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Human Resource


IPM 213
Thomas H. JJäkel
ƒ Phone 00-2729-6305
ƒ E -Mail

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Recommended Text
Human Resource Management
Ninth Edition

John M. Ivancevich

ISBN: 007-123248-6

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

ƒ Performance Evaluation and Management

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

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What is
Human Resource

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

ƒ Equal employment opportunity compliance

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

ƒ It is action-oriented
ƒ It is people-oriented
ƒ It is globally-oriented
ƒ It is future-oriented

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Strategic Importance of HRM

The increased strategic importance of HRM means that:

ƒ Human resource specialists must show that they

contribute to the goals and mission of the firm

The actions, language, and performance of the HRM

function must be:

ƒ Measured
ƒ Precisely communicated
ƒ Evaluated

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The new strategic

positioning of HRM
means that
accountability must
be taken seriously

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Key Strategic HRM Concepts

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

oriented, point of view

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

productivity, salaries and benefits, recruitment, training, absenteeism,
overseas relocation, layoffs, meetings, and attitude surveys

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

meaningful goals

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

ƒ Training the human resources staff and emphasizing the strategic

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

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If the HRM function is

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

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HRM and Organizational Effectiveness
Criteria and Components
ƒ Performance
ƒ Legal compliance
ƒ Employee satisfaction
ƒ Absenteeism
ƒ Turnover
ƒ Training effectiveness
ƒ Training return on investment
ƒ Grievance rates
ƒ Accident rates

In order for a firm to survive and prosper and earn a profit, reasonable goals in
each of these components must be achieved. In most organizations,
effectiveness is measured by the balance of such complementary
characteristics as reaching goals, employing the skills and abilities of
employees efficiently, and ensuring the influx and retention of well-trained and
motivated employees.

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Objectives of the HRM Function

ƒ Helping the organization reach its goals

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

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Who Performs HRM Activities
In most organizations two groups perform HRM activities:
ƒ HR manager-specialists (staff)
ƒ Operating managers (line)

Competencies needed
ƒ Communication skills
ƒ Problem solving
ƒ Leadership
ƒ Recruiting/staffing
ƒ Employment law
ƒ Training and development
ƒ Technology
ƒ Forecasting
ƒ Compensation design
ƒ Benefits design and administration
ƒ Accounting and finance
ƒ Record keeping

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

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HRM’s Place in Management

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

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HRM Strategy

The HRM strategy will help aggregate and allocate a

firm’s resources into a unique entity on the basis of:

ƒ Its internal strengths and weaknesses

ƒ Changes in the environment
ƒ The anticipated actions of competitors

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Strategy, Objectives, Policies, Rules




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Levels of Performance
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

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

future oriented - It focuses on satisfying the needs of individuals at

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

the crucial difference between successful and unsuccessful

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

input from both operating managers and HR specialists

ƒ This dual role can lead to conflict, or it can result in more effective
HRM decisions

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A Strategic Management
Approach to Human
Resource Management

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A Diagnostic HRM Framework

The diagnostic approach

ƒ Can help operating managers focus on a set of relevant


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

picture or parts of the picture

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Diagnostic Approach to HRM

1. Diagnosis 2. Prescription

4. Evaluation 3. Implementation

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
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Internal & External Environment

Laws & Regulations Geographical Location Shareholders

Unions Strategy, Goals
Corporate Environment
Economy Culture

Productivity Nature of Task

Human Resource
Minorities Core Functions

Competitiveness Work Group

Labor Force Corporate Environment Leadership

Older Employees Educational Factors Experience

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Key Job Factors

ƒ Degree of knowledge and ability to use information

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

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Enhance & Sustain Competitive Advantage

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

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Three Levels of Strategy

(long term)

(medium term)

(short term)

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HR Activities by Level of Strategy (1)

LEVEL Employee Rewards (Pay Appraisal Development

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

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HR Activities by Level of Strategy (2)

LEVEL Employee Rewards (Pay Appraisal Development

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

Develop approach to Set up retirement Encourage self-

build labor resource packages development

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HR Activities by Level of Strategy (3)

LEVEL Employee Rewards (Pay Appraisal Development

Selection and and Benefits)
Operational Prepare staffing plans Administer wage and Use annual or more Use specific job-skill
(short term) salary program frequent appraisal training

Prepare recruitment Administer benefits Use day-to-day Use on-the-job

plans packages performance review training

Review performance of Use Web-based

workers daily training on a 24/7

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Strategic Challenges Facing HRM

Building A
Technology Competitive

Caliber of the Restructuring
Workforce and

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People and the Diagnostic Framework

Abilities of
Attitudes and

Motivation of Personality of
Employees Employees

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Desirable End Results

ƒ Organizational effectiveness is critically influenced

by human resource (HR) management practices

ƒ Changes in staffing, training, and compensation

form an integral part of a coordinated change effort

ƒ HR management systems must be in alignment

with other management systems

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A sound HRM program can contribute to organizational end results.
Before choosing an HRM program, the diagnostic approach suggests
ƒ the nature of employees
ƒ the external environmental influences
ƒ the internal environmental influences
ƒ organizational factors

HRM has become a strategic area now recognized as important in

creating and implementing the overall strategies of a firm.

