Learning objectives

After studying this chapter, you should be able to:

 explain the role of human resource management in organisational strategic planning
 describe legislation and societal trends that influence human resource management
 explain what the changing social contract between organisations and employees
means for workers and human resource managers
 explain how organisations determine their future staffing needs through human
resource planning
 describe the tools managers use to recruit and select employees
 describe the way organisations develop an effective workforce through training and
performance appraisal
 explain how organisations maintain a workforce through the administration of wages
and salaries, benefits and terminations.

Chapter outline
 The strategic role of HRM
 Environmental influences on HRM
o Competitive strategy
 The changing nature of careers
o The changing social contract
o New ways of working
o Current HR and work condition trends in Australia
 Attracting an effective workforce
o HR planning
o Recruiting
o Selecting
 Developing an effective workforce
o Training and development
o Performance appraisal
 Maintaining an effective workforce
o Compensation
o Designing a wage and salary structure
o Benefits
o Termination
 Appendix
o Managing diverse employees
o Affirmative action
o Defining new relationships in organisations
o Global diversity
o Benefits of valuing diversity.
MANAGEMENT PROBLEM
Sten Jim McCann took over as president of 800-Flowers, the company was burdened by debt
and had less than US$1 million in annual revenues. To effectively meet customers' floral
delivery needs, 800-Flowers needed dedicated order-takers and customer service
representatives. Yet it was in these departments that employee enthusiasm was lowest and
turnover highest. The problem was compounded by the seasonal ebb and flow of the floral
business, which meant that the company reeded around 2400 employees during peak seasons,
such as Valentine's Day or Mother's Day, and only 900 workers during slow periods. To
regain competitiveness, McCann needed a strategy to deal with this fluctuating demand for
workers. In addition, to build and maintain a reputation for quality service, the company
needed to retain good employees in the high-pressure order-taking and customer service
departments.

How can McCann find and keep a core group of high-quality employees and cope with
seasonal demands for additional workers? Can human resource management be part of the
strategy to restore 800-Flowers to competitiveness?
Jim McCann's problem at 800-Flowers illustrates the need for managing HR. McCann and
his management team must develop the company's ability to recruit, train and keep top-quility
employees, as well as its ability to train and motivate seasonal workers. Without effective
human. resource management, company growth will be restricted and performance will
continue to suffer. The term human resource management (HRM) refers to activities
undertaken to attract, develop and maintain an effective workforce within an organisation.
Companies such as General Electric and Hewlett-Packard have become famous for their
philosophy about HRM which is the foundation of their success. HRM is equally important
for not-for-profit organisa tions. For example, the Catholic Church must address the crisis of
the sharply declining number of priests. The Australian Army and Navy have experienced
substantial losses of personnel in recent years and have had a number of recruiting drives.
Over the past decade, HRM has shed its old 'personnel' image and gained recognition as a
vital player in corporate strategy. Research has found that effective HRM has a positive
impact on organisational performance, including higher employee productivity and stronger
financial performance. Especially in today's tight labour market, the ability to attract and
retain Qulity employees can be a powerful strategie weapon. Small businesses in particular
report that finding and keeping good workers is the biggest problem they face. Australian
companies have been increasingly making all types of efforts to attract, recruit and retain
their staff. In the USA, Steve Jacobus moved his company, Olson Warehouse & Distribution,
from the suburbs to the city in order to tap into the larger pool of unemployed workers. On
the other hand, in Australia, Mars deliberately locates its confectionery and pet food factories
in provincial cities such as Ballarat and Albury/Wodonga because of the loyalty it achieves
from its workforce and its positive image in the local community. To keep talented workers at
Booz, Allen & Hamilton Inc. this consulting firm recently started a job rotation plan to help
employees cope with a consultant's gruelling schedule.
Despite its importance, many managers still do not understand the value of HR activities. In
addition, organisation employees often do not understand the full range of HRM functions.
For example, in some organisations, surveys indicated employees were not aware of the full
range of HR services or their access to those services. Effective education about HRM
functions is essential.
HRM consists of three parts. First, all managers are HR managers. For example, at IBM
every manager is expected to pay attention to the development and satisfaction of employees.
Line managers use surveys, career planning, performance appraisal and compensation to
encourage commitment to IBM. Second, employees are viewed as assets. Employees, not
buildings and machinery, give an organisation a competitive advantage. In today's brutally
competitive business environment, the way an organisation manages its workforce may be
the single most important factor in sustained competitive success. 7 Third, HRM is a
matching process, integrating the organisation's goals with employees' needs. Employees
should receive satisfaction equal to that of the organisation.
The strategic role of HRM
In this chapter, we examine the three primary goals of HRM as illustrated in Exhibit 13.1.
