Luckily, the planners are aware of these
trends way before they actually strike.
1 :r America and Europe, the “baby boonr’ during the late 1940s and 1950s r-
rought with it huge increases in population after the low birth rates e
rerienced in 1930s and early 1940s. The 1930s low birth rates created a
'Irortage of college professors when the Post World War II babies began :heir
college in 1960s. These demographic trends were already in motion r;. 1950.
The demographic development sensitive long-range human resource
planning could have predicted soon enough this shortage for r " ■'active
colleges to take remedial measures.
r:£iire 3-5 represents a summary of the main conccpts of this chapter. At the left side,
the figure highlights the external, organizational, "ass : id workforce factors, which are
the major causes of human resource uemand. Experts, trend data, and other methods
anticipate these
causes of demand to define the long-range and short-range demand for human
resources. This demand is fulfilled either internally with existing employees or
externally with new comers. Replacement charts, based on the audits of the
organization’s human resources, show the internal supply. While the analysis of the
relevant labor market shows the externa! supply. Results present the short and long-
range HR plans fulfilled by internal and external employment procedures.
After the estimation of the employee supply and demand, there might be a need for
adjustment. In case the internal supply of workers exceeds the demand of employees in
a firm, it is said to have human resource su rplus. This causes the employers to adopt
the h i ring freeze which helps them fill in the vacancies with existing employees by
reassigning their jobs and avoid external supplies. Voluntary departures, called
attrition, slowly reduce the surplus. The continuation of this trend'encou ragesthe leave
of absence. For instance, after a summer holiday season, airlines provide their
employees leaves of absence on their request. This practice helps to reduce the
workforce during winter season and slack fall.
On the contrary, when the internal supply is unable to fulfill the organization's .needs,
a human resource shortage is crcated. in short run. planners are uliable to operate
flexibly and thus require conducting external staffing process for finding new
employees. The responses of nianners can be more flexible in the long run. In this case,
planners redouble the existing workers’ responsibilities in order to sharpen and
enhance necessary knowledge, skills and attitude for filling these vacancies.
It is prudent for planners to consider their affirmative action plans regardless of the
fact that staffing needs were met externally or internally. This plan mainly ensures that
past discrimination is stopped and future discrimination is avoided through a strategy.
The decisions
- hiring internal and external candidates for filling in job openings rrust be in line
with the goals and timetables in the affirmative action r an. The HR plan also signifies
whether the firm’s affirmative action roals are met. For instance, even unpretentious
goals like increasing the minority representation in the company cannot be achieved if
■ re company’s human resource plan shows that the company will be ■■-ducing
its number of employees through attrition instead of hiring new employees.
Tnere is more to the human resource plan than only the anticipation of :he probable
success of the affirmative action plan. HRP is an integral rart of the organization’s
human resource information system. The ~formation in the human resource plan
assists and directs recruiters, :ra ners, career planners, information system and other
human resource specialists. Personnel specialists, operating managers, and .-.dividual
employees, using the organization’s knowledge of internal and external employment
requirements, can put in more efforts and :hem to the achievement of the firm’s future
employment needs. ~ order to prepare their employees for future openings, managers
:_r _room their employees through training and development efforts, idual employees
can groom themselves for future job openings as
- :hrough education and other self-help efforts. However, according
■ :re HR department, the human resource plan is only a single part
47
mem-
of the human resource information system. One other crucial part of this system is
the details about the specific jobs in the organization. The way in which HR officials
learn the content of their jobs is covered later. The HR professionals, after being
equipped with the knowledge of job vacancies (through human resource planning)
and the content of the job (through job analysis) can begin the employment process
in a proficient, effective and proactive manner.
Significant time, staff, and financial resources are required for human resource
planning. Large organizations use human resource planning very frequently.
However, the return on investment of this planning for small firms is not sufficient
enough to cover the expenditures.
The HR budget is the operational budget within the Human Resources department.
Adequate investment in human resources of a company’s ncome is absolutely
necessary when compiling the budget. All the rferent components of labor costs
have to be taken into consideration: -aiaries, social security fees, fringe benefits and
reimbursement of . oenses, allowances for travel and transfers, training,
kindergartens for children of employees, cafeterias, etc.
. Overhead Costs
j
* Salaries Overtime
■ Allowances
■ Bonuses
Selection Costs
Welfare Costs
1
* Transportation Accom modation
■ Uniforms
■ Medical facilities
:
* Group insurance Allowances -
■ Sports Club
The budget will be based on the overall objectives and business targets of the
organization for the coming year. If there are no such specific objectives or targets,
next year’s budget can be based on the current year’s budget, with 20-30% increase.
How HR Programs
HR programs enable companies to avoid potentially devastating costs Some of the
Save Money
costs HR activities save companies are direct costs — :cc example the cost of hiring
outside consultants to perform HR tasks surras recruiting, at possibly a higher rate and
r
without inside knowledge : the company’s workforce.
But direct costs are just the tip of the iceberg. Most of the savings H» generates result
from enabling companies to avoid indirect costs contingent liabilities. For example,
every rupee spent on HR sala~ enables a company to avoid having to spend money in
litigation ce and wrongful dismissal liabilities in the months or even years a Similarly,
money spent on programs to retain and educate staff is investment that yields major
dividends later by enabling the comr' to retain key talent and avoid the considerable
costs of recruiting - retraining new staff.
The HR budgeting process becomes critical to ensure that the right : mount of
investment is made in the right areas for the long-term vision : the company.
Part 4
The HRM Process
In This Fart
Chapter 1: Preparation and Selection
Channels of Recruitment
Career Planning
Career Education Career
Counseling Career
Development
Protection
Pricing Jobs
Approaches
' ~:roduction
Twining
1
The Approach to Learning and Learning Styles Training
Learning Outcome By the end of this chapter you should be able to:
* List and describe the inputs and challenges of the selection process
■ Recall the best practice in each of the steps involved in the selection
process
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Introduction to
Before an HR department was created, line managers handled all HR
Collection of Job
matters. Since line managers are familiar with the job, they genera!;;, do not
Analysis
require job information. They can identify the characteristics- standards, and
Information
human abilities required to do a job. With the growth in the scope and
complexity of HR activities, many of these duties, such as recruiting and compensating, are delegated to
the Human Resourc; Department. However, HR employees do not usually have sufficien: detailed
knowledge of the jobs in the other departments. Therefore the;, need to conduct job analysis in order to
collect the relevant information
3. Discover job elements that help or hinder the quality of work life
4. Plan for future human resource requirements v Match job applicants and job
openings
6. Determine training needs for new and experienced employees Create plans
order to understand the nature of the job, the analysts first study :he
organization - its purpose, design, structure, inputs (workforce, ~iterials and
procedures) and outputs (products or services). They also re\ ew the company,
industry and government reports related to the job has to be analyzed. On the
basis of the general understanding of the r^nization and its functions, the
analysts:
I .estionnaire Development
rier to study jobs, analysts generally develop checklists or . r . n a i r e s
that arc sometimes referred to as “job analysis K*-ei_.es~. These forms seek to
collect job information uniformly. The .— - -n a ires disclose the duties,
responsibilities, human abilities, and performance standards of the jobs
investigated. It is important to use the same questionnaire for similar jobs. The
4. Performance standards
The job analysis questionnaire also seeks information about :-r standards
that are used to evaluate performance. This information 5 collected on jobs
with obvious objective standards of performance. Where such standards are
not immediately apparent, job anal;.-ni may ask supervisors or industrial
engineers to develop reasonre standards of performance.
Data Collection
There is no one way to collect information found on the job analysis
questionnaire. Therefore, analysts must evaluate trade-offs between : me. cost
and accuracy associated with the various methods explained 7:’ow that are used
to collect data. Analysts can also use more than one :e;hnique for data collection,
if required.
Interviews
Face-to-face interviews are an effective way to collect job information. The
analysts have a job checklist guide but more questions can be added.
Although conducting interviews is expensive and time consuming, the
interviewer can ask for explanation or clarification if required. The analyst
often talks with a limited number of workers first and then verifies the
answers with the supervisor. This technique usually produces accurate
results.
2. Jury of experts
A jury of experts consists of senior job incumbents and immediate
supervisors. This group represents considerable knowledge and experience
of the job. The analyst conducts interviews with this croup and obtains
answers to the questions that he/she may not .zet from interviewing an
individual. This technique, again, is time consuming and expensive but it
helps the analyst to clarify what is expected in the duties of the job among
the workers and supervisors . . ho are on the jury.
— Employee log
^-ether approach is to use an employee log. Workers periodically :_~Tiarize
their tasks and activities in the log. If entries are made er ;he entire job cycle,
the diary can prove to be quite accurate. It even be the only feasible way to
collect job information, when :.~er techniques fail to capture the information
about a complex ioh.
Application of The information collected by analyzing the job can be used to formulate job
Job Analysis descriptions and job specifications and in setting job standards. The
Information usefulness of these applications is explained below.
job Descriptions
This is an outline, in general terms, of the activities, tasks are responsibilities
involved in a job. It is a written statement of job con ter: The job specification
normally adds to this information on the methoof of performing the job and
the skills and knowledge required. It ai>: specifies the purpose of the job, its
nature and responsibilities, where the position is located and to whom the
individual is responsible.
Job Specifications
The difference between a job description and a job specification is ore
perspective. A job description defines what the job is about, therefore r can
be said to be a profile of the job, whereas a job specification describe^ what
the job demands of employees who do it and the human required to perform
the job.
The second function is that standards are criteria against which success is
measured. These standards are indispensible to HR mans who attempt to
control work performance. Without standards, performance may not be
evaluated.
5. Observation
Observation is the most time consuming, costly and less accura:; method to
collect job information, although it is the most preferred method in certain
situations. Observation can be used to confirm or remove any doubt after
collecting data using any other technique.
Application of The information collected by analyzing the job can be used to formulate job
Job Analysis descriptions and job specifications and in setting job standards. The usefulness of
Information these applications is explained below.
Job Descriptions
This is an outline, in general terms, of the activities, tasks ar: responsibilities
involved in a job. It is a written statement of job contem. The job specification
normally adds to this information on the methc-a- of performing the job and the
skills and knowledge required. It al>c specifies the purpose of the job, its nature
and responsibilities, where the position is located and to whom the individual is
responsible.
Job Specifications
The difference between a job description and a job specification is one
perspective. A job description defines what the job is about, therefore can be
said to be a profile of the job, whereas a job specification descr:, what the job
demands of employees who do it and the human s' required to perform the
job.
;
Job specification requires experience, training, education, and phy and
mental capabilities. Since the job description and the job specific;, both have
the same focus, i.e. job requirements, they are often comb into one document
under the heading of Job Description. The d used to compile specifications
also come from job analysis informa collected using a questionnaire or a
checklist.
The second function is that standards are criteria against whicr success is
measured. These standards are indispensible to HR ma who attempt to
control work performance. Without standards, performance may not be
evaluated.
Organizational Elements
The organizational elements of job designed are linked with efficiency.
’ ose jobs that are designed to increase efficiency for highly motivated capable
employees generally result in output maximization. This > achieved when
employees are made to do repetitive tasks. Hence oecialization” is a key element
in the design of such jobs.
Environmental Elements
E-.-.ironmental elements are also very essential in job design. The
environmental externalities cannot be overlooked as HR specialists and ~laagers
need to consider the ability and availability of prospective c~rioyees.
Considerations about efficiency must be balanced against :be abilities and the
availability of the workers. If an employee is not iSc to do an assigned task, the
task will definitely not be completed .ciently.
Behavioral Elements
r designers heavily rely on behavioral research to provide the working r~
ronment that can help individuals in fulfilling their needs. Higher- : ■ r needs
are of utmost importance to every employee. Research --’-csts that people with
strong desire to satisfy high-order needs rm their best when placed on jobs that
were high on certain : — ensions such as
* Skill Variety
• s the degree to which a job requires a variety of different activities
> :he workers can use a number of different skills and talent.
» Task identity
h s the degree to which a job requires completion of a whole and :. mifiable
piece of work.
■ Task significance
- :~e degree to which a job has a substantial impact on the lives or ■** :rk
of other people.
• Vjtonomv
■ Feedback
It is the degree to which carrying out the work activities required r a job
results in the individual obtaining direct and clear informat cc about the
effectiveness of his or her performance.
Techniques of job Jobs are often redesigned to decrease boredom that may arise due t; repetitive
Redesign _
tasks or to make the job more challenging, stimulating a c interesting, jobs are
often redesigned to assess whether a particular ;cos should have higher or lesser
specialization. Job redesigning technic-r- give more autonomy to the employee
and help in increasing employee* motivation and productivity. Some of the ways
to implement or redesigning techniques are:
Job Rotation
If employees suffer from an overly routine type of work, one altemat e is to use
job rotation (or what many now call cross-training). Job rota: :r is the periodic
shifting of the employee from one task to anotre: When an activity is no longer
challenging, the employee is rotate: to another job, usually at the same level. The
organization beneoes because workers become more competent by learning and
perform various tasks. Knowing a variety of jobs helps the employee’s self intiTz.
provides personal growth, and makes an employee more valuable to tbe
organization.
Job Enlargement
Job enlargement, also known as horizontal loading, increases : number and
variety of tasks that an individual performs, resulting jobs with more diversity.
Instead of only sorting the incoming rr by department, for instance, a mail
sorter’s job could be enlarge: include physically delivering the mail to the
various departments running outgoing letters through the postage meter. The
differ between job rotation and job enlargement may seem subtle. Hov._ in
job rotation, jobs are not redesigned. Employees are simply from one job to
another, but the nature of the work remains the SJ Job enlargement, however,
involves actually changing the job.
Job Enrichment
Job enrichment refers to the vertical expansions of jobs. It incr the degree to
which the employee controls the planning, exer_~ and evaluation of the work.
1
An enriched job involves the orgar of tasks so as to allow the employee to do
a complete activity, inc
■“e employee’s freedom and independence, increases responsibility, and
provides feedback so that individuals will be able to asses and correct their own
performance.
The phrase “recruitment and selection” is often used with the inference :~.at
both of these words mean the same. However, there is some i -Terence in
meaning between the terms “recruitment” and “selection”:
• Recruitment refers to the analysis of a job and the features the organization
will look for in a potential employee, attracting candidates - which could be
internal, external, or a combination of "oth - to apply, and the offering of
various terms and conditions of employment to a chosen potential
employee.
■ ecru it men t is therefore the process of finding and attracting potential -- iates
for employment and selection is the step ahead of recruitment
-ere an employer chooses from the list of recruits the “best fit” for ■-
organization. Hence the recruitment and selection process are "reconnected. If
the company fails to recruit the right people for the
■ r : will result in selection of the wrong person.
__
e rrocess of recruitment and selection begins with human resource
• .--ms which concentrates on those aspects of corporate strategy . -cerned with
manpower. The human resource plan indicates areas
e organization where there are likely to be shortages of people and ■- ; - -
mber of people to be recruited to meet anticipated employment teis. This can be
due to planned corporate change, redeployment, -=■ -.~ent. career progression,
management development or people i:- the organization for alternative
employment. The human ■- _rce plan will also consider external factors such as
population technological advances, projected governmental policies and
variations.
:
- crge organizations recruit almost continuously, their Human - - _rce
departments use specialists in the recruiting process called .. ■ - :~:ent
managers, who work to find and attract capable applicants.
the job opening is identified, the recruitment manager then T . — • . rat each job
requires by reviewing the job analysis information,
- .. arly the job descriptions and job specifications. The job
analysis information helps the recruitment manager to understand the
characteristics of the job and the person who will be sought to fill the position. If
the information is not sufficient, the recruiter can learn more about the job’s
requirements from the relevant manager. The flow of the recruitment process is
illustrated below:
Channels of potential candidates for the job. In reviewing the most common Recruitment
channels, recruitment managers must be aware of the constraints in each approach, and the
need for creativity if the recruiting effort is to be effective and efficient. The most widely used
channels by applicants anc recruitment managers are discussed below:
Employee Referrals
Employee referral is one of the most effective channels of recruitment in
which an employee may refer or endorse an applicant to the HR department.
The biggest advantage of employee referrals is th=t employees acquiring
specialized skills would know the people in :he same field.
Advertising
Advertising is another effective method of screening recra 3. Advertisements
can help in reaching a w'ider audience than employes referrals or unsolicited
walk-ins, therefore many recruitment mana;.~ use this channel as a key part
of their efforts.
Educational Institutions
_:ational institutions are suitable if the employer is targeting to ~zzrj.it fresh graduates. Several
_
universities, colleges, and vocational >: .ools offer placement assistance to their current students
-
and . ni. Distributive education programs, counselors and vocational . _. er> may also provide
recruitment managers with leads to desirable .-■e dates in local educational institutions.
Professional Associations
• regional associations can also be a source of job seekers. Several . 7:10ns conduct placement
activities to help new and experienced 7- e^ionals to get jobs, especially at job fairs during meetings
and . ~ .-'tions. Professionals belonging to appropriate associations are deredmore likely to remain
informed about the latest developments
■ . - respective fields; therefore, this channel of recruitment may lead *-7 * gher quality
applicants.
.a--or Organizations
;
Tment managers in the organizations seeking candidates with i~-7: :11s can contact the local
labor unions or labor organizations. ~organizations maintain rosters of members who are looking
for -~ 7 -nent. The local union of plumbers, for example, keeps a list ar - - —?ers who are seeking
jobs. In the construction industry, many . " -77075 get skilled labor from the local labor
organization. Since c r_-i7tors hire on a project basis, a union hiring hall is a convenient for
attracting large number of potential recruits for new
International Recruiting
Recruitment in foreign countries presents recruitment managers with special
Open House
A relatively unusual technique of recruiting involves holding an open house.
People in the adjacent community are invited to see the company facilities,
have refreshments, and perhaps view a film about the company. This method
has proved to be successful in recruiting clerical workers when people with
office skills are in short supply.
- iV-
Huma
n
Resour
ce
Affirmativ
e
Action
Plans
Specific
Requests
Of
Manager
s
M Organizational Policies
** r^anizational policies are incorporated to achieve uniformity, .. nomies, public
relations benefits, or other objectives that might not
- - related to recruiting. However, certain policies can be a potent source
constraint. Some of those policies that may hinder recruitment rrocess are:
-romote-from-within policies
v
Tr.rse policies aim at filling any job opening in an organization by - j-:ng
it first to the current employees. Such policies ensure employees term
growth within an organization and help in retaining . mpetent
employees.
Irmpensation policies
- _ most common yet the most critical constraint recruitment manager
' the pay policy. The HR department designs the compensation according to the
level of the job. Recruitment managers seldom . the authority to alter the
compensation package, therefore, they 'ucceed in finding a promising
candidate but may fail to recruit
■ m her if the candidate is looking for a higher salary package or
thinks ■' r ray being offered is not at par with the market rate.
Environmental Conditions
Leading economic indicators
The leading economic indicators such as GDP, inflation, unemployment rate,
among others, suggest the future course of the national economy. If these
indices signal a sudden downturn in the economy, recruiting plans may have
to be altered.
Job Requirements
A study by the Committee for Economic Development surveyed 438 large
businesses and 6000 small ones to identify what contributes to job success.
The study found that a stronger academic background is more crucial than
specific vocational skills. In addition, responsible attitudes toward work,
command of English language and the capacity to learr were regarded to be
important.
Cost
There is a cost associated with identifying and attracting recruits.
Recruitment managers are assigned a budget therefore they have to be very
careful when planning. Smart recruitment managers can minimize the
recruiting expense through recruiting for multiple jor openings
simultaneously. However, the best solution to avoiding the cost of recruiting
is by using proactive HR practices to reduce employee turnover. Furthermore,
evaluating the quantity, quality and costs x applicants helps to ensure that
recruiting is efficient and cost-effective
The Selection A series of steps are involved in choosing suitable candidates from i. Process pool
of potential recruits. This involves a series a time consuming steps that lead on to the decision to
hire a particular applicant. This is an
mportant aspect, but its nature is such that can result in frustrating applicants as well as the
Many HR departments combine the recruiting and selection process, renaming it the
“Resourcing”. For large HR departments, this function is :he responsibility of the employment
manager. In smaller departments, HR managers handle the recruiting and selection
responsibilities. Employment is often assumed to be the primary reason for the HR department's
existence.
