HROB Study Guide 1

Corporate Finance
UNIT 3
The Financing Side of the Company
Bangor Business School – Executive Education
Chartered Banker MBA

Human Resources and
Organisational Behaviour
UNIT 1
Individual level processes in
organisational behaviour and HRM
Page 1 Human Resources Organisational Behaviour Unit 1

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Personal Profile
Dr Olga Suhomlinova
Member of Bangor University Adjunct Faculty
Olga Suhomlinova is currently Associate Professor of Management at the University of Leicester

School of Business. She has received BA in Political Economy from Moscow State University (Russia)
and PhD in Sociology from Duke University (USA) and taught organizational behavior and human
resource management courses for Duke University, University of Bath, University of Nottingham, and
Manchester Business School Worldwide. She has widely published in the areas of organizational
behavior and theory, including articles in American Sociological Review, Human Relations, Journal of
Management, Journal of Management and Organization, Journal of Management Studies, Journal of
Applied Behavioral Science, Leadership Quarterly, Organization Studies, and Public Administration.
Her research has covered a variety of industries (construction, banking, education, healthcare),
countries (the UK, Russia, Bulgaria) and topics (managerial work and identity, organizational change,
leadership).

Contents
About this study guide ............................................................................................................................ 2
Personal Profile ....................................................................................................................................... 3
1. Introduction to organizational behavior and human resource management ................................ 9
1.1 Learning objectives ................................................................................................................. 9
1.2 Linked reading ......................................................................................................................... 9
1.3 Introduction ............................................................................................................................ 9
1.4 Organizational behavior ........................................................................................................ 10
1.4.1 Organizational behavior as multidisciplinary field ............................................................ 10
1.4.2 Goals of organizational behavior research ....................................................................... 11
1.4.3 Organizational behavior research methods...................................................................... 13
1.5 Management and organizational behavior........................................................................... 16
1.6 Human Resource Management ............................................................................................ 19
1.7 Altogether now: OB, HRM and management ....................................................................... 22
1.8 Organizations and organizational environment ................................................................... 23
1.8.1 Organizations .................................................................................................................... 23
1.8.2 Organizational environment ............................................................................................. 27
1.9 A brief history of research on managing people and organizations ..................................... 32
1.9.1 Classical management....................................................................................................... 33
1.9.2 Management activities – a realist approach ..................................................................... 38
1.10 Logic of presentation in the module ..................................................................................... 42
Section 2: Individual characteristics, behaviors and performance .................................................... 44
2.1 Learning objectives ............................................................................................................... 44
2.1 Linked readings ..................................................................................................................... 44
2.3 Individual behavior ............................................................................................................... 45
2.4 Individual behavior: OB and HRM points of view ................................................................. 46
2.5 Individual behavior as a function of person and situation ................................................... 47
2.5.1 Example: How people shape their environments ............................................................. 49
2.5.2 Behavior in social interactions .......................................................................................... 50
2.6 Behaviors at work ................................................................................................................. 52
2.7 Situations .............................................................................................................................. 56

2.8 Individual differences: Overview .......................................................................................... 59
2.9 Individual differences: Demographic characteristics ............................................................ 63
2.9.1 Age .................................................................................................................................... 63
2.9.2 Gender .............................................................................................................................. 64
2.10 Individual characteristics and organizational behavior ........................................................ 65
2.11 Abilities.................................................................................................................................. 65
2.12 Cognitive abilities .................................................................................................................. 66
2.12.1 Measuring cognitive abilities ........................................................................................ 67
2.12.2 Importance of general mental ability ........................................................................... 68
2.12.3 GMA and work outcomes ............................................................................................. 69
2.13 Emotional intelligence .......................................................................................................... 71
2.13.1 Measuring emotional intelligence ................................................................................ 73
2.13.2 Importance of emotional intelligence .......................................................................... 73
2.14 Personality ............................................................................................................................ 74
2.14.1 The Five Factor model of personality............................................................................ 74
2.14.2 Measuring personality .................................................................................................. 75
2.14.3 Personality FAQs ........................................................................................................... 76
2.14.4 Importance of personality............................................................................................. 77
2.14.5 Personality and work outcomes ................................................................................... 78
2.15 Implications for practice ....................................................................................................... 79
2.15.1 Using GMA in practice................................................................................................... 80
2.15.2 Using the Big Five in practice ........................................................................................ 80
2.16 Values .................................................................................................................................... 81
2.16.1 The Schwartz Theory of Basic Values ............................................................................ 84
2.16.2 Importance of values .................................................................................................... 87
2.17 TAKEAWAYS .......................................................................................................................... 93
Section 3: Strategic HRM and HRM system .......................................................................................... 94
3.1 Learning objectives ............................................................................................................... 94
3.2 Linked readings ..................................................................................................................... 95
3.3 HRM fundamentals: HRM system, policies and practices .................................................... 95
3.4 HRM system: General and specific functions ....................................................................... 98
3.5 HRM and organizational strategy ......................................................................................... 99

3.6 Strategic HRM ..................................................................................................................... 100
3.7 HRM strategy ...................................................................................................................... 100
3.8 Strategic HRM choices ........................................................................................................ 101
3.9 Strategic HRM choices: ‘Best practice’ vs ‘best fit’ views ................................................... 103
3.9.1 The best practice perspective ..................................................................................... 103
3.9.2 The ‘best fit’ models........................................................................................................ 110
3.9.3 Strategic challenges in the financial services .................................................................. 121
3.10 HRM and sustainability ....................................................................................................... 122
3.10.1 Sustainable Development Goals ................................................................................. 122
3.10.2 The UN Global Compact .............................................................................................. 123
3.10.3 The role of HRM in achieving the SDGs ...................................................................... 125
3.11 Moving forward .................................................................................................................. 128
3.12 TAKEAWAYS ........................................................................................................................ 128
3.13 Answers to the cases .......................................................................................................... 130
Section 4: Workforce planning and work analysis .............................................................................. 132
4.1 Learning objectives ............................................................................................................. 132
4.2 Linked readings ................................................................................................................... 133
4.3 Introduction ........................................................................................................................ 133
4.4 Workforce planning ............................................................................................................ 133
4.4.1 Workforce planning practice .......................................................................................... 135
4.4.2 Stages of workforce planning ......................................................................................... 135
4.5 Factors affecting workforce planning ................................................................................. 137
4.5.1 Human resources in the labour market .......................................................................... 137
4.5.2 Labour market trends ..................................................................................................... 140
4.5.3 Employee turnover and retention .................................................................................. 143
4.6 Work analysis ...................................................................................................................... 148
4.6.1 Describing jobs and work roles ....................................................................................... 149
4.6.2 Applications of work analysis .......................................................................................... 150
4.6.3 Work analysis design choices .......................................................................................... 151
4.6.4 The “what” of work analysis: Work analysis descriptors ................................................ 151
4.6.5 The “how” of work analysis: Methods of collecting work data .................................. 153
4.6.6 The “who” of work analysis: Sources of work analysis data ........................................... 155

4.6.7 Matching “why”, “what”, “how” and “who” in work analysis ........................................ 156
4.6.8 Work analysis: Other considerations .............................................................................. 157
4.6.9 Work analysis: Limitations .............................................................................................. 158
Section 5: Recruitment and selection ................................................................................................. 160
5.2 Linked readings ................................................................................................................... 160
5.3 Introduction ........................................................................................................................ 160
5.4 Recruitment ........................................................................................................................ 161
5.4.1 Stages of the recruitment process .................................................................................. 161
5.4.2 Recruitment process: The applicant’s point of view....................................................... 163
5.4.3 Recruitment sources ....................................................................................................... 163
5.4.4 Advertising a job ............................................................................................................. 165
5.4.5 Managing the application process .................................................................................. 165
5.4.6 Information technology in recruitment .......................................................................... 166
5.5 Selection.............................................................................................................................. 168
5.5.1 Defining selection............................................................................................................ 168
5.5.2 Approaches to selection ................................................................................................. 169
5.5.3 Psychometric approach to selection ............................................................................... 170
5.5.4 Comparison of selection methods .................................................................................. 186
5.5.5 Interactional approach to selection ................................................................................ 187
5.6 Current trends in recruitment and selection ...................................................................... 190
5.6.1 Sustainable recruitment.................................................................................................. 190
5.6.2 Name-blind recruitment ................................................................................................. 191
5.6.3 Gamification .................................................................................................................... 191
5.7 TAKEAWAYS ........................................................................................................................ 193
Section 6: Learning, training and development .................................................................................. 195
6.2 Linked readings ................................................................................................................... 195
6.3 Introduction ........................................................................................................................ 195
6.4 Defining the key terms ........................................................................................................ 196
6.5 Theories of learning ............................................................................................................ 198
6.6 Learning cycle and learning styles ...................................................................................... 199

6.6.1 Learning cycle.................................................................................................................. 199
6.6.2 Kolb’s learning styles....................................................................................................... 201
6.6.3 Honey and Mumford’s learning styles ............................................................................ 204
6.6.4 Application ...................................................................................................................... 206
6.7 Psychology and neuroscience of learning ........................................................................... 207
6.7.1 Cognitive styles ............................................................................................................... 207
6.7.2 Learning to learn ............................................................................................................. 208
6.7.3 Models that apply neuroscience to learning .................................................................. 208
6.8 Learning in the workplace ................................................................................................... 210
6.9 Importance of learning, training and development............................................................ 210
6.9.1 Benefits of LT&D ............................................................................................................. 211
6.10 Strategic approach to learning, training and development (LT&D) .................................... 212
6.11 Learning, training and development system and process .................................................. 214
6.11.1 Identifying learning, training and development needs............................................... 214
6.11.2 Devising LT&D plans for learning interventions.......................................................... 217
6.11.3 Types of learning methods.......................................................................................... 219
6.11.4 Recent trends affecting learning methods ................................................................. 223
6.11.5 Popularity and effectiveness of learning methods ..................................................... 223
6.12 Evaluating learning, training and development .................................................................. 224
6.13 Learning culture .................................................................................................................. 226
6.13.1 Developing competencies ........................................................................................... 227
6.14 Organizational learning and learning organization............................................................. 228
6.14.1 Creating a learning organization ................................................................................. 229
6.14.2 A new view of learning organization........................................................................... 230
6.15 TAKEAWAYS ........................................................................................................................ 236
6.15.1 Answers to the case .................................................................................................... 237
References........................................................................................................................................... 239

1. Introduction to organizational behavior and human resource
management
1.1 Learning objectives
After completing this section you will be able to:
• define organizational behavior and human resource management

• explain relationships between management, organizational behavior and HRM
• identify goals and methods of organizational behavior research
• define organizations and their environments
• give an overview of the historical development of research on management.
1.2 Linked reading
Organizational Behavior, Chapter 1 What Is Organizational Behavior?
1.3 Introduction
This module covers two interrelated areas of study and knowledge that are crucial for managing and
developing people and organizations: organizational behavior and human resource management.
In this introductory section we will explain what organizational behavior and human resource
management are and do and provide a map for the rest of the module.
In this module you will learn about a wide range of matters that are crucial for people management.
You will learn what affects individual behavior and behavior in groups, what is organizational structure
and what is organizational culture and how they influence what and how people do. You will explore
how to analyse and design work, how to recruit and select people, how to manage performance and
motivate and reward people, and how to manage change. You will consider learning, training and
development and evidence-based management decision making. You will learn how to manage teams
and how to manage people across the world; and you will learn not just how to manage but how to
lead. You will also have an opportunity to learn how to apply your knowledge to practice through
selfassessed exercises included in this study guide and the accompanying textbook and through your
individual assignment.