Organizational factors must be taken into account to maximize the

effectiveness of HRM.

The work sector in which the organization operates is a key factor on

management systems and the HRM function

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Human Resource Planning

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Human Resource Planning

ƒ Both a process and a set of plans

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

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
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Human Resource Planning Process
Strategic Planning HR Demand HR Supply

Technological forecasts
Technological forecasts
Economic forecasts Annual employment requirements
Economic forecasts Annual employment requirements Existing employment inventory
Market forecasts Numbers Existing employment inventory
Market forecasts Numbers After application of expected loss
Organizational planning Skills After application of expected loss
Organizational planning Skills and attrition rates
Investment planning Occupation categories and attrition rates
Investment planning Occupation categories
Annual operating plans
Annual operating plans

If none
Variances End
Variances End

IfIfsurplus IfIfShortage
surplus Shortage

Decisions Decisions
Action Decisions Decisions
-Layoffs -Overtime
Decisions -Layoffs -Overtime
- -Retirement -Recruitment
Retirement -Recruitment
- -etc -etc
etc -etc

End End
End End

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Levels of Performance
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

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Factors Affecting Planning

ƒ Goals of the controlling interests in the organization

ƒ Government policies
ƒ Changing demographics and the future composition of
the workforce

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Strategic and Human Resource Planning

Strategic Planning –an organization’s decision about:

ƒ What it wants to accomplish (its mission)

ƒ How it wants to go about accomplishing it

ƒ HR planning is important for developing a strategic plan

ƒ HR planning is critical to the implementation of the
strategic plan

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Strategic Human Resource Management

ƒ The acknowledgement that HR policies and practices

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

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Four Stages of HR Planning

ƒ Situation analysis or environmental scanning

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

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

Analyzing the Current Supply of Employees

ƒ Skills Inventory
ƒ Data summarizing the employee’s past
ƒ Data summarizing status of present skills
ƒ Data that focus on the future
ƒ Management Inventory
ƒ Maintaining the Skills Inventory
ƒ Interview
ƒ Questionnaire
ƒ Data storage and maintenance
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Action Decisions: Shortage of Employees

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

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Action Decisions: Surplus of Employees

1. Attrition

2. Early 3. Creation of
retirements work

5. Layoffs 6. Terminations
4. Demotions

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Human Resource Information Systems

ƒ Integrated approach to acquiring, storing, analyzing, and

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

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Safeguarding Privacy in an HRIS

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

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

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ƒ There is no one best method for conducting HR planning

ƒ Methods and techniques all differ from organization to organization

ƒ Many companies do not devote enough time and energy to the HR planning

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

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

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

ƒ By matching supply and demand, the organization can know:

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

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ƒ Organizations must have a systematic way to determine

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

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Studying and under-

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

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Job analysis provides answers to …

ƒ How much time is taken to complete important tasks?

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

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The Vocabulary of Job Analysis

ƒ Job analysis – A purposeful, systematic process for collecting information

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

ƒ Examine the total organization and the fit of each job

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

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Levels of Performance
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

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The Uses of Job Analysis

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

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Who Should Conduct the Job Analysis?

External Internal
Job Analysis Job Analysis
Expert Expert

Supervisor Job Incumbent

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Methods of Data Collection

Observation Interviews

Job Incumbent
Diaries or Logs

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Specific Quantitative Techniques

Functional Job Analysis

Position Analysis

Management Position
Description Questionnaire

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Position Analysis Questionnaire (PAQ)

Major sections of the PAQ:

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

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Management Position Description

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

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Job Descriptions

ƒ A primary output of a systematic job analysis

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

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Job Descriptions Include

Job Title Summary

Equipment Environment

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

ƒ Job specifications must differentiate between:

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

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Job design integrates

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

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Job Characteristics Model of Work Motivation

Critical Personal
Core Job
Psychological and Work
States Outcomes

Skill variety
Experienced High internal
Task identify meaningfulness work motivation
of the work
Task significance High-quality
Experienced work performance
for outcomes High satisfaction
of the work with the work

Knowledge of the Low absenteeism

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

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Job Enlargement and Job Enrichment

Job Enlargement
ƒ Employees given a greater variety of things to do
ƒ Horizontal expansion of work
ƒ Greater number of tasks
ƒ Responsibility and authority not increased

Job Enrichment
ƒ Job is expanded vertically
ƒ Increased responsibility
ƒ Focus on growth and recognition

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ƒ Job analysis plays a major role in HRM activities and


ƒ The job is the major building block of an organization

ƒ Each characteristic of each job in an organization must

be clearly understood

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ƒ Organizational activities that influence:

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

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
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External Influences on Recruitment


Labor Market
Union Restrictions

Composition of Location of the

the Labor Force Organization

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Internal Influences

Strategy Goals

Corporate Culture Nature of the Task

Leader’s style and

Work Group

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Guidelines for Recruitment

ƒ Post notices regarding the availability of a job

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

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The Organization’s View of Recruiting