' — proper selection can cause HR departments to fail at achieving their set targets and can also
negatively affect candidate self-esteem and violate employment laws. Subsequent HR process
can lose their effectiveness :ue to improperly selected workers. Thus, recognizing recruitment as
:e~:ral to the success of a HR department is no exaggeration.
Trends in recent times, make employers fear that they may be held re-ronsible for the unlawful
acts of the employees they hire. This failure ■: recruit the right employees may leave the
_
employer at risk in the ear future. Ensuring the employment process is effective is one of the
— : -t important aspects of a HR department, and it may be one of the
— important decisions made by a line manager. No organization can re—brm better than the
people it employs, and if the recruitment and '■■i ererion process proves ineffective, the
company may be exposed to
-: _re financial and legal damage.
~ puts to Selection
HR uses the selection process to find new workers. As Figure 4-3 ■.__ests. this process relies
on three helpful inputs.
r analysis information provides the description of the jobs, the -.man specifications, and the
performance standards each job
requires.
: Human resource plans tell employment managers the job openings :~a: are likely to occur.
These plans allow selection to proceed in a _ cal and effective manner.
:
e: ru its are necessary so that the HR manager has a group of people
■ choose from.
Figure 4~3-
Figure 4-3: Dependency of HR management
activities on the Selection Process
Inputs
Challenges HR Activities
job analysis
Recruits
Supply Challenges
Despite the nature of some vacancies, it is pivotal that there be a fitting list of
applications for each vacancy. Low-skilled jobs and extremeh specialized roles
are examples of positions with small selection ratios. A selection ratio is the
relationship between the number of applicants hired and the total number of
applicants available. A large selection ratio is 1:25. whereas a small selection
ratio is 1:2. This, a small selection ratio implies there are fewer applicants
from which to select. It may also mean a relatively low quality of recruits.
Ethical Challenges
It must be ensured by the HR that no unethical decisions are taker. Hiring
acquaintances or accepting bribes challenge not only their morals and ethics
but also the recruitment process as a whole.
Credential Distortion
Farhad Khan had been working for a multi national audit firm for almo'*. 3
years. He claimed to have a management degree from I BA - one of the top
business schools in Pakistan. When investigated in further detail. : was
discovered that was all false. The firm had to immediately termini:; Farhad’s
employment with them.
This is a classic example of embarrassment to the HR, due to the lack their
thorough investigation into checking the credentials of all prospeet recru its.
Organizational Challenges
T -. selection process should not be seen as an end in itself it is a process
- which the organization achieves its objectives. However, there are
— e limitations - legal, financial and resource - that organizations
-_'i impose. The recruitment process must be cost effective and the . : ~tion
made must be suitable to return back to the organization by ‘ hard work all
the investment that was made in their recruitment
- - -c''. There are also certain restrictions set by organizational policies
may further hinder the process. All of these prove to add on further
;nges for HR specialists.
: Legal Challenges
.re several other legal obligations that may constrain the
• sent process. For example, a female employee for a local
• • . - -i —utical attempted to sue the employers for not taking any SLZ:< -
_::cr she was raped by a fellow employee. Although eventually I": : "r^ny did
not incur any financial loss, this incident did lead to r-..£.: e';. affecting their
repute. Had they psychologically screened tre r re at the time of recruitment,
the situation could have been
avoided altogether. If not careful, legal challenges may also arise when a HR
department tries to thoroughly scrutinize current employees or potential
candidates.
The selection process comprises several steps through which all candidates are taken through. These
Steps in The steps help determine the most suitable applicant for the position, by
Selection Process eliminating out the rest. When used to fill openings internally, the process
becomes a lot simpler and more affective.
Employment tests
E~ plovment aptitude test helps to assess the suitability of all applicants " the
ongoing recruitment. Based on the vacancy’s requirements, tests are derived
to check the applicant’s knowledge and grasp of v ~at they would generally be
encountering in the position. Tests are
- used more frequently when recruiting for hourly paid jobs than
permanent openings, because hourly jobs usually have a limited
~-Tiber of skills or activities that may be easily examined.
*V -en aptitude tests are conducted for management position, they tend : re
complex and more situation-based. This helps understands that ■' ~ —is and
processing abilities of all candidates. Research shows that -7 :: 40% of hiring
and promotion decisions are made based on the -1'-' of these tests. Also,
when testing foreign nationals or international -■? ;ants, it must be ensured
that no local slang is used that makes the . ■ 7 :ncult for them to
comprehend. It must also be checked whether . • their home country allows
such testing methods to be used.
~Z5~. Validation
- 77 gained momentum during the times of the World War 1 when
• ■e gence tests were given to army recruits. Since then, tests have been . . _
extensively for employment purposes, but many of these tests were . - ried to
be valid without sufficient proof. For results to be relied on,
- : ■ ■ -.ould be declared as valid. Validity means that the context of the
■- ' 7, a:es to key elements of the job it is conducted for. The stronger t ■ -
relationship is, the more effective the test is as a selection tool.
■ Content validity is when the applicant on the skills that are needed to
successfully perform the job. For example, a speed typing test for an
applicant to a typist position validates content.
Psychological Tests
Involving measuring personality tend to be the least effective :n churning out
reliable results. This is because there tends to be a ve~ vague and fuzzy link
between personality and performance.
Knowledge Test
These tests are more dependable because they determine the levels ct one’s
level of knowledge. This is helpful as it adds on to their ab:.;t-r to being ability
to perform well in their tasks. However, it should rc ensured that only the
ability and awareness needed for the job are testri.
Performance Tests
Measures the aptitude ofapplicants to perform some important elemerri of
their work. It is declared valid when the test includes a represents: ; sample of
the work the applicant is to do upon being hired.
-::itude Tests
L>ed to learn about people’s attitudes with regards to work related ~_::ers. They test their
values, moral characteristics and what they are
• - to contribute into the work environment.
v edical Tests
~'t>es are recently gaining popularity. Through medical checks and c screening, the presence
of drugs and other substances can be Testing for genetic defects or predispositions has
become
- - — .callv and financially feasible. This may also alert employers —--ding candidates who
may have higher chances of developing
•7r::nc diseases. Careful monitoring also helps keep them informed . - the health and safety
shortcomings in work environment.
- >: such extensive testing is not always feasible. Some positions may
even justify the amount of money involved in carrying out such : 'r-.iive testing. Even
when being used, there needs to be flexibility; i" fj should only be implemented if and when
deemed appropriate.
"Many HR managers in other industries use testing only after other steps
in the selection process. In the grocery business you must test first. Why
waste time interviewing a grocery clerk who doesn’t know that three for
90 rupees is 30 rupees a piece? Besides, when we take applications on
Tuesdays, we may have 300 f them. Interviews would take 75 hours a
week, and my staff consists of a clerk and myself. But through resting, we
can test the entire group in an hour. Then we interview only those who
score well."
See:* :n Interview
■; employment testing is only one of the several steps involved ■: *--'_;:ment process, and
possesses limitations as it cannot always
m
taken into consideration all personal factors that can be brought into a position by each
candidate.
The selection interview is a formal, in-depth meeting that helps employers to evaluate the
applicants’ ability and knowledge; keeping in mind the requirements of the vacancy. The
interviewer looks for answers to three broad questions: Can the applicant do the job? Will the
applicant do the job? How does the applicant compare with others who are being considered
for the job?
This method is one that is most commonly used in recruitment. It is a very flexible method and
can be adapted to suit each position that is being recruited for. It also allows for a two-way
interaction, where both the employer and candidate can gain further information. Its
limitations raises questions on reliability and validity. Reliability means that results of this
process should not vary from interviewer to interviewer, but different interviewers are likely to
form different opinions about eacr potential candidate. This can be improved when the exact
questions are and interviewers are trained to record all responses.
Further validation of interviews is needed because they may relate more to personal features of
candidates than to the candidates’ potentt.il performance. For example, one study reported
that two of the mcsc important variables that influence an interview are fluency of spees and
composure. Based on this, interview results are based more c-tt personal impressionable
factors and not potential performance.
Types of Interviews
_
Interviews are commonly conducted as a one-on-one between : - interviewer and the
applicants. Group interviews are sometimes £>: made use of.
One mode of group interviews is having each applicant meet a p of interviewers. This allows
all of them to simultaneously evaluate - candidate on the same questions, eliminating its
initial limitation, interview can also comprise having two or more applicant in toget More
like a group discussion, this not only saves time, but also jail: for immediate comparison.
In any adopted format, there are still different ways of conductir: interview. Questions can
be structured, unstructured, mixed, pro: solving, or stress-producing. The mixed format is
most comme* practice, although each of the others has an appropriate role to pi:
Unstructured Interviews
The unstructured interview allows interviewers to ask question' is interview proceeds. The
interviewer goes into more detail on tot
;:'jctured Interviews
'•.r-_;tured interviews are based on a set of predetermined questions,
-. eloped to suit the relevance of the vacancy. They are developed '■e: re the interviews
commence to be asked to each applicant, .---cssing all they key areas that are necessary to be
addressed. This .rrroach improves the reliability of the process, but does not allow the
■■.r'viewer to follow up on unusual responses. In conclusion, this is . ■ J and mechanized
procedure that may not bring out the best of rrronses from the applicants.
v ted Interviews
T- - s the method that is most commonly used, whereby interviewers . ■; :■ blend of
structured and unstructured questions. The structured --:~.ions provide a general base that
allows comparisons between . - ■; gates, while the unstructured questions make the interview
more
> and spontaneous. This allows interviewers to understand a zta\ more about
the candidates, and makes comparison a lot more ~-.e~.ient.
r
: em-solving Interviews ■ : -"-solving interviews focus on situations or problems for which
. _ giies are expected to give solutions to. This is an approach that
- :he applicant to be evaluated on a set of relevant skills that may •-i -rj-ired
within the context of the vacancy’s job description. The are evaluated based on the
background and approach used by ;-g:Jate in reaching to the conclusion. This technique has a
very scope. and is only suitable to a limited list of positions.
' . : ' ' more likely if the hypothetical situations are similar to those in. . the job. The actual
interview might consist of various questions SET ei^iupJe:
r received and the answer given is made noted by the r- -n evaluate the
;
applicant. Such interviews also produce help understanding
how the applicant would perform
Stress interviews- In jobs that involve being in stressful situations, such interviews help
determine how the applicant copes under pressure. This concept was originally developed
during the times of World War. to see how recruits would react to stress when faced by the
enemy. For example, applicants for police work are sometimes put through a stres? interview
to see how they might react to problems they encounter in the streets.
The process is in itself intense and distant, with the candidate bein£ faced with a constant
string of questions. This format should however be used alongside other formats, to avoid
negative reactions from the respondents. Reliability and validity are hard to demonstrate since
tre stress on the job may differ from the stress posed in the interview.
Beyond the different types of interviews, the interview process h:- sequential steps that should
be followed.
Interviewer preparation
Interviewer Preparation Before any interview process is initiated, the interviewer mu-:
a specific list of questions. These must address all key -^T-e. need to be evaluated
about the individual, and it is the refr these questions that will decide whether or not
the applies be taken any further. Since they use the interview to per-
The questions are intended to achieve responses that allow an u-.ierstanding of the
applicant’s interests, attitudes, and background. -'Trdfic questions are added on to
determine their suitability with ~:cards to the vacancy. Reviewing the job description will
help the ~:er\ iewer prepare these particular questions.
How do you spend your spare time? What are your hobbies?
Describe your ideal job. In what type of work are you interested?
K * ' obs have you had that you liked the most? Least?
ssany ~ours do you think you will have to work at your job?
is ravorite sport?
B
When preparing, the interviewer must be careful not to ask air discriminatory questions.
Questions asked from a protected gro_T but not from members of the majority are usually the
ones thit cause violations. Similarly, questions about gender, age, nationl origin, handicaps,
religion, race, or color are likely to be consider: discriminatory.
The interviewer should also review a blank application form, for a further understanding of
what exactly they are looking for. Research shows thz. the quality of the interviewer’s decision
is significantly better when application blank is present. Regardless, interviewers take between
to to ten minutes to reach a conclusion. The longer the interview lasts ini the more potential in
the candidate, the longer it takes the interviews to reach a decision.
The average cost of hiring new employees is estimated to Fee PKR 40,000/-, and more for
highly skilled positions, the interview* should aim to make the interview process efficient and
constructive.
—
The interviewer is likely to be the first person the applicant faces :':: the organization, and
that is where the impression of the company v.-M also be formed.
Creation of Rapport
This is also a task for the interviewer, as they must initiate conversation and establish a
comfort level. This can be done by init:; the interview with friendly questions like, “Did you
have any pari problems?” Simultaneously, non-verbal communication can also made use
oftoxonnect with the applicant.
Information Exchange
The whole interview process is basically an exchange of informa To help establish an initial
-
rapport while learning about the canc: some interviewers begin by asking the interviewee if he
or she ■* any questions. This establishes an interactive ambience and allows ~ interviewer to
start his evaluation of the candidate.
Interviewers aim to ask question that will allow them to learn as as possible about the
candidate. Questions that begin with ‘how'. w- 'why’, ‘describe’ or ‘could you tell me more
about’ are more likely an open and detailed response.
Interviewers tend to terminate the session by inviting any questions conclusion. They will also
inform the applicant of the next stage oc process, and when should they expect to be informed.
There shoe e indication of how the interviewer found the candidate to be. as *
may still be more candidates to interview and the opinion might change it the time of the final
selection.
E. aluation
As soon as the interview is concluded, the interviewer should record their general opinion
about the candidate. Using a checklist is an effective i> of recording where exactly the
particular interviewee stands in the ■•-.ole process.
nterviewer Errors
7.tere are still some limitations of the whole process, primarily due to human error. These add
onto lowering the effectiveness of the whole
- • ;ess. If an applicant is judged according to the halo effect or personal : ises. the results of the
interview are misinterpreted. Applicants can be ;::epted or rejected for irrelevant reasons that
will in no way have any it ition to their actual performance in the job.
ng questions and an indication of answers will also now allow the -terviewer to learn anything
new about the applicant. This will also the reliability of the whole process. Regardless of what
the errors ft. it brings down the validity of the whole process and results in time
- - : resources being wasted.
Wr;- such cultural and behavioral differences affect the interviewers .: :n. a potentially capable
candidate might be lost out on for no
ii_ t ?f their own.
Examples:
■ An applicant who has a pleasant smile and firm handshake bl considered a
leading candidate before the interview begins.
Leading Questions
Interviewers who indicate the desired response lose out on further insight
into the applicants mind.
Examples:
■ Do you think you’ll like this work?
Personal Biases
Interviewers who harbor prejudice against specific groups are exhib a
personal bias.
Examples:
* Some jobs are for men and others for women Interviewer Domination
Interviewers may dominate the conversation, by bragging about *
successes, or carry on a social conversation instead of an interview guilty
of interviewer domination.
Examples:
■ Spending the entire interview telling the applicant about com plans or
benefits
* Using the interview to tell the applicant how important interviewer’s job is
Many people remain uncertain of the use of these checks and their credibility.
Personal references attesting the applicant’s character are often provided by
friends or family, in which case their reliability remains questionable.
This uncertainty has caused most process to remove this step almost entirely
from the selection process. It has also been substituted at times with telephone
referencing, which is faster and more cost-effective. It is also more likely to
indicate how certain the referee is about their answers with regards to the
applicant.
it compan)
A study reveals that 48 percent of reference checks are used to verify application
information and 30 percent are used to gather additional data.
Medical Evaluation
The process may also include a medical examination of the applicant before the
hiring decision is made. Normally, this is done making use of a health checklist
that gathers health and accident information. This questionnaire may be
complimented with a physical examination by a company doctor.
The medical evaluation may:
* Be useful to evaluate whether the applicant can handle the ph>' or mental
stress of a job
Supervisory interview
The line manager is ultimately responsible for newly hired won therefore
they are allowed to have a final say in the selection pr They are
considered to be the best judge of the capabilities of respondent, and can
also best address any concerns that the cand may raise.
Also, when the supervisor makes the decision upon an indiv becomes a moral
obligation on their part to ensure they fit mar: into the organization.
Realistic job Reviews
-
“c-P: the supervisory interview also comprises a realistic job preview. I 5 ;> to
allow the candidate to understand the job and the environment t • ruld be
based in, to see how well they manage to fit in.
7 ■ ' > done to help prevent job dissatisfaction and de-motivation once
■ 'c employee has been taken onboard. It works towards addressing
concerns that either the line manager or the applicant may have.
:
_.."t y hired employees who have had a realistic job preview are less •; > to be
shocked by the job and are more likely to easily settle in as 'tart working.
Research has shown that employee turnover tends
■ re higher if realistic job previews are not used. As two researchers ;:rr; _ded:
- - -,g Decision
■--- the final decision is made, assuming the job offer is accepted,
i the selection process. To prevent any negative reactions, all . ■ -
ite—ful applicants should be notified and encouraged to apply for
f. _ nancies. Unsuccessful applications, that may be suitable for any
—
- ■. positions are generally kept on record.
T': _rr .ration form begins the employee’s personnel file and contains
ii str.: r personal and confidential information.
Part 4
Development and Evaluation
Chapter 2
Learning Outcome
By the end of this chapter you should be able to:
Introduction to
Since the investment has already been made by the organize is now
expected off the employee. But first, the newcomer assisted into
overcoming the hesitancies and anxieties of being one. Initial jitters,
although natural, C3n hinder their abi:::;- and adapt and will thus affect
their initial satisfaction level?. T*
Obstacles to productivity
- major barrier to achieve this is that employees are more likely
■ quit during their first few months than at any other time in their
rloyment. This is not an uncommon phenomenon, and might even
;“efit the organization is there really was no fit between it and the . —rioyee.
Realistic job previews work as a means of reducing such
■ virilities, by allowing potential candidates to preview what their
- •. ill be all about. Then, on their first few days at work, there is not
— _;r. of a difference between what they expected and what it really is. ~~ -
difference between what one expects and what one finds is called . - - :ive
dissonance. If this dissonance is too high, people take adverse .- - In this
situation, it could also be translated as a resignation.
" * tre can also be other causes of dissonance other than the job itself.
~r reople might not like the policies and work environment, some ~ _ not get
along well with the rest of the department, so might not _ able to fit in due
to cultural differences. All of these are concerns r:: ::nnot be addressed until
the employee actually starts work. And : • 5 •.-.here the HR must be proactive
and prepared to help resolve all
- nitial concerns.
N - -Employee Turnover
:~ r HR helps employees meet their personal objectives, their SB acrion levels
tend to improve, which may benefit the organization
- wavs — lower turnover costs, as well as a productive recruit rrr*
Turnover is extremely expensive, because of all the costs
. -'ti •. ith it. These go beyond the recruiting and selection expenses,
- is ~:ludes the cost involved in creation of new employee records,
stration, training that was provided and any equipment that
- - have been given to them.
- are not recorded as turnover expenses, but are part of the : for
the various departments they may be affected. It is r . - ; determine
the exact cost per employee, but it can vary based on the job role as
well as how soon after joining did
At a local electronic appliances company, the orientation program that was
implemented comprised all new employees gathering into a lar_'; room where
they arc quickly told about the company and its frir.^r benefits. They filled
out relevant forms, and were then dispatched to their supervisors to start
working. Barely was any time ever dedicates t.» introduce the new employee
to the rest of the team. The supervisor the" delegated them to a work station
with nearby workers helping him e_t in case of any problems.
-
did nothing but add on to the already anxious newcomer, resulti^ them not
-
even wanting to fit in and probably making the decisio quit soon after.
The new employees were informed of how likely they were to successful at
their jobs, and were then taken into a secluded a:t. the cafeteria to have lunch
with their future supervisors. Towards end of the day, their supervisors would
take them to their r departments and introduce them to the rest of the team.
Even t the other employees tried to pull them down, their initial ex with the
organization was so positive that it made settling in a lot
Socialization Process
For a successful orientation process, the employees must get to
quickly. This is important because it helps understand the
. 2-1 depicts the socialization process as the meeting of the ration's culture
and the individual’s personality.
r
v j- : The Socialization Process
Process
_
atsn =nc .? Individual's ’
l=s personality
f- . on programs are a very effective socialization tool that can . -sh rr used for
new employees. As in most cases, newcomers tend to tjtt ;'-.e desire to be
accepted, this process can ensure they actually learn
- - rrvrm the desired behavior. During this process, the person gets
elements of the organizations values, beliefs, and traditions. •V . - _-.dergoing
such a process, acceptable levels of satisfaction, Jr r_a: t\. and stability of
employment become highly likely.