1.4 Organizational behavior
The term ‘organizational behavior’ (OB) has two meanings: it refers to
1. the actual behavior – behavior of individuals and groups in organizations
2. the study of behavior of people in organizations.
Organizational behavior as a domain of study and scholarship is “devoted to understanding individuals

and groups within an organizational context. It focuses on attributes, processes, behaviors, and
outcomes within and between individual, interpersonal, group, and organizational levels of analysis.
Major topics include
• individual characteristics such as beliefs, values, personality, and demographic attributes, and
individual processes such as learning, perception, motivation, emotions, and decision making
• interpersonal processes such as trust, justice, power, politics, social exchange, and networks
• group/team characteristics such as size, diversity, and cohesion, and group/ team processes
such as development, leadership, decision making, and cooperation and conflict
• organizational processes and practices such as leadership, goal setting, work design, feedback,
rewards, communication, and socialization
• contextual influences on individuals and groups such as organizational and national culture,
and organizational identity and climate, and
• the influence of all of the above on individual, interpersonal, group, and organizational
outcomes such as performance, creativity, attachment, citizenship behaviors, stress,
absenteeism, turnover, deviance, and ethical behavior” (Organizational Behavior Division of
the Academy of Management, 2016).
Organizational behavior as a field of study generates the knowledge that managers need in order to
understand, predict, and influence the attitudes and behaviors of people in organizations. Concepts
and lessons of organizational behavior are useful for anyone working in organizations, regardless of
their job or work role, business function and professional specialty.
1.4.1 Organizational behavior as multidisciplinary field
Organizational Behavior draws on different disciplines.
• Psychology studies and attempts to understand individual behavior and the bases of individual
differences and with the impact of the environment on shaping these differences. The areas
of psychology particularly relevant to the study of organizational behavior include learning,
personality, and industrial and organizational psychology.

• Social psychology concentrates on the individual in groups and the social processes which
influence the behavior of groups. Its focus is on social relations, as it examines individuals in
relation to each other rather than in isolation.
• Sociology makes an important contribution by bringing to the study of organizational behavior
the role of social structures and their impact on individuals’ actions. Thus the main focus of
sociology is the relationship between structure and agency: the idea that we cannot
understand individuals’ behavior without looking at the broader social and economic
structures within which they are embedded. For example, sociology considers how social
divisions such as class, gender and race influence organizations and social relations in
organizations, and how the action of individuals is influenced by shared meanings such as
culture. The approach emphasises the role of power and conflict in understanding behavior
in organizations. Behavior therefore is seen not just as a matter of individual personality but
as being understood by looking at broader social structures.
• Anthropology brings in an understanding of the ways in which cultures develop and shape
human behavior and of differences between national cultures.
• Political science adds to the understanding of issues relating to conflict and negotiation and
to the allocation and use of power in organizations.
Together these different perspectives suggest an important point: to understand organizational

behavior, we must draw upon different perspectives and levels of analysis. This suggests a multi-
dimensional framework in which to consider the individual, processes of motivation and social
interactions like group behavior, leadership and communication, and the structural and cultural
factors which reflect broader social contexts and influence behavior in organizations.
1.4.2 Goals of organizational behavior research
The goals of organizational behavior research are similar to those of social sciences more generally:
1. To describe various organizational behavior phenomena
Description is fundamental to understanding. Describing behavior, however, is challenging.

Certain phenomena are more readily accessible. For instance, one can describe the employee
turnover in terms of turnover rates, i.e. how many employees have voluntarily left the company
during a particular period of time. Other phenomena are much less tangible and cannot be
observed directly. For instance, how do you describe learning? Or organizational culture? Or
personality? One first needs to define the phenomenon, conceptualise what it is and what it is
not, consider its potential dimensions and devise some way of meaningfully depicting or
measuring it. Many phenomena are also difficult to pin down, because they change over time.
2. To explain behavior

It is sometimes possible to infer that one event has caused another event. For instance, if you
practice your English (or Russian or French or Chinese or whatever foreign language you would
like to learn) by doing exercises and your test scores on this language test improve after this
practice, we can infer that your practice has caused your scores to improve. However, by and
large, explaining behavior is a difficult task. Behavior generally is subject to many different
influences – individual, group, organizational, social and cultural – so that it is difficult to pinpoint
particular set of factors that affect particular behavior. There may also be multiple interactions
between forces and processes. Finally, establishing ‘what comes first’ is not easy. For instance,
research suggests that job satisfaction is associated with better performance. However, it may be
the case that job satisfaction causes performance improvement or that when people perform
better they become more satisfied with their jobs.
3. To predict behavior
When one can explain what factors affect behavior and make general prediction, this prediction
would be phrased as a tendency or a probability, not a certainty. This is again due to the fact that
behavior is a result of a multitude of factors and occurs in a context that is constantly changing.
One can, for instance, predict that if the work is repetitive and boring, staff turnover would be
relatively high, but one would not be able to predict which member of staff will leave or when.
Equally, one can explain why a particular type of organizational structure would be more
adaptable, but one cannot predict he performance improvement that will follow if the
organization adopts this type of structure.
4. To effect change
Organizational behavior research findings have a capacity to prompt change. Organizations

commission research studies (from academics or consultants) to identify the causes of problems
and propose recommendations for improvement. Researchers themselves advocate changes in
academic publications and/ or in mass media or strive to change public opinion (or opinion of
particular groups, such as managers or trade unions) in order to facilitate change. The challenge
here stems from ethical considerations. A socially negative side of such interventions and impact
may emerge if research findings are employed to justify organizational actions that may be in the
interests of some but not all stakeholders (e.g., in the interests of management, but not of
workers).
Despite these challenges and unavoidable limitations, organizational behavior research does provide
a strong evidence base consisting of descriptions, explanations, predictions, and recommendations
for improvement of various aspects of individual and group behavior and organization-wide
processes, structures, and cultures. And who are the intended recipients of organizational behavior
wisdom?

A key audience is, obviously, managers, for whom the OB provides the knowledge and analytical tools
to inform their decision making on various aspects of organizational behavior with the ultimate goal
of improving efficiency and effectiveness of organizations and – hopefully – improving the well-being
of all organizational members, as well as other organizational stakeholders.
OB research, however, aspires to reach broader audiences and to appeal to all of us who work in – or
interact with – organizations on a daily basis, in order to
• help us understand how organizations affect us and we affect them

• explore and find solutions to the problems that are not necessarily related to organizational
efficiency and effectiveness, but have potential to make our lives better.
Where does this evidence come from? From empirical research. This leads us to the question: How
does organizational behavior research study behavior?
1.4.3 Organizational behavior research methods
In some sense, organizational behavior research is not a “rocket science”, because it deals with the
phenomena everyone encounters in their daily existence and for which most people have some
intuitive explanations. In that respect, it might appear common sense. However, human beings are
much more complex than the majority of natural phenomena that natural sciences study. They have
agency and choice. Furthermore, the very fact of ‘studying’ (e.g., observing, asking questions) affects
the behavior. Finally, interpreting human behavior involves value judgements.
However, organizational behavior research also has some elements of ‘rocket science’ in that employs
highly sophisticated methods, both qualitative and quantitative. It is intellectually challenging and
demanding. And it frequently provides different answers to the same question, depending on the
perspective taken by the researcher.
The key methods of studying behavior are by:
1. Conducting experiments
2. Observing behavior in its ‘natural’ environment (e.g., in organizational context)
3. Asking questions through interviews or surveys
4. Examining texts and artefacts produced by organizations (e.g., reports, e-mails, websites, images,
architecture, etc.).
Experiments

An experiment is a study in which a treatment, procedure, or program is intentionally introduced and
a result or outcome is observed.
Let us give you an example. Researchers Porath and Erez (2007) conducted three experimental studies
to test how rudeness affects task performance and helpfulness. In the experiment, participants were
randomly assigned to one of the two experimental conditions, rudeness and control.
In the first experiment, when a participant arrived at the lab, an experimenter told him or her a cover
story that the study was about the link between personality and performance. The experimenter then
asked the participant to answer a personality questionnaire. About six minutes after the start of the
experiment, the confederate arrived at the lab and said, “I am really sorry that I am late. My class
across campus was not released on time.” The experimenter then told him (in a neutral tone) that it
was too late, that he would not be able to participate in the experiment, and that he would have to
leave. As soon as the confederate had left the room, the experimenter did one of two possible things.
When a participant was in the control condition, the experimenter said nothing. When a participant
was assigned to the rudeness condition, however, the experimenter said: “What is it with you
undergrads here at XXX [university name]? You always arrive late; you’re not professional. I conducted
this type of study at other universities, and I can tell you that students here at XXX leave a lot to be
desired as participants.” This rudeness display was designed to be abstract and general and not
specifically directed toward the participant. Accordingly, the experimenter delivered the rude
statement indirectly, using a low voice (i.e., not louder than normal) and not looking directly at the
participant. When the participant had completed the personality questionnaire, the experimenter
explained again that the purpose of the study was to investigate the link between personality and
performance and that the participant would therefore perform two tasks. The experimenter then
handed the participant the first task, which consisted of ten anagrams (purposely scrambled words)
that the participant had ten minutes to solve. Upon completion of the task, he or she was asked to
complete the second task, which was to write down as many uses for a brick as possible in five
minutes. In another experiment rudeness was manipulated by asking participants to write short
stories elaborating and extending a scenario that described a rude incident. They were specifically
instructed to imagine that this rude incident had happened to them. This manipulation was designed
to test the effect of “just thinking” about rudeness. In contrast, participants in the control condition
were instructed to imagine that one of the neutral/control scenarios had happened to them. The
results of the experiments showed that an act of rudeness on the part of an authority figure (the
experimenter) and even just imagining a rude incident reduced performance on both routine and
creative tasks.
The results show that even one-time incidents of exposure to rudeness may have serious
consequences for individual performance on cognitive tasks. The controlled nature of laboratory
studies enhances research precision; but generalising the results to organizational context requires
caution.