Recruiting Requirements

Organizational Policies and


Organizational Image

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Potential Employee’s View of Recruiting

Preferencesof of Jobsearch
Job searchand
recruits for
recruits for findingaajob:
finding job:The
organizationsandand recruit

Applicants’ abilities, attitudes, and preferences are based on:

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

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Responsibilities for Recruiting

ƒ In larger organizations, the HR department does the


ƒ In smaller organizations, multipurpose HR people or

operating managers recruit and interview applicants

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Internal Recruiting

Job posting and bidding

Inside moonlighting

Employees’ friends

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External Recruiting

Media Advertising E-recruiting


Executive Search

Special Events
Summer Internships Recruiting
College Recruiting

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E-Recruiting: Key Issues to Keep in Mind

ƒ Be careful not to inadvertently screen out diverse

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

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Consequences of Job Preview: Traditional Preview

ƒ Sets initial job expectations too high

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

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Consequences of Job Preview: Realistic Preview

ƒ Sets job expectations realistically

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

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Alternatives to Recruitment


Employee Leasing

Temporary Employment

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Evaluating Recruiting

Effectiveness of Sources of recruits


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ƒ A better job of recruiting and matching employees to

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

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Selection – the process by which an

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

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
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Internal Factors Influencing Selection

ƒ Organization characteristics that can influence

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

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External Factors Influencing Selection

ƒ Federal government employment laws and regulations

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

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Selection Criteria

Experience and
Formal Education
Past Performance

Characteristics and
Personality Type

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Reliability of Selection Criteria

ƒ Reliability – how stable or repeatable a measurement

is over a variety of testing conditions

ƒ How to assess reliability:

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

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Validity of Selection Criteria
ƒ Validity – addresses the questions of:
ƒ What a selection tool measures
ƒ How well it has measured it
ƒ It is not sufficient for a selection tool to be reliable
ƒ The selection tool must also be valid

ƒ Content Validity – degree to which a test, interview, or performance

evaluation measures the skill, knowledge, or ability to perform

ƒ Construct Validity – extent to which a selection tool actually measures

the unobservable trait that it claims to measure

ƒ Criterion-Related Validity – extent to which a selection technique can

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

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Typical Selection Decision Process

1. Application blank
1. Preliminary
screening Biographical Information Blank

2. Employment

3. Employment
Employment 4.
4. Background
Background &&
tests reference
reference checks
5. Selection

6. Physical

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Preliminary Screening

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

01/2005 Thomas H. Jäkel 95

Employment Interview

ƒ Two strategies for effective us of interviews:

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

01/2005 Thomas H. Jäkel 96

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

01/2005 Thomas H. Jäkel 97

Reference Checks and Recommendations

ƒ Do not always provide an organization with meaningful

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

01/2005 Thomas H. Jäkel 98

Selection of Managers

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

01/2005 Thomas H. Jäkel 99


ƒ The way that an organization hires employees is directly

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

01/2005 Thomas H. Jäkel 100

Performance Evaluation
and Management

01/2005 Thomas H. Jäkel 101

Performance Management

ƒ Process by which executives, managers, and supervisors work to align

employee performance with the firm’s goals
ƒ Defines, measures, monitors, and gives feedback

ƒ Performance evaluation is a crucial part of a firm’s performance

management process

ƒ The activity used to determine the extent to which an employee

performs work effectively
ƒ Informal performance evaluation system
ƒ Formal performance evaluation system

01/2005 Thomas H. Jäkel 102

Levels of Performance
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

01/2005 Thomas H. Jäkel 103

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
01/2005 Thomas H. Jäkel 104
Purposes of Formal Performance Evaluation


HR and
Motivation employment

Legal HRM research

Communication compliance

01/2005 Thomas H. Jäkel 105


To provide information that can serve

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

01/2005 Thomas H. Jäkel 106

Six Steps for a Systematic Process

ƒ Establish performance standards for each position and

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

01/2005 Thomas H. Jäkel 107

Characteristics of Effective Criteria

ƒ Reliability – a measure of performance must be

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

01/2005 Thomas H. Jäkel 108

Who Should Evaluate the Employee?

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

01/2005 Thomas H. Jäkel 109

360-Degree Appraisal Systems

ƒ Multiple perspectives of a person’s performance
ƒ Ratings can evaluate person based on actual contact and observation
ƒ Feedback is provided from multiple directions (above, below, and peer)
ƒ Upward feedback when anonymous, results in full participation
ƒ Learning about weaknesses and strengths is motivation

ƒ Feedback from all sources can be overwhelming
ƒ Rater can hide in a group of raters and provide harsh evaluations
ƒ Conflicting ratings can be confusing and frustrating
ƒ Providing feedback that is constructive requires a plan and well-trained
ƒ Not typically found in organizations

01/2005 Thomas H. Jäkel 110

Performance Evaluation Methods

Individual Evaluation Multiple-Person

Methods Evaluation Methods

01/2005 Thomas H. Jäkel 111

Individual Evaluation Methods
Graphic Rating
Forced Choice

Essay Evaluation
Critical Incident
Methods Technique

Behavioral Checklists and

Observation Weighted
Behaviorally Checklists
Anchored Rating
01/2005 Thomas H. Jäkel 112
Advantages and Disadvantages of Some Individual
Methods of Performance Evaluation

Individual Methods Comments

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

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

Essay Good in providing specific feedback if evaluator is a good writer; difficult

in making comparisons across those being evaluated.