Figure 2-3 shows the common topics in an orientation program. Thc'_ labcled
“organizational issues” and “employee benefits” are genera concerns to
practically every new employee, and are so explained ?y representatives from
the HR department. Sophisticated oriental:, - programs may include films or
video-tapes about the company’s hist. —r as well as videotaped greetings
from key executives. However, the bu % of the information comes from the
HR department representative.
_m supervisors believe they follow up with the new employee quite —muently, but this interaction
is often not perceived as a follow- -r It could be due to the supervisor’s body language, for example.
A .rervisor may ask, “Is everything OK? Let me know if you have any memions.” But if this is stated
as the supervisor continues to walk past '. employee, the body language received by the employee is,
-
“My s-r-emisor really doesn’t want to stop and talk.’ So instead of actually
- -g up concerns or questions, the employee is more likely to ■t-mond with a quick “Ok”.
1' >: me situations, the supervisor may not be able to come up with an . ■ • e~ to the employee’s
question and must refer them on to someone : : A :hough, this may be done with good intentions,
for the employee . - d translate into the supervisor not really caring about the problem.
- :m be made even worse when the supervisor says “I’ll find out” ire ~ever gets back to the
employee - That is indifference.
fi' : ional orientation should especially include an additional degree •’ /.-up. Once in a foreign
country, further assistance may be :h local customs, housing, shopping, and/or schooling.
Sac : .ee Placement
r is me assignment or reassignment of an employee to a new or
_
- - on. It comprises initial assignment for new employees and fee : :r.ion/transfer of present
employees. Regardless of their status
■me organization, all employees must be recruitcd, selected and m before they can be placed
in different positions. However, me activities are not as elaborate, when recruiting internally,
reemse the HR department already has employee records with
- mi application, references, and work history. This makes -IT:-: of internal candidates is
easier, particularly if employee nave been recorded and computerized. Time and effort is . ..
~en in orienting internal recruits, as they do not really need
- m m me basic values and beliefs of the organization.
r
’ m-. decisions are made by immediate supervisors, along with ? _m* - magement. The role
of the HR is to communicate with the r.- - - i formalize the new contract.
The human resource department works to review human resource planning and staffing
decisions, orientation planning, and all placemen: decisions. Mergers and acquisitions require a
-
different set of orientatic and placement activities.
Another important aspcct of placement decisions is the growth dual-career families. With both
the husband and wife pursuing the * careers, a placement decision involving a geographic
-
relocation involves more than just the employee; the spouse is affected too. This prohe can be
tackled by HR. because they tend to be well connected with ~ a local network that gives them
access to other professionals in other companies. A suitable role for the spouse can thus be
_
found, by ui: z these informal channels of communication. In certain cases, the ~e i recruit might
actually be offered a higher salary to compensate for :t loss of income of the spouse.
With these constraints in mind, there are three major classes af placement decisions: promotions,
89
transfers and demotions.
Promotions
A promotion is when an employee js moved from one job to anedao| It is generally, higher in
pay, responsibility, and position. It is ach ; as a result of one’s past performance and future
potential. In : where promotion is mostly a “reward” for past efforts and successes problems
may be encountered. One problem is whether decision rr. - can actually differentiate the
strong performers from the weak coes. is important that the decision reflects on one’s work
performance not on any other biases.
Another issue with merit-based promotions is the “Peter P: ir which states that in a hierarchy
people tend to rise to the:' k incompetence. This principle suggests that good performance in
a is no guarantee of good performance in another. For examrl; if engineers are hired by a
research firm that made major cost-sav: - . changes in a refinery hat would be an example of
superior per* >: However, suppose the engineer were promoted to supervisor. Ibe needed to
be an effective supervisor are very different from these to be a top engineer. As a result of
such a promotion, the comri.- gain an ineffective supervisor and lose a superior engineer.
Seniority-based promotions
m some situations it is senior most employees who get the promotion. The advantage of this
approach is that there can be no bias, as all that : required is to compare the seniority records of the
candidates to -r.crmine who should be promoted. Seniority-based promotions are _' jallv limited to
hourly employees. For example, a promotion from ~--manic second class to mechanic first class
may occur automatically r m-niority whenever an opening for mechanic first class occurs. Labor
rmnizations often seek this type of promotion to prevent employers
■ m discriminating among union members.
?t HR experts are concerned about the competency of those r* moted solely because of seniority,
since not all workers are equally . mmie. Under seniority-based promotions, the best person can
possibly imied the job unless the individual happens to be the most senior
* -<er as well. This approach to promotion causes HR departments to
their efforts on training senior workers to ensure that they are rmmred to handle future
promotions.
■ _ ~ -mrs may even be beneficial to jobholders. The transfer might just ... “to provide a person
with new skills and a different perspective, . ~is-’ed on experience. These may even add on to ones
motivation and
-mm on. especially when a person finds little challenge in the old «:<- 7 m new position, may
offer them new technical and interpersonal . m ermes. These can prove to be a growth opportunity
for the ~imferee.
Dfc- - "ns seldom hold positive outcomes for the individual. Usually m- associated with discipline
—the individual is demoted for
* x-- ? performance or for inappropriate behavior. A problem with
• : m is that the demoted employee may become demotivated or .— - - e towards those
responsible for the demotion decision. Besides m _ negative influence on the morale of others, this
person is B m a poor producer. Sometimes these can be an alternative to h employee who
cannot their present job rather than sever the
— ent relationship; a decision is made to retain the employee but J: - m level of
responsibility.
job Posting Programs
Job posting programs inform employees about unfilled job openings and qualifications. The
announcement of the opening invites qualified employees to apply to notices usually posted on
company bulletin boards or placed in the company newspaper. Then through self-nominations or
the recommendation others, employees who are interested in the posted opening report to the HR
department and apply.
Job posting is most common among lower-level clerical, technical. ar._ supervisory positions. When
lower-level jobs are filled without postir.i them, employees may believe that they should have been
allowed :: apply through the posting program.
Although most job bidders seek promotions, some self-nominations ire likely from those who seek a
transfer. Even self-nominated demotions art possible if the person is frustrated by their present job
or if the pers:' secs the demotion as a means to a job with more favorable promoticc possibilities.
Self-nominations may also be used by management trainees. M- organizations hire recent college
graduates that allow for little than an extended job rotation throughout each of several departme
Separation
A separation is a decision for the individual and the organization to It may be initiated by
disciplinary or personal reasons. Regardless c-r reason, the HR department’s role is to find the
most satisfactory met of conducting the separation. Separations can take several forms ?
attrition, layoffs, and termination.
Attrition
Attrition is the normal separation of people from an organization result of resignation,
retirement, or death. It is initiated by the ■ and not by the company. In most organizations, the
key compor attrition is resignation, and is a voluntary action
Voluntary departures simply create a vacancy that is not filled staffing level declines without
-
anyone being forced out of a job there is sufficient lead time, attrition can reduce or even elim:
projected surplus.
A special form of attrition is early retirement. It is one form of ser • that the HR department can
actively control. It is used to reduce levels and to create internal job openings. Early retiremerx
are designed to encourage long-service workers to retire b traditional retirement age of 60.
If the employer is anxious to reduce the number of senior workers, the early retirement provisions
may be supplemented so that there is no reduction in retirement benefits. The advantage of this
form of separation is that it can start a chain reaction of promotions for several layers of junior
workers. Moreover, senior workers tend to be the highest paid employees; when they resign, the
employer’s labor costs may decline.
Layoffs
Layoffs are the separation of employees from the organization for economic or business reasons.
This separation may last only a few' weeks : its purpose is to adjust inventory levels or to allow the
factory to retool for a new product. When caused by a business cycle, the layoffs may last
- much longer period.
■ ~en the layoffs are expected to be of a short duration, they may not re of the usual pattern of
forcing the most recent ly hired employee to -;;ept unemployment. If the senior worker w'ants to
accept the layoff,
- person collects unemployment money while less senior workers
• ::p their jobs. Senior workers are likely to accept layoffs of short
ration because they receive almost the same take-home pay without working.
'efmination
T—_ 0yees may also be separated by termination of the employment .v.onship. Termination is the
permanent separation of the employee
- — the organization for any reason. Sometimes, however, the employer ~ to separate some
employees for business reasons and has no plans xr- re them. In these cases, the employees may
receive severance pay .'. .replacement assistance.
ement assistance
Miller, Inc., the world’s second largest manufacturer of . -- :ure. developed a novel approach to
r
severance pay, called I t: rarachute.” Unlike the “golden parachutes” offered only to : c: _::ves at
firms likely to be targets of a takeover, the “silver ■fcte-r extend to all 35,000 of the company’s
employees. “The jld be activated in the event of a hostile takeover, and the -_ld be pulled if a
worker’s job were eliminated, salary reduced ~ n d i t i o n s or benefits altered.”
This unusual form of severance pay would be paid in ten days :: terminations occurred. Those
employees with between one and fhe years would receive twice their previous twelve-month
compensation l.onger-service employees would receive 2.5 times their salary for the previous twelve
months. Besides assuring employees of severance p_- should they lose their job in a hostile takeover,
this benefit makes the company a less attractive takeover target.
Outplacement assistance includes efforts made by the employer throu_r a firm to help the recently
separated worker find a job. Althou_~ outplacement is a relatively new benefit, it gained widespread
support in the 1970s and early 1980s and is offered by 73.6 percent of employ according to one study.
Issues in Placement
Two placement decisions that are overriding concerns to a hur~^~ resource department are
effectiveness and prevention of separations
Effectiveness
The effectiveness of a placement decision depends on minimi' disruption to the employee and
the organization. To reduce disrur promotions and transfer decisions should be made in
accordance v. the selection steps. Likewise, all demotions should be well recorder - in
accordance to the rules and procedures.
Prevention of Separations
One of the more creative areas of HR management is the preve of separations. This is when HR
departments can prevent organizations from losing valuable human resources, the invested in
recruitment, selection, orientation, and training is no:
To reduce the loss of valuable human resources, HR department undertake a variety of actions.
Through proactive programs, er; losses through voluntary resignations, death, layoffs, and term: can
be reduced.
Voluntary Resignations
Voluntary resignations are reduced by a satisfying work envirer a challenging job, and
personal opportunities for growth. For e the HR department can play an especially powerful
role as an ad line managers who seek better ways to redesign the jobs they sur Realistic job
previews and orientation programs are two other v>~ department may reduce voluntary
turnover.
Equitable Life Assurance Society’s part-time program for re called “Retiree Talent Bank.”
Salaried employees who ha\e are used to staff temporary openings instead of hiring workers
temporary help providers or consultants.
Layoffs
Layoffs are minimized in some companies by careful human resource planning. By projecting
employment needs several years into the future, employers like IBM and State Farm Insurance
Company have avoided layoffs even during the worst recessions.
*rr:-: .ction to
Performance management is a feature in almost all organizations now, so you will almost certainly
"nance Mani-
have personal experience of this. While your organization will have its own framework, it is likely
gement
that the main components of the framework or system will not be markedly different from that in
other organizations. Also the '‘soft” skills that are necessary to help manage the performance of an
individual employee are the same across all organizations.
An effective performance management system should provide valuable ir'.d relevant information to
both the organization and the individual.
• To reveal the adequacy of other HR procedures, such as selection and training; if there is a poor
match between people selected for a ,'b and the job itself, this will be revealed in the poor
performance :: the employee to indicate improvements in performance due to ning or development
programs
■ : .-“-end appraisals are used by some organizations as the basis for z.-;-mining salary reviews
and performance-related pay/bonuses
* To identify potential and lead to recommendations for the next job and training.
* This feedback should increase the motivation of the individual through a combination of praise
and suggestions for improvements.
Performance Appraisal
Performance appraisal is the process by which organizations evaluate job performance. It benefits
employees, their supervisors, the MR department, and, ultimately, the organization itself.
Employees working for a longer time period with an organization want positive feedback on their
good performance, although they may resent corrective feedback.
Performance Improvement
Performance feedback allows the employee, manager, and HR specialist to intervene appropriate
actions to improve performance
Compensation Adjustments
Performance evaluations help decision makers determine who receives pay raises. Many firms grant
part or all of their pay increases and bonuses based up6n merit, which is determined mostly through
performance appraisals
Placement Decisions
Promotions, transfers and demotions are usually based on past or anticipated performance. Often
promotions are a reward for past performance
Eternal Challenges
Sometimes performance is influenced by factors outside the work environment, such as family,
financial, health, or other personal matters. If uncovered through appraisals, the HR department
may be able to provide assistance.
order to overcome the problems of the old system, a new process -- :-d Performance Feedback and
Development was created by a task :c of senior HR managers and middle-management
representative. 7~,h required employee objectives to be set at the outset of the year and --proved by
a second-level manager.
.\ v 2-2 shows the elements of an acceptable appraisal system. The _:rr.'ach must identify
performance-related standards, measure those .- :tria, and then give feedback to employees and to
the human resource i apartment.
“7feedback
jg Ts? H - s' / v Pei y Employee
s
formar.ee appraisal WmmSMm
1
* Performance
measures
Performance
related
standards
4^ *
The human resource department usually develops performance appraisals for employees in all
departments. This centralization is done to ensure uniformity, and to allow for comparisons
amongst similar groups of employees.
The employee’s immediate supervisor performs the evaluation. Although others may rate
performance, the immediate supervisor is often in the best position to make the appraisal. However,
multiple raters—including peers and even subordinates—offer additional perspectives.
Before specific approaches to performance appraisal can be examined, however, c6mmon elements
of most performance systems should be discussed. These include performance standards,
performance measures and rater biases.
Performance Standards
Performance evaluation requires performance standards. They are the benchmarks against which
performance is measured. To be effective, they should relate to the desired results of each job. They
cannot be set arbitrarily. Knowledge of these standards is collected through job analysis. As
discussed previously, job analysis uncovers specific performance criteria by analyzing the
performance of existing employees.
It is important that management carefully examine the characteristics of effective performance. Job
analysis, coupled with a detailed performance analysis of existing employees, should begin to
identify what characteristics are required by job and which of those are exhibited by “successful’'
employees.
From the duties and standards listed in the job description, the analyst can decide which behaviors
are critical and should be evaluated. V. hen this information is lacking or unclear, standards are
developed from observation of the job or discussions with the immediate supervisor.
Performance Measures
Performance evaluation also requires dependable performance measures. They are the ratings used
to evaluate performance. To be useful, they must be easy to use, be reliable, and report on the
critical behaviors that determine performance. For example, a telephone company supervisor must
observe:
■ Use of company procedures—staying calm, applying tariff rates for phone calls, and following
company rules and regulation
These observations can be made either directly or indirectly. Direct observation occurs when the
rater actually sees the performance. Indirect observation occurs when the rater can evaluate only
substitutes for actual performance. For example, a supervisor’s monitoring of an operator’s calls is
direct observation; a written test on company procedures for handling emergency calls is indirect
observation.
To test how well operators might respond to emergency calls, an independent telephone company
developed a paper and pencil test. The test was intended to determine if each operator knew exactly
how to proceed when emergency calls were received for such requests as police, ambulance, or fire
equipment.
Another dimension of performance measures is whether they are objective or subjective. Objective
performance measures are those indications of job performance that are verifiable by others. For
example, if two supervisors monitor an operator’s calls, they can count :he number of misdialing.
The results are objective and verifiable since ea:h supervisor gets the same call placement accuracy
percentage. . -;:ally. objective measures are quantitative.
V. :r. more than 13 million workers using video-display terminals, new : - of objectively measuring
employee performance are emerging.
- ■ at one-third of these workers are in jobs that can be scrutinized
- - ■ — atically by computer.
--reservation computers, for example, closely measure how long a _a. clerks take to handle
each customer and the amount of time... -1 -r. calls.
99
Figure 2-3 compares the accuracy of objective and subjective measure-. It shows that subjective
measures are low in accuracy. When subjective measures are also indirect, accuracy becomes even
lower. For examp’;, measurement of an operator’s phone manners is done subjective/: supervisors
must use their personal opinions of good or bad manners. Since the evaluation is subjective,
accuracy is usually low even if the supervisor directly observes the operator.
Direct Indirect
Rater Biases
The problem with subjective measures is the opportunity for bias. This is caused by raters who
failed to remain emotionally unattached whi c they evaluate employee performance. The most
common rater biases include the following factors:
-rsonal Prejudice
:
- rr=7 s dislike for a group or class of people may distort the ratings ’' r^ople receive. For example,
some HR departments noticed ~ale supervisors give undeservedly low ratings to women who I* :
'Traditionally male jobs”. Sometimes raters are unaware of their :e. which makes such biases even
more difficult to overcome.
Human Resource Management and Organizational Behavior | Reference Boc* I
V r.eiess, HR specialists should pay close attention to patterns in b:*. ' that suggest prejudice.
Personal Prejudice
A rater’s dislike for a group or class of people may distort the ratings those
people receive. For example, some HR departments noticed that male
supervisors give undeservedly low ratings to women who hold “traditionally
male jobs”. Sometimes raters are unaware of their prejudice, which makes
such biases even more difficult to overcome. Nevertheless, HR specialists
should pay close attention to patterns in appraisals that suggest prejudice.
Once the use of subjective performance measures move out of the classroom
and into practice, raters should get feedback about their previous ratings.
When ratings prove relatively accurate, or inaccurate, feedback helps raters to
adjust their behavior accordingly.
Past-Oriented The importance of performance evaluations has led to the creation Appraisals of
many methods to appraise past performance. Past-oriented approaches have
the advantage of dealing with performance that has already occurred and, to
some degree, can be measured. The obvious disadvantage is that past
performance cannot be changed, but by- evaluating past performance,
employees can get feedback about their efforts.
Disadvantages are numerous. A rater’s biases are likely to be reflected in a subjective instrument
of this type. Specific performance criteria may be omitted to make the form applicable to a
variety of jobs. T~e descriptive evaluations are also subject to individual interpretation 'ftvaWary
w&fhy, anti vvnen specific performance criteria are hard identify, the form may rely on irrelevant
personality variables dilute the meaning of the evaluation. The result is a standardized and
procedure that are not always job-related.
Checklists
The checklist rating method requires the rater to select state- words that describe the
employee’s performance and characte rater is usually the immediate superior. Without
the rater's the HR department may assign weights to different ite~: checklist, according
to each item’s importance. The result is weighted checklist. The weights allow the rating
to be quan total scores can be determined.
The advantages of a checklist are economy, ease of ad. limited training of raters, and
standardization. The disadvar* susceptibility to rater bias (especially the halo effect),
use oc criteria instead of performance criteria, misinterpretation - items, and the use
of improper weights by the HR departr disadvantage of approach is that it does not
allow the relative ratings.
anee appraisal e Sometimes the rater must select the best statement (or even pair of statements) from four
a subjective choices. However the form is constructed, HR specialists usually group the items on the form
■glow to high, into predetermined categories such as learning ability, performance, interpersonal relations, and
r. and in many the like. The effectiveness can be computed for each category by adding up the number of times
nee Although each category is selected by the rater. The results can be reported to show which areas need
npleted by the r further improvement.
response for The forced choice method has the advantages of reducing rater bias, because some employees
must be rated as superior to others. This approach is also very easy to administer and fits a wide
:o be reflected variety of jobs. Although practical and easily standardized, the general statements may not be
na~.;e criteria y specifically job-related. Thus it may limit usefulness in helping employees improve their
The critical incident method is extremely useful for giving employees job-related feedback. It
statements or also reduces the recency bias. Of course, the main drawback is that supervisors often do not
fcnr-istics. The record incidents that occur. Many start out recording incidents faithfully but lose interest, and
rs • nowledge, then just before the evaluation period ends, they add new entries.
terns on the Li::
Behaviorally Anchored Rating Scale
s called a n:
Behaviorally anchored rating scales are a family of evaluation approaches that identify and
r.ed so that
evaluate relevant job-related behaviors. Specific named behaviors are used to give the rater
reference points in making the evaluation. Since job-related behaviors are used, validity is more
“i strati on, likely than with adjectival rating scales or forced choice methods. The most popular approaches
nrafc> include are called behavioral expectation scales and behavioral observation scales.
or personality K
Behavioral expectation scales (BES) use specific named behaviors as benchmarks to help the
:: checklist re-:.
rater. This method attempts to reduce some of the subjectivity and biases found in other
Another rater
approaches to performance measurement.
to give
Behavioral observation scales (BOS) use specific named behaviors as bench-marks and require
the rater to report the frequency of these behaviors. These differences between the behavioral
expectation scales and the behavioral observation scales can best be seen by contrasting Figures
2-4 ami 2-5.