These goals, which take place within the organisational environment, include competitive
strategy federal legislation and societal trends. The three goals are to attract an effective
workforce the organisation, develop the workforce to its potential, and maintain the
workforce over the long term.S Achieving these goals requires skills in planning, training,
performance appraisal, wage and salary administration, benefit programs and even
termination. Each of the activities in Exhibit 13.1 is discussed in this chapter. Most
organisations employ HR professionals to perform these functions. HR specialists focus on
one of the HRM areas, such as recruitment of employees or administration of wage or benefit
programs. HR generalists have responsibility in more than one HRM area.
Environmental influences on HRM
“Our strength is the quality of our people.'
“Our people are our most important resource.'
These often-repeated statements by executives emphasise the importance of HRM. HR
managers must find, recruit, train, nurture and retain the best people. HR programs are
designed to fit organisational needs, core values and strategic goals. HRM is more important
today than ever before. In addition, an era of downsizing, restructuring and re-engineering
has left many employees with decreased morale and little loyalty to their employers. In this
environment, more managers are recognising the value of paying attention to HR issues.
Without the right personnel, the brightest idea or management trend – whether teams, quality
circles, telecommuting or flexible compensation - is doomed to failure. In addition, when
employees do not feel valued, usually they are not willing to give their best to the
organisation and often leave to find a more supportive work environment. For these reasons,
it is important that HR executives be involved in competitive strategy. HR executives also
interpret federal legislation and respond to the changing nature of careers and work
relationships.
Competitive strategy
HRM helps organisations find the right mix of people and skills they need to meet
organisational goals. HRM contributes directly to the bottom line through its appreciation
that it is the organisation's human assets - its people - that meet or fail to meet strategic goals.
Judy Lyles of DET Distributing Company, which delivers beer in the USA, reports what her
boss told her when he hired her as HR manager: 'Any good manager will tell you that a
company's greatest asset is its employees, but employees show up as a liability on a profit-
and-loss statement. Yet our trucks are an asset. So, we've got all these mechanics to work on
the fleet, but we don’t have anyone working on our greatest asset, which is our people." Lyles
sees herself as the human mechanic and lead cheerleader for DET workers. She considers the
HR department not just as the keeper of the rules but as the 'keeper of workers' hearts - the
keeper of why they want to come to work every day.
The HRM function has changed enormously over the years. In the 1920s, HRM was a low-
level position charged with ensuring that procedures were developed for hiring and firing
employees and with implementing benefit plans. By the 1950s unions were a major force, and
the HRM manager was elevated to a senior position as chief negotiator. During the 1980s
unions began to decline, and top HRM managers became directly involved in corporate
strategic management.
Exhibit 13.2 illustrates the interdependence between organisation and HR Strategy HR
strategy is designed to provide the correct mix of employees and skills needed to meet
competitive conditions. The Louis Harris Labourforce 2000 survey of 400 companies found
that the top strategic issues of concern to managers were to become more competitive on a
global basis, to cut costs and improve efficiency, and to improve quality , productivity and
customer service. An organisation's competitive strategy may also include mergers and
acquisitions, re-engineering or the acquisition of automated production technology. All of
these strategic decisions determine the organisation's need for skills and employees. It is the
role of HRM strategy to include the correct employee composition to implement the
organisation's competitive strategy
Today, more than ever, strategic decisions are related to HR considerations. For example, the
shift to the learning organisation, where everyone is engaged in making decisions and solving
problems, requires a different mix of workers and skills than is needed in a traditional,
vertical organisation, where most decisions are made by top managers. Learning
organisations look for people who are open-minded, curious and willing to break the rules.
One staffing director at a computer company that emphasises autonomy, informality and
learning reports, “We look for people's passions, what they've done with their lives: the kind
of people who took a year off after their MBA to play the violin or travel the world.”
As another example, the introduction of flexible manufacturing systems has dramatically
changed the need for workforce skill. These new machines require a highly skilled
workforce, including interpersonal skills and the ability to work as a team. To make the
strategic change to automated technology, the HRM department must upgrade the skills of
shop machine operators and recruit new employees who have human skills as well as
technical skills. Chrysler spent a million hours training workers, many without a high school
education, to run its highly automated plant using self-directed work teams. As aging factory
workers retire, the company is recruiting workers with more education to replace them.
Today, most organisations want workers who can learn new skills quickly and require less
supervision.
coomonwealth Securities (ComSec), a major Australian Internet-based stockbroker that
has grown Very quickly from a recent start-up, recruits top graduates from the University of
Sydney and other Australian universities. These graduates learn the business by spending
time in its operations, such as the call centre, but then they can quickly move into supervisory
and managerial positions once they learn the business from the ground up. In businesses such
as ComSec, opportunities for promotion often appear as a result of the growth environment.