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

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

01/2005 Thomas H. Jäkel 113

Multiple-Person Evaluation Methods


Forced Management by
Distribution Objectives

01/2005 Thomas H. Jäkel 114

Advantages and Disadvantages of Some Multiple-
Person Methods of Performance Evaluation

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

01/2005 Thomas H. Jäkel 115

MBO Program Process

ƒ Supervisor and employee conduct meetings to define key tasks of the

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

01/2005 Thomas H. Jäkel 116

Problems with the MBO Process

ƒ Too much paperwork is involved

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

01/2005 Thomas H. Jäkel 117

Problems in Performance Evaluation

Opposition to

System Design and

Operating Problems

Rater Problems

01/2005 Thomas H. Jäkel 118

Employees’ Problems with Performance Evaluation

ƒ Employees do not understand the system or its purpose

ƒ Employees are not work-oriented

ƒ Evaluation may be below the employee’s expectations

01/2005 Thomas H. Jäkel 119

Rater Problems
Standards of
Evaluation Halo Effect

Leniency or
Rater Problems
Central Tendency

Personal Bias “Recency of

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

01/2005 Thomas H. Jäkel 120

The Feedback Interview

ƒ Can be effective if the evaluation information is

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

01/2005 Thomas H. Jäkel 121


ƒ Properly performed, performance evaluation can

contribute to:
ƒ organizational objectives
ƒ employees’ development and satisfaction

ƒ These are goals of performance management

01/2005 Thomas H. Jäkel 122

Compensation: An

01/2005 Thomas H. Jäkel 123


ƒ Deals with every type of reward individuals receive in

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

01/2005 Thomas H. Jäkel 124

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
01/2005 Thomas H. Jäkel 125
Why do we compensate employees?

„ Payment for Services Rendered?

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

01/2005 Thomas H. Jäkel 126

Compensation Types

Financial Non-Financial

Direct Indirect The Job Job Environment

• Wages • Unemployment • Skill Variety • Sound Policies

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

01/2005 Thomas H. Jäkel 127

Objective of Compensation

ƒ To create a system of rewards that is equitable to the

employer and employee alike

ƒ The desired outcome is an employee who is:

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

01/2005 Thomas H. Jäkel 128



A Compensation providing*
system should
be: Cost-effective
(* focus of this chapter)

Acceptable to Secure
the employee

01/2005 Thomas H. Jäkel 129

External Influences on Compensation


Labor Market
Union Restrictions

Composition of Location of the

the Labor Force Organization

01/2005 Thomas H. Jäkel 130


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

01/2005 Thomas H. Jäkel 131

Internal Influences on Compensation

Strategy Goals

Corporate Culture Nature of the Task

Leader’s style and

Work Group

01/2005 Thomas H. Jäkel 132

Pay and Motivation

ƒ Motivation – set of attitudes and values that

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

01/2005 Thomas H. Jäkel 133

Theories of Motivation

Needs Two-Factor
Theories Theory

Social Reinforcement
Comparison Theories

01/2005 Thomas H. Jäkel 134

Pay and Employees’ Satisfaction

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

dislike of the employer’s compensation package
(including pay and benefits)

ƒ Lawler’s Model – the distinction between the amount

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

01/2005 Thomas H. Jäkel 135

Pay dissatisfaction is a function of six
important judgments:

ƒ A discrepancy between what employees want and what

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

01/2005 Thomas H. Jäkel 136

Pay and Employees’ Productivity

ƒ Studies indicate that if pay is tied to performance, the

employee produces a higher quality and quantity of

ƒ The key to making compensation systems more

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

01/2005 Thomas H. Jäkel 137

Compensation Decisions

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

01/2005 Thomas H. Jäkel 138

Pay-Level Strategies

High-Pay Strategy

Low-Pay Strategy


01/2005 Thomas H. Jäkel 139

Factors Affecting the Choice of Pay Strategy

ƒ The motivation and attitudes held by management

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

01/2005 Thomas H. Jäkel 140


ƒ The objective of the compensation function is to create a

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

01/2005 Thomas H. Jäkel 141

Compensation: Methods
and Policies

01/2005 Thomas H. Jäkel 142

Compensation System


A Compensation providing
system should
be: Cost-effective*
(* focus of this chapter)

Acceptable to Secure*
the employee*

01/2005 Thomas H. Jäkel 143


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

01/2005 Thomas H. Jäkel 144

Determination of Individual Pay

Three questions need to be addressed:

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

01/2005 Thomas H. Jäkel 145

Pay differentials are based on:

ƒ Individual differences in experience, skills, and


ƒ Expectations that seniority, higher performance (or

both) deserve higher pay

01/2005 Thomas H. Jäkel 146

Reasons for pay differentials

ƒ Pay differentials allow firms to recognize that different employees

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

01/2005 Thomas H. Jäkel 147

Methods of Payment

Flat Rates

Payment for Time


Variable Pay: Incentive


01/2005 Thomas H. Jäkel 148

Payment for Time Worked

ƒ General, across-the-board increase for all employees

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

01/2005 Thomas H. Jäkel 149

Variable Pay

ƒ Percentage of an employee’s paycheck is put at risk

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

01/2005 Thomas H. Jäkel 150

Variable Pay: Key Design Factors

Support by Acceptance by
management employees

organizational Timing

01/2005 Thomas H. Jäkel 151

Types of Variable Pay

Individual Incentives

Group Incentives

Organization Incentives

01/2005 Thomas H. Jäkel 152

Individual Variable Pay
ƒ Merit incentives
ƒ Employees fail to make the connection between pay and performance
ƒ The secrecy of the reward is perceived by other employees as inequity
ƒ The size of the merit award has little effect on performance

ƒ Individual incentives
ƒ Piecework
ƒ production bonuses
ƒ Commissions

ƒ Possible only in situations where performance can be specified in

terms of output
ƒe.g., sales dollars generated
ƒe.g., number of items completed

ƒ Employees must work independently of each other so that individual

incentives can be applied equitably

01/2005 Thomas H. Jäkel 153

Effective Individual Incentive Plans

ƒ The task is liked

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

01/2005 Thomas H. Jäkel 154

Reasons to Use Team Incentives

ƒ When it is difficult to measure individual output

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

01/2005 Thomas H. Jäkel 155

Organization-wide Incentives

ƒ Usually based on one of two performance concepts:

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

01/2005 Thomas H. Jäkel 156

Approaches to Organization-wide Incentives


Profit Sharing Ownership

01/2005 Thomas H. Jäkel 157

Suggestion Systems: Essential Elements

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

01/2005 Thomas H. Jäkel 158

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

• Commonly used gainsharing plans:

• Lincoln Electric Plan
• Scanlon Plan
• Rucker Plan
• ImproShare

• Key Elements in Designing a Gainsharing Plan

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

01/2005 Thomas H. Jäkel 159

Newer Approaches to Gainsharing

Business Plan


Spot Gainsharing

01/2005 Thomas H. Jäkel 160

Typical Profit Sharing Plans

ƒ Cash or current distribution plans provide full payment to

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

01/2005 Thomas H. Jäkel 161


ƒ Employee stock ownership plan (ESOP) – employees

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

01/2005 Thomas H. Jäkel 162

People-Based Pay

Skill-Based Knowledge-
Pay Based Pay

Feedback Pay
Based Pay

01/2005 Thomas H. Jäkel 163

Executive Pay

More likely to be based on comparative performance:

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

01/2005 Thomas H. Jäkel 164

Issues in Compensation Administration

Pay Secrecy or

Pay Security

Pay Compression

01/2005 Thomas H. Jäkel 165

Pay Security Plans

Guaranteed Supplementary
Annual Wage Unemployment
(GAW) Benefits (SUB)

Cost of Living
Adjustments Severance Pay

01/2005 Thomas H. Jäkel 166

Solutions to Pay Compression

ƒ Reexamining how many entry-level people are needed

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

01/2005 Thomas H. Jäkel 167


ƒ There is a growing realization that traditional pay

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

01/2005 Thomas H. Jäkel 168

Employee Benefits and

01/2005 Thomas H. Jäkel 169

Indirect Financial Compensation - Benefits

ƒ All employer-provided rewards and services (other than

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

01/2005 Thomas H. Jäkel 170


ƒ Most benefits and services are available to workers as

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

01/2005 Thomas H. Jäkel 171

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

01/2005 Thomas H. Jäkel 172

The Role of Managers

Benefits & Services Operating Manager (OM) HR Manager (HRM)

Benefits & services budget Preliminary budget approved Preliminary budget
or adjusted by top developed by HRM
Voluntary benefits & services Programs approved by OM Programs recommended by
(top management) HRM

Communication of benefits & OM cooperates with HRM Primary duty of HRM


Evaluation of benefits & Done by HRM


Administration of benefits & Done by HRM

services programs

01/2005 Thomas H. Jäkel 173

Benefits and Services Programs

Voluntary Income in
Benefits Retirement

Mandated Benefits

Flexible Employee
Benefits Services

01/2005 Thomas H. Jäkel 174

Mandated Benefits Programs


Social Security


01/2005 Thomas H. Jäkel 175

Unemployment Insurance

ƒ Unemployment tax paid by employer

ƒ Unemployment tax rates, eligibility requirements, weekly

benefits, and duration of regular benefits vary from state
to state

ƒ Employee receives compensation for a limited time –

typically a maximum of 26 weeks

01/2005 Thomas H. Jäkel 176

Social Security

Social Security Medicare

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

01/2005 Thomas H. Jäkel 177

Workers’ Compensation

ƒ Based on the principle of liability without fault

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

01/2005 Thomas H. Jäkel 178

Voluntary Benefits Programs

Insurance Protection

Retirement Plans

Compensation for
Time Not Worked

01/2005 Thomas H. Jäkel 179

Compensation for Time Not Worked


Paid Personal
Vacations Time Off

Sick Family and Parental
Leave Leave Leave

01/2005 Thomas H. Jäkel 180

Employer-Purchased Insurance

Health Insurance

Life Insurance

Disability Income

01/2005 Thomas H. Jäkel 181

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

01/2005 Thomas H. Jäkel 182

Income in Retirement Programs

Retirement Individual
Income from Retirement
Savings & Accounts
Work (IRAs)