Performance
Good Performance b
You can expect this manager to calm clown arguments before they erupt into rights.
Poor Performance 1
You can expect this manager to check identification of young customers on their first time
in the hotel
I
Extremely Poor Performance You can expect this manager to present the check to the customer at closing time even
In Figure 2-5, the anchors used in Figure 2-4 have been converted into frequency ranges.
One pair of researchers found that a year after BOS were installed in a company, senior
management reported satisfaction with this method. They believed it minimized personality
disputes, enabled raters to explain low ratings, led to comprehensive reviews, and improved
feedback between raters and workers.
it the check to the customer at do* .ing time even if the customer has
iii You can expect not
IIMWI 1 HfH ' . 1 II V*%' ''/J.'
W
1 2 34 5
The HR specialist solicits from the immediate supervisor specific information about the
employee’s performance, and then the expert prepares an evaluation based on this
information. The evaluation is sent to the supervisor for review, changes, approval, and
discussion with the employee who was rated.
The evaluation is sent to the supervisor for review, changes, approval, and discussion with the
employee who was rated.
Ranking method The ranking method has the rater place each employee in order from best to
worst. The HR department is generally aware of the certain employees who are better than
others. However, HR cannot measure how good an employee is at his or her work. The employee
ranked second may be almost as good as the one who was ranked first, or perhaps considerably
worse.
Forced distribution Forced distribution requires raters to sort employees into different
classifications. Usually a certain proportion must be put in each category. Figure 2-6 shows how a
rater m ight classi fy ten subordinates. The criterion shown in the figure is for overall
performance (but this method can be used for other performance criteria such as reliability and
control of costs). As with the ranking method, relative differences among employees are
unknown, but this method does overcome the biases of central tendency, leniency, and
strictness errors.
lillMlllli HI -
. llllilllls; / '
Best 10% of Next 20% of Middle 40% of Next 20% of Lowest 10%of
Subordinates Subordinates Subordinates Subordinates Subordinates
Mahendar Gupta
Khalid Mir
Point allocation method The point allocation method requires the rater to allocate a fixed
number of points among employees in the group, as shown in Figure 2-7.
Good performers are given more points than poor performers. The advantage of the point
allocation method is that the rater can recognize the relative differences between employees.
17 Ali Ahmed
14 M.Arif
13 Abdul Sami
11 Sliuja Khan
10 Hira Sheikh
10 Mahendar Gupta
9 Khalid Mir
6 Sarah Lodhi
5 M. Ali
5 SabihYousuf
100
Instructions: Allocate TOO points to the entire workforce according to their relative worth. The
employee with maximum points is considered to be the best one
Paired comparisons Paired comparisons force raters to compare each employee with all other
employees who are being rated in the same group. An example of paired comparisons appears
in Figure 2-8. The basis for comparison is usually overall performance. The number of times
each employee is rated superior to another can be summed to develop an index.
Employee 9 10
Ali Ahmed 1 1 4 1 1 1 1 9 1
M.Arif 3 4 2 2 2 2 9 2
Abdul Sami 4 3 3 3 3 9 3
Shuja Khan 4 4 4 4 9 4
Hira Sheikh 6 5 8 9 10
Mahendar Gupta 6 8 9 10
Khalid Mir 8 9 10
Sarah lodhi 9 10
M. Ali 9
SabihYousuf
107
_2tion
Instructions: Compare each employee on overall performance with every
other employee. For each comparison, write the number of the employee who
is best in the intersecting box. Each time an employee is found superior to
another employee, the better employee receives one point. Employees can
then be ranked according to the number of times each is selected as best by
the rater.
Self-Appraisals
Getting employees to conduct a self-appraisal can be a useful evaluation
technique if the goal of evaluation is to further self-development. When
employees evaluate themselves, defensive behavior is less likely to occur, thus
:
self improvement is more likely.
Management by Objectives
The heart of the management by objectives (M BO) approach is that both
employee and superior jointly establish performance goals for the future.
Ideally, these goals are mutually agreed upon, and can be measured
objectively. If both of these conditions are met, the employees are apt to be
more motivated to achieve their goals since they participated in setting them.
Moreover, since they can measure their progress, employees can adjust their
behavior periodically to ensure attainment of the objectives. However, in
order to adjust their efforts, employees most receive performance feedback
on a timely basis.
When future objectives are set, employees gain the motivational benefit of a
specific target to organize and direct their efforts. Objectives alsc help the
employee and supervisor discuss specific development needs cc the
employee. When done correctly, performance discussions focus or the job’s
objectives and not on personality variables. Biases are reduce-' to the extent
that goal attainment can be measured objectively.
Assessment Centers
Assessment centers are another method of evaluating future potent: but
they do not rely on the conclusions of one psychologist. Assessrr. centers
are a standardized employee appraisal that relies on mul types of
evaluation and multiple raters.
Assessment centers are both time-consuming and costly. Not only are the candidates away from
their jobs with the company paying for travel and lodging, but the evaluators are often company
managers who are assigned to the assessment center for short durations.
From the results obtained, a report is prepared on each attendee. This information goes into the
FIR management information system to assist human resource planning (particularly the
development of replacement charts) and other HR management decisions.
)fassessment centers are the sole determinant of future career progress in the organization, people
will see the assessment process as threatening. However, if it is used to appraise an individual’s
strengths and weaknesses and the person has a way of improving areas of deficiency, the center
can be a positive force for developing future talent within the organization.
Two major problems are rater understanding and consistency of evaluations. Some HR
departments provide raters with a handbook that describes the employer’s approach. Guidelines for
conducting the evaluation or for providing the rates with feedback are often included, as well as
definitions for key terms such as “shows initiative” or “provides leadership”.
The training workshops are usually intended to explain to raters the purpose of the procedure, the
mechanics of it, likely pitfalls or biases they may encounter and answers to their questions.
Typically, most companies do formal evaluations annually near the individual’s employment
anniversary. For new employees or for those having performance problems, evaluations may be
done more frequently as part of the HR department’s formal program or as the supervisor sees
With the new appraisal process and related forms in place, the : major step was educating
managers and supervisors in the use program. Mandatory one-day training workshops were
-
given, pro , each manager with an opportunity to review, discuss, and under- the objectives of the
program. The appraisal forms were reviev. e_ detail with an explanation of how to use the various
sections :r. form. A videotaped appraisal discussion was presented to demor.-- how performance
appraisal worked. Finally, during the work>b managers were given role-play situations using the
new ap; forms. As a result, managers knew how to complete the forrr - few delinquencies
occurred. The human resource department a > valuable data that allow it to anticipate and
respond to training and employee concerns.
Once raters are trained, the appraisal process can begin. Howe\r~ results of the appraisal do little
to improve employee per:'.— unless employees receive feedback. This feedback process is f_
evaluation interview.
Evaluation Interviews
Evaluation interviews are performance review sessions i~z: employees feedback about their past
performance or future r The evaluator may provide this feedback through several ar. tell-and-sell,
tell-and-listen, and problem solving. The tel’-; approach reviews the employee’s performance and
tries to cor-, employee to perform better.
The tell-and-listen method allows the employee to explain excuses, and defensive feelings
about performance. It at* overcome these reactions by counseling the employee or. perform
better. The problem-solving approach identifies pro? are interfering with employee
performance.
Then through training, coaching, or counseling, goals for performance are set to remove these
deficiencies. Regardle^ •- approach is used to give employees feedback, the guided in Figure 2-9
can help make the performance review s effective. The intent of these suggestions is to make the
positive, performance-improving dialog. By stressing des.r.:- - of employee performance, the
evaluator can give the emplc;. re confidence in her or his ability to perform satisfactorily. T~m
approach also enables the employee to keep desirable anj _ performance in perspective because it
prevents the inc
■ :~3t performance review sessions are entirely negative. When
': - comments are made, they focus on work performance and not
‘ ; riividual’s personal ity.
r
BC Jf 2-$: Guidelines for Effective Performance Evaluation Interviews
each employee that the evaluation session is to improve :: - :~iance, not to discipline.
5 .y ;e'.m and do not argue with the person being evaluated, fcr-rry specific actions the
: ~ r - esize the evaluator’s willingness to assist the employee’s efforts : :c improve performance.
ETJ* evaluation sessions by stressing the positive aspects of the £— r : vee’s performance.
— c~:e appraisal serves as a quality control check. If the . . rrocess indicates that poor
performance is widespread, many <cr ;e- ere excluded from internal placement decisions. They
will "■ noted or transferred. In fact, they may be excluded from zetion through termination.
(Jnacceptably high numbers of . _ ,ers may indicate errors elsewhere in the HR management
c. — :• :re HR function is pursuing the wrong human resource . :: the appraisal system
itself may be faulty because of
resistance, incorrect performance standards or measures, . . constructive feedback.
Wherever the problem lies. HR si? to monitor carefully the results of the organization’s : ~ :e
eppraisal process. These results can serve as a barometer of
■ function
now promotions
■ Are ao l get ahead inaround
this company?
here based on seniority or on perform^n;-''
■ Don’t you think that most promotions are based on luck and knov. n the right people?
The answers to these questions help guide HR, the line managers, and the employees regarding
-
appropriate training and developme : guidelines. This understanding helps the employees sees how
relevant actions could benefit their career.
A career is the total number of jobs that are held by an individual during their working life. While
some people carefully plan out their career moves, for others it’s just a game of luck. People who fail
at establishing their careers lay responsibility on the shoulders of other influencers. like their line
manager or their organization. However, what they do not is that they themselves are unaware of
some very basic concepts, as described in Figure 2-10.
■ Career A career is all the jobs that are held during one’s working life.
■ Career path A career path is the sequential pattern of jobs that forms one’s career.
■ Career goals Career goals are the future positions one strives to reach as part of a career. These
goals serve as benchmarks along one’s career path.
■ Career planning Career planning is the process by which one selects career goals and the path to
those goals.
The HR department’s role is publicizing, and maintaining the career progression program through
training and information, but the main responsibility lies with the employee alone.
After graduation from college and three years in the Merchant Navy, Babar Ali joined National Bank
as a teller trainee. At that point in his career, his goal was to become a banking executive. He had no
idea of the career path he would follow, but Babar realized that his first step was to become a
supervisor. This career planning caused him to enroll in the bank’s management training program.
After being promoted to teller, he enrolled in other training programs and also took some non-
credit courses from the Institute of Bankers Pakistan. These programs were the first of many career
development actions that Babar undertook. He received two more promotions and at age 30 was
made head teller. After four years, Babar felt his career plan was stalled, and so he accepted a
transfer into the bank’s new account department. Although the transfer was not a promotion and
did not even include a raise, Babar knew that some diversification in his background would increase
his chances of becoming an assistant branch manager. In three years he was made assistant branch
manager for loans.
After three years as an assistant branch manager for loans, Babar again felt that his career progress
was too slow, and so he took educational leave and finished his Master of Business Administration
degree (M.B.A.). With the M.B.A., he returned to the bank as an assistant manager in a new branch.
A year later he was promoted to a branch manager’s job. To gain a wider breadth of skills, Babar
transferred to another branch as manager and then to the home office as a loan officer. After five
years he became chief loan officer, and then three years later he achieved his goal by accepting a job
as vice president in a competing bank. His success as an executive led to two more promotions
before he retired as an executive vice president at age 65.
Babar’s career plan involved well-timed transfers and educational leave. When Babar started as a
teller trainee at age 24, there was no way he could have predicted the career path he would follow,
but through periodic career planning, he reassessed his career progress and then undertook
development activities to achieve intermediate career goa‘>. such as becoming a supervisor.
Today however, there are an increasing number of human experts who not only see career
planning as a viable way to meet :H staffing needs, but also actively promote it. And when the
eir.p encourage career planning, employees are more likely to set career _ and work toward
them.
But what do employees want? A study of one group of emr . revealed five factors of concern.
These include:
a Supervisory concern Employees want their supervisors to p-i: ■ an active role in career
development and to provide timer, performance feedback.
■ Employee interest Employees need different amounts of information and have different
degrees of interest in career advancement depending on a variety of factors.
■ Career satisfaction Employees, depending on their age and occupation, have different
levels of career satisfaction.
Effective career planning and development programs must consider these different perceptions and
desires of employees. Workers expectations from career programs developed by HR will vary
according to age, gender, occupation, education, and other variables.
HR Department
The I-IR department needs to take an active interest and play a role in employee career planning. It
And Career
is the HR’s future plan that is indicative of the organization’s future employment needs and related
Planning
upcoming career opportunities. In addition, HR experts are more likely to be aware of training and
other developmental opportunities, due to the various benefits involved:
■ Develops promotable employees Career planning helps to develop internal career planning
supplies of promotable talent.
114
Human Resource Management and Organizational Behavior I Reference Book 2
• Lowers turnover The increased attention and concern for individual careers generate more
organizational loyalty and, therefore, lower employee turnover.
■ Taps employee potential Career planning encourages employees to tap more of their potential
abilities because they have specific career goals.
■ Furthers growth Career plans and goals motivate employees to grow and develop.
■ Reduces hoarding Without career planning, it is easier for managers to hoard key subordinates.
Career planning causes employees, managers, and the HR department to become aware of
employee qualifications.
* Satisfies employee needs With less hoarding and improved growth opportunities for employees,
an individual's esteem needs, such as recognition and accomplishment, arc more readily
satisfied.
■ Assists affirmative action plans Career planning can help members of protected groups prepare
for more important jobs. This preparation can contribute to meeting affirmative action
timetables.
l^-eer Education
Surprisingly, despite all of this many employees still know very little about career
planning. Either they are unaware of the need for and advantages of career planning, or they lack
the necessary information to plan their careers successfully.
Workshops and seminars on career planning increase employee interest by pointing out the key
concepts and gains associated with career planning. They help them set career goals, identify career
paths, and encourage a more fulfilling career for the employee.
When the HR department lacks the necessary staffto design and conduct educational programs,
public programs conducted by local colleges or consultants may help.
job Performance
The most important action an individual can undertake to further his or her career is through
improving job performance.
Exposure Career
Progression is also fueled by exposure. Without exposure to the industry, good performers may not
get a chance at the opportunities needed to achieve their career goals.
Resignations
If an individual finds a better career opportunity and he/she is able to capitalize on it, then a
resignation may be the only way to acquire the desired job.
Organizational Loyalty
There are several people who prefer loyalty over career progression. Mentors and Sponsors
Mentors can help employees in career development. These are people in senior positions having a
vast experience who offer informal career advice to his or her protege. The mentor can guide the
junior worker and help him or her in finding out the most effective ways for career progression.
Key Subordinates
Successful managers rely on subordinates who aid the manager’s development and performance.
The subordinates may possess highly specialized knowledge or skills that the manager may learn
from them, or the employee may perform a crucial role in helping the manager achieve good
performance.
Growth Opportunities
When employees expand their abilities, they complement the organization’s objectives.
Learning Outcome
By the end of this chapter you should be able to:
Protection
Proper documentation of employment is extremely important for both
employers and employees. The documentation contains details of all
employee activity from the time of hiring of the person and throughout their
time of employment with the organization. It is a valuable and necessary
practice to keep a record of both positive and negative outcomes of employee
activity as there will be examples to use in performance appraisal, and there
will be opportunities for the employer to provide recognition to talented
employees, as w'ell as evidence for use in disciplinary discussions.
Career Counseling To help employees establish career goals and find appropriate career
paths, some HR departments offer career counseling. These could simply be
people who listen and understand the employee’s interests and guide them
towards job-related information. However, to be truly successful, career
counselors must encourage employees to assess themselves on their own, as
there is no better judge.
Together all of these roles form one’s life plan. Ideally, a career plan is an
integral part of one’s life plan. Otherwise, career goals become ends rather
than means toward fulfilling a life plan.
Career The implementation of career plans requires career development Development generally
comprises personal improvements one undertakes to achieve a career plan. These actions can be
sponsored by the HR department, or they may be activities that employees undertake independently of
the department.
explains the decision-maker’s rationale in taking the action, or evidences communications between
supervisors and their subordinates can prove helpful. When things are documented, they are less
likely to be disputed by a current or former employee, and when they are challenged, they are much
easier to defend. Specifically, employers would be wise to document the following:
Human Resource Management and Organizational Behavior | Reference Book 2
Initial Employment Records
Documentation should include records obtained from the employee at the outset of employment: the
application, any authorizations obtained from the employee (i.e., background check), and any benefit
election/ waiver forms.
Signed Acknowledgment
A critical piece of documentation that should be obtained at the inception of the employment
relationship is a signed acknowledgment from the employee stating that he/she received the
employer’s important policies and/or employee handbook. It is critical that certain policies such as the
company’s equal employment opportunity and harassment policy, the at-will employment policy and
the Family and Medical Leave policy he communicated to employees at the inception of employment.
Proof that employees received certain policies is essential in some kinds of employment cases and is
helpful in virtually every employment case.
Updated Acknowledgments
When policies or handbooks are updated and distributed, acknowledgments of receipt should be
obtained from existing employees and kept in the personnel files.
Training Documentation
Proof of attendance at key training events can be important in employment litigation. Employers
should document employees' attendance at harassment training, safety training and training on other
important aspects of an employee’s job.
Attendance
Attendance records should be accurate, current and maintained consistently for all employees who are
subject to a company’s attends r.ee policy. Unexcused absences should be documented as such.
Excused absences should be documented to ensure that they are not considered in connection with
discipline arising out of attendance issues.
Performance Evaluations
Make certain that managers consistently carry out employee evaluations at the scheduled intervals
and that those evaluations are maintained in the employees’ files.
Misconduct
Regardless of whether one thinks an employee’s isolated actions will lead to discipline, all misconduct
must be recorded. Documentation that is created contemporaneously with the event is more reliable
than documentation created after the fact.
Discipline/counseling Records
All oral and written discipline or counseling should be documented in the employee’s file. Employers
should document performance and discipline problems carefully, contemporaneously, consistently
and thoroughly. It is important to make certain that performance-related documentation in the
employee’s personnel file appears consistent with that of other, similarly-situated employees.
Post-termination Records
The employer should maintain a copy of the employee’s separation notice and a copy of any
correspondence or documentation relating to the return of company property.
The documentation of employee records is clearly useful for the employers; however, it also has a great
deal of significance for the employees. The foremost document is the employee contract.
A contract of employment is a category of contract used in labor law to attribute rights and
responsibilities between parties to a bargain. On one side stands an “employee” who is “employed” by
an “employer” on the other.
The contract of employment is a vital document as it regulates the terms and conditions of
employment between the employer and the employee.
It also regulates the behavior of the employee in the workplace, because all company policies and
procedures, as well as the disciplinary code, form a part of the employment contract.
■ reporting relationships
■ salary
■ benefits
■ paid holidays
■ paid vacation
■ sales commissions
■ phone allowance
Many different types of employee agreements are used by organizations, some of which are:
The employer has to advise the employee of the reason for making the fixed term and they have to
explain why the employment will come to an end at a later date. These agreements cannot be used to
avoid obligations the employer has to an employee (in good faith). For example, an employer cannot
evade the responsibility of acting fairly and following through proper procedures in an employee
dismissal situation.
Probationary Period
Another type of contract is the probationary period during which the employer usually has more
rights. Even if an employee is under a probationary period, the good faith obligations for dismissal etc.
will still apply, and an employer has to comply. A probationary period does not mean, however, that an
employer cannot get rid of somebody without notice, or after consultation at the end of the period.
The contractual obligations of the employees differ according to the type of agreement. “Contractual
obligation” refers to the obligation on the employer or the employee as per the contract/agreement
signed by them. The obligations laid out in the contract are usually legally binding.
The legal obligations of temporary and permanent employees may differ based on their contracts.
Companies usually have lesser benefits for temporary employees while permanent employees enjoy
more benefits and perks.
The documentation requirements by regulators ensure that employers are obliged to meet a certain
level and standard of documentation. This should lead to proper documentation being compiled and
maintained.
Compensation
Compensation is the way employees are rewarded for the work to do. It is vital that this aspect is
Management
managed well by the organization to ensure they retain a competitive and motivated workforce.
Ensure Equity
Pay rates in the work place must not only be externally competitive - that is, be in line with the
average expected in the labor market - but should also be internally aligned. Within the same
organization, the same level of jobs must be equally compensated for.