The changing nature of careers
One isue of growing concern to organisations and HR managers is the changing nature of
Cereers HRM can benefit employees and organisations by responding to recent changes in
the relationship between employers and employees and new ways of working, such as
telecomuniting and job sharing
The changing social contract
In the old social contract between organisation and employee, the employee could contribute
ability, education, loyalty and commitment, and expect in return that the organisation would
provide wages and benefits, work, advancement and training throughout the employee's
working life. But the volatile changes in the environment have disrupted this contract. Many
organisations have been downsized, eliminating many employees. Employees who are left
may feel little stability. In a fast-moving organisation, a person is hired and assigned to a
project. The project changes over time, as do the person's tasks. Then the person is assigned
to another poject and then to still another. These new projects require working with different
groups and leaders and schedules. Workers often have no place to call their own. Careers no
longer progress up a vertical hierarchy but move across jobs horizontally. People succeed
only if the organisation succeeds, and they may lose their jobs. Particularly in learning
organisations, everyone is expected to be a self-motivated worker who has excellent
interpersonal relationships and is continuously acquiring new skills.
Exhibit 13.3 lists some elements of the new social contract. The new contract is based on the
concept of employability rather than lifetime employment. Individuals manage their own
careers; the organisation no longer takes care of them or guarantees employment.
Organisations agree to pay somewhat higher wages and invest in creative training and
development opportunities so people will be more employable when the organisation no
longer needs their services. Employees take more responsibility and control in their jobs,
becoming partners in business improvement rather than cogs in a machine. In retum, the
organisation provides challenging work asignments as well as information and resources to
enable workers to continuously learn new skills. The new contract can provide many
opportunities for employees to be more involved and express new aspects of themselves.
However, many employees are not prepared for new levels of cooperation or responsibility
on the job. Employment insecurity is stressful for most employees, and it is harder than it was
in the past to gain an employee's full commitment and enthusiasm. In addition, one study
found that while most workers today feel they are contributing to their organisation's success,
they are increasingly sceptical that their hard work is being fully recognised. Some
organisations are discovering they went overboard with downsizing efforts in the 1990s and
are now finding it difficult to keep good workers because employee trust has been destroyed.
Many employees feel little loyalty to their employers. To respond to these problems, HRM
departments can help organisations develop a mix of training, career development
opportunities, compensation packages, and rewards and incentives. They can provide career
information and assesment, combined with career coaching, to help employees determine
new career directions.
New ways of working
More organisations are turning to interim or contingency workers to save money and avoid
layoffs in the future. People in these temporary jobs do everything from typing to becoming
the temporary CEO. In addition, organisational transformation is taking place on a global
scales. Not since the advent of mass production and modern organisations has a redefinition
of work and career been so profound. In the new image, each person must take care of herself
or himself.
Organisations undergoing rapid change no longer offer certain employment. Instead, it is the
individual's responsibility to maintain lifelong employability. The employer's obligation is to
provide opportunity for self-improvement. It is up to the individual, however, to take changed
his or her own career.
Career paths in the twenty-first century will be a mix of the old and the new. There will still
be traditional managers in traditional hierarchies, but many careers will be less linear and less
secure than before. People can look for niches that suit their talents and ways of working that
suit their needs. One of the biggest trends is telecommuting. Telecommuting means using
computers and telecommunications equipment to do work without going to an office. The US
Department of Transport predicted in 1997 that the number of telecommuters would increase
to 10 per cent of the workforce by 2002.20 These virtual workers and managers live wherever
they want, untethered to any office or city. At PeopleSoft, for example, all 6000 are
sometimes conducted in person and sometimes online. AT&T has 35 000 telecommuter
employees work from remote locations at some time during their employment. Weekly
meetings who e-mail a list of weekly goals on Monday and follow up on Friday.
The advent of teams is another significant trend in careers. People who used to work alone on
the shop floor, in the advertising department or in middle management are now thrown into
teams and succeed as part of a group. Each member of the team acts like a manager,
becoming responsible for quality standards, scheduling, and even hiring and firing other team
workers At an empowered Frito Lay plant, the number of managers dropped from 38 to 13
while the labour workforce grew by more than 20 per cent to about 220.22 With less
supervision the plants has powered quality, productivity and profits. But people on the teams
lose some of their autonomy must develop excellent communication skills and a positive
attitude. They also must learn sll jobs,they will not be doing just one thing.
sometimes, people looking for a new career direction decide to start their own businesses.