Observation
An observation is a study conducted by a researcher in an organizational setting, where researcher

observes behavior in its ‘natural’ (i.e. workplace) context. A researcher may collect data as an outsider
(non-participant observation) or as a member of the work team/organization (participant
observation).
For example, Michael Burawoy, an organizational sociologist, worked for one and a half years at the
Personnel Research Unit of the Copper Industry Service Bureau in Zambia, to study industrial relations
in postcolonial context (participant observation). In order to better understand the experience of
young rural Chinese girls working in Hong Kong factories, Pun (2005) worked for eight months as a
Chinese factory girl, putting in 12-hour days and living in the workers’ dormitory along with other girls.
Van Maanen (1973) became a recruit to study police socialisation, and later continued as a police
officer reserve, riding along on patrols. Watson (1994) spent a year working as a manager in the
human resources function at GEC Plessey Telecommunications to study the implementation of a
cultural change initiative. Pratt (2000) became an Amway distributor to study the process of
socialisation and identity formation. Henry Mintzberg developed his famous study of manager’s job
(1975) through non-participant observation, following five American CEOs for one week each,
recording various aspects of every piece of mail they received and every verbal contact they engaged
in (non-participant observation).
Survey
A survey is a study of a sample of individuals from a specified population. These individuals are
required to respond to a questionnaire. The researchers then draw conclusions about the relevant
population based on the responses provided by the sample.
A good example of a survey is Denison’s Organizational Culture Survey. Organizational culture is

generally defined values, beliefs and assumptions that are held by the employees of an organization
and which facilitate shared meaning and guide behavior. One way to assess organizational culture is
to focus on observable norms, values and practices and to measure them using a culture survey
administered to a sample of employees in an organization. The Denison’s survey assesses four primary
cultural traits: involvement, consistency, adaptability, and mission. The survey consists of 60 items (15
items per trait), each of which uses a 5-point scale ranging from 1=strongly disagree to 5=strongly
agree.
The statements (survey items) that survey participants are invited to rate on this scale include:
• Most employees are highly involved in their work

• Decisions are usually made at the level where the best information is available
• Information is widely shared so that everyone can get the information he or she needs when
it’s needed

• Everyone believes that he or she can have a positive impact
• Business planning is ongoing and involves everyone in the process to some degree
• The leaders and managers ‘practice what they preach’
• There is a characteristic management style and a distinct set of management practices
• There is a clear and consistent set of values that governs the way we do business
• Ignoring core values will get you in trouble
• There is an ethical code that guides our behavior and tells us right from wrong.
This survey instrument is used in research to assess cultures of different organizations and examine
culture’s impact on various organizational outcomes, such as performance. The survey instrument is
also used in practice to diagnose an organization’s culture, identify its strengths and weaknesses, and
propose interventions to strengthen the organization’s culture profile. Diagnosis and intervention are
guided by the evidence from Denison and colleagues’ research that suggests that organizations that
are ‘higher’ on all four cultural traits perform better than organizations that are lower on these traits
(Boyce et al., 2015; Denison and Mishra, 1995).
Interview
Interviews rely on either face-to-face or ‘virtual’ (over the phone or internet) synchronous interactions
to ask respondents questions of interest. In a structured interview, interviewees are asked the same
question in the same order. Structured interviews permit consistent comparisons between people.
Unstructured interviews do not require interviewers to use the same questions or format and are
more spontaneous. Semi-structured interviews are in-between: they use some standard questions but
also allow the respondents to lead the interview conversation into the areas which researchers may
not have considered when designing the interview questions.
For instance, Ashforth, Kreiner, Clark and Fugate (2007) used semi-structured interviews to examine
how managers experience and negotiate the dilemmas of “dirty work” – working and managing in
occupations that the society considers to be physically, socially or morally tainted, such as used car
salespersons, morticians and funeral directors, personal injury lawyers, pest control exterminators,
debt collection officers, and adult entertainment performers.
1.5 Management and organizational behavior
Management can be regarded, for the most part, as application of the organizational behavior
principles in practice.
Consider the following list of 25 most commonly performed work activities of top managers, such as
Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), Executive
Director, and President. This list comes from the world’s most comprehensive database of
occupations, the Occupational Information Network (O*NET) developed under the sponsorship of the

US Department of Labor. The database provides the list of 41 work activities, of which we have
selected the 25 most important. The numbers indicate the importance of activity, on the scale from 1
to 100 (with higher values implying greater importance).
Work activities of chief executives

The majority of activities on this list either directly correspond to key topics in organizational behavior
research (e.g., team building) or can be informed by the organizational behavior knowledge (e.g.,
“getting and analysing information” may involve obtaining and breaking down the information about
behavior of subordinates and organizational units, and the OB knowledge would pinpoint what
information needs to be collected and how such information can be categorised and examined).

1.6 Human Resource Management
The expression Human Resource Management (abbreviated as HRM) generally refers to “the theory
and practices relating to the way people are managed at work” (Storey, 2016).
The term HRM can be used in three distinct meanings, depending on the context, to refer to:
1. a set of “people management” activities within an organization. In this sense, HRM includes
anything and everything associated with the management of employment relations in an
organization, and exists in any organization. It is just that in some organizations HRM is an
undifferentiated part of line management, while in other organizations HRM practices and
procedures are formalised and separated into a specialised function
2. as a specific functional area within organizations (e.g., HRM department), a job or work role and
a profession (e.g., HR manager, personnel manager, people manager, HR business partner). In
some cases the human resource manager may be a generalist with responsibility for a variety of
HR issues. In larger organizations an HR department might comprise a large team, including
specialists in areas such as employee relations, learning and development or reward and benefits.
In SMEs, there may be no specialist human resource manager and HRM may be the responsibility
of general or line managers
3. as an applied science, which aims to create cumulative knowledge based on trustworthy empirical
evidence and to support the applied practices in the area of managing people. As such, HRM
scholars strive to develop a better understanding of how work organizations can perform more
effectively by better management of their human resources. Major topics include acquisition,
allocation, development, utilization, maintenance, and evaluation of humans as resources in work
organizations.
What does ‘people management’ entail?

Read the Robin Hood case below and then, thinking of the idea of human resource management in a
common sense way, try to identify the main issues and areas of people management that you feel are
important in the story.

So, what would Robin need to manage the Merry Men?
There is no definitive response but you would probably suggest that Robin first needs to decide what
he is trying to achieve; in other words, his strategy. The strategic objective of the group could be seen
as twofold: 1. to survive until King Richard returns to oust John and restore law and order; 2. to raise
as much money as possible, as quickly as possible, to contribute to King Richard’s ransom and facilitate
his return to England. Once the objectives are clear, Robin should do human resource planning, that
is, consider how many and what sort of people he needs to achieve these objectives,–. You could
probably come up with a long list of employees, which might include: fighters, people to ‘fence’ the
stolen goods into cash, shelter builders, cooks and housekeepers, clothes makers, medical experts,
and weapon makers. But the important thing for him to decide is how many of each is optimum,

because his organization cannot afford having non-productive members who use resources but do
not contribute to the achievement of strategic objectives.
You would also point out that, rather than waiting for people to just turn up, Robin should try to
specifically attract people with the skills/knowledge his organization requires. He should develop a
recruitment system and ‘advertise’ through word of mouth, targeting particular groups like disaffected
soldiers in the Sheriff’s army. When he attracted the applicants, he needs a selection system – a way
to decide whom to employ and whom to reject. For instance, to assess skills, he may set up tests in
archery, orienteering, or cooking.
Once he has his workforce, if Robin is to know the weaknesses and strengths of his Merry Men he will
need to constantly monitor and review individual performance. For performance management, he
should first decide what performance measures to use: for the robbers it might be the value of their
loot, and for the weapon makers – the accuracy of their product. And then he needs to have regular
conversations (appraisals) with the Merry Men to discuss with them how well they do and how they
can improve. Training will be an issue, too. Little John might be concerned with honing the fighting
skills of the men that he is responsible for, whilst at the other extreme Will Scarlet may want to ensure
his teams are up to date with the best concealed building methods available. How and where will this
be done?
Then, there is reward management. For the Merry Men, the main reward might be a more just society
that King Richard’s reinstatement on the throne will bring. Yet, in the interim, some more tangible
incentives and ways of recognising individual and team efforts may not come amiss. Perhaps, the
bravest fighter could be given the best meal, and the better cooks could be allotted a better shelter.
Robin and his lieutenants will also need to consider what behaviors are deemed acceptable and make
sure Merry Men follow the rules; i.e. they need an employee relations system. Merry Men will also
need to have their say in the organization and so Robin will need to create the mechanisms for
employee involvement and participation (perhaps, all-band meetings around the campfire).
To perform successfully, the Merry Men – and any other organization – need a well functioning system
of people management. We will discuss this in much greater detail in Section 3.
1.7 Altogether now: OB, HRM and management
How do organizational behavior, human resource management and the actual practice of
management all fit together?
Firstly, organizational behavior feeds directly into the management practice. OB researchers conduct
empirical studies of different organizational behavior issues, find out what factors affect various
behaviors, and then translate their findings into recommendations for practice. For example, OB

researchers examine how group size affects group performance; and this evidence can then be used
by practicing managers to construct effective work teams.
Organizational behavior also feeds into human resource management research. Human resource
management research takes the ideas from organizational behavior research and examines them in
the context of HRM applications. These recommendations are then passed onto management
practitioners. For instance, OB scholars study how learning affects job performance and then translate
their findings into recommendations for training programmes. Researchers in HRM take these
recommendations and specify them further in the context of organizational HRM systems. They test
them for fit with other HRM practices, for feasibility and for compliance with legal requirements.
Based on this further research, HRM scholars provide guidance on developing and evaluating training
programmes.
And where do management practitioners learn about the recommendations from OB and HRM
research? They learn this through formal education (such as this programme) or through training
provided in their organizations. They also learn by reading relevant publications. Finally, they learn by
following the guidelines developed by professional associations, as these guidelines are informed by
OB and HRM research.
Because of the affinities between organizational behavior and human resource management, we
cover both areas in this module. We also interweave the HRM and the OB topics, because learning OB
and HRM works best in tandem.
1.8 Organizations and organizational environment
Before we progress further, we also need to define the key terms: organization and organizational
environment.
1.8.1 Organizations
Organizations have a pervasive influence over our lives. We live in what has been called an ‘organised
society’. As Henry Mintzberg (1989) has observed:

‘Ours has become, for better and for worse, a society of organizations. We are born in
organizations and are educated in organizations so that we can later work in organizations.
At the same time, organizations supply us and entertain us, they govern us and harass us
(sometime concurrently). Finally, we are buried by organizations.’
Therefore it seems that we encounter organizations in all parts of our life, not only in our working
lives, but as consumers, as citizens, as students and as patients. And occupying these different roles
creates different perspectives on how we see the ‘organization’ and how we expect it to function.
Organizations exist because they allow individuals to achieve objectives collectively that they would
be unable to achieve alone. By grouping together, individuals strive to overcome challenges from the
physical environment and their human physical limitations. Through modes of ‘organising’ they seek
to improve and augment their productive capacity. These methods include specialisation or ‘the
division of labour’ and the accumulation of knowledge. The result is to produce ‘synergy’, the idea
that the ‘whole’ is greater than the sum of its parts. Organizations also provide us with an important
means of fulfilling social needs.
But what is an organization?
Organization is a term that allows us to differentiate “certain sorts of enduring collectivities, which
have relatively limited and specific aims (e.g., a business undertaking, a university, a government
department) from other more general collectivities (e.g., age, class, ethnic, occupational and societal
groups)” (Pugh, 1973: 349).
We define organization here as (1) a social entity that (2) is goal-directed, (3) boundary maintaining,
(4) resource dependent, (5) linked to the external environment, (6) socially constructed and (7)
deliberately structured, coordinated and controlled systems of activities (Daft, 2001: 13).
Organization is …

Metaphors for organizations
In an influential account, Gareth Morgan (1986) has identified eight metaphors for understanding
organizations. These are not meant to be exclusive definitions but intended to expose the differing
assumptions that inform the nature and functioning of organizations and, by extension, the behavior
of those who occupy them.
The eight metaphors are as follows:
• Organizations as machines – Organizations here are seen as a set of interrelated components

whose combined, structured operation carries out a common task. To some extent, those who
work within the organization are the ‘cogs’ in this machine and are assumed to behave in a
similarly ordered and predictable manner.
• Organizations as biological organisms – Biological organisms are born, grow, mature and die,
and are in a series of constant interchanges with the environment. Some are able to adapt,
whilst some become extinct. We can view organizations as being subject to similar processes.
• Organizations as brains – Organizations may be regarded as networks of information., as they

rely on processing knowledge and developing the capacity ‘to learn’.

• Organizations as cultures – This metaphor encourages us to appreciate how an organization
is constituted from the different rituals, values and systems of belief of its members. In the
same way that a nation can be seen to have a distinctive ‘culture’, so can an organization.
• Organizations as political systems – An organization may be interpreted as an arena where

different interested parties compete for resources and control of the organization’s activities.
Often these interests conflict and are resolved, if at all, through the imposition of power and
authority.
• Organizations as psychic prisons – Arguably, this a stronger version of the metaphor of

organizations as cultures. It suggests that the values of an organization can constrain and
sometimes overcome those of the individual. Members can become trapped in a particular
organizational ‘reality’.
• Organizations as systems of flux and transformation – This view recognises that the universe
is in a constant state of change. Organizations are similarly constructed; and to understand
the nature of organizations, we must understand the nature of change.
• Organizations as instruments of domination – Here organizations are seen as arenas in which

certain individuals and groups are able to impose their will on others. This is because of the
asymmetry of power that characterises most organizations. Simply, some individuals are more
powerful than others and an organization provides a setting in which they take advantage of
this power.
The point of this ‘metaphorical’ approach is to show that there are many different sides to
organizations. Moreover, differing beliefs, values and assumptions mean that the same organization
can look very different depending on the ‘lens’ through which it is viewed. We need to be aware of
this in our study of organizations and take a suitably critical approach to the perspectives that we will
encounter.
We recommend that, to develop a critical approach you follow five key processes (Linstead et al.,
2004: 5):
• Identify and challenge the assumptions underlying the ideas that you are presented with.
• Develop an awareness of the context in which ideas have evolved – historically, culturally and
socially.
• Seek alternative ways of seeing situations, interpreting what is going on and understanding
why the organization is the way it is.

• Think about how things could be managed and organised differently.
• Be appropriately sceptical about what you read and hear about management and
organizations.
You should strive to take this approach as you engage with the material in the module.
1.8.2 Organizational environment
Organizational environment is everything that lies outside the boundaries of the organization and
affects what the organization does. Organizations are affected by a myriad of external forces,
processes and actors, many of whom are other organizations: competitors; suppliers of raw materials
and other inputs into production processes; available technologies and technological changes;
customers and clients; social conditions and cultural trends; sources of finance; educational
institutions and training providers; the general state of the economy; political regime, parties and
interest groups; laws and regulations; and, of course, the actual natural environment.
There are two ways in which we can impose some order on this variety.
One way is to divide the environment into sectors, as presented on the diagram below.
Organizational environment: Sectors

Alternatively, one can organise the external factors using the following six categories, collectively
known under the abbreviation PESTLE:
• Political – political parties and movements, ideologies, political regime, government policies,
trade unions, interest groups, political stability, wars, conflicts, terrorism, and so forth
• Economic – economic cycle, tax regime, wage rates, currency exchange rates, interest rates,
competitor, supplier and customer behavior
• Social and cultural – demographic trends, health, social/cultural values, attitudes to work,
labour mobility, availability of skills, ethics
• Technological – production methods and processes, information and communication
technologies, transportation technologies, new materials, innovations
• Legal – local, national and international laws and regulations, trade agreements, human
rights, courts
• Environmental – climate, weather, terrain, ecosystem, pollution and emissions,
environmental protection laws, regulations and their enforcement.
All of these sectors/aspects of the environment significantly impact on organizational processes. For
instance, take social influences on organizations, such as demographic changes.
The following case illustrates the point.

In other parts of the world, however, the trends are different: Compare, for instance, the age
distribution of population in Western Europe with that of Western Africa represented in the graph
below.
Age distribution of population in Western Europe and Western Africa in 2017

Similarly consider technological changes and their influence on work and organizations.
Case: Replacing people with computers and robots

A 2017 research report from a British think tank Reform suggests that around a quarter of a million
jobs in the United Kingdom public sector could be replaced by computers and robots in the next 15
years (Hitchcock et al., 2017). Some key points are as follows:
Administrative and operational functions are repetitive and predictable activities, which can be desk-
based administrative roles, or physical roles such as cleaners. These functions can, in many instances,
be fully automated and replaced through integrated working. Her Majesty Revenue and Customs
(HMRC), for example, has reduced the workforce from 96,000 in 2005 to 60,000 a decade later
through expanding online services and rolling out real-time information, enabling less contact
between tax advisers and users. In the UK National Health Service (NHS), a conservative estimate
reveals an 81 per cent chance of automation of these functions. More complex administrative roles
can also be automated. McKinsey argues that finance-officer roles can be cut by 45 per cent, while
Deloitte calculates that 39 per cent of legal-associate can be automated. Robotic-process automation
has been used in legal services to replace basic-regulatory-search tasks, find precedents and conduct
research.
• Interactive and frontline roles require substantial personal interaction, and include jobs such
as doctors, nurses, teachers and police officers. These are less likely to be automated than
administrative tasks. Yet there is still potential to use automation to increase productivity –
by enabling skilled practitioners to focus on activities that require currently non-automatable
skills, and by reducing the tasks involved in a given role and thus reducing the overall
headcount. McKinsey estimate that 30 per cent of a nurse’s activities could be automated –
which include tasks such as collecting information and administering non-intravenous
medications. Much of the technology required is already there: IBM’s Watson computer is
better at diagnosing lung cancer than humans, with a success rate of 90 per cent, compared
to 50 per cent. This is due to employing artificial intelligence technology, where machines
learn by collecting information as a human would – but they can process this at a considerably
faster speed. Watson, for instance, can read 40 million documents in 15 seconds. With 160
hours’ reading a week required to keep up with newly published medical knowledge,
computers have a competitive advantage. Policing can also be revolutionised. Autonomous
crowd-monitoring drones could replace police-helicopter-operating roles by identifying issues
and deploying police officers most effectively on the ground. Facial-recognition technology
has been applied by police forces across the world, notably in the US and Israel. Used in CCTV
or body cameras, this technology can more efficiently identify missing people, people
committing crime or fugitives.
• Cognitive roles are those which require strategic thinking and complex reasoning, such as
chief executives and senior managers. One-fifth of publicsector workers fill these roles. These
roles are least likely to be automated over the next ten to 20 years, but there are several areas
where technology can improve senior officials’ work – increasing efficiency for them and the
frontline staff who respond to their instructions. For instance, Japan’s Ministry of Economy,
Trade and Industry has announced plans to use AI to help civil servants to draft answers to
questions put to Cabinet Ministers in parliamentary debates. Predictive analytics is another