These objectives should be used as guidelines for the effective management of the compensation
element of recruitment. All jobs, salary expectations and labor market averages needs to thoroughly
be scrutinized in order to ensure optimal pay costs are incurred by the organization.
Job Analysis
This phase is about understanding jobs in more depth via surveys and meetings with members of the
actual workforces. This information is then used to design job formats and writing down their
description and specifications. Compensation is then derived based on this analysis.
job Evaluation
This procedure is undertaken to understand the worth of all the jobs that are to be done. This
evaluation helps determine what levels of compensation need to be given to the various different jobs
present in the organization. This task is carried out by a team of job analysts, who are primarily
responsible to determine compensation scales based on the working environment and the
responsibilities allotted to each of the job titles.
Job Ranking
Jobs are evaluated through this step. All job titles are analyzed and then ranked in accordance to their
importance when compared to the rest of the jobs. They are rated based on their responsibilities
attached, the skills required as well as the work environment.
This method is not said to be the most effective, as it may not give importance to all the substantial
factors. These rankings also don’t
Job Grading
This method assigns a grade to each of the jobs within an organization. These grades are determined
by a specialized committee who focuses on understanding the significance of each of the roles within
the organization and then ranks them accordingly.
Factor Comparison
This method requires specialists to compare all the crucial elements that make up a job. By doing this
for all the jobs in consideration, each position is evaluated by a common set of factors — such as
responsibility, skill, work environment, etc. by doing so, all the positions are compared on an equal
scale and compensation plans can then be derived more effectively.
Figure 3-1: A job classification schedule for use with job grading method
Directions: To determine appropriate job grade, match standard description with job description
Toiil 5~
> W-
Xvlv
Grade
I•
Work is simple and highly repetitive, done under close supervision, requiring minimal training and little
responsibility or initiative.
Examples: Janitor, file clerk
II
Work is simple and repetitive, done under close supervision, requiring some training or skill. Employee is expected
III
Work is simple, with little variation, done under general supervision. Training or skill required. Employee has
IV
Work is moderately complex, with some variation, done under general supervision. High level of skill required.
V
Work is complex, varied, done under general supervision. Advanced skill level required. Employee is responsible for
Responsibility
Skill
PKR 22.0
4.00
18.0
1.50
18.0
1.60
6.60
0.60
I
9.5
1.20
Step 2
Determine key jobs: These are key positions that are commonly found across all organization, and are
also seen in the labor market. These jobs are used because it is easier to determine the demand and
supply rates for them in the market. They comprise a range of critical factors that need to be taken
into consideration.
Step 3 .
Apportion present wages for key jobs: Compensation plans are then allotted to each job, based on the
factors taken into consideration. The relative importance of each critical factor and its contribution
within each position is what determines the overall wage rate. For example, assuming a janitor
receives PKR 10.70 an hour. This amount is apportioned in Figure 3-2 as follows:
6.60 rupees for responsibil ity, 60 paisa for skill, 30 paisa for mental effort, PKR 1.70 for physical effort,
and 1.50 rupees for working conditions.
When determining the overall wage rate, the committee takes into consideration how the amount
allotted to each factor should reflect its importance when compared with other factors of the job. For
example, if PKR 4 is assigned to skill and PKR 2 is assigned to physical effort for a machinist, this
implies that the skill factor is two times as important as the physical effort. Also, the amount allocated
to a single factor should reflect its relative importance among the different jobs. For example, if
Step 4
Place key jobs on a factor comparison: After wage rates are assigned based on the importance factors
within each job, these positions are placed on a factor comparison chart. Key jobs are placed in the
columns according to the amount of wages assigned to each critical factor.
Step 5
Evaluate other jobs: Each job title in each column in the factor comparison chart serves as
benchmarks. Other jobs are then evaluated by fitting them based on relevance on the scale in each
column.
For the job of senior maintenance mechanic, the evaluation committee compares the responsibility of
the mechanic with the responsibility of other key jobs already on the chart. It is decided subjectively
that the mechanic’s responsibility is between that of the forklift driver and the file clerk. And since the
mechanic’s job requires about three-fourths of the machinist’s skills, the skill component of this job is
placed just below that of the machinist in the skill column. This procedure is repeated for each critical
factor. When the task is completed, the committee can determine the worth of the mechanic’s job,
which is:
Skill 3.00
PKR 22.9
By using this same procedure, the committee can evaluate every other job in the organization. When
the evaluations are completed, the job evaluation committee can rank every job according to its
relative worth as indicated by its wage rate. These rankings should be reviewed by department
managers to verify their appropriateness.
Point System
Research has shown that this method has been made use of more than any other. It evaluates the
critical factors present within each of the jobs, but instead of using wages, it uses points. It is more
difficult to develop initially, but is actually more precise than the factor comparison method because it
can handle critical factors in more detail. This system requires six steps and is usually implemented by
a job evaluation committee or by an individual analyst.
Step 1
Determine critical factors: The point system tends to use the same factors as the factor comparison
method, but adds on to them by further breaking down all these factors into sub-factors. For example,
Figure 3-3 shows how the factor of responsibility can be broken down into (a) safety of others, (b)
equipment and materials, (c) assisting trainees, and (d) product and service quality.
s Responsibility H -W
j: yv■/ \
a. Safety of others 25 50 75 100
c. Assisting trainees 5 20 35 50
d. Product/service quality 20 40 60 So
pit ■H
, -k,n
a. Experience 45 90 135
m 180
b. Education/training 25 50 75 100
| Effort - •
A:4vv''
a. Physical 25 50 75 too
4 Working conditions
a. Unpleasant conditions 20 40 60 80
b. Hazards 20 40 60 80
Responsibility: Equipment and materials. Each employee is responsible for conserving the company’s
equipment and materials. This includes reporting malfunctioning equipment or defective materials,
keeping equipment and
Level II. Employee maintains the appearance of equipment or order of materials and has responsibility for the security of such equipmem or materials.
“* «* same . V further
Level 111. Employee performs preventive maintenance and minor repairs on equipment or corrects minor defects in materials.
&
°TPk’ figure '"to (a;
Level IV. ' Employee performs major maintenance or overhauls of equipment or is responsible for deciding type, quantity, and quality of materials to be
Step 4
Allocate points to levels: Once the points for each job element are assigned under level IV, analysts
allocate points across each row to reflect theimportance of the different levels. For simplicity, equal
point differences are usually assigned between levels, as was done for “safety of others” in Figvre 3-3. Or
point differences between levels can be variable, as shown for “assisting trainees.” Both approaches are
used depending on the importance of each level of each sub-factor.
Step 5
Develop the point manual: Analysts then develop a point manual. It contains a written explanation of
each job element, as shown in Figure 3-4, for responsibility of equipment and materials. It also defines
what is expected for the four levels of each sub-factor. This information is needed to assign jobs to
their appropriate level.
Step 6
Apply the point system: When the point matrix and manual are ready, the relative value of each job
can be determined. This process is subjective. It requires specialists to compare job descriptions with
the point manual for each sub-factor. The match between the job
After the total points for each job are known, the jobs are ranked. As with the
job ranking, job grading, and factor comparison systems, this relative ranking
should be reviewed by department managers to ensure that it is appropriate.
Beyond the four job evaluation methods discussed in this section, many other
variations exist. Large organizations often modify standard approaches to
create unique in-house variations. Although other job evaluation approaches
exist, all effective job evaluation schemes attempt to determine a job’s relative
worth to ensure internal equity.
Wage and Salary job evaluations generally tend to result in a ranking of jobs based on Surveys their
contribution into the organization. This ensures jobs are paid according to the value attached to them
in general. The question now is how much should they be paid? And what seems like fair
compensation?
To determine fair wage rate, wage surveys are conducted. These are done to
understand what the average rate is like in the labor market. Generally, the
market surveyed is that within a commutable distance; where the firm is
likely to be hiring from. However, for some exceptional employees,
organizations will have to pay more competitive rate in order to have them on
board.
Consider how the president of one large university viewed the labor market:
“Our labor market depends on the type of position we are trying to fill. For
the hourly paid jobs such as janitor, clerk, typist, and mason, the labor market
is in the surrounding metropolitan community. When we hire professors, our
labor market is the entire country. We have to compete with universities in
other parts of the country to get the type of
labor
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ason
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took 2 Chapter: Compensation and Protection
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To set the right pay level, the internal rankings and the survey wage rates are combined through the
graph called a Scattergram. As Figure 3-5 shows, the vertical axis is for pay rates. If the point system is
used to determine the ranking of jobs, the horizontal axis is for points.
This is created by plotting the total points and wage level for each key job. Thus, each dot represents
the intersection of the point value and the wage rate for a particular key job. For example, key job A,
in is worth 500 points, and is paid PKR 60 an hour. Through the dots that represent key jobs, a wage
trend line is drawn as close to as many points as possible.
The wage-trend line helps determine the wage rates for non-key jobs that are those jobs that have not
been surveyed for. To do so, a point value for the non-key job is located on the horizontal axis. A line
is then traced vertically to the wage-trend line, then horizontally to the rupee scale. The amount on
the vertical is the appropriate wage for the non-key job.
For example, non-key job B is worth 700 points. By tracing a vertical line up to the wage-trend line
and then across to the vertical (rupee) scale, it can be seen in Figure 3-5 that the appropriate wage
rate for job B is PKR 70 per hour.
100 200 BOO 400 500 600 700 800 900 Point Values
Thus, what analysts generally do is group jobs together into classes. When grading jobs, they are then
awarded points and pay scales accordingly. Compensation analysts find it more convenient to lump
jobs together
However, a problem with this approach is that exceptional performance cannot be rewarded. In order
to be able to do so, workers must be moved into a higher job class. This then also affects all other
employees working within the same class. A solution used is when organizations adopt a set of rate
ranges for each class.
These ranges are simple pay ranges within each job class. So this means, there is no single flat rate to
be paid to all employees within the same class, but there is actually a range based on which some can
outperform the rest and actually earn more based entirely on merit.
There is a range between which employees can compete, but once they reaches the top of the rate
range, no more wage increases will be forthcoming. It is at this point where the organization will
decide to reward them with either a promotion, or increase the range for the job class in general.
This is a method that employers use to link compensation with employee performance and its
contribution in the organization. The costs of compensation, bonus, etc all fluctuate
s and Gain
based on the organizations overall performance.
Sharing
Ahmed Electronics hasn’t laid off a worker in more than three decades. Even during the
severe recession of 2007, when the company’s sales plummeted by 40%, employment stayed steady.
Workers reduced their hours, and bonus payments fell from a total of PKR 25million in 2005 to PKR
io.2million in 2007. The combined result: the average production worker’s pay fell from PKR 50,000 in
2005 to 25,000 in 2007
Although it for allows a lot more flexibility in managing the cost of labor, there are still issues that
need considering before this method is adopted into the overall compensation plan. The HR should
taken into consideration the purpose, payout levels and the overall administration of this approach
Some of these issues are summarized in Figure 3.6 on the following page.
traditional compensation What are the key goals of this non-traditional compensation program?
Payout standard
What will trigger an incentive or gainsharing bonus? When will it be paid?
Administration
How will the program be administered? By HR department? By line management? Both?
Incentives Gain sharing are compensation approaches that reward specified outcomes. Incentives are
linked to individual performance and reward them accordingly. Gain sharing is meant to target
groups (or classes) of employees simultaneously, and reward them for their overall performance and
contribution.
Such methods have over the years boosted employee morale and motivation levels. They are also a
way to build upon employee loyalty. Many different incentive systems exist, and they take into
consideration several criteria before allowing employees to qualify for the additional benefits they
can receive as a form of compensation.
Other incentive methods that can be used are merit raises, piece-work, production bonuses,
commissions, maturity curves, pay-for-knowledge compensation, and non-monetary and executive
incentives.
Gain sharing is a means of sharing the additional earnings of the organization and a boost in its
performance by rewarding the employees who have contributed to it. These approaches include
production- and profit-sharing plans. Also popular are cost-reduction methods such as Scanlon,
Rucker, and Improshare.
Since workers gets to see how they can improve their pay scales, they are bound to remain motivated
and productive. It is also beneficial for the employer, as rewards are given out when the organization
is performing better and not for extra hours worked, regardless of the outcome.
As one economist observed:
“With fixed wages individual workers also have little incentive to cooperate
with management or to take the initiative in suggesting new ideas for raising
productivity. At the level of the individual worker, higher productivity has no
immediate payoff as wages are fixed for the length of the contract. The
immediate effect of higher productivity is, in fact, negative. Less labor is
needed, and the probability of layoffs rises.”
As is' the case at Lincoln Electric, hourly paid workers get individual
incentives (piece rates), while managers and workers share in the profits.
Individual incentives, such as sales commissions, work best with cooperation
and teamwork.
System Incentive methods are used in all types of job roles. They can either make up all
of the compensation that is earned, or a part of it in addition to salaries. The
more common incentives are discussed in the following pages.
Piece-Work
Piece-work rewards employees for every single unit of output produced. Wags
can then be rewarded by a fixed amount added on for each unit. Total wage is
that fixed rate multiplied by the total produced in a period.
Production Bonuses
These are additional wages that are rewarded to employees who produce over
the desired quantities that were expected off them.
me Protection 135
Commissions
In sales positions, a certain percentage of every sale made or a fixed amount is paid
to the sales person who makes the deal from every unit sold. This may or may not
make up the employees full wage for the period. Real estate agents and automobile
salespeople are often on this form of “straight commission.”
Maturity Curves
Some employees can end up reaching the top end of their rate range. In such
situations, they can either be promoted further as a form of reward or they can be
placed on a maturity curve. These make adjustments for people who are top of the
rate range in selected job roles. Employees are rated on productivity and
experience, and the best performers are placed on top of the curve, as shown in
Figure 3-7.
The relatively less outstanding workers are then placed below them, and so on. It
is by this method, that all high performers can be continuously rewarded for their
dedication and motivation even after reaching the top of their rate range.
Figure 3-7: Maturity curves for professionals with varying degrees of performance
Point Values
Merit Raises
The most commonly used form of reward in the incentive system is « merit raise.
These are pay rises given to employee based on a performance evaluation. These are
normally decided by the line manager, in consul'
with other members of the management. They are rewarded to high performing
individuals, but are not restricted to any standards or limits.
r
Their limitation is in their execution - w hich can be affected by bias. In such scenarios,
exceptional performance can go unrewarded, and average performance might just be
rewarded. It also communicates to the workers that instead of quality, quantity is what is
expected of them. Also, if almost the entire workforce is rewarded with a merit raise at
the same time, it loses its meaning and can be seen as a general pay rise instead.
Dissatisfaction by those who have not received a merit increase can also be a source of a
Human Resource Management and Organizational Behavior j Reference
problem, especially if it is due to bias.
Pay-for-Knowledge Compensation
This is mode of compensation that provides employees an incentive to learn more. For
each skill they master, or new task they learn, they are rewarded for the knowledge
gained. So it is not about what they do, it I more about what they know. These rewards
are beneficial to the employer, because those with a larger variety of skills can be moved
around flexibly based on the organizations requirements. This may also lead to a
reduction in the total workforce size, saving compensation costs to the firm instead.
The higher the pay rate is, and the more diverse each work role is, the lower
dissatisfaction is expected to be. There should also then be a low employee turnover rate
as well as decreased absenteeism, as employee morale is expected to be high.
ABC Station facility makes electronic assemblies for military radar. Each worker averages
12 assemblies a day, compared with a more traditional operation in Dadu where
employees average 1.5 assembly per day. Although part of the difference stems from ABC
Station plant’s investment in automated equipment and its use of teamwork, some of the
difference can be attributed to the plant’s pay-for-knowledge compensation system.
Under this site’s pay-for-knowledge approach, employees can increase their annual
salaries by 60 percent in three years, depending on how many jobs they master. As each
new job is mastered, the employee receives a pay increase.
Non-monetary Incentives
There can also be forms of incentive that are not tied with monetary compensation. This
can be in the form of employee recognition, sponsored holidays, giveaways and so on.
These are commonly used to motivate sales staff, besides the monetary compensation
that they may be receiving.
Some job roles are also popular because of the benefits associated with them. Beyond the
financial gain, there might be certain non-monetary
■ Company size
■ Profitability
Due to the volatile nature of the stock market, incentives might be more effective if they
are linked to improvements in aspects of the organization that executives do control. For
example, weighted incentive systems reward executives on the basis of improvements in
multiple areas of business performance.
Deferred stock incentive systems award stock to executives over a period of time. This
not only acts as an incentive for the executive to stay onboard until the stock is owned,
but its value is also derived from what the executive has contributed in improving the
company’s performance during this time.
Gain sharing matches an improved company performance with some sort of financial
Gainsharing
distribution amongst the employees. For increased feelings of equality, gainsharing
Approaches
also tends to include supervisors and managers. Employers with gainsharing are also
much more likely to share their financial and non-financial information with employees,
thus making them feel more involved.
In recent times, the use of this method is rapidly increasing - as it can be customized
based on individual plans or specific groups. Most gainsharing tends to falls into four
broad categories:
Employee Ownership
This is the most motivating, as employees begin to own a share in the company they work
for. Many companies now have stock purchase plans that allow workers to purchase
shares in the company. This results in these employees “owning” a stake in the company,
and thus sharing in its achievements dividends and stock appreciation.
ESOPs can be used in other ways that can be called creative financing. The ESOP as a
separate legal entity may:
Buy the stock with borrowed money secured by the stock and employee pledges
■ Buy the stock with the funds from a tax-deductible contribution made by the
company (an owner wanting to sell his or her interests may authorize a tax-
deductible contribution to the ESOP so it can buy the stock, leaving the owner
with cash)
* Create a new employee benefit when a company contributes new stock issues to
the plan
■ Make public companies private, spin off or divest subsidiaries, or even save failing
companies
Production-Sharing Plans
Production-sharing p\ans aWow groups of workers to receive bonuses when they go
beyond the levels of output that were expected of This is a short-term approach and
is quite restrictive in nature related to very specific production goals.
However, by using this plan, workers are motivated to act as a team collaborativdy
work towards improving overall productivity.
Profit-Sharing Plans
Profit-sharing plans are when an increase in company profits is with the work force.
Although this may result in a motivated work it may also mean that those who have
not contributed to the su~- are also reaping benefits from it. Some companies further
r the effectiveness of the incentive by diverting the employee’s share profits into
retirement pians. By doing so, its affect - of achieving ~ motivation levels, is lost and
becomes more subdued.
One example comes from the XYZ Velvet Company, a leading of velvet.
Cost-Reduction Plans
Group incentive plans are criticized to not always reward the employees’ efforts. If profits
decrease despite the contribution of the employees, - due to recession - it is the workers
who will suffer.
Another method that can be used is to reward workers for something they can control -
labor costs. The idea is to reduce costs, by allowing a committee of employees to be
formed that may facilitate the communication of new ideas. This also allows workers to
make a more involved contribution in the firm’s day-to-day operations.
The best and most popular approach to use is Scanlon Plan, which bases bonuses on
improvements in labor costs, as compared to past trends. Employees can work towards
reducing labor costs, and then have a share in the savings made. If employee productivity
increases, while labor cost decreases - this savings is then shared with the employees as a
bonus.
Rucker and improshare plans us a similar approach to Scanlon, but differs in how
bonuses are calculated. All of these methods differ from profit sharing as they focus on
labor cost reduction, which is something the employee can have influence over, instead
of that which can only indirectly affect overall profitability.
All of these methods aim to reduce costs, alongside gaining increased loyalty and
commitment from the workforce. Improshare, for example, focuses on reducing labor
hours as a means of reducing costs. Rucker seeks reduction in labor and material costs by
including these reductions in the calculations of gainsharing bonuses. The Scanlon Plan
focuses primarily on labor costs and quality of work.
Learning Outcome By the end of this chapter you should be able to:
In the past, organizations were used to tapping into the worker? energy and
sweat but did not attach any value to their brain power. J thus causing the
employees to attach little value to the firm’s success an failure resulting from
their unilateral decisions. In severe cases, where the rules are being devised
by the management and union as a collectr** bargaining agreement, the
outcome turns out to be an “us versus therrfl competition. Formal rules
substituted cooperation while teamwork ~*OB barely seen. However this
team work rarely bridged the gap between titf
The HR function is directly and in directly related to worfa satisfaction. The success of
their efforts is directly proportional to th level of employee’s job contentment. According
to figure 4-i orientatk* employee training programs, one to one or group meeting
employee, career planning and counseling bring manaeetf in "irec contact with their
workers. This provides the emplcsees a 5-en^e o
Motivation, a complicated concept is not easy to apply or use, especially in a work place with hundreds of
workers. What motivates an individual depends on their personality, unique feelings and individual past
experiences. Hence the difficulty that more than one or even two motivational approaches are required to
keep the staff of any firm motivated. Even psychologists have different ideas about motivation.