Then employees who are laid off during organisation downsizing do not want to return. Other
and never want to join a large organisation, preferring the challenge and autonomy of running
their own businesses. People who become freelancers or virtual workers often can create their
own enterprise, hiring their own employees to provide services to larger organisations. As
organisations try to reduce costs, they hire outside services to meet their needs. This is called
outsourcing Entrepreneurship is challenging and exciting, and if you fit the criteria described
in Chapter 6 or if you desire the autonomy and challenge of your own business, this may be
an effective career path for you.
Within the context of new trends in careers and working relationships, HR managers must
achieve the three primary goals described earlier in this chapter: attracting, developing and
maintaining an effective workforce for the organisation. Let us now review some of the
established techniques for accomplishing these goals.
Current HR and work condition trends in Australia
A number of developments have occurred in recent years in the relationships between
employers and employees. First is federal legislation, which has made it harder to retrench
staff. This has made it expensive for organisations to lay off staff and difficult for them to fire
staff who are not performing up to expectations, reducing the flexibility and control of
managers anf employers. The lack of flexibility in Australia's employment laws has led to an
increasing number of people who work as contractors and as casual employees as against
full-time, “lemured”, continuing or long-term staff. Further, the cost of labour has increased
with state payroll taxes and compulsory superannuation adding to the 'on-costs' associated
with employing people. This has exacerbated the trend towards outsourcing, often of non-
core operations and activities such as accounting and information technology services. Job
sharing and telecommuting have not caught on as quickly as most people thought, even
though the technical capability for working from home for office work has been in place for a
number of years.
It is also apparent that it was possible to go too far in outsourcing activities and in downing
the workforces of Australia's major enterprises. Although many of Australia's organisations
entered the 1990s with too many staff and too many layers of middle managers, some
organisations engaged in wholesale 'slashing and burning exercises that reduced the
knowledge base of the organisation and led to longer-term problems. If an organisation's key
resource really is its people, then key questions for every manager are what are the right
numbers people, how should they be organised and how should we get the most from them?
Some Australian organisations, like those in many other parts of the world, did not conside
these from a long-term, strategic perspective when they engaged in wholesale staff reduction.
An extreme proponent of downsizing was Al Chainsaw' Dunlap, a chief executive from the
USA who headed Kerry Packer's Consolidated Press company in the 1990s. He had a
reputation for cutting costs to the bone, usually by 'cutting people' in a ruthless manner.
Dunlap’s approach of wholesale cost cutting clearly led companies he headed, such as
Sunbeam, to increase their profitability in the very short term, but reduced their
competitiveness and strategic capabilities in the medium and long term. That approach has
been clearly rejected organisations that wish to remain competitive in a sustainable manner.
Another significant trend in Australia, which is a few years behind the USA, in the increasing
number of staff at all levels who have an incentive component included in the salary. This
may be based on individual or enterprise performance. The incentive component can be as
much as 40 per cent for executives and 15 per cent for lower-level staff.
Perhaps the most important recent trend in Australia and elsewhere has been a recognition by
many major organisations that they are short of really talented people who can lead major
business activities, functions, projects and, indeed, whole organisations. The so-called was
for talent', as highlighted by consulting firm McKinsey, has been brought on by baby
boomers now being past their prime, the rate of women entering the workforce no longer
accelerating and the trend for many executives to take early retirement. In addition, many
talented people have chosen to put their efforts into small- and medium-sized business, and
even into starting up their own businesses, often in the new economy. Major established
organisations often find themselves short of bright, up-and-coming managers and executives
whom they can tunr into business leaders. In addition, such people are in high demand in the
marketplace and find themselves in positions of great demand and mobility.
Many people used to devote their whole life to one organisation – for example, Don Argus
spent 40 years at the National Australia Bank before retiring as CEO. However, executive
like. Don Argus are in the minority. Successful executives today move from organisation to
organisation. For example, Bob Mansfield has been managing director of up to half a dozen
companies in only a decade or so, including McDonald's, Reil Corporation, Tico, Optus and
Fairfax. He then moved into the public sector. Lyn Ralph has moved from being portfolio
manager at BT Australian to general manager of funds investments at CRA, through general
manager of the Sydney Dance Company, then director of McIntosh Securities, through the
deputy chairman position at the Australian Securities Commission to become development
manager of Lend Lease. Lifetime organisation loyalty does not exist for this new breed of
managers, who often say between two and five years in a role, and then look for newer fields
and different challenges. For organisations, this can mean coping with regular turnover in key
positions, including the top job. At the TAC in Victoria, three CEOs in seven years (1994-
2001) have each brought their own new perspective and strategic focus to the ongoing
development of the organisation. Those who left did not do so because of problems or poor
performance, either personally or for the organisation - the opposite is the case.