key area. For example, burglary data is currently used by Santa Cruz City in the USA and West
Yorkshire Police in the UK to identify areas at greatest risk of burglary to increase presence in
those areas. With no additional officers, Santa Cruz reduced property theft by 19 per cent,
while West Yorkshire Police reported a 25 per cent reduction.
Source: Hitchcock et al. (2017)
Throughout this module we will be drawing your attention to various ways in which behavior in
organizations and the principles and practices of human resource management are influenced (and
also in turn influence) organizational environment.
1.9 A brief history of research on managing people and organizations
In order to understand the key approaches to management it is necessary to first look at how the
organization has developed. The growth of the ‘organization’ as we know it and the methods by which
such entities are ‘organised’, is the result of an historical development linked to the growth of the
large-scale commercial organization born out of the Industrial Revolution. The rapid expansion of such
enterprises created problems for the managers of the time. These difficulties prompted a number of
theories of organization structure that attempted to provide managers with ‘best practices’ for
efficient and effective organization. The analysis, critique and refinement of these ideas laid the
foundation for subsequent theories of organizations and management.
Prior to the Industrial Revolution, most societies consisted of small-scale, selfsufficient agrarian
communities. By the end of the Industrial Revolution most people lived in towns or cities. Central to
this movement was the development of the ‘factory system’. The industrial revolution saw a massive
increase in volumes of trade, especially in the area of textiles. Before industrialisation, textile
production was largely a secondary source of income in agricultural communities. Increasing demand
for textile products led to the emergence of more and more specialists and the development of a new
system linking consumers and producers. Before this, textile production was based on a system known
as ‘putting out’; this involved merchants placing work with several independent home-based workers.
This system had a number of advantages; since workers were not employed directly costs were kept
low and changes in demand could be responded to quickly. The system was therefore quite flexible.
Yet with the growing demand for textile products the system began to show signs of stress. This was
due to increasing complexity and inefficiencies. It became more difficult to effectively control a large
and complex distribution system with a multitude of small domestic workshops operating largely
unsupervised. Therefore merchants sought ways to establish greater levels of control over the
production system in order to exploit the new demand fully. The result was a move to a more
centralised form of production based on the factory system. The move towards a factory system was
not achieved overnight, but rather through an incremental process of change and the adoption of new
practices. Nevertheless, it was the need to obtain greater levels of control over the workforce, which

influenced the attitude of employers towards labour at this time. These attitudes were central to the
development of the structure of the modern organization. Employers believed that labour is
unreliable and will only work under supervision, and that the cost of labour is the main business
expense and should be reduced in order to maximise profits.
Contemporary writers observed that skill was viewed as an inconvenience and a threat to the ultimate
position of the employer or entrepreneur. This hostility was reciprocated by labour that demonstrated
an unwillingness to enter into the factory system. Essentially there was a very real conflict of interests
between the factory owners and entrepreneurs and the workers they sought to employ in the
factories.
It is perhaps not surprising that workers objected to the factory system and many continued to seek
ways in which to undermine attempts by factory owners to change work practices and introduce new
technologies. Yet, despite opposition, the factory system began to permeate all levels of industrial life
and commerce in general. This growth in adoption was incremental and there was still no one
universal approach which managers could use to organise work. Moreover, as the size of enterprise
grew, controlling an increasingly recalcitrant workforce remained problematic.
There was also a problem of management. As the generation of the founder entrepreneurs passed
away many organizations faced a problem of succession. Control of organizations often passed to less
able members of the founding family. Whilst founders were able to combine entrepreneurial and
managerial responsibilities, succeeding generations frequently lacked both of these skills. Although
these inadequacies often lead to the creation of a nascent managerial profession, the quality of these
early managers was usually rather poor. As Wren (1994:45) points out,
‘Judging by the early literature, the salaried managers, that is, those in the layer of
management below entrepreneur were usually illiterate workers, promoted from the ranks
because they evidenced a greater degree of technical skills or had the ability to keep
discipline. Typically they were paid only a little more than the workers and more often than
not were attracted to the managerial position because it gave them the power to hire their
spouses and children to work in the factory.’
Consequently, by the end of the nineteenth century there was a growing need to establish some form
of codified and consistent approach to the design and management of organizations. This was
necessary in order to improve performance, increase competitiveness and to legitimise managerial
authority in the workplace. The response gave rise to what become known as ‘classical management’.
1.9.1 Classical management
Classical management was seen as a way of improving the quality of management, by ‘discovering’,
through scientific methods, a ‘best practice’ of organizational design which could be taught to

managers to make them more efficient and effective. The approach was very much a reflection of the
assumptions of the time in which organizations were portrayed as machines and the people within
them as cogs in those machines. Organizations were seen as closed systems, never changing and
unaffected by the outside world.
The classical approach was made up of three common themes:
1. Organizations are rational entities, a collection of individuals with a focus on achieving specific
goals through organization into formalised, differentiated structures.
2. Organization design is built on science-based experience – observation and experimentation are

essential in discovering the one best organizational form, one based on hierarchy and horizontal
division of labour and task.
3. People are economic bodies – that is, the only motivation they have for working is to receive
money in payment for their labour. As such they will seek to maximise the amount of money
earned and minimise the amount of work performed. They will use their skills and abilities as a
means of bargaining with employers to achieve this situation. Therefore jobs should be designed
in such a way as to reduce skill levels and minimise discretion exercised over activities as well as
increasing levels of managerial control.
The two key contributors to this classical school of thought were Frederick Taylor and Henri Fayol.
Frederick Taylor and Scientific Management
Frederick Taylor was an American engineer who for many was a controversial figure, but one who
made a significant contribution to the development of organizational theory and practice. Taylor is
credited with creating what was the first ‘management movement’. Although from a wealthy Quaker
family, Taylor began his career as a labourer in a steel works, working his way up to clerk, machinist,
sub-foreman and finally chief engineer within six years.
As chief engineer, Taylor was able to put into practice some of his ideas regarding organizational
design and management practice. His main concern was the inefficiency of industrial practice; Taylor
believed that many workplaces were ridden with the practice of ‘systematic soldiering’ or deliberately
working at less than full capacity. This he attributed to poor management which left workers to control
their own work methods. He believed that just as the performance of machinery could be improved
so too could the management and operation of those machines be made more efficient. Taylor held
that by examining the component parts of a task it was possible to identify the ‘one best way’ of
performing it. The publication of The Principles of Scientific Management in 1911 was a major
milestone in the evolving management theory (Rose, 1988).

Taylor saw the arbitrary, ‘rule of thumb’ approaches adopted by many managers at the time as being
a source of industrial unrest and mistrust. He believed that through methodical study and scientific
principles it was possible to establish the one best way of carrying out a task or job. Once this method
of work had been established it had to be adhered to consistently. Taylor also believed that individuals
had a tendency to seek the maximum reward for the minimum of effort. In order to prevent this,
managers had to set out a detailed way of performing work and had to closely supervise this work.
He incorporated these beliefs into his precepts for scientific management, which comprised three
central elements:
• a systematic collection of knowledge about work processes by managers,

• the removal of worker discretion and control over their activities,
• the creation of standard procedures and times for performing certain tasks.
The methodology of scientific management is the accumulation of knowledge about work tasks and
the subsequent creation of a set of basic rules and practices. Employing what he called a time study,
which later became know as ‘time-and-motion’, Taylor broke down tasks into their component
elements and, calculating the actions and time required for each, he redefined the roles of foremen
(and issued them with stopwatches). Each job was given a set amount of time to complete and output
was calculated from these times. Additionally, Taylor created differential pay rates for each job based
on what each worker should be able to achieve.
Taylor’s time study involved a five-step process.
(1) Find 10–15 men who are particularly skilled in doing a particular kind of work or task (preferably
from different firms in different parts of the country).
(2) Study the component movements each man uses to do the work together with the tools they use.
(3) Using a stopwatch, study the time taken to make each of these movements and select the quickest
way of doing each component part.
(4) Eliminate all false movements, slow movements and useless movements.
(5) After doing away with all unnecessary movements collect into one series the quickest and best
movements together with the best implements.
By following these processes, Taylor believed that managers could increase their level of control
through increased awareness and knowledge about the tasks that workers performed. They could also
reduce the degree of knowledge required by workers to perform tasks by simplifying the work and
breaking down the task into component parts. As a result of this process the aspect of work relating
to conception or ‘brain work’ is removed from the control of the worker and centred within the
management structure. This completes the process of obtaining management control of the work
process. Workers now require only limited skill to perform their work – they are supervised by
management who tell them what to do, when to do it and how long it should take.

Taylor saw his methods as simply legitimising the activities of management in analysing and changing
methods of working – all managers were doing was applying scientific methods to determine the most
effective and efficient method of work. He saw his methods as benefiting both worker and manager
since the worker was encouraged to attain peak performance and receive payment in relation to this,
but management also obtained increased output. However, through the application of scientific
management, the position of the worker was transformed from having a monopoly of knowledge
about the work process and control over it, to one whereby they required only a limited amount of
knowledge and had little or no control over the work process. This greatly reduced the skill levels
required and therefore the level of wages paid. There were strong criticisms of scientific management,
primarily from workers who found the system made their jobs boring and repetitive and feared that
increased efficiency would lead to workers being laid off. Bethlehem Steel eventually parted company
with Taylor in the face of growing worker fears over redundancies and Taylor’s refusal to moderate
his system.
Henry Fayol and the principles of management
Whilst scientific management was concerned largely with the production process, administrative
management sought to identify principles that could be used to co-ordinate the internal workings of
the organization. The principal concern was with identifying the forms of organization structure that
could optimise an organization’s efficiency. The main force behind administrative theory was Henri
Fayol (1841–1925). Fayol was writing in France at the same time as Taylor was developing his ideas in
the USA. Fayol, a mining engineer, based his writings on his experience of French coal mining as a
practising manager. Since the focus of his work was at the organizational level rather than that of the
task, it complemented much of what Taylor was saying in the USA. Fayol was concerned with
developing a universal approach to management. He believed that efficient management could be
taught if its underlying principles were identified and a general theory of management constructed.
In his Principles of Management, Fayol identified the following general principles of management.
(1) Division of work. Work specialisation can result in efficiencies and is applicable to both managerial
and technical functions. Yet there are limitations as to how much that work should be divided.
(2) Authority. Authority is the right to give orders and the power to exact obedience. It derives from
the formal authority of the office and from personal authority based on factors like intelligence
and experience. With authority comes responsibility.
(3) Discipline. Discipline is absolutely necessary for the smooth running of an organization, but the
state of discipline depends essentially on the worthiness of its leaders.
(4) Unity of command. An employee should receive orders from one superior only.
(5) Unity of direction. Activities aimed at the same objective should be organised so that there is one
plan and one person in charge.