Organizations are forced to rely on some basic guidelines that can help in certain situations only.
Motivation is a desire to do something that comes from within a person, in other words a man does
something because he wants to not because he is compelled to. If an individual is pushed to take an
action, he or she does it only in reaction to the pressure, like companies are forced to lower prices due to
competition; they don’t want but have to. Motivation is when you encourage some one enough to awaken
a wish, a longing to do or achieve something. They do it because they feel that the action is important for
them and would satisfy some urge or need of theirs.
HR departments that adhere to rules in a bureaucratic or over zealously religious fashion attract employee
discontent. However departments that run the program on a humanitarian basis are successful in garnering
contentment, motivation, growth and approval from the staff. This leads us to the question “Does
satisfaction lead to better performance or vice versa. What comes first?” Actually, the relationship between
the two is a bit intricate as they are interdependent. Studies have shown that high and low performance can
be linked to high and low level of satisfaction, but which causes which is hard to say. Studies also indicate
that this lack of knowledge about the cause is not strange as contentment and success are not the only
players; motivation also holds an important place in the equation. Satisfaction and motivation are two
different things. The fact that a worker is satisfied does not mean that he is motivated. He may be satisfied
because he does not have to commute to great distances, or because the tasks assigned are easy, or he is
comfortable in the workplace environment etc. Similarly, a hard working person may not be satisfied. The
reason he works hard could be his strong work ethic, fear of punishment or discipline or most importantly
his religious belief about honesty at work. Why is the relationship between performance and satisfaction so
undecided? The answer is another factor, REWARDS.
Environmental System
job Itself Small Groups
Organization External
Performance Environment Satisfaction
Employer
Motivation Self
image Self-
Inner drives esteem
Self-expectations
Needs and desires
As the bottom of the figure shows, all employees come to their job with
certain expectations, needs and desires. If the rewards provided match the
employee’s expectations than satisfaction is achieved. When an employee
performs well he or she is rewarded, if the reward is viewed as just and fair
return for his/her efforts, then improved satisfaction is the result. Conversely,
if the employee feels the reward does not equal his effort level, it leads to
dissatisfaction. As, the rewards bestowed affect their self image so it also
influences his or her motivation level. If the employee feels appreciated and
worthy he would be motivated and would perform better. But if he feels
neglected or unappreciated he which get de-motivated leading to a dip in
performance level. The relationship of these factors is continuous and it’s
difficult to judge what affects what and how.
Human Resource
Management and
Organizational
Behavior | Reference
Boo*. 2
Workers today are far more intelligent and aware of their opportunities and
rights then they ever were in the past. They seem to have far more choices and
due to the increased awareness, they don’t take any order without question,
they decide for themselves if they would follow the order or not. In short
QWL has gained immense importance in the workers as well as an
organization’s life. QWL of a workplace can be judged by the feelings of the
employees for the organization. According to a study a long term hike in
productivity should be matched by an increased level of QWL, if the
management of the company wants it to flourish. However in short term,
some despotic firms manage to achieve higher productivity while leaving the
level of QWL in a continuous downward spiral. In the long term they suffer
for this as they are unable to maintain their productivity standard. The falling
standard of QWL leads employees to leave the company for better prospects.
This withdrawal contributes to an increase in absenteeism and turnover rate,
poor QWL rate. Even if an employee does not withdraw physically, he
withdraws emotionally and does not put in his hundred percent. In such cases
employees limit themselves to their assigned tasks and don’t bother with
anything extra, they stop caring and don’t share the company’s interests.
Eventually this results in falling productivity, thus proving that ‘Employee
Productivity and QWL go hand in hand.’
Another observation in the same study was that at times workers report
higher plane of QWL for their own satisfaction and create a false sense of
value. The reason, people want to make a contribution and want to know that
they made a difference. This should be an indication to the company
managers to create an environment where everyone is treated as an expert at
their jobs. Managers create the ‘Pygmalion effect’; share their high
expectations from individuals. The employer’s good opinion motivates the
employees and they do their best to fulfill those high hopes, thus increasing
employee productivity. If the management is clever about it they can take
advantage of this heightened motivation to upgrade not only QWL, employee
productivity but also the raise the level of ideas, decisions made in the firm.
This can be done by inviting ideas and opinions from workers, hence giving an
elevation to their sense of belonging and worth. Common approaches for
enhancing QWL, via El are given below.
Quality Circles
Quality circles’ were first started in Japan, to perk up the quality of products
produced in Japan, they were called, ‘Quality Control circles’. They are small
groups which comprise of a handful of employees and’an elected leader. The
employees schedule regular meetings with the leader to discuss and overcome
their work related problems.
Unique characteristics
QC membership, for all, starts as a voluntary activity. The leaders, who are
usually supervisors, are briefed about them and are asked if they are interested
in starting a group. If yes, they then brief their (usually hourly) workers about
the group and again extend the invitation of membership. The leaders then go
through a two to three day workshop, where they are made aware of the
philosophy behind the group, small group dynamics are discussed and leader
ship skills are taught. A day is spent discussing the different approaches to
problem solving, brainstorming, cause-and- effect diagrams and other
techniques, as explained in Figure 4-3.
Brainstorming
A topic is provided and the groups have an open ended discu session.
Some circles do request that members present their ideas in to ensure
that each one participates.
Pareto Analysis
Data about ‘types and causes of production problems’ is collected
presented in the form of a Bar chart. It is collected by the workers the
supervisor and provided to the workers. Workers arrange the problems in
descending order of frequency. The bar chart helf identify the most
pressing problems, and they are then listed in order.
there is a relationship
between them
Statistical Tools
Workers are taught statistical tools which they use to identify production
problems, objectively. Some of these preferred tools are random and
probability sampling, computation of arithmetical mean and variances.
___
A lowing employees to select the problem also has other benefits, as i r such
as; it keeps them motivated, gives them a sense of belonging. £ enrually they
want to remain a part of the circle so they can solve rr important issues.
9C Process
We—r ;::on of the training then leads to weekly meetings of the circle. T5-:
ir_es the group is allowed to address are ones that are part of their IKS i: . ark.
They range from; Company pay policies to union contracts, iflt7i~~ent specific
issues. Personality issues are of no concern to the 03Lt is ‘hey are there to
decrease their work stress and make their job :■ But before they start some
basic ground rules for the discussion ta . j n by the team leader.
The use of these circles tends to improve the relations between and
workers as they are meeting in a democratic enviroi of an
autocratic one. Thus in the long run QWL is improv these
employees learn to be more systematic in their work process. This
is because when solving a problem, they s> out or include solutions
and then work out the cost effe. proposed solution. These circles
also serves as employee program as the employees participation in
the ho'-irtoj managers spot and pick out potential future superv
Socio-technical Systems
Such systems are used to further the QWL efforts by firms. They aim at
modifying the work environment and at times very radical changes are
witnessed, where this process is used. It is used to restructure the tasks, the
work group itself, and the relations between the worker and the technology
being used.
Indus Motors in the past used a traditional work environment for assembly of
electronic parts. There, workers performed a simple task repeatedly and spent
less than a minute on each unit or machine part. Now they have specially
designed ‘work islands’ where three to seven people work and they can not
only rotate jobs, hence avoiding boredom, but also socialize. This has lead to a
higher level of QWL.
Little things such as raising or lowering the work stations, relocating handles
to an easily reachable height or place, and fixing parts bins that are slightly
tilted- to provide ease in extracting part- can help reduce a workers stress level
considerably.
It is expected that QWL will improve in the years to come as the workers
today select jobs based on appropriate behavioral features. The new
workforce comprised of educated individuals is eager for jobs that are
challenging and offer some degree of autonomy. Also participation in
decision-making process of the company is extremely desirable for them.
However the slow birth rate in Industrial countries may lead to an increase in
the shortage of new workers.
1. Take whatever pay and benefit cuts the firm offers or,
As it is a lose-lose situation for the workers, so unions have been seen giving
up their hard-won work place rules and settle for limited gains
Ups and downs and swing in the balance of power is pretty common, but it is
of note here that this structure of labor-management relation is very resilient.
The evidence being that it has been in existence since 1947. The look of this
structure has evolved and become refined as the partners have also advanced
overtime. This bond is also flexible enough to cope with and even out last
numerous legal, social and economic challenges.
Labor unions tend to change the whole dynamic of the relationship between
Labor Unions and employers and employees, also changing the work environment. They
HR Management specifically alter the roles played by the HR experts and supervisors, since their
level of freedom and day - to-day activities are limited by additional laws and
rules. However, the atmosphere remains same in some ways. For instance, the
responsibilities of the supervisors and HR professionals stay the same. Profit
objectives and budgetary goals are one area that is not discussed or bargained
on with the union. Neither does the union reduce the need for effective HR
procedures. In short, the management is still in charge of managing and
running the firm as well as the HR department, union does not affect them. To
understand the degree of the union’s influence their goals and structure should
be understood.
These were internal factors, but there are some external factors also that
influence them. These are a following:
No matter the changing condition of the factors, there exists a common core of
unmoving goals. These common goals are the purpose of the
However, higher cost per worker results in the organization cutting back on
job positions in the company; it may even fire workers, and increases their
reliance on mechanization. Trade offs made under the head of ‘social
unionism’ are less apparent. Here the labor organizations are under duress on
whether to maximize the benefits to all workers, hence minimizing the
benefits for the union’s members alone. HR departments and officials are
influenced by both business and social unionism goals, as most incentives
were borne out of the pressure exerted by the unions. Firms that do not have
a union in their midst, also give their employees benefits in order to stay in
the running of successful companies and more importantly delay
unionization.
1. Craft unions
2. Industrial unions
3. Mixed locals
Craft unions are organized on the basis of shared skill or trade among workers
of one geographical area. Industrial unions have both u nskilled and semi-
skilled workers where as local unions have a variety of people working in
different localities. At each location a different local union represents workers,
and they may be a combination of both semi and unskilled workers. A mixed
local union, which is a combination of unskilled, semi-skilled and skilled
workers, it exists today in the Electric utility industry.
The framework of a local union is depicted in Figure 4-6. Starting from the
ground level, we first have the steward, who is most often elected by the
workers. In a mixed or Industrial union any problem that the steward is unable
to handle is passed onto the grievances committee, who in turn present it to
the higher management or the HR department. For craft unions the process is
different. The steward-known as representative- himself reports the issue to a
full time employee of the union or their business agent. This process is called
grievance procedure. It tends to limit the power of the HR specialist and line
managers by questioning and challenging their decisions. A successful
complaint works as a model that helps the union limit any such decisions in
the future. Whether workers would come to the HR specialist with complaints
about the union depends on their experience with the union’s local
management and its image in the o the worker’s mind.
I
Grievance
Committee
iI Bargaining
committee
HMSIMSH
“Local union members were largely satisfied at being a part of the local
union’s day-to-day affairs, with their contract’s terms and the
communications and informational materials given to them by the officials.
Moderate approval and satisfaction was granted to: the effectiveness of union
leadership, the overall worth of union meetings, and the administration of
grievances. The main problematic issues were: inadequacy of union training,
lack of willingness of the leaders to take action on the personal complaint of it
members, and uselessness of their meetings in addressing job related issues.
The union’s contract places the HR specialist and supervisor under even
greater pressure, the HR department has to depend on it for specific
guidelines and is restricted by its rules. This contract lists down the wages,
hours, working conditions, grievance procedures, safety standards,
probationary periods, and benefits of the employees. These are decided in
meetings between the bargaining committee of the unions and the HR or
industrial relations department.
National unions: These head or supervise all the local unions. The work of
these organizations is not only to look after the interests of its members but
also maintaining a staff to aide the local unions in legal matters, carrying out
negotiations, training local officers, grievance handling, and providing expert
advice. The local unions, in return, revert of their share to the national union
and also bound, legally, to
follow its constitution and it is by laws. The national union heading the craft
unions often leaves some decisions up to the discretion of the locals.
However, industrial national unions involve themselves with all issues
pertaining to the native workers. An example being that the national union
orders that all bargained contracts are to be signed by it, to ensure equal
treatment of allworkers.
Craft Unions
Craft unions offer workers opportunities to learn a craft or skill. They offer an
apprentice ship program that provides a job along with train Hence people
join this kind of union for practical reasons, for ins"' finding a job. For
instance, in construction industry workers are ta on a project by project basis.
After the job is done they are laid off the contractor and they approach the
union for recommendation other firms, in need of their services. Thus Craft
unions do the w job placement and have great benefit. They offer other
services, as such as, as health insurance, life insurance, and pension plans t'
financed through employer payments. Union
industrial Unions
These are formed when HR policies cause mistreatment. HR po’'
affect discipline, layoffs, compensation, job design, and comm are
especially important. When these policies are ignored employers are
acting indifferently to employee needs, a unier formed to bring
changes in the policies. First level manag who link employees and
management. If the supervisor unable to take care of the workers, a
union may be formed is easier to attract members for it. People who
are already put pressure on their peer to join the group. The peer p
superbly on new workers as they are there to make an im
Reasons why people avoid unions are also diverse. For instance, a person who wants to be a
manager may see this union membership as a hurdle in their way to the managerial post.
Others don’t view the union as a friend but as another boss, who wants them paying extra
costs. Someone may have heard of an incident that gave them a negative impression of
unions, so they might not be ready to risk it. Lastly the corporation might be so fair and just
in its HR dealing that workers don’t feel the need of establishing a union.
Professional Associations
A majority of professionals, instead of joining unions, link themselves to professional
associations, which help them further enhance their knowledge. The associations these
professionals belong to start functioning as unions when their members are employees. Such
unions are called ‘quasi unions’. Poor treatment at the hands of management has seen much
education associations and nurse associations turn into unions, to protect the interests of
their members. These result from unacceptable HR policies, supervisory practices etc.
Self employed professionals would receive little to no benefits from joining a union, so they
avoid it. Those who work under favorable work conditions see no need for it either.
Organizing a Union
Unions hire professional organizers for developing the frame work for the union; however
the union’s nature depends on the nature of its employees.
Union organizers cannot be blamed for making workers join unions because their purpose is
to provide guidance and assistance to workers. They do brief workers about the benefits of
joining a union. But their main focus is deciding how and by what means the union will
place the workers demands and needs in front of the management. This is done by
discussion about rules, discipline and compensation. Some unions also provide advisory
services to individuals.
Recently it has been noticed that most blue collar people tend to avoid such associations
hence the associations target are teachers, nurses and white- collar government personnel.
External Factors
• Have any labor commandments influencing your industry changed lately causing the union
organizers’ interest to develop in your organization?
* Is your organization preparing for an increase in workforce in order to arouse the union
organizers and motivate them to organize the corporation'prior to its expanding magnitude
making it difficult to organize?
Internal Factors
■ All through the increasing previous organizing efforts, has your organization been unsuccessful
in proper handling of the uni complaints?
■ Has the rates of turnover and absenteeism surpassed organization’s usual norms?
■ Has the company fallen short of carrying out the job satisfa surveys? If it has performed
this task, are the trends inclined tow dissatisfaction?
■ Have fringe benefits and rewards to employees plunged down the average industry, community,
or unionized firms rate?
■ Are the workers infrequent in implementing and fail to use company’s procedures for sorting
out employee complaints?
Another set of signs can be the changes in the employee behavior indicating a
union rise is in pipeline. Figure 4-9 mention the various types of behaviors
that FIR professionals and supervisors must look out for. As in case of internal
and external factors, the more the yes answers the more inevitable the
occurrence of unionization. Yet these are only hints not evidence.
Lastly, unionization creates another concern towards the actions of the management. When any
member of the management commits an unfair labor practice, the organization has to go
through expensive, time-consuming lawsuits. As further validation for creating a union, the
organizing committee may highlight any violations committed by the management. Union
leaders may file claims for the introduction and implementation of new more employee favorable
policies, despite the fact that the actions of the management are lawful.
examination of how people learn, and the different learning styles that we all
have.
The reasons why organizations carry out training will then be considered,
followed by a description of a systematic approach organizations may tike to
training. The chapter concludes by considering the different levels of training
evaluation that maybe used by organizations.
Induction training
This is the training that is given to individuals when they join an rsanization.
Normally there will be both generic and specific elements to this induction
training. The generic elements are suitable for anyone who joins the
organization and will cover topics such as the : riranization’s mission and
values, the reward systems, performance ~ inagement, health and safety, etc.
Many businesses will run this training with participants drawn from a range of
business units. What the participants have in common is that :hey are new to
the organization. Indeed, some organizations tailor their recruitment process
to ensure that new entrants to the business start
163
this type of training on their first day, before going to their units.
Thereafter, the induction training will be specific to the unit and role to
which the new entrant has been recruited.
Technical Training
-
This is the training that an individual receives to provide thr the skills and
knowledge that they need in order to perform ~ role. This training will
almost certainly occur as part of an in induction training, but it will also
happen throughout the ' time with the organization. For example, it may be
that for a role, the volume of this training is too great to be carried ota one
course; therefore a staged approach is taken whereby the broken down into
smaller chunks or steps.
At the end of each stage of the training, the trainee’s perfo be assessed by
the trainer or some other assessor, for exarr.r-r leader or a trainer. Once the
trainee is deemed to be compe:=“ area, they then go to the workplace to
deal with this type of so build up their proficiency. Once they are deemed to
be . in this area, they then move on to the next step in the training before
putting these new skills into practice, and so on.
Professional Training
This is training for an individual on the “softer” skills that ire for them to be
_
successful in either their current or fut_ r example, this could be on
communication skills, in:e etc. Professional training is also helpful in
developing le managerial skills in the employees.
The Approach to
Learning is a concept applicable to all behavior and is c acquiring
Learning and
knowledge, attitudes, values and responses. It b have some
Learning Styles
knowledge of how people learn to provide e ~
There are several different approaches that attempt to people learn, but all
involve the idea that there are differed* that comprise the learning process.
What we are looking at here can also be called “experiential learning”. This is
the way that we have learned throughout our lives — from learning how to
walk to mastering how to operate a pc effectively! In order to engage with
experiential learning, those being trained need to
Concrete experience
In training we need to provide participants with an opportunity to practice
the skills that we are introducing them to. Primarily we are giving the
participants a forum to have some sort of hands-on experience of the skills
that have been introduced by the training.
* How did the team perform in comparison with the other teams?
■ Did I close on the sale at terms beneficial to the bank and the customer?
As can be seen from the above, all we are looking at here is a factual reflection
on what actually happened. A more in-depth analysis will rbllow in the next
stage.
Formation of modification concepts
This is the stage where we begin to consider why the points raisei previous
section happened; for example:
■ Why did I close the sale but not obtain a suitable arrange Testing
The stages and personality types associated with each staac of are:
Activists
Involve themselves fully in any new experience. They live for moment
and their thinking is dominated by immediate They are o'pen-minded
people who are not usually skerrJji result they tend to be enthusiasts.
Their outlook in life is * try anything once. They tend to react to
_
situations first. a a of the consequences. They will fill their days with
activity. - on brainstorming. They are gregarious people who set f with
others, but by being like this, they seek to be the cer.:rr
Reflectors
Like to sit back and consider experiences, looking at thers different
perspectives. They lay great store in the c from disparate sources and
consequently, they can decisions for a long time. Caution is their outlook in
i it. they tend to be quiet, taking a back seat during disc listen to others
points of view before coming in with tfc will usually have a low profile, with
a slightly distant and them. When they do commit to action, it is part of a
>.dl plan based on the past as well as on other people's they add to their
own thoughts.
Pragmatists
Want to try out learning to see how well they will work in practice. They will
actively seek new ideas, and experiment with their application. They are the
type who will return from a course full of ideas and can’t wait to try them out.
Pragmatists like to get on with things sooner rather than later and will quickly
get impatient with prolonged discussion.
■%y Training
Today, some form of training is carried out at all levels within financial
Should Be
services. Why is this training considered to be such a necessary part of
Carried Out
organizational life?
Enhances Performance
As outlined at the start of this chapter, training can improve the individual’s
performance on a job through induction and later training. This improved
personal performance will result in improved organizational performance.