Most young people now expect to have at least five, and possibly 10 major job moves across
organisations during the course of their career. The war for talented people is exacerbated in a
volatile labour market. Many organisations have established a floating pool of talented people
and contractors on whom they can call in order to balance this volatility and manage the
supply and demand of executives.
Another important trend for Australia is that as large and small businesses globalise,
managers at all levels can expect to be placed overseas at least once, and possibly two or
three times during their careers. This brings with it a number of complications, not the least
of which is the difficulty of balancing career aspirations with personal and family issues.
Attracting an effective workforce
The first goal of HRM is to attract individuals who show signs of becoming valued,
productive and satisfied employees. The first step in attracting an effective workforce
involves HS planning, in which managers or HRM professionals predict the need for new
employess based on the types of vacancies that exist, as illustrated in Exhibit 13.4. The
second step is to use recruiting procedures to communicate with potential applicants. The
third step is to select from the applicants those persons believed to be the best potential
contributors to the organisation. Finally, the new employee is welcomed into the
organisation.
Underlying the organisation's effort to attract employees is a matching model. With the
matching model, the organisation and the individual attempt to match the needs, interests and
values they offer each other. The organisation offers 'inducements, and the employee offers
“contributions”. HRM professionals attempt to identify a correct match. For example, a small
software developer may require long hours from creative, technically skilled employees. In
return, it can offer freedom from bureaucracy, tolerance of idiosyncrasies and potentially,
high pay. A large manufacturer can offer employment security and stability, but it may have
more rules and regulations and require greater skills for 'getting approval from the higher-
ups. The individual who would thrive working for the software developer might feel
restricted and unhappy working for a large manufacturer. Both the company and the
employee are interested in finding a good match.
HR planning
Human resource planning is the forecasting of HR needs and the projected matching of
individuals with expected vacancies. HR planning begins with several questions :
 What new technologies are emerging, and how will these affect the work system?
• What is the volume of the business likely to be in the next five to 10 years?
 What is the turnover rate, and how much, if any, is avoidable?
The responses to these questions are used to formulate specific questions pertaining to
HRM activities, such as the following:
• How many senior managers will we need during this time period?
• What types of engineers will we need, and how many?
• Are persons with adequate computer skills available for meeting our projected needs?
 What administrative personnel - technicians, secretaries - will we need to support the
additional managers and engineers?
Answers to these questions help define the direction for the organisation's HRM strategy. For
example, if forecasting suggests that there will be a strong need for more technically trained
individuals, the organisation can: (1) define the jobs and skills needed in some detail; (2) hire
and train recruiters to look for the specified skills; and (3) provide new training for existing
employess. By anticipating future HRM needs, the organisation can prepare itself to meet on
petitive challange more effectively than organisations that react to problems only as they
arive.
One of the most successfyl applications of HR planning is TVA’s development of an eight,
step system.
CASE STUDY\
In the confusion and uncertainty following a period of reorganisation and downsizing, a
crucial role for HRM is balancing the need for future workforce planning with the creation of
a climate of stability for the remaining workers. TVA created an eight-step plan that can
serve as a model for organisations in assessing future HR needs and formulating actions to
meet those needs.
The first step is laying the groundwork for later implementation of the program by creating
planning and oversight teams within each business unit. Step two involves assessing
processes and functions that can be benchmarked. Step three involves the projection of skills
and employee numbers (demand data) necessary to reach goals within each business unit.
Once these numbers are in place, step four involves projection of the current employee
numbers (supply data) over the planning horizon' without new hires and taking into
consideration the normal attrition of staff through death, retirement, resignation, and so forth.
Comparison of the difference between supply and demand (step five) gives the 'future gap' or
'surplus situation'. This knowledge enables HR to develop strategies and operational plans
(step six). Step seven involves communication of the action plan to employees. The final step
is to periodically evaluate and update the plan as the organisation's needs change.
Although, in a small organisation, developing demand and supply data could be handled with
a pad and a calculator, TVA uses a sophisticated automated system to update and revise the
plan as needed to meet new competitive situations. Determining skills-gap and surplus
information (step five) helped TVA develop a workforce plan to implement
crossorganisational placement and retraining as alternatives to further employee cutbacks in
the individual business units, thereby providing a greater sense of stability for workers. If
needs change and TVA faces a demand for additional employees, this process will enable the
company to recruit workers with the skills needed to help meet organisational goals.
Recruiting
Recruiting is defined as 'activities or practices that define the characteristics of applicants to
whom selection procedures are ultimately applied":26 Although we frequently think of
campus recruiting as a typical recruiting activity, many organisations use internal recruiting,
or "promote-from-within' policies, to fill their high-level positions. At Mellon Bank in the
USA, for example, current employees are given preference when a position opens. Open
positions are listed in Mellon's career opportunity bulletins, which are distributed to
employees. Internall recruiting has several advantages: it is less costly than an external
search, and it generates higher employee commitment, development and satisfaction, because
it offers opportunities for carrer advancement to employees rather than outsiders.