(6) Subordination of individual interest to general interest. The interests of one employee or group
should not prevail over the interests and goals of the organization.
(7) Remuneration. Compensation should be fair to both the employee and the employer.
(8) Centralisation. The amount of centralisation or decentralisation depends on the situation. The
objective is the optimum use of the capabilities of personnel.
(9) Scalar chain. A scalar (hierarchical) chain of authority extends from the top to the bottom of an
organization and defines the communication path. Horizontal communication is also encouraged
if the managers in the chain are kept informed.
(10)Order. Materials should be kept in well-chosen places that facilitate activities. Similarly, due to
good organization and selection, the right person should be in the right place.
(11)Equity. Employees should be treated with kindness and justice.
(12)Stability of personnel tenure. Because time is required to become effective in new jobs, high
turnover should be prevented.
(13)Initiative. Managers should develop subordinate initiative to the fullest.
(14)Esprit de corps. Since union is strength, harmony and teamwork are essential.
Many of the principles are still practised today and they influence much common sense of what an
organization and management ‘look like’. Much of Fayol’s success was due to the fact that he was
writing for an audience that was receptive to his ideas, when business was being internationalised and
the business community was searching for a comprehensive management theory.
Chester Barnard and the authority principle
Other writers in the administrative school added to Fayol’s ideas or developed certain aspects of the
principles he laid down. Chester Barnard, for example, expanded upon the authority principle by
maintaining that authority depended not so much on the ‘person of authority’ issuing orders as the
willingness of those receiving the orders to carry them out. Barnard referred to this as the ‘acceptance
theory of authority’. Barnard (1938) argued that while authority did flow from the top it would be
facilitated if employees:
• understood the communication,

• saw the communication as in line with the organization’s aims,
• felt that the order was in line with the needs of employees, and
• felt they were physically and mentally able to carry it out.

Barnard’s theory was controversial due to its emphasis on employee acceptance. Nonetheless it marks
an important point in the development of theory as it recognised the human and relational element
of leadership and management.
1.9.2 Management activities – a realist approach
Fast forward thirty years. In the 1960s the attention shifted from a prescriptive to a ‘realist’ approach
to management activities, when researchers have started to explore what managers actually do on a
day-to-day basis. A number of similar studies have been carried in the next fifty years, in which
researchers observed managers and talked to them directly in order to discover at first hand the
nature of managerial work as it is actually practised in organizations.
This stream of research into management behavior has led away from the rationalism of the classical
school and its central belief that ‘management’ is a neutral function serving the goals of the
organization. These studies provide three main lessons:
1. The fragmented and ad hoc nature of management. These studies reveal that the image of the
manager as a reflective and strategic thinker is a myth. In contrast to classical models, empirical
studies suggest that management practices are opportunistic, habitual, tactical, reactive, frenetic
and ad hoc. Thus managers are more concerned with ‘fixing’ problems than developing long-term
strategies. This is primarily because managers have to adapt to continual uncertainties, limited
information and contradictory pressures. As a result, managerial activities are dominated by face-
to-face interaction and lateral communication (for instance, speculation and gossip) as a means
of gathering and using information.
2. The political nature of management. Realist studies often portray managers not as servants of the
owners or organizational interests, or as neutral technocrats serving the system, but as
‘manipulators’ trying to compete and co-operate with others in order to pursue sectional or
personal interests. Consequently these accounts support a pluralist view of organizational power
and politics in organizations. Organizations are divided by sectional and personal interests and are
sites of political struggles between different groups and coalitions. This view recognises that there
are inevitably multiple and competing goals within organizations. Groups and individuals will
engage in bargaining, negotiation, alliance building and coalitions to pursue their interests.
Although realist studies have made a major contribution to the understanding of management by
highlighting the fragmented and political nature of the activity, their methodology might have a
bias towards such findings. Because they concentrate on individual managers’ behavior, they
portray management as unplanned and political, rather than purposeful and coherent. However,
by concentrating on individual jobs rather than on management as a general process, the realist
perspective may lose sight of the broader framework within which managers operate. We have
to acknowledge that management is part of the process of the control of labour.

3. Management as process of control. Organizations contain many conflicting interests. Thus owners
pursue their interests in accumulating profit, and workers pursue their own interests for job
security, higher rewards and satisfying work. To resolve this tension, employers have to exercise
control over labour, which they do through management. From this perspective, management is
seen as the servant of the owner in controlling labour. However, management not only exercises
control but also needs to generate consent from workers. No method of control can completely
regulate workers’ behavior; employees will always have a degree of autonomy. In order to
manage this autonomy, employers need to enlist workers’ consent in the production process.
Indeed many current trends in management, for instance HRM and corporate culture, emphasise
the importance of allowing workers to have a degree of self-control over their work. Nevertheless,
the central tension between ‘control’ and ‘consent’ remains. Management is a key activity in
dealing with this tension.
Realist studies of management caution us against drawing an overly broad distinction between
management and non-management in terms of control. Perhaps the distinction is not so clear cut.
Firstly there are many different layers of management, each with different degrees of authority.
Secondly management has itself been the object and victim of restructuring, downsizing and pay
freezes. In this respect, management must also be seen as an object of control, as well as a
controlling influence.
Manager’s job: Folklore and fact
Undoubtedly, the most popular of the realist studies has been the work conducted by Canadian
scholar Henry Mintzberg. In his article “Manager’s Job: Folklore and Fact” published in Harvard
Business Review in 1975, which propelled him to instant fame, he debunked the classical view of
management: “If you ask managers what they do they will most likely tell you that they plan, organize,
coordinate and control. Then watch what they do. Don’t be surprised if you can’t relate what you see
to these words” (Mintzberg, 1975) After examining prior research on managers’ activities and
conducting his own study of five managers, he summarised the myths and the reality of managerial
work as follows:
Manager’s job: Folklore and Fact

In the same article, Mintzberg also identified 10 managerial roles, grouped into three categories:
1. Interpersonal
• Figurehead – performing symbolic duties as a representative of the organization.

• Leader – establishing the atmosphere and motivating the subordinates.
• Liaison – developing and maintaining webs of contacts outside the organization.
2. Informational
• Monitor – collecting all types of information that are relevant and useful to the
organization.
• Disseminator – transmitting information from outside the organization to those inside.
• Spokesman – transmitting information from inside the organization to outsiders.
3. Decision-making
• Entrepreneur – initiating change and adapting to the environment.

• Disturbance Handler – dealing with unexpected events.
• Resource Allocator – deciding on the use of organizational resources.
• Negotiator – negotiating with individuals and dealing with other organizations.

Have things changed in the new millennium? The latest writings on managers’ jobs suggest that the
facts have not changed. Writing in 2006, Watson reported that managers are “are endlessly on the
move and shift from task to task; spend a high proportion of their time talking ; are largely ‘reactive’
to events; are very reliant for information on gossip and guesswork. (formal reports are less important
and contextualised by informal information); spend little time analysing formal information or
engaging in systematic planning; rarely give direct commands to subordinates, and the more senior
the manager the more true this is” (Watson, 2006).
Mintzberg has updated his list of managerial roles in 2009, but the new list bears a strong resemblance
to the original.
Managerial roles in the 21st century
Why is it the case? Mintzberg himself provided an answer in an interview given on the occasion of the
30th anniversary of the publication of his book “The Nature of Managerial Work”:

“… managerial work is about life itself, in a sense, managerial work is the essence of human
activity. Management is not a science, it is not a profession, so it does not change, it remains
basically what it was, and I think if you go back 100 years, or 500 years, the essential nature
of managerial work would not be different” (de Holan and Mintzberg, 2004: 207)
He acknowledged the frenetic nature of the job has gotten worse (he blamed e-mail and mobile
communication for this), but refused to subscribe to the view that the complexity of managerial job
has dramatically increased compared to the past:
“Is decision-making more complex today? Were things easier in 1973, or in 1946 or 1939?
Was that simple? Come on. There is this view that says that we live where it is at, the really
big things are happening only to us, that we live in times of great change. Who are we to
judge that anyway? They were running a war in 1943. Was that simple? Was it simple for
Henry Ford to develop the enormous assembly lines? The obsession with the present and
ignorance of the past are the worst signs of a hyper-analytic mentality. It is arrogance. It is
ignorance of history. It is an attempt to glorify ourselves, and to say: listen to me because I
am telling you what is happening right now and I am important because I am describing things
NOW. It is superficial and sad…” (de Holan and Mintzberg, 2004: 207).
To what extent this description reflects your perception of your own work and the work of other
managers?
1.10 Logic of presentation in the module
In this module we will be shuttling back and forward between OB and HRM to connect the key
organizational behavior topics to their human resource management applications.
As we do so, we will also be travelling ‘upwards’ across three levels of analysis:

• individual level – the level of a single organizational member (which could be an employee or
a manager)
• group level – the level that encompasses relationships between two or more people and
processes that occur in both formal and informal groups and organizational teams
• organization – the level of an entire organization that covers all parts (e.g., units,
departments, divisions) of the organization and relationships between them.
Levels of analysis