*
Legislative/ Regulatory Requirements
Organizations are often required to carry out training initiatives to comply
with legislation and regulation.
Increased Motivation
Training increases the motivation of employees by retaining their interest and
giving them a wider range of skills. In addition, staff can have increased
feelings of belonging to the organization due to the investment they see their
employer making in their development. Motivation may also be increased due
to the social contact that face-to-
Analysis Of
Organization
al Needs
Job Analysis
training Needs >
Now identified r
Objectives For
Performance
Feedback
<"
Person Analysis
Training Needs
Nov/ identified
* *
*
* *
Of
Programme And
implementation
r'. aiuation is concerned with the cost benefit of training in monetary terms
and the perceived value and usefulness from the point of view of the people
involved and the work they do. It can occur for the employee a number of
levels.
169
■ Was the material relevant to their work?
* How do they feel about the way in which the trainer delivered the material?
■ What did they feel about the training environment and support materials?
Therefore, having attended a training course, you will almost certainly have
completed some type of level i evaluation document and either returned it to the
trainer or sent it directly to the organization’s training department.
From a business and organizational perspective, this is the overall reason for a
training event, yet level four results are not typically addressed. Determining results
HRM Challenges
What is motivation?
McClelland’s Theory
Motivation
Workplace Diversity
Workplace Diversity
The “business case for diversity” theorizes that, in a global marketplace, a
company that employs a diverse workforce (both men and women, people of
many generations, people fromethnically and racially diverse backgrounds etc.)
is better able to understand the demographics of the marketplace it serves and
is thus better equipped to thrive in that marketplace than a company that has a
more limited range of employee demographics.
2. The company may miss out on a broader talent pool that might have been
available. When employee selections are not limited by such criteria as
age group, educational experience or location, this increases the
possibility of finding the right employee-employer match.
Employee Employee engagement is about the level of comm itment and involvement
Engagement an employee has towards their organization and its values. An
engaged employee istaware of the business context, and works with
colleagues to improve performance within the job for the benefit of the
organization. It is a positive attitude held by the employees towards the
organization and its values. HR practitioners believe that the engagement
challenge has a lot to do with how the employee feels about the work
experience and how he or she is treated in the organization. It has a lot to do
with emotions which are fundamentally related to driving bottom line
success in a company. There will always be people who never give their best
efforts no matter how hard HR and line managers try to engage them. “But
for the most part employees want to commit to companies because doing so
satisfies a powerful and basic need in connecting with and contributing to
something significant”.
1. The employees along with their distinctive psychological framework and know-how.
2. The employers and their skills of crafting an environment promoting employee engagement.
Engaged
Engaged employees are considered to be builders. They willingly yearn to understand and know
the expectations of the organization in order to fulfill and even surpass them. They are eagerly
inquisitive about their company and their position in it. They show persistent high level
performances and are keen to display and make use of their aptitude and skills at work. They
act as a driving force for their organization and with their zeal and novelty facilitate its growth.
Not Engaged
These types of employees focus more on the completion of the tasks rather than on the
achievement of anticipated goals and the end result. They expect to be given responsibilities
and carry out these jobs just for the sake of finishing them. Such employees are under the
impression that the organization does not acknowledge their efforts and does not contribute to
tapping their talents. This is because of the disengaged employees’ weak relationship with their
mangers and co-workers.
Actively Disengaged
These employees are considered to be the “cave dwellers”. They are “Consistently against
Virtually Everything”. They show their d issatisfaction from work by acting it out. These workers
seek every cha nee of disseminating pessimism in the organization and make attempts of
demoralizing the achievements of their committed coworkers. The problems cultivated by these
employees can harm the organization’s operation greatly due to the fact that all the workers
highly depend on each other for the creation of the organization’s products and services.
Importance of Engagement
It is prudent for the organizations to develop employee engagement, as the root cause of the
employees’ lack of involvement and motivation is their disengagement and estrangement to
their work. Lack of interest and impassiveness to one’s work mostly leads to meaningless work.
Another research shows that variables like employee turnover, customer satisfaction - loyalty,
safety and, to a lesser degree, productivity and profitability criteria are connected to employee
engagement usir.;: i. different resource of engagement (involvement and enthusiasm).
Another issue that public sector banks face is that they never pursued the
concept of employer branding from the recruitment point of view and thus
especially among the gifted and learned youth of today, it is one of the least
preferred career choices. Yet they cannot be blamed for this as they lack the
competitive advantage needed to magnetize the appropriate talent compared
to their private/foreign neighbors or other market players.
Talent Management
The following steps are taken in talent management:
■ Positioning of the right people at the right places
Talent Development
There are numerous concerns that should be addressed prior to . a long-
term commitment to a career, apart from creating condu. environment for
the employees to prosper in. These concerns the achievement of
satisfaction through job enrichment r recognition for good work, prospects
of performance based 7 accomplishment of flexibility in terms of job hours
and other aspects, receiving monetary and non-monetary benefits and
promotion process. The public sector is unable to provide such not because
the management is reluctant to provide them r _r the government, its
regulatory systems and procedures are ut»
In order to make the working place enjoyable to work at and in order to make the HR
systems more effective, certain measures can be taken:
Diversity 179
to organization. According to McKinsey’s report on “War for Talent”, it is
prudent for every organization to implement its presented seven talent
imperatives in order to achieve success in this intricate and competitive
world. These talent imperatives are constructing talent mind-set at all levels
of the organization, creatine employee value propositions (EVPs) in order to
retain employees in the organization, creating a high-performance oriented
culture, employing the finest talent available, evolving all the employees to
their fuller, potential and making sentient efforts to retain high performers. It
b crucia 1 for the HR department to apply some of these ideas for furnishing
the strategic imperatives.
Succession This is the procedure which involves ensuring the supply of planning
beneficiaries for the current and future chief jobs.
■ Forecasting individual career paths through objective approximation of future needs and
assessments of the potential.
■ Career counseling considering the future needs of the corporation and the individuals.
■ Filling in the vacancies in reality, with the help of recruitment managers, internal
promotions and etc.
Learning Outcome By the end of this chapter you should be able to:
“Impulses that stem from within a person and lead him to act in ways that will
satisfy these impulses”
The concept underlying motivation is that there is some driving force within
individuals which drives them to attempt to achieve a goal or objective in
order to satisfy their need or needs. After all, if we were not motivated, why
would we get out of bed in the morning?
A lack of motivation within a team can affect the morale, so if they are not
interested in what they are doing they tend to have low spirits. Likewise if
they are motivated and are interested and getting a “buzz’’ out of what they
are doing, they will generally be in good spirits. Motivational theories have
attempted to explain and predict the development and satisfaction of human
needs.
Three Different There are three major groups of theories of motivation. The first and earliest
Approaches to approach has been referred to as the traditional or utilitarian view of man.
Motivation The second is the human relations view (also known a? social or actualizing
man). The complex man view or process theories are the third approach.
Fortunately, according to Theory X, not all people are like this; there are some superior
people who can assume authority and control (those destined to be team leaders and
managers).
A predecessor, who held similar views, although writing 50 years earlier, is Frederick W
Taylor with his view' of man as a purely rational, economic being. He assumes employees
are motivated purely by economic reward and will work harder if they believe there is to be
more money.
hierarchy This is one theory that could be said to belong to the self-actualizing of Needs approach.
People’s needs are arranged in a hierarchy; when one need is satisfied, individuals move on to the next
level. His hierarchy arranges individual needs in an order of prepotency -the stronger ones at the bottom
and the weaker (but more distinctly human) ones at the top.
The hierarchy starts at the bottom with physiological needs and extends through four
levels of psychological needs:
■ eating
■ drinking
■ sleeping
■ sex
Safety and security covers the need to feel safe both now and in the future.
Working and saving can characterize the behavior used in an attempt to
satisfy this level of need.
Esteem needs cover the need to achieve both self respect and the respect of
others.
Self actualizing includes the desire to realize one’s potential - to feel that I am
more than a “cog in the wheel”, to achieve self fulfillment by creating,
innovating, learning and developing.
Self-
actualization
lob design
■ Can the theory be put into effect because there is no timescale to indicate when satisfaction is
supposed to occur at a particular level? The organization will therefore need to be constantly
checking and rechecking the satisfaction level of employees.
* Although Maslow implied the need pattern was the same in all individuals, it does seem to vary
from one person to another (for example, penniless artists who could be said to be on the esteem
level without satisfying the physiological).
■ It is difficult to fit motivators into categories (for example, a company car satisfies physiological
and esteem needs).
■ Research carried out into Maslow’s theory has found no empirical evidence to support his views.
Lawler and Suttle (1972) found no evidence to indicate that “satisfied” needs become any less
important than “unsatisfied” ones or that the satisfaction of lower level needs
<
-erzberg's Two This theory evolved in the later 1950s from a questionnaire answered by 200 engineers and
Factor Theory accountants asking them what made them feel exceptionally good or bad at work.
Recognition Supervision
■ Those that led to satisfaction and were intrinsic to the job - motivators (the first set of factors)
■ Those extrinsic to the job - hygiene factors. Although these could prevent dissatisfaction to some
extent, they never provided true satisfaction (the second set of factors).
He used the term “hygiene factors” by way of analogy, in the same way as providing a hygienic
sewerage system, you may prevent the plague from starting, but hygienic sewers will not cure a
plague once it has started.
Autonomy and responsibility for organizing and controlling one’s own work is the real answer. No
amount of environmental improvement can compensate for task impoverishment. However, this
presents significant challenges for organizations in the present day as the need for consistent levels
of customer service has led to many organizations agreeing standards and procedures that cover
many of the routine jobs in the business; therefore there is a reduction in the autonomy levels of the
individuals operating in this type of environment.
There are also some other problems wi g’s two factor theory:
■ The theory is method bound - if the same methodology is used, the same results are always
obtained, but if more searching questions are asked, the results are not the same.
■ The two groups of factors are not mutually exclusive as Herzberg suggested -motivators can also
act as sources of dissatisfaction.
McClelland developed his theory in the 1970s, citing various needs and motives (over 40 in total)
McClelland's theory
which are of importance to individuals and act as factors which influence behavior and
reactions. One of the needs
Individuals differ in the extent to which they experience this need. In order to assess this, McClelland
uses TPT (thematic perception tests) - a mixture of pictures to interpret verbal questions and
problems. The role of management is to determine the level of needs an individual possesses and
assign organizational duties in line with this.
■ likes initiative
■ enjoys new things and change, but is not so concerned about attention to detail
■ Belonging
■ enjoys being a member of a team or club loyal to department or team
■ The lack of attention given to the issue of how the needs interact with other organizational
factors.
View or Process may have hierarchies of needs but maintain that these hierarchies can change as
Theories circumstances change. Man is variable; he has many needs and does not necessarily find
fulfillment of all his needs in any one solution. He can respond to a variety of managerial
strategies - his reaction is dependent on the situation and the needs which are dominant at the time.
This view of motivation, together with some of the problems associated with the earlier theories,
gives an indication that simple theories of motivation are not enough to account for behavior in
organizations.
The theoretical models do not explain the individual context, how individuals understand, attach
meaning to and interpret the work situations they find themselves in.
Porter and Lawler's There are several theories very similar to that presented by Lawler and Porter but theirs is
Expectancy Theory perhaps one of the simplest to understand.
Percived Effort
* It takes account of the many intervening factors that determine motivation and attitudes to work.
This theory states that people are only likely to exert some effort when they value the rewards and see
that they will get these rewards as a result of doing what is required. An individual’s social
background can greatly affect their valuation of different kinds of reward. Some groups may strive for
improved social status, others will not.
As always, there are several difficulties with the theory that have to be
resolved:
Practical Although different factors can both motivate and de-motivate, there are
Applications of some common factors to consider, such as:
Motivation .,,
* High absenteeism
■ Late finishes
■ Backlog of work
■ Bad timekeeping
Team leaders and managers need to be aware of the signs so that they can
recognize them and intervene as necessary. Again, there is no prescriptive list
of these factors, but they may well include:
■ Boredom
■ Lack of training
Learning Outcome By the end of this chapter you should be able to:
■ List the steps businesses must take to ensure the ex standards are
met
Introduction— Ethics considers what is right and wrong and \v What is Ethics?
individuals and organizations is good or bad. Stra i we see
that there is an element of judgment in this, of ethics is
centered on human behavior; either for benefit or by humans
on behalf of organizations. One the subjective nature of
ethics is that you will rarely b that a behavior or outcome is
absolutely right or wr examination will present you with case
study see will be asked to exercise judgment about ethical the
examiner will give you credit for your conclus: may be
different to those in the next script marked as long as you
back your answer with rational a.gi are bound to arise in
capitalist systems because the enterprises are usually defined
in relation to ma value, which may in turn create wealth but
have for other individuals and groups.
Branches of ethics
The term “ethics” is generic, and is often studied in the broader context of philosophy. As stated
earlier, it addresses right and wrong, though some consider ethics in relation to attitudes, behaviors
and actions that will enrich one’s life.
Normative ethics is of most relevance to our study. It looks at how people actually act and whether
such actions are right or wrong. There are three established branches of normative ethics:
■ Virtue ethics
■ Deontological ethics
Ethics based on duty relates to absolute moral rules as propounded by philosophers such as Kant. It is
suggested that some moral rules should apply in all circumstances. Kant refers to such rules as
categorical imperatives. A test of this approach is never to act in a manner that would be condemned
in others. This deontological approach distinguishes between people and objectives - people have
feelings and dignity.
Ethics based on consequences (or the teleological approach; judsc-5 actions by looking at outcomes.
Bentham was a utilitarian writer who maintained that actions should reflect the greatest good for the
srcate<:
The Bentham principle can also be used to justify unethical actions taken to secure a contract on the
basis that nobody actually loses out. A higher principle might be to test whether the individual would
be proud to tell his or her family of such actions.
The one ethical question is the extent to which the organization must pursue broader purposes.
Business Ethics Traditionally, it is the senior management of the organization who consider such
issues. The accountability for addressing the organization’s ethical position or stance lies with the
board of directors. The decisions taken by the board in this respect are likely to be unstructured (non-
programmable) and will be influenced by many factors, including:
■ The influence of regulators and others who can force the organization to behave in a particular
manner
The level of discretion at different levels of the organization and the nature of decisions has a crucial
bearing on the extent to which the organization’s values are applied consistently or otherwise. During
the 1980s and 1990s, there was a shift in management thinking that moved towards empowerment of
managers. The idea underpinning this is that managers further down the hierarchy will be more
intimately familiar with the needs of their stakeholders, particularly their customers and their staff.
With competition increasing, organizations had to demonstrate that they could adapt to change
quickly. Successful organizations were those who could not only react to small changes in their
environment but also predict and pre-empt such changes.
This notion of empowerment sits comfortably with the traditional role of managers in banks.
Historically, retail branch managers were seen as important figures in the community. They could
take important decisions, some of which could mean the difference between the success and failure of
small companies who banked with them.
In some banks it was also accepted practice for the manager to personally
receive commissions from business referred to other organizations (such as
insurance companies) resulting in a practice of incoming managers making
“goodwill” payments to those who retired or moved on to more senior
appointments. This would of course be totally unacceptable (and illegal)
today.
1
The concept of fiduciary responsibility is difficult to define, bui f* generally be regarded as a high
Fiduciary form of moral responsibility - goes further than contractual accountability to others.
Responsibility
Some de>:~ fiduciary responsibility as a duty of faithful service. Others express ir B terms
of a person having responsibility for the property or interests others.
The ethical standards expected from companies in the global economy are:
■ Workers are not required to lodge “deposits” or identity papers with their employer
* Working Conditions
■ Safe and hygienic work environment - considering the industry/ type of business
■ No child labor
■ Wages
■ Working Hours
■ No discrimination
* No discrimination in hiring, compensation, access to training, promotion, termination or
retirement based on race, caste, national origin, religion, age, disability, gender, marital
status, sexual orientation
■ Treatment
■ Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and
verbal abuse or other forms of intimidation shall be prohibited.
■ Job security
■ Working conditions
■ Control of pollution
management
Implication of ethical conduct is becoming an imperative function for management. While
compliance requires adherence to the law, most accept that the values and culture of the
organization should refer to broader objectives.
■ Organizational cultures that foster the “right” behaviors. Paine suggests that ethical decisions
are becoming more significant and may be supported by two approaches:
■ the compliance-based approach, designed to ensure that companies operate within the
letter of the law
Ethical Stance
Johnson and Scholes define ethical stance as the extent to which the organization will
exceed its minimum obligation to stakeholders. The ethical stance of any business can be
evaluated by considering the following issues.
A major determinant of ethical stance is where the responsibility for ethical conduct lies in the
sector or company concerned. For example, in the medical profession (in the United Kingdom)
this is influenced by the policies of the National Health Service which sets out broad (and
sometimes specific) guidelines on the use of certain treatments. Linked to this factor is the
regulatory regime.
Johnson and Scholes also suggest that how the ethical stance is incorporated
into business activity will shape ethical behavior in an organization. This will
be affected by organizational structure and the level of autonomy of business
units, together with the zeal with which the organization’s cultural values are
communicated and implemented.
Advantages of Absolutism
In some countries citizens are used to rules driven from a central source, such as a religion or central
government. In Germany, a proverb states “If there is no rule it is forbidden”, though modern
Germans usually quote this in an ironic manner nowadays.
When principles are derived directly from religious authority, the majority of citizens will accept it.
The absolutism approach is more definite. Everyone knows where they stand. In Pakistan adultery
and alcohol are forbidden and that’s it. If you have a relationship outside your marriage or make or
consume alcohol, you are breaking the law and your actions are judged to be wrong.
Disadvantages of absolutism
Over time the norms of society change which means that what was once universally accepted may
no longer be so. If the absolute model is driven by central government and legislation, this may not
be a problem. The most obvious contemporary example is homosexual relationships, which were
forbidden by law in the United Kingdom but are now legal. However, if the views of society run
deeper, such as religious principles, there can be a big problem in facilitating change.
As universally applicable laws are regarded as binding, a problem occurs when the acknowledged
sources of law differ. For example, the state may disagree with the church.
Furthermore, those within the decision-taking hierarchy may also differ. A major problem arises
when two sources fundamentally differ on the same principle, or where the same source is
apparently contradictory. Some would argue that it is never right to tell a lie. Consider then the
dilemma of an individual who knows that his mother is terminally ill but the mother is not aware of
this. If the mother asks “Am I dying?” is it really wrong to say “no” in every case?
Relativism
This is sometimes called the non-cognitive approach to ethics. It states that it is not possible to
acquire objective knowledge of moral principles; therefore all moral statements are subjective and
open to challenge or debate.
Relativism accepts the differences between rules of behavior in different
cultures and communities.
Advantages of relativism
The approach acknowledges cultural diversities, which are important in
societies where communities are made up of several different ethnic groups
or races. It does not mean that everyone will be happy with the system.
Disadvantages of relativism
By accepting that everything is relative, some argue that this approach will
always result in contradictions and ethical dilemmas. If everyone is right, who
is wrong? Some suggest that relativism promotes a belief that anything is
acceptable. This may compromise moral values and decent behavior.
ate rest Financial services organizations and their employees and agents have a duty to
take reasonable care to identify potential conflicts of interest and take actions
that are appropriate to address them. A conflict of ir.re'est can arise from two
situations:
■ A decision will have a positive impact on one client and a negative impact
on another client.
Generally, the first situation is less difficult to resolve than the second
situation.
241
Self-interest
The individual may have a financial interest in a transaction proceeding. The most
commonly encountered situation is where a broker or employee will receive
commission income from completion of a contract with the client. There are several
safeguards in place to prevent mis-selling. The
individual may have a close business or personal relationship with the client. This can
be of enormous significance to a banking organization. In the 1980s a major freight
company was permitted to increase its overdraft to unacceptable levels because the
bank’s business adviser did not have the courage to say “no” to the client’s
representative with whom he had a close business relationship, developed over many
years. Today such situations arise rarely as banks are much more rigorous in applying
centralized controls over large exposures.
“Soft” commissions, such as gifts and hospitality, can create a conflict of interest. This
is most likely to occur when such gestures cease to be rewards and turn into
inducements to do further business. There is sometimes a thin line between a “thank
you” and an inducement.
Many organizations attempt to reduce the risks arising from self-interest in a proactive
way; for example, they may:
* Introduce and maintain a gift register and make it a policy of the organization that
all gifts be declared and recorded.