Frequently, however, external recruiting-recruiting newcomers from outside the organisition -
is advantageous. Applicants are provided by a variety of outside sources including
advertising, government employment services, private employment agencies ('headhunters').
Job fairs and employee referrals. Some employers even provide cash awards for employees
submit names of people who subsequently accept employment, because referral is one of the
cheapest and most reliable methods for external recruiting.
Realistic job previews One approach to enhancing recruiting effectiveness is called a
realistic job preview. A realistic job preview (RJP) gives applicants all pertinent and realistic
information - positive and negative – about the job and the organisation. RJPs enhance
employee satisfaction and reduce turnover, because they facilitate matching individuals, jobs
and organisations. Individuals have a better basis on which to determine their suitability to
the organisation and 'self-select' into or out of positions based on full information. When
employees choose positions without RJPs, unmet expectations may cause initial job
dissatisfaction and increased turnover. For example, Linda McDermott left a good position in
an accounting firm to become an executive vice-president of a new management consulting
company. She was told she would have a major role in helping the business grow. As it
turned out, her boss relegated her to administrative duties, so she quit after a few months,
causing the company to initiate another lengthy search and sidetracking her career for a year
or two.
Legal considerations Organisations must ensure that their recruiting practices conform to the
law. As discussed in the appendix to this chapter, equal employment opportunity (EEO) laws
stipulate that recruiting and hiring decisions cannot discriminate on the basis of race, national
origin, religion or sex. Affirmative action refers to the use of goals, timetables or other
methods in recruiting to promote the hiring, development and retention of protected groups' -
persons historically under-represented in the workplace. A local council may establish a goal
of recruiting one woman for every male until the proportion of women is commensurate with
the female population in the workforce and community.
Most large organisations try to comply with affirmative action and EEO guidelines.
Prudential Insurance Company's policy is presented in Exhibit 13.5. Prudential actively
recruits employees and takes affirmative action steps to recruit individuals from all walks of
life.
Another legal consideration is company liability in connection with hiring employees who
later commit crimes in the workplace, such as an employee who goes berserk and attacks
fellow workers. An increasing number of court cases in the USA cite employer negligence in
hiring people without careful background checks. As a result, HR departments are
increasingly looking beyond personal references and personnel records to investigate
prospective employees through past immediate supervisors, credit bureaus, criminal court
records and driver's licence records. Careful hiring practices are important, but they must be
implemented without discriminating against applicants or violating the individual's right to
privacy.
chaving
New approaches to recruiting In today's tight labour market, many organisations are having
a difficult time finding good workers. However, HR managers have new tools to use for
recruiting. The World Wide Web enables organisations to cast a wide net in search of
employees. Internet recruiting is increasingly being used by both large and small
organisations as a new and very efficient labour market mechanism. In Malaysia, for
example, half a does significant websites are available through which employees and
employers scan find each other. The longest established of these is jobstreet.com, which has
300 000 users and 2600 companies in its database. Others are jobpilot.com, monster.com and
businesstrends.com.sg (part of Kelly Services Inc, a Fortune 500 global staffing company),
hotjobs.com (a Yahoo service) and jobs.net. They are major players in what is increasingly
becoming an efficient way of matching the skills and needs of employers and employees in
the Asia Pacific region. Companies such as Fuji, Xerox, Citibank, HP-Compaq, Hitachi,
Intel, Dell and many other less prominese companies are making extensive use of such sites
to find their staff. Systems West Computer Resources first tried online recruiting in 1994,
when few organisations had moved into this new area. Although the company's first attempts
were not very successful, within two years Systems West was receiving about 40 per cent of
incoming resumes online.
The Technology box describes how Cisco Systems has used new methods to gain an edge in
recruitment. Another innovative approach to recruiting workers in a tight labour market is to
tum to non-traditional sources of employees. Whatever methods are used, recruiting is an
important responsibility for HRM. Perhaps no company does it better than McDonald's
Selecting
The next step for managers is to select desired employees from the pool of recruited
applicants In the selection process, employers attempt to determine the skills, abilities and
other attributes a person needs to perform a particular job. Then they assess applicants'
characteristics in an attempt to determine the 'fit' between the job and applicant
characteristics.
LEADING THE REVOLUTION : TECHNOLOGY
“welcome, would you like a job?”