Simplified Private
Employee 401 (k)
Pension Plans

01/2005 Thomas H. Jäkel 183

Pension Benefits

ƒ Defined benefit pension plan

ƒ Specifies the benefit employees will receive at

ƒ Defined contribution pension plan

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

01/2005 Thomas H. Jäkel 184

Employee Services
Ownership Education
Plans Programs

Employee Programs

Social and
Recreational Eldercare
Programs Financial

01/2005 Thomas H. Jäkel 185

Flexible Benefits Plans

ƒ Allow employees to choose between two or more types

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

01/2005 Thomas H. Jäkel 186

Reimbursement Accounts

ƒ Also known as flexible spending accounts

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

01/2005 Thomas H. Jäkel 187

Managing an Effective Benefits Program

ƒ Step 1: Set Objectives and Strategy for Benefits

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

01/2005 Thomas H. Jäkel 188


ƒ Top managers must consider the following when making decisions

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

01/2005 Thomas H. Jäkel 189

Training and Development

01/2005 Thomas H. Jäkel 190

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
01/2005 Thomas H. Jäkel 191
Nature of Corporate Training

Training is often seen as an employee benefit, which is not expected to

provide a tangible return. Isn’t training just part of enlightened management,
intrinsically good unquestionably valuable in unmeasurable ways?


Training must be treated like any other investment.

ƒ If the return on a given training investment is not easily quantified, how

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

01/2005 Thomas H. Jäkel 192

Common View

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

improve a certain performance output, all they need to do is arrange for the
proper training input.

Skills/Knowledge Performance

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

01/2005 Thomas H. Jäkel 193

The Systems View
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

01/2005 Thomas H. Jäkel 194

Reacting to Training Requests

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

01/2005 Thomas H. Jäkel 195

Proactive Training Planning

ƒ Identify major clients (by business unit or department, with a senior

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

01/2005 Thomas H. Jäkel 196

HRM as Performance Department
HRM can transform itself from a training operation to the organization’s
performance department.

ƒ Understand that their mission is to improve performance, not to provide

skills and knowledge.
ƒ Only conduct training and development that are linked to organization
performance needs.
ƒ Only conduct training and development that are supported by the
environment in which the trainees work.
ƒ Evaluate training and development according to its contributions to
organization performance needs.
ƒ Conduct diagnoses that go beyond training.
ƒ Recommend solutions to both training and development and non-training
and development needs.
ƒ Understand the business at all Three Levels of Performance and the
influence of all Nine Performance Variables
ƒ Understand that the department is a business and must be run as a
01/2005 Thomas H. Jäkel 197
Different Types

ƒ Orientation – orients, directs, and guides employees to

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

01/2005 Thomas H. Jäkel 198

Goals of Orientation

To reduce To reduce
anxiety turnover

To develop
realistic To save time

01/2005 Thomas H. Jäkel 199

How Orientation Works

ƒ Orientation should begin with the most relevant and

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

01/2005 Thomas H. Jäkel 200


ƒ The systematic process of altering the behavior of

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

01/2005 Thomas H. Jäkel 201

Goals of Training
ƒ Training validity
ƒ Did the trainees learn skills or acquire knowledge or abilities
during the training?

ƒ Transfer validity
ƒ Did the knowledge, skills, and abilities learned in training lead to
improved performance on the job?

ƒ Intraorganizational validity
ƒ Is the job performance of a new group of trainees in the same
organization that developed the program comparable to the job
performance of the original training groups?

ƒ Interorganizational validity
ƒ Can a training program that has been validated in one
organization be used successfully in another firm?

01/2005 Thomas H. Jäkel 202

Learning Theory and Training

ƒ The trainee must be motivated to learn

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

01/2005 Thomas H. Jäkel 203

Learning Organizations

ƒ Organizations that are proficient in:

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

01/2005 Thomas H. Jäkel 204

Managing the Training Program

ƒ Determining needs and objectives

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

01/2005 Thomas H. Jäkel 205

Needs Assessment


Person Analysis

Task Analysis

01/2005 Thomas H. Jäkel 206

Employees’ Needs for Training

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

01/2005 Thomas H. Jäkel 207

Steps to a Performance Analysis

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

01/2005 Thomas H. Jäkel 208

Instructional Methods
Training Case Method

Training and Role Playing

Instructional In-Basket
Methods Technique

Outdoor-Oriented Management
Programs Behavior Games

01/2005 Thomas H. Jäkel 209

On-the-Job Training for Managers

ƒ Coaching and counseling

ƒ Transitory anticipatory experiences

ƒ Transfers and rotation

01/2005 Thomas H. Jäkel 210

Off-the-Job Training

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

01/2005 Thomas H. Jäkel 211

Diagnostic Steps in Development Programs

1. Determine short- and long-

term goals of the organization Organizational

2. Examine work requirements,

specifications, and changes in Work

3. Determine behaviors needed

to perform work and Human
performance standards

4. Develop behavior objectives to Objectives to be used in evaluation

be accomplished through of success of program
development programs

01/2005 Thomas H. Jäkel 212

Development: Individual Techniques

Goal Setting Behavior


01/2005 Thomas H. Jäkel 213

Goal Setting: Key Steps

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

01/2005 Thomas H. Jäkel 214

Criticisms of Goal Setting

ƒ Goal setting is complex and difficult to sustain

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

01/2005 Thomas H. Jäkel 215

Applied Behavior Modification

ƒ Managers must identify and define the specific behavior

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

01/2005 Thomas H. Jäkel 216

Questions for Performance Analysis

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

01/2005 Thomas H. Jäkel 217

A Group Technique – Team Building

ƒ A development process that helps or prepares

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

01/2005 Thomas H. Jäkel 218

Total Quality Management (TQM)

ƒ TQM – a philosophy, a process, and a set of principles that provide

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

01/2005 Thomas H. Jäkel 219

Criteria for Training Evaluation

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

01/2005 Thomas H. Jäkel 220

An Evaluation Matrix: Issues to Consider

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

01/2005 Thomas H. Jäkel 221

An Evaluation Matrix: Issues to Consider

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

01/2005 Thomas H. Jäkel 222


ƒ Formal training and development have been shown to

be more effective than informal or no training and

ƒ For most training and development programs the results

tend to be assumed rather than evaluated

01/2005 Thomas H. Jäkel 223

Career Planning and

01/2005 Thomas H. Jäkel 224

The Concept of Career

ƒ A career is the pattern of work-related experiences and

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

01/2005 Thomas H. Jäkel 225

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

Human Resource Processes

Acquiring Human Rewarding Human Developing Maintaining and
Resources Resources Human Resources Protecting Human

Focus of each process is on people and results

Desirable End Results

Socially Competitive,
high Competitive,
responsibleandand quality products
quality products quality services
quality services
01/2005 Thomas H. Jäkel 226
Career Development System


What are the organization’s major How do I find career opportunities

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

• Staffing levels required? • Match my interests

• Does the organization have the • Match my values

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

01/2005 Thomas H. Jäkel 227

Career Stages
Stage I: Apprenticeship
ƒ Important needs – safety, security, physiological
ƒ Expected to show competence in learning and following directions
ƒ Must be able to accept the psychological state of dependence
Stage II: Advancement
ƒ Important needs – achievement, esteem, autonomy
ƒ Demonstrate competence in a specific technical area
ƒ Expected to be an independent contributor of ideas in the chosen area
Stage III: Maintenance
ƒ Important needs – esteem, self-actualization
ƒ Expected to become the mentors of those in Stage I
ƒ Central activities are training and interaction with others
ƒ Assume responsibility for the work of others
Stage IV: Strategic Thinking
ƒ Important needs – self-actualization
ƒ Involves shaping the direction of the organization itself
ƒ Expected to play the roles of manager, entrepreneur, and idea generator
ƒ Attention directed to long-range strategic planning
01/2005 Thomas H. Jäkel 228
Career Choice and Personality


Investigative Artistic

Enterprising Conventional

01/2005 Thomas H. Jäkel 229

Career Development: A Commitment

ƒ Career development programs are most valuable when

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

01/2005 Thomas H. Jäkel 230

Career Development
Counseling Career Pathing

Career Resources
Programs Information

Management or
Special Groups Supervisory
Training Development

01/2005 Thomas H. Jäkel 231

Causes of Early Career Difficulties

Initial Job Challenge

Initial Job Satisfaction

Initial Job
01/2005 Thomas H. Jäkel 232
How to Counteract Early Career Problems

Realistic job


01/2005 Thomas H. Jäkel 233

Causes of the Midcareer Plateau

ƒ Fewer jobs at the top of organizations

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

01/2005 Thomas H. Jäkel 234

How to Counteract Midcareer Problems

ƒ Midcareer counseling

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

01/2005 Thomas H. Jäkel 235

Minimize Retirement Adjustment Problems

ƒ When do employees plan to retire?