Sometimes the fear of losing the customer may result in the financial institution
agreeing a fee or charging structure that is simply too low. This practice is sometimes
referred to as “low balling”.
Self-review
These conflicts often arise in the field of auditing work, or where the client has
responsibility for evaluating the work or standing of others. For example, an internal
auditor may have to evaluate the quality of
a system but may also have been involved in developing and installing the system. The
individual here is bound to have preconceived opinions about certain aspects of the
In some cases, the financial services professional may have worked for or in association
with client organizations before joining the firm.
Advocacy
The term “advocacy” means to support. In the context of professional services, this threat
arises where a professional firm is called upon to support the client. There are many
examples of this, including banking organizations providing corporate finance services
and then being asked to support legal action by other financial institutions in the event of
default on loans. A bank may also provide small business loans to a client whose affairs
are then conducted in an exemplary manner, only later to be asked by a second
mortgagee to enforce securities.
Banking organizations now reduce the advocacy threat by taking a neutral position when
considering the business plans of clients. The well-known Verity case involved a branch
manager agreeing that the client’s business assumptions were sound, only to be sued later
for giving misleading advice. The clients won their case.
<
Familiarity
This can arise in several ways:
■ The firm has a long-standing relationship with the client and the principals of each
entity are too familiar with one another
individual may have a close business or personal relationship with the client. This can be
of enormous significance to a banking organization. In the 1980s a major freight
company was permitted to increase its overdraft to unacceptable levels because the
bank’s business adviser
whom he had a close business relationship, developed over maaf Today such
situations arise rarely as banks are much more r,£rrc* applying centralized controls
over large exposures.
“Soft” commissions, such as gifts and hospitality, can create a of interest. This is
most likely to occur when such gestures eeisc rewards and turn into inducements to
do further business, sometimes a thin line between a “thank you” and an induce-ea.
Many organizations attempt to reduce the risks arising frorr. seJ-rr in a proactive
way; for example, they may:
■ Introduce and maintain a gift register and make it a : Eq| organization that all
gifts be declared and recorded.
Sometimes the fear of losing the customer may result in ire institution agreeing a
—
fee or charging structure that is s:
This practice is sometimes referred to as “low bailing^
Self-review
These conflicts often arise in the field of auditing work, or client has responsibility
for evaluating the work or sr^~-~
For example, an internal auditor may have to evaluate d
a system but may also have been involved in developing and installing the system. The
individual here is bound to have preconceived opinions about certain aspects of the
system and cannot therefore make a truly objective assessment.
In some cases, the financial services professional may have worked for or in association
with client organizations before joining the firm.
Advocacy
The term “advocacy” means to support. In the context of professional services, this threat
arises where a professional firm is called upon to support the client. There are many
examples of this, including banking organizations providing corporate finance services
and then being asked to support legal action by other financial institutions in the event of
default on loans. A bank may also provide small business loans to a client whose affairs
are then conducted in an exemplary manner, only later to be asked by a second mortgagee
to enforce securities.
Banking organizations now reduce the advocacy threat by taking a neutral position when
considering the business plans of clients. The well-known Verity case involved a branch
manager agreeing that the client’s business assumptions were sound, only to be sued later
for giving misleading advice. The clients won their case.
Familiarity
This can arise in several ways:
■ The firm has a long-standing relationship with the client and the principals of each
entity are too familiar with one another
3ws 203
Loss of
general the client
public.
The threat of litigation can be reduced but never avoided entirely. All
providers of professional services should have adequate professional
indemnity insurance in place to ensure that the compensation and expenses
incurred can be paid if a case against the firm is successful. This does not
reduce the liability of the firm and cannot avoid the damage to reputation,
but it does ensure that the claimant can be paid. Some regulators and many
professional bodies insist that practicing firms have this insurance cover in
place.
Intimidation threats also arise when a client seeks a second opinion from
another professional firm. This occurs in the accountancy, legal and medical
professions in particular. It is also quite common for the second opinion to
differ from that of the original firm. There are often two or more views of any
given situation and intelligent people have a right to disagree with one
another.
Whenever a second opinion is sought, there are risks to all parties involved. It
cannot be assumed that all will be working from the same information, or
even when they are working from the same information, that it will be
represented in exactly the same way. The directors of the client company may
deliberately withhold information, making a variance between opinions
inevitable.
There are various ethical considerations to take into account here. For
example, if an accountancy firm is invited to consider information with a view
to forming a second opinion, it should seek permission to contact the original
audit firm if it is necessary to do so.
■ internal procedures
■ consequences of each
The ethical decisions should turn on the answers to a series of questions:
* What are the facts of the case?
■ What are the norms, values and principles relating to the case?
In some cases it may be necessary to review the safeguards that are in place
by engaging the services of an independent professional. Clier.:? may also be
advised to seek independent legal or financial advice where appropriate.
■ Focus on the spirit of compliance and reliance to some extent on self
regulation
* A framework setting out the safeguards that will apply to address the threats
posed by non-compliance.
Safeguards
Several safeguards may be applied to support compliance with the principles
laid down in a code. They are rooted in extemalh dri\er. measures and the
systems and procedures of firms themselves.
The law
The academic board or other academic authorities may lay c; .- minimum
qualification and experience requirements. These may re examination based,
competence-based or a combination of these.
Codes of practice
Some codes apply to many businesses. For example, a Combined Code on
Corporate Governance was applied to public limited companies, listed on the
stock exchange, in the United Kingdom.
Professional standards
As we have seen, these are centered on individual rather than corporate
compliance and are focused on the member. These standards incorporate
personal qualities criteria and disciplinary sanctions.
Monitoring
Many professional bodies monitor the conduct of firms within the financial
services industry and investigate individual transgressions where appropriate.
Some of the undesirable practices are inappropriate policies of organizations
while others are divergences from accepted practice by individuals. Other
examples of inappropriate actions can be:
Do Codes of Codes create greater awareness of professional standards and also generate
Conduct and Ethics further debate about ethical behavior, but they cannot complete the task of
Work? ensuring that individuals working in the financial services industry will
behave ethically at all times. That is too ambitious and there are many
drawbacks:
■ An individual can read this book and attend lectures for many hours, but
this will not necessarily make the person a more ethical person
In This Part
Chapter 1: Organizational Behavior Concepts
-£5~ning Outcome By the end of this chapter you should be able to:
■ Define and describe the term "Organizational Behavior"
Introduction Organizational Behavior (OB) is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within organizations, for
the purpose of applying such knowledge toward improving an organization’s
effectiveness. OB is a distinct area of expertise with a common body of
knowledge.
Organizational Behavior (OB) is the study that explores how the behavior
within the organization is influenced by individuals, groups and structures,
thus assisting the organization in using this knowledge in enhancing its
operations and efficiency. It is a distinct and unique area of proficiency that
contains a common body of knowledge.
* Mission equals the action; vision is the ultimate result of the action
■ Mission answers the question “What would not happen if we were not
here as an organization?” Or more positively, “What change is achieved
because we exist?”
■ Vision answers the question: “What are the results, the ends, the
consequences of our action?”
Organizational values
Organizational values define the acceptable standards which govern the
behavior of individuals within the organization. Without such values,
individuals will pursue behaviors that are in line with their own individual
value systems, which may lead to behaviors that the organization doesn’t
wish to encourage.
Clearly, the organization’s values must be in line with its purpose or mission,
and the vision that it is trying to achieve. So to summarize, articulated values of
an organization can provide a framework for the collective leadership of an
Human Resource Management and Organizational Behavior | Reference Book 2
organization to encourage common norms of behavior which will support the
achievement Of the organization’s goals and mission.
Organizational culture
Organizational culture is an idea in the field of organizational studies and
management which describes the psychology, attitudes, experiences, beliefs
and values (personal and cultural values) of an organization. It has been
defined as “the specific collection of values and norms that are shared by people
and groups in an organization and that control the w'ay they interact with each
other and with stakeholders outside the organization”.
Strong culture is said to exist where staff respond to stimulus because of their
alignment to organizational values. In such environments, strong cultures help
firms operate like well-oiled machines, cruising along with outstanding
execution and perhaps minor tweaking of existing procedures here and there.
Research shows that organizations that foster strong cultures have clear values
that give employees a reason to embrace the culture. A “strong” culture may be
especially beneficial to firms operating in the service sector since members of
these organizations are responsible for delivering the service and for evaluating
customer feedback about the service. Research indicates that organizations may
derive the following benefits from developing strong and productive cultures:
■ Better aligning the company towards achieving its vision, mission, and goals
Productivity
Productivity is when an organization successfully accomplishes its objectives at
the least possible cost of converting its inputs into the desired outputs.
Intrinsically, productivity greatly emphasizes the significance and achievement
of effectiveness and efficiency. For instance, a hospital is the most productive
when it successfully accomplishes and fulfills the requirements of its patients
and the most efficient when it does this at the lowest possible cost.
Additionally, a hospital accomplishes productive efficiency when it successfully
produces a higher output with its existing staff by reducing the number of days
a patient stays admitted in the hospital or by increasing the number of staff-
patient interactions per day. In contrast, a business organization achieves
productivity by accomplishing its sales and market share goals with efficiency.
Return on investment, profit per rupee of sales, and output per hour of labor
are some of the standard measures of estimating efficiency in a business
organization. Productivity can be seen from an individual's perspective as well.
Turnover
Turnover is the concept that signifies the voluntary and involuntary permanent
departure from an organization. High turnover signifies high enrollment and
selection and training costs. These costs can be immensely high and may take
you as a surprise. When highly qualified and erudite employees leave an
organization, and the replacements most appropriate and willing to take up the
jobs need to be found, a high turnover rate may lead to a huge disruption in the
manning process of the organization.
Every organization has a certain turnover rate. However, in case the right
people are leaving the organization, the turnover rate can be positive. This
includes the departure of marginal (unimportant) and sub-marginal employees.
It helps the organization replace a poorly performing employee with a more
experienced and motivated employee, it can open up a gate towards increased
promotions and it could equip the organization with novel and fresh ideas.
Successful organizations look for employees who are more than willing to
perform additional tasks that are not a part of their job description and who
always perform extraordinarily. In the current fluctuating market, where
organizations perform more and more tasks in teams and where flexibility is a
necessity, organizations seek for employees who willingly participate in “good
citizenship” behaviors like helping others in their team, volunteering for extra
work, avoiding pointless conflicts, respecting the spirit as well as the letter of
rules and regulations, and gracefully tolerating occasional work-related
impositions and nuisances.
Organizations seek for employees who show innovation in doing activities that
are not included in their job description. Substantial evidence signified that
organizations with such a workforce surpass those who lack such a workforce.
Therefore, OCB is a dependent variable for OB.
job Satisfaction
Lastly, the dependent variable job satisfaction is a proactive feeling about one’s
job ensuing from an assessment of its characteristics. This variable in contrast
to other dependent variables indicates an employee’s attitude rather than
his/her behavior. It is yet considered a primary dependent variable due to two
reasons; its established relationship to the performance factors and the many
researchers’ value preferences. The basic principle saying that satisfied
employees are more productive than dissatisfied employees has been there for
years, but now researches support this principle with the assistance of
questions related to satisfaction-performance relationship. In conclusion,
advanced societies should stress on the significance of the quantity (material
acquisitions and higher productivity) as well as quality of life.
The initiating levels or the foundation of our model highly depends on the
understanding of individual behavior, considering our unswerving credence
which specifies that an organization’s behaviors can preeminently be observed
as a set of highly intricate building blocks.
Individual-Level Variables
It is considered prudent for the managers to make use of existing human
resources rather than the new ones - human resources initially utilized by
someone else. Employees when come into a new organization are considered to
be used cars as everyone is unique and different. Some arc “low mileage”, these
are the employees whose skills are watchfully utilized by organizations and
thus have restricted experience to the realism of the elements. In contrast,
some employees are “well worn” as their skills and knowledge ability has been
utilized roughly. Thus this signifies that employees enter an organization with
particular personality that further influences and affects their performance and
behavior in the organization. The most common characteristics among the
many are personal and biographical characteristics that majorly include factors
like age, gender, and marital status; personality characteristics; an innate
emotional framework; morals and attitudes; and basic ability levels. All these
characteristics are fundamentally in position as soon as it enters the workforce
and thus most of the times management is unable to make any amendments.
Nonetheless, they significantly influence or have a genuine brunt on the
employee behavior.
Group-Level Variables
The behavior of individuals in a group differs from the overall or summation of
all individuals’ acting in the similar manner. Our model becomes more intricate
due to the fact that people in a team behave in a different manner than they
behave individually. Consequently, for the understanding of OB and the
development of its comprehension, it is essential to study the behavior of
groups; how individuals in an organization while working in a group execute
the behavior that if being expected from them, according to the group, what are
the acceptable moral and behavioral standards and how much are the
employees concerned towards each other. Some other factors that it highlight
include the understanding of efficient work teams, commun::a::cn. leadership,
power and politics, and how levels of conflict influence group behavior.
Decision Making
Decision making is an important element in leadership and therefore a factor in
successful management.
According to Vroom and Yetton (1973), decision making may be described as:
Productivity
Absence
Turnover
Deviant I
workplace
b
e
h
Citizenship
a
vior
Organizational
Culture
Organization
Systems Level
Leadership
L and tiust
Work teams
**
Strategic Decisions
There are several characteristics associated with decision making that let us
determine whether the decision is strategic. The first area to think about is
whether the decision is likely to affect the long-term existence of the
organization. If the answer to this question is yes, then we are likely to be
looking at a strategic decision.
Operational Decisions
Operational decisions are concerned with ensuring that the day-to-day
operations precede smoothly; for example, decisions about a breakdown in
technology, reorganizing staff when there is absence, or amending a plan
which is not working. It seems that if a manager or employee is to make
successful decisions, a similar pattern of stages should be followed, which is
what we will look at in the next section.
The decision-making process
Problem awareness
The environment, both external and internal, should be constantly monitored
Specify
The decision objectives have to be specified with the key result areas and
clearly defined standards of performance. The likely risks and constraints
need to be identified. What the decision makers hope to achieve should be
clarified.
Diagnosis
The problem must be analyzed and the causes scrutinized before action can
be taken.
Establish criteria
The methods or criteria to be used in the appraisal of different options need to
be established before they can be applied.
Appraise alternatives
Alternative solutions or courses of action must be appraisee. Each is evaluated
in terms of the quantity and quality of informati :>n :rat can be provided; the
costs of implementation of the various alternatives should also be explored.
Costs and benefits can be expressed in bo:h quantitative and qualitative terms.
Choose
The best alternative is then selected by an individual or a group of interested
parties.
Implement
Evaluation
■ Ensuring that the information available is adequate for the decision. Risk
management
1. Analysis of risk
Models are used throughout the financial services industry globally. Examples
of the purposes for which models are used include:
Individual influences
An individual may influence the way in which information is acquired,
processed and used. Research reveals that dogmatic or authoritarian
personalities show a lack of tolerance for ambiguity and uncertainty and are
less likely to search for information. They are also less capable of dealing with
inconsistent information and are les> flexible in approach.
Those who regard power as important can use information as a tool for
achieving personal objectives, resulting in the withholding of information in
order to maintain control or win favors. This can be detrimental to decision
making which relies on cooperative or combined efforts, and possession of the
right levels of information. Training provided by an organization sometimes
may resuir in an interference with the decision process. This can arise when
the decision ru es r procedures do not fit the decision; rigidity can result and
_
mpa r the capacity to react to circumstances although the employee will 'r-e c
fess time analyzing the problem and therefore it can be to their cc -'
Organizational influences
The division of labor in organizations allows for speck! izs±«r. n decision
making but also provides restrictions in the form of speck :rc language and
terminology, as well as communication barriers between different parts of the
business.
Organizational hierarchy
This is the organization of tasks in hierarchical form. It can lead to problems
in the processing and transfer ofinformation. The organization filters
information by providing less detail to the top of the business. Technology
has aided this process because senior managers can have direct access to
■ Is it a unique problem?
Leadership Those features which characterize a group’s effective performance are high morale
and high productivity. If productivity is high, unit costs will be lowered and
this will make the firm’s products more competitive. By the same token, high
morale is a good indication of low labor turnover and low absenteeism. These
are all positive indicators of effective leadership - a leader is someone who
influences others.
There are a number of definitions of leadership from the various writers in this
field. Mullins has defined leadership as: “A relationship through which one
person influences the behavior of other people”.
Fieldman and Arnold take things a little further, when they state:
“Leadership involves one person (the leader) consciously trying to get other
people (the followers) to do something the leader wants them to do”.
Leadership effectiveness
One issue which has concerned organizational theorists is why some leaders are effective and
others ineffective. You may well have experience of this from your own working life. A popular
boss is not always an effective boss. This person can sometimes hinder the performance of a
team by always putting the needs of the individual (or a number of individuals) first.
An effective boss is often the one who balances the needs of the team, individual and task that
has to be completed. The management of balancing these needs is generally known as “action
centered leadership”
Thus, achieve the task, build the team and develop individuals.
The difference between a need and what economists call a want is that a need cannot be done
without, whereas a want is something that can easily be done without- you may want a new
computer, whether you need one is a different matter.
Task Needs
The leader of a team has to get results, such as productivity, sales, etc. Consequently the
leader’s main contribution in achieving the required results lies in:
■ feel that they are making a worthwhile contribution to the group’s objectives
■ feel that the job demands the best of them and is giving them the responsibility to match
their capability
■ feel that, as an individual, they are developing and advancing in experience and ability
A team leader must try to achieve the required results and to manage his/her interpersonal
relationships and those within the group by acting in all three areas of overlapping needs.
Successful leadership occurs when influence brings about the behavior and results intended
by the leader. Effective leadership occurs when it results in functional behavior and the
achievement of team goals. Within an organization, the leadership influence will be
dependent on the type of power the leader can exercise over others. This exercise of power is a
social process and explains how different people can influence the behavior of others.
There are five main sources of power, as identified by French and Raven:
■ Reward power—based on fact and on the team members’ perception that the leader has
the ability and resources to obtain rewards for those who comply, such as pay, promotion
■ Coercive power — based on the fact and the team members’ perception that the leader has
the ability to punish those who do not comply
■ Referent power — based on the team members’ identification with the leader who
exercises influence because of perceived attractiveness - “charisma”; a manager may not be
able to reward subordinates but can still command respect
■ Expert power — based on the team members’ perception of the leader as someone who is
competent and has special knowledge
Another category of power defined by other writers is political power, which is derived from
knowing “how things work”, in other ords. :he politics of the organization.
Your power bases will depend on your job and position, but you will probably have at least
expert power. The sources of power ire based on the team members’ perception of the leader.
If suppliers believe ; manager has the power to withdraw an order, then the manager can
exercise considerable influence even though he/she may not have this power in reality.
■ the environment
A leader can also act as a model for his/her team - his/her attitude, energy, etc can set a
pattern and standard for others to follow. The leader is also a representative of the team in the
eyes of others - by being the link in the organization between the team and others. Team
members rely on their leader to act as the mouthpiece and occupy a representative role to
other parties.
Perception Management
Perception management is a process by which individuals organize and interpret their sensory
impressions in order to give meaning to their environment. However, what we perceive can be
substantially different from objective reality. For example, all employees in a firm may view it
as a great place to work - favorable working conditions, interesting job assignments, good pay,
excellent benefits, understanding and responsible management- but, as most of us know, it’s
very unusual to find such an agreement.
Why is perception important in the study of OB? Simply because people’s behavior is based
on their perception of what reality is, not on reality itself? The world as it is perceived is the
world that is behaviorally important.
When an individual looks at a target and attempts to interpret what he or she sees, the
interpretation is heavily influenced by the personal characteristics of the individual perceiver.
Personal characteristics that affect perception include a person’s attitudes, personality,
motives, interests, past experiences, and expectations. For instance, if you expect police
officers to be authoritative, young people to be lazy, or individuals holding public office to be
unscrupulous, you may perceive them as such, regardless of their actual traits.
context in which we see objects or events is also important. The •use at which
we see an object or event can influence attention, as can kxati on. light, heat, or any
number of situational factors. For example, in . restaurant on a Saturday night, you
may notice a young guest “dressed :c :he nines.” Yet that same person so attired for
your Monday morning ~;~.ugement class would certainly catch your attention (and
that of the rest of the class). Neither the perceiver nor the target changed between
Saturday night and Monday morning, but the situation is different.