For Cisco Systems, effective recruiting has become a powerful strategic weapon. The
company's rapid growth has meant it had to double its workforce in 18 months while hiring
only the highest-calibre workers. Cisco's HR team identified exactly the kind of people they
wanted and then figured out the best methods for recruiting. One key element is the World
Wide Web.
Cisco still uses newspaper help-wanted ads, but with a difference. Rather than listing specific
job openings, Cisco runs ads featuring an Internet address and an invitation to apply for work
at Cisco. Cisco's website has become a turbo-charged recruiting tool. It allows the company
to post hundreds of job openings with specific information about each one. The company also
advertises its site in cyberspace, which helps to reach a self-selected set of candidates (people
who can easily navigate the Internet) from around the globe. People looking for a job can
search by keyword to match their skills with job openings at the company. Then, they are
able to file a resume or fill out a resume form online using Cisco's resume builder program.
Most importantly, the site pairs each applicant with a volunteer 'friend' inside the company.
This friend will teach you about Cisco, introduce you to important people and lead you
through the hiring process.
The real power of Cisco's website is that it targets 'passive' jobseekers - people who are happy
and successful in their current jobs. Cisco advertises its site at places where its kind of people
hang out. For example, the company has linked to the Dilbert website, which attracts a large
audience of programmers. One of Cisco's best sources of employees is its competitors. Since
many prospects visit Cisco's website from their jobs, Cisco can even tell where they work and
pull some sneaky tricks. For example, anyone who visits the site from archrival 3Com is
greeted with the following message: 'Welcome to Cisco. Would you like a job?
CASE STUDY
The fast-food business is known for high turnover, and so recruiting is a never-ending job.
However, McDonald's has some unique recruiting strategies that help the company lure a
larger number of job applicants than most other fast-food restaurants. McDonald's emphasises
alternative labour sources. It has long been one of the largest employers of young people, and
the company makes effective use of internal recruiting to move some of these workers into
management jobs rather than losing them after they leave school. In addition, two highly
successful programs in the USA target groups that have proved to be loyal workers: older
people and people who have physical or mental challenges.
A program called ReHIREment has recruited more than 40 000 older employees to serve
McDonald's customers in the USA. Each older person is assigned a 'buddy' who works
alongside the new employee for the training period. Older workers appreciate McDonald's
flexibility in scheduling and they are able to set the number of hours they work so as not to
jeopardise welfare benefits. The McJobs program was founded to assist in recruiting
employees with physical or mental disabilities. Each recruit is paired with a job coach, who
may be a specially trained McDonald's worker or a state agency counsellor, for a period of
six to eight weeks. So far, more than 9000 workers have gone through the McJobs program.
As a result of these two innovative recruiting programs, an entire pool of workers that often
goes untapped is now successfully working for McDonald's rather than its competitors.
Job descriptions A good place to start in making a selection decision is the job description.
HR professionals or line managers who make selection decisions may have little direct
experience with the job to be filled. If these persons are to make a good match between job
and candidate, they should read the job description before they review applications.
A job description typically lists job duties as well as desirable qualifications for a particular
job. For internal recruiting, organisations may come up with lists of skills and abilities they
want candidates to have. For example, Sara Lee Corp. identified six functional areas and 24
significant skills that it wants its finance executives to develop, as illustrated in Exhibit 13.6.
Financial officers are tracked on their development and moved into other positions to help
them acquire needed skills. Sara Lee believes that by developing talent in-house, it will rarely
have to recruit top managers from outside the company.
Selection devices Several devices are used for assessing applicant qualifications. The most
frequently used are the application form, interview, paper-and-pencil test and assessment HR
professionals may use a combination of these devices to obtain a valid prediction of
employee job performance. Validity relates to the relationship between one's score on a
selection device and one's future job performance. A valid selection procedure will provide
high scores that correspond to subsequent high job performance.
Application form The application form is used to collect information about the applicant's
education, previous job experience and other background characteristics. Research in the life
insurance industry shows that biographical information inventories can validly predict future
job success.
One pitfall to be avoided is the inclusion of questions that are irrelevant to job success. In line
with affirmative action, the application form should not ask questions that will create an
adverse impact on protected groups' unless the questions are clearly related to the job. For
example, employers should not ask whether the applicant rents or owns his or her own home
because (1) an applicant's response might adversely affect his or her chances at the job; (2)
women may be less likely to own a home; and (3) home ownership is probably unrelated to
job performance On the other hand, the CPA exam is relevant to job performance in a CPA
firm; thus, it is appropriate to ask whether an applicant for employment has passed the CPA
exam even if only one-half of all female applicants have done so versus nine-tenths of male
applicants.
Interview The interview is used in the hiring process in almost every job category in
virtually every organisation. It serves as a two-way communication channel that allows both
the organisation and the applicant to collect information that would otherwise be difficult to
obtain.