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

01/2005 Thomas H. Jäkel 236

Career Planning and Pathing

ƒ Career planning – involves matching an individual’s

career aspirations with the opportunities available in an

ƒ Career pathing – the sequencing of the specific jobs

associated with the opportunities available in the

01/2005 Thomas H. Jäkel 237

A Career Planning and Pathing Process

Individual needs and Personal counseling Individual

aspirations and assessment development efforts

Placement on
Matching Matching
career path

Organizational needs Personnel planning Formal training and

and opportunities and career development
information programs


01/2005 Thomas H. Jäkel 238

Career Planning Approaches

Informal Formal
counseling counseling

Tuition aid
Job posting

01/2005 Thomas H. Jäkel 239

Job Posting: Minimum Conditions

ƒ It should include promotions and transfers as well as

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

01/2005 Thomas H. Jäkel 240

Career Pathing

ƒ Important in workforce planning

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

01/2005 Thomas H. Jäkel 241

Realistic Career Paths

ƒ Include lateral and downward possibilities, as well as

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

01/2005 Thomas H. Jäkel 242

Problems and Issues

ƒ Integrating career development and workforce planning

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

01/2005 Thomas H. Jäkel 243

Job Layoff and Job Loss

ƒ Job layoff exists when three conditions occur:

ƒ There is no work available at the time and the
employee is sent home
ƒ Management expects the no-work situation to be
ƒ Management intends to recall the employee

ƒ Job loss means that the employee has permanently lost

his or her job

01/2005 Thomas H. Jäkel 244

Managerial Responses to Layoffs and Job Loss

Layoff Criteria


Severance Pay

01/2005 Thomas H. Jäkel 245


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

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

01/2005 Thomas H. Jäkel 246


01/2005 Thomas H. Jäkel 247


Organization Development (OD) is the systematic

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

01/2005 Thomas H. Jäkel 248

The Three Levels of Performance
The Organization
Level Shareholders

Function A Function B Function C


The Process
Level Shareholders

Function A Function B Function C

2 Market

The Job/
Performer Level

Function A Function B Function C

2 Market

01/2005 Thomas H. Jäkel 249

Organizational Level

„ Relationship with the Market

„ Major Functions

„ Corporate Strategy

„ Corporate Goals

„ Organization Structure

„ Deployment of Resources

01/2005 Thomas H. Jäkel 250

Process Level

„ Organizational level plus

„ Work Flow

„ Cross-relations

„ How the work is done

„ Business view

01/2005 Thomas H. Jäkel 251

Job/Performer Level
„ Organization level plus
„ Process level plus

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

01/2005 Thomas H. Jäkel 252

The Nine Performance Variables
The Three Performance Needs

Goals Design Management

Organization Organization Organization Organization

The Three Levels of Performance

Level Goals Design Management

Process Process Process Process

Level Goals Design Management

Job/Performer Job Job Job

Level Goals Design Management

01/2005 Thomas H. Jäkel 253

Performance Needs

Specific standards that reflect customers’

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

Necessary components, configured in a way

that enables the goals to be efficiently met.

Management practices that ensure that goals

Management are current and are being achieved.

01/2005 Thomas H. Jäkel 254

Organizational Goals

„ Organizational goals are part of the business strategy

and must comprise the following:

„ The organizations competitive advantage

„ New Services

„ New Markets

„ Emphasis on products, services, markets

„ Investment on resources and expected returns

01/2005 Thomas H. Jäkel 255

Organization Design

„ Organization Structure

„Responsibilities, Functional Components

„Relationships, Input/Output Connections

01/2005 Thomas H. Jäkel 256

Organization Management

„ Corporate Goal Management

„ Performance Management

„ Resource Management

„ Interface Management

01/2005 Thomas H. Jäkel 257

Process Goals

„ External process goals must derive from corporate


„ Internal process goals must be driven by the needs of

internal customers

„ Functional goals must be integrated in key processes

01/2005 Thomas H. Jäkel 258

Process Design

„ Logical process structure

„ Streamlines paths

„ Can processes meet the goals?

„ Are all necessary processes in place?

01/2005 Thomas H. Jäkel 259

Process Management

„ Goal Management

„ Performance Management

„ Resource Management

„ Interface Management

01/2005 Thomas H. Jäkel 260

Job Goals

„ Does the job contribute to key processes?

„ Are outputs and goals in line with requirements of key


01/2005 Thomas H. Jäkel 261

Job Design

„ Optimum contribution to job goals

„ Boundaries and responsibilities

01/2005 Thomas H. Jäkel 262

Job Management

„ Performance Specification

„ Task Support

„ Consequences

„ Feedback

„ Skills and Knowledge

„ Individual Capacity

01/2005 Thomas H. Jäkel 263

20 Topics (1)

„ Delegation of Responsibility

„ Conflict Management

„ Learning Capabilities

„ New Leadership Paradigm

„ Delaying and Team Orientation

01/2005 Thomas H. Jäkel 264

20 Topics (2)

„ Creativity

„ Just-in-Time Information

„ Reward and Evaluation

„ Management Development

„ Constraints and Policies

01/2005 Thomas H. Jäkel 265

20 Topics (3)

„ Brain Drain

„ Training and Employee Orientation

„ Value Lens

„ Process Awareness

„ Speed vs Accuracy

01/2005 Thomas H. Jäkel 266

20 Topics (4)

„ External Lens

„ Corporate Image

„ Solution Gap

„ Knowledge Management

„ Communications

01/2005 Thomas H. Jäkel 267