The study guide consists of three units. In Unit 1 we mainly focus on individual level characteristics
and processes. In Unit 2 we move onto group level phenomena. In Unit 3 we consider organizational
level issues.
Each Unit consists of six sections. Thus, altogether, there are 18 sections – the number that roughly
corresponds to the number of weeks in the module. We suggest that you progress at a steady pace
through the module, working through one section per week. (This leaves you with a few weeks to
spare, in order to prepare your assignment that is due in the middle of the module, and to revise for
the examinations at the end of the module.)
In most sections, we signpost you to the relevant chapters in your textbook, by highlighting which
chapters you need to read in “Linked readings”. For the few remaining sections, your readings are
contained in this study guide. We hope that you will find this module practically useful and
intellectually engaging, as well as enjoyable! 1.11 TAKEAWAYS 1. Organizational behavior is behavior
of people in organizations. It is also a domain of study and scholarship devoted to understanding
individuals and groups within an organizational context. It focuses on attributes, processes, behaviors,
and outcomes within and between individual, group, and organizational levels of analysis. 2. Human
Resource Management (HRM) is a set of “people management” activities within an organization and
includes all processes associated with the management of employment relations in an organization.
It is also an applied science devoted to helping organizations perform more effectively by better
managing their human resources. 3. Organizational behavior research directly affects the practice of
management by providing recommendations based on research evidence. These recommendations
are available to practitioners in academic and practitioner literature and are also integrated into
management education and training. Organizational behavior research also provides evidence for
HRM research, which, in turn, develops evidence-based recommendations for practice in the context
of employment relationship. 4. The goals of organizational behavior research are to describe, explain
and predict behaviors of people in organizations and to help effect change in these behaviors. 5. The
methods of organizational behavior research are experiment, observation, interview, survey and
examination of artefacts (texts and objects) produced by organizations. 6. Organizations are social
entities that are goal-directed, boundary maintaining, resource dependent, linked to the external
environment, socially constructed and deliberately structured, coordinated and controlled systems of
activities. 7. Organizational environment is everything that lies outside the boundaries of the

organization and affects what the organization does. An organizational environment can be described
as a set of ten sectors: industry, raw materials, human resources, financial resources, market,
technology, economic conditions, government, sociocultural, and international sectors. Alternatively,
an organizational environment can be divided into six categories of external factors that affect
organizations: political, economic, social and cultural, technological, legal and environmental
(abbreviated as PESTLE). 8. Research on management has progressed from the rational and
prescriptive approach to management developed by the researchers in the classical scientific
management tradition in the early 20th century (Taylor, Fayol and Barnard) to a more realist and
descriptive approach in the late 20th-early 21st century (exemplified by Mintzberg). Note: Remember
also to review Takeaways provided in your textbook Chapter 1.
Section 2: Individual characteristics, behaviors and performance
• identify the impact of person and situation on individual behavior and performance and
categorise situations based on ‘situation strength’ in organizational context
• distinguish between task behaviors, organizational citizenship behaviors and
counterproductive behaviors, and organizational withdrawal and commitment
• demonstrate awareness of various dimensions of individual differences in application to
workplace context
• describe the impact of abilities and personality on work behaviors and outcomes and promote
the application of general mental ability and personality assessment in organizations
• identify basic values, distinguish values from other phenomena, and explain importance of
values in organizations.
2.1 Linked readings
Organizational Behavior, Chapter 2 Job Performance

Organizational Behavior, Chapter 3 Organizational Commitment
Organizational Behavior, Chapter 9 Personality and Cultural Values
Organizational Behavior, Chapter 10 Ability

2.3 Individual behavior
Imagine the following situation: You enter a café and order a coffee and a sandwich. The person who
serves you is abrupt and unpleasant, does not smile, does not make eye contact, and continues his
conversation with a colleague instead of asking if you wanted to order something else. He slaps your
change on the counter, rather than handing it to you, and turns away. The encounter leaves you angry
and upset.
How would you explain this experience?
You may attribute it to individual factors: It is possible that this person is not suited to work that
requires interactions with customers, so the issue may stem from the individual’s personality traits. It
is also possible that this person finds the job boring and lacks challenge; this would be a motivation
problem. It is also possible that the person is not coping with the demands of the job because
adequate training has not been provided; this would be a learning problem.
You also need to consider wider factors.
• The problem may relate to group factors: The employee may be a member of a new work
group that has been formed recently and is undergoing friction and conflict associated with
early stages of group development. Alternatively, the employee may be nominally a member
of the work group but is shunned, for some reason, by other members (perhaps, as a
newcomer? or as a member of a minority, against which the rest of the group discriminates?)
and is therefore feeling upset or angry.
• The problem may also reflect problems with management: The employee may be annoyed at
the autocratic behavior of his manager and is taking it out on the customers; hence, the root
of the problem may be in an inappropriate leadership style. It is also possible that the person
feels let down by management, if management has made some important decision without
consulting employees; the problem then becomes one of poor decisionmaking.
• Another potential explanation may involve organizational level factors, such as organization
structure: There may be concerns with work allocation, so that the employees in the café have
too many tasks and are unable to cope. There also may be issues with the distribution of
authority across the management levels: for instance, there may be longstanding problems
with the café operations which the café manager does not have power to resolve and has to
refer them to a regional manager, who is reluctant to act, because she does not understand
the local issues. The cause may also lie in other organizational issues. For instance, the
organization may be undergoing a major transformation, and employees are anxious about
its impact on their jobs. Or this change is one of a sequence of many recent changes, and the
employee is suffering from “initiative fatigue”.
• The problem may also reflect yet broader issues relating to the organizational context
(organizational environment). It may be the case that the café employees are all on edge
because of the threat of redundancy. The profits have been falling for a while and the café is

scheduled to be closed next month. The café’s poor performance, in turn, may be a
consequence of an increasing competition in the area (economic factors), decreasing local
population (social factors) or regulatory changes imposing, say, stricter standards in health
and safety that the café owners are unable to meet (legal factors).
And this list of explanations is far from exhaustive.
It is tempting to assume, when we encounter individual behavior, that the individual is at fault. We
must, however, look beyond the person to consider factors at different levels of analysis – individual,
group, organization, and even outside the organization.
It is also tempting to look for the single main cause of a particular behavior. Behavior, however, is
influenced by many factors; and these factors act in combination. In the café example, the structural
issues, such as excessive centralisation of decision making can slow down organizational response to
the changing competitive landscape, thus exacerbating the impact of economic factors on
organizational performance. The decrease in the local population may contribute to problems with
recruiting suitable candidates for the jobs. Intragroup conflict may exacerbate the manager’s
tendency to autocratic supervisory style. Falling profits could lead to cuts in the training budget.
Individual lack of motivation would likely reflect the organization’s lack of attention to work design,
as well as deficiencies in the reward system; and so forth (Buchanan and Huczynski, 2010: 8, 14-15).
2.4 Individual behavior: OB and HRM points of view
From the organizational behavior point of view, we are interested in describing, understanding and
predicting behavior. We view behavior as an outcome of the interaction between the person and the
situation. The person is active in this process and both affects the situation and is affected by the
situation:
Organizational behavior view of behavior

So, from the organizational behavior (OB) viewpoint, behavior = f (person, situation).
From the human resource management point of view, we are interested to know how an employee
would perform their work role and how we can affect the performance.
We view performance of work activities as stemming from both the employee’s attributes and the
context, within which the work is performed.
(Note that, by ‘performance’, we mean here behavior, i.e. “what people actually do and what can be
observed”, and not the outcomes or products of one’s behavior. The outcomes/products are affected
by other factors that may not be attributable to an individual job incumbent.)
Human resource management view of performance
So, from the HRM viewpoint, performance = f (employee attributes, work context). As you can see,
the two viewpoints are very similar.
2.5 Individual behavior as a function of person and situation
We try to explain and predict the behavior of others all the time in all areas of life (e.g., “Why did she
say this?”, “Why did he do that?”, “What would they do?”, “What would they say?”)
Organizations and their managers need to be able to:
• understand why a particular person behaves in a certain way in a particular situation and
• predict how this person would behave in a specific situation.

These behaviors include performing specific work tasks and the job overall, solving problems and
making decisions, interacting with other employees and customers/ clients, following organizational
rules and going beyond the call of duty, working in teams, leading and following, and so forth.
The study of organizational behavior views behavior as a function of continuous, multidirectional

interaction between the person and the situation. The person is active in this process and both affects
the situation and is affected by the situation.
Lewin’s (1951) dictum that behavior (B) is a function of the person (P) and his/her environment (E)
B = f (P, E)
is one of the most influential principles in social psychology.
In this formulation,
B stands for the individual’s overt, publicly observable behavior.
P stands for all the causal factors that reside within the individual person – all the individual’s mental
(cognitive, emotional, and motivational) states, as well as traits, attitudes, and other behavioral
dispositions.
E stands for all the causal factors that reside in the world outside the individual, including aspects of
the physical ecology (e.g., temperature, humidity, altitude, etc.) and the sociocultural ecology (e.g.,
the presence and behavior of other people, constraints imposed by social structures, social roles,
situational demands and expectations, social incentives, and so forth).
The Doctrine of Reciprocal Determinism (Bandura, 1977) further specifies the relationships between
P, E, and B. It states that the person, the environment, and behavior exist in an interlocking
relationship characterized by bidirectional causality.
This means that persons shape their environments, but environments also shape persons. Personal
factors influence behavior, but behavior also feeds back to change the person who engaged in it.
Environments elicit behavior, but behavior changes the environment in which it takes place.
Relationships between person, environment and behavior are complex.
We will look at the two examples here: (1) the ways in which individuals can shape their environments
and (2) the ways in which behavior is shaped by social interactions.