Although widely used, the interview as generally practised is not a valid predictor of later job
performance. Interviews are more likely to test how well someone interviews than to test how
well they will actually perform on the job. Most interviews follow a rather predictable series
of steps, and candidates can prepare and practise their answers. Less predictable interviews
help to give a better idea of how a person actually will perform.The Manager's Shoptalk
discusses several ideas for effective interviewing, as well as some unusual interview
experiences.
Paper-and-pencil test Many organisations use paper-and-pencil tests such as intelligence
tests, aptitude and ability tests, and personality inventories, particularly those shown to be
valid predictors.Many organisations today are particularly interested in personality
inventories that measure such characteristics as openness to learning, initiative,
responsibility, creativity and emotional stability. One of the newest types of testing is an
emotional intelligence quotient scale, designed by Multi-Health Systems. The idea is that
measuring a candidate's emotional intelligence, including such things as self-awareness,
ability to empathise with others and the capacity to build positive relationships, can give
clues as to how well the person will do in his or her professional as well as personal life.
MANAGER’S SHOPTALK
A so-so interview usually nets a so-so employee. Many hiring mistakes can be prevented
during the interview. The following techniques will ensure a successful interview :
1. know what you want. Before the interview, prepare questions based on your knowledge of
the job to be filled. If you do not have a thorough knowledge of the job, read a job
description. If pos sible, call one or more jobholders, and ask them about the job duties
and what is required to succeed. Another idea is to make up a list of traits and
qualifications for the ideal candidate. Be specific about what it will take to get the job
done.
2. Prepare a road map. Develop questions that will reveal whether the candidate has the
correct background and qualifications. The questions should focus on previous
 experiences that are relevant to the current job. If the job requires creativity and
innovation, ask a question such as 'What do you do differently from other sales reps?
3. Use open-ended questions in which the right answer is not obvious. Ask the applicant to
give specific examples of previous work experiences. For example, don't ask, “Are you a
hard worker?' or 'Tell me about yourself.' Instead ask, 'Can you give me examples from
your previous work history that reflect your level of motivation?' or 'How did you go
about getting your current job?"
4. Do not ask questions that are irrelevant to the job. This is particularly important when the
irrelevant questions might adversely affect minorities or women. Questions that are
considered objectionable are the same as those considered objectionable on application
forms.
5. Listen; don't talk. You should spend most of the interview listening. If you talk too much,
the focus will shift to you, and you may miss important cues. One expert actually
recommends laying out all your questions right at the beginning of the interview and
following up with only brief reminders. This forces you to sit back and listen and also
gives you a chance to watch a candidate's behaviour and body language.
6. Allow enough time so that the interview will not be rushed. Leave time for the candidate
to ask questions about the job. The types of questions the candidate asks can be an
important clue to his or her interest in the job. Try to delay forming an opinion about the
applicant until after the entire interview has been completed.
7. Avoid reliance on your memory. Request the applicant's permission to take notes; then do
so unobtrusively during the interview or immediately after. If several applicants are
interviewed, notes are essential for remembering what they said and the impressions they
made.
Even a well-planned interview may be disrupted by the unexpected. Robert Half asked vice-
presidents and HR directors at 100 major American companies to describe the most unusual
thing that they were aware of ever happening during a job interview. Various applicants
reportedly :
 Wore a Walkman and said she could listen to me and the music at the same time.
 Announced she hadn't had lunch and proceeded to eat a hamburger and french fries in the
interviewer's office.
 Wore a jogging suit to interview for a position as a vice-president.
 He said he was so well-qualified that if he didn't get the job, it would prove that the
company's management was incompetent.
 A balding candidate abruptly excused himself. He returned to the office a few minutes
later wearing a hairpiece.
 Not only did he ignore the "No Smoking" sign in my office, he lit ct up the wrong end of
several filter-tip cigarettes.
 She chewed bubble gum and constantly blew bubbles.
 Job applicant challenged the interviewer to arm wrestle.
 He stretched out on the floor to fill out the job application.
 He interrupted to telephone his therapist for advice on answering specific interview
questions.
 He dozed off and started snoring during the interview.
 He said that if he were hired, he would demonstrate his loyalty by having the corporate
logo tattooed on his forearm.
Assessment centre First developed by psychologists at AT&T, assessment centres are used
to select individuals with high potential for managerial careers by such organisations as South
Pacific Tyres, IBM and General Electric.39 Assessment centres present a series of managerial
situations to groups of applicants over, say, two or three days. One technique is the 'in-basket'
(or in-tray) simulation, which requires the applicant to play the role of a manager who must
decide how to respond to 10 memos in his or her in-tray within a two-hour period. Panels of