2.5.1 Example: How people shape their environments
Individuals may change their environment in four ways (Kihlstrom, 2013):
1. Evocation. The mere presence of a person in an environment alters that environment – even in
the absence of any behavior by this person – by evoking behavior from others. The behavior of
others, in turn, changes the situation for the evoking person. One example is found in gender
dimorphism, where the physical appearance of a new-born literally structures the environment
surrounding the child. Infants are treated differently depending on whether they are identified as
boys or girls. From the moment the baby’s gender is announced, parents and others in the social
environment raise the child in accordance with prevailing cultural concepts of masculinity and
femininity by communicating gender-typed expectations, and demanding, modelling, and
reinforcing gender-typed behaviors. Another example is stereotyping and prejudice based on
race, ethnicity, and any other social category that is marked by physical attributes or other
stigmata.
2. Selection. People are making choices all the time, and by virtue of some of those choices they
enter one environment as opposed to another. As a result, the match between the person and
the environment is non-random. Individuals tend to choose environments that are congruent with
their own personalities, supporting and promoting their own preferences and tendencies. The
classic example of selection may be one’s choice of mate: people tend to marry people who are
like themselves; and, in furtherance of this tendency, contemporary dating websites tend to
match potential partners on the basis of similarity in traits and attitudes). In the context of
organizational behavior: people typically select the jobs for which they will be considered, and can
refuse a job that does not seem to “fit” them. Each such choice moves the person out of one
environment and into another, pre-empting alternatives – with the result that the individual’s
behaviors will be constrained by an environment that is, to at least some extent, one of his or her
own making.
3. Manipulation. Finding ourselves in a particular environment, we engage in overt behaviors that

will modify the character of whatever environment we find ourselves in. One example is self-
fulfilling prophecy. Depending on the expectations we have of the other person, we behave
towards them in such a way as to elicit from them the behavior that confirms those expectations.
4. Transformation. Evocation, selection, and manipulation all change the environment through overt
behavior – either the behavior of the person him- or herself, or that of other people. In addition
to this, people also engage in covert mental activities that alter their mental representations of
their subjective environment -- that is, the environment as they privately experience it. This is
called cognitive transformation. Through cognitive transformations, people can change their
internal, mental representations of the external environment – perceiving it differently,
categorizing it differently, giving it a different meaning, than before. In cognitive transformation,
the objective features of the environment remain intact. Cognitive transformation alters the

environment for one person only. This is reflected in the “Thomas Theorem”: “If men define
situations as real, they are real in their consequences” (Thomas and Thomas, 1928: 529).
2.5.2 Behavior in social interactions
Social interactions are determined by what individual participants perceive, think and remember:
what they pay attention to; how they categorise the objects and events they encounter; their
knowledge about themselves, their interactional partners and the social world in general; and their
repertoire of skills and rules for managing various aspects of social intercourse.
The social world lies outside the individual, but the cognitive structures and processes through which
people achieve their understanding of that social world and navigate through it lie inside.
Imagine a situation with two individuals: the Actor and the Target. Let us say the Actor is a woman
and the Target is a man, and the woman wants to ask the man out on a date on Friday night.
First, the Actor enters the situation – the immediate context in which she physically encounters the
Target. She enters the situation with a goal in mind: to ask the Target for a date. The Actor carries a
fund of social knowledge about herself and the Target into the situation (How badly does she want a
date? Does she know whether he is currently seeing someone else? Does she have any reason to think
he might be interested in her?). She also carries a fund of more generic social knowledge relevant to
her current goals (What movies are in town? Are there any parties?). Finally, the Actor carries a
repertoire of skills to be used in the course of the interaction, such as how to start a conversation, and
how to bring it around to the subject of Friday night. Some of these skills are cognitive in nature, such
as her ability to ‘read people’; others are motoric, such as a particular way of walking or using her
hands. This sort of social knowledge constitutes the individual’s fund of social intelligence.
As she begins the interaction, the Actor forms an impression of the situation – of the target, and of
the immediate environmental context. Does he still seem interested? Is this a good time to ask? This
impression combines knowledge derived from two sources: information about the current stimulus
situation, extracted through the mechanisms of social perception; and pre-existing knowledge about
herself and the Target, retrieved from social memory.
Finally, the Actor acts on the basis of her impression. She may approach the target or shy away; she
may pop the question or not. If she does not ask the Target for a date, the interaction will end shortly.
If she does, the interaction will continue. Assuming that the Actor has asked him for a date, attention
shifts to the Target, who now has to do something in response to the Actor’s initial overture.
Now, the Target enters the situation, either actively by approaching and greeting the Actor when he
sees her, or passively by being approached and greeted by her. He, too, brings his social intelligence

into the situation. The Target forms an impression of the situation in which he now finds himself – a
situation that is immediately clarified when the Actor asks him for a date.
The Target knows he is free on Friday night because the woman he has been dating is out of town, but
that is not decisive. Should he play hard to get? Should he wait to see if he gets a better offer from
someone else? What if his current girlfriend finds out?
On the basis of the impression he has formed, the Target responds. He decides to keep his options
open for Friday night, but does not want to spurn the Actor entirely, so he says he cannot see her on
Friday but proposes that they go out on Saturday instead. Now attention shifts back to the Actor.
The Actor must interpret the Target’s response and revise her impression of the situation accordingly.
Perhaps he is Jewish or Muslim, and devout, and does not go out on Friday nights. Perhaps he is seeing
someone else. Obviously, he has something he would rather do on Friday, while she does not and she
has now clearly communicated this fact to him. As it happens, she is also free on Saturday night, but
if she accepts his counter-offer, she clearly communicates that she has no date for either night. Should
she let him have this information? If she says ‘yes’, will she become a pawn in whatever other
relationship he may be pursuing? Or is the ‘Friday-night woman’ (because by now she is certain that
he already has a date for Friday night) a pawn in a new game that he is now playing with her?
On the basis of her impression, the Actor responds to the Target: she decides to take a chance, and
accepts the date for Saturday night. Now the ball is back in the Target’s court.
The Target must interpret the Actor’s response, revise his impression and figure out what to do next.
And so it goes, with the cycle of exchanges continuing. Each participant is trying to make sense of
what the other is doing; each is trying to read the other’s mind; and each is planning and executing
behavior in accordance with his or her evolving understanding of the total situation.
Behavior does not simply affect the person toward whom it is directed; it also feeds back to affect the
person emitting the behavior. The Actor may have wondered if she had the nerve, and the skill, to ask
a man for a date. Now she knows that she does (this kind of knowledge is referred to as a self-efficacy
expectation).
Similarly, the Target may never have had to negotiate overlapping dating relationships. Now he knows
he can do this – or he has put himself in a situation in which he must learn how.
In any event, each participant in this social interaction is behaving in accordance with his or her
construal of him- or herself and of the other, and also of the situation in which they meet. Each
construal is modified by the other’s and his or her own behavior, and these individual construals
eventually lead the participants to behave in the way they do.

These interactions are summarised in the graph below.
Social interactional view of behavior
In what follows, we will first look at behaviors: What behaviors at work are of interest to us? We will
then look broadly at situation: How do situations constrain and enable behaviors? Finally, we will focus
on person, and examine what individual characteristics affect work behaviors.
2.6 Behaviors at work
What do we mean by ‘behavior’ in work context? From both HRM and organizational behavior point
of view, we are interested, firstly, in task performance, i.e. individual behavior that is a required part
of the job.
There is, however, a whole range of other workplace behaviors that are important for both individuals
and organizations:
• Organizational citizenship behaviors (OCB) – these are ‘good’ behaviors that go ‘above and
beyond’ one’s duties and task performance. OCBs are divided into three types (Chiaburu et
al., 2011):
• organization-directed OCBs, including compliance, job dedication, organizational
support, sportsmanship, and civic virtue;
• individual-directed OCBs, i.e. interpersonal behaviors reflecting altruism, courtesy,
helping and personal support; and
• change-oriented OCBs, including proactive behaviors such as taking charge, personal
initiative, adaptive, creative and innovative performance, and voice.

• Counterproductive work behaviors (CWB) – these are ‘bad’ behaviors, and are formally
defined as “any volitional acts by employees that potentially violate the legitimate interests
of, or do harm to, an organization or its stakeholders” (Marcus et al., 2016)(Markus, Taylor,
Hastings, Sturm and Weigelt, 2016). CWBs are divided into:
• organization-directed CWBs, such as destroying organizational property, purposely doing
work incorrectly, and taking unauthorized work breaks; and
• people-directed CWBs, for instance, hitting a co-worker, insulting others, and shouting at
someone are forms.
• Organizational commitment and withdrawal behaviors. Organizational commitment is the

desire on the part of an employee to remain a member of the organization. Organizational
commitment influences whether an employee remains a member of the organization (i.e., is
retained) or leaves to pursue another job (i.e. turns over). Employees who are not committed
to their organization engage in withdrawal behaviors, that is, various actions that employees
perform to avoid work situations. Withdrawal behaviors include: (1) psychological withdrawal,
that is, actions that provide a mental escape from the work environment, such as
daydreaming, socialising, or cyberloafing (e.g., surfing Internet); and (2) physical withdrawal,
or short-/long-term physical escape from the work environment, such as tardiness, taking long
breaks, absenteeism, and, at the extreme, quitting the job.
Types of behavior at work
As an example, what do you think determines whether employees engage in ‘good’ (i.e. organizational
citizenship) behaviors? There are many different organizational citizenship behaviors and many
antecedents and determinant of OCB. In a simplified form, all OCBs are partly determined by individual

personality (in particular, conscientiousness) and partly - by work environment, as perceived by
employees (in particular, employee perceptions of fairness and employee job satisfaction). So, OCB is
partly driven by the person (employee attributes) and partly by the situation (the work context). Based
on this evidence, in order to increase OCB, managers should (a) focus on selecting employees high on
conscientiousness and (b) create a work environment that promotes fairness.
Case: JPMorgan Chase
J. P. Morgan Chase & Co (JPMorgan thereafter) is one of the oldest financial institutions in the US. Its
roots go back to the ale 1700s when Arron Burr and Alexander Hamilton established a company to
supply fresh water to the inhabitants of Lower Manhattan. Burr inserted creative language in the
company’s charter, allowing him to use the company’s excess capital to start a commercial bank in
1799. This bank, called The Bank of the Manhattan Co., was the only competitor to a bank Alexander
Hamilton founded 15 years earlier. If you are a history buff you may already know that the two became
antagonistic and that, in addition to serving as Thomas Jefferson’s vice president for one term, Burr
also killed Hamilton in a duel in 1804.
Over the next 200 years hundreds of mergers resulted in today’s JPMorgan. Most relevant to the
company’s namesake was the merger of The Bank of the Manhattan Co. and Chase National Bank in
1955, and then the merger of this company – called The Chase Manhattan Group – and JPMorgan and
Co in 2000. Today, with assets around $2.6 trillion and operations in 60 countries, the company’s
240,000 employees must perform their jobs effectively to serve customers in investment banking,
consumer financial services, small business and commercial banks, financial transaction processing,
asset management, and private equity.
So what does effective job performance mean for employees of JPMorgan Chase? Obviously, he
answer depends a great deal on the specific job in question. Whereas the job performance of an
investment banker may depend on the amount of money a client company makes on an initial public

offering, the job performance of a customer service representative may depend on whether concerns
of customers are resolved quickly. There are also general aspects of job performance that are
determined by the company’s business practices. Across jobs at JP Morgan Chase, employees need to
be cooperative and have a customer focus, and entrepreneurial spirit and discipline. Finally, the
company has recently had costly legal and regulatory problems and has responded to these challenges
in part by emphasising ways in which employees may negatively contribute to the company.
Creativity and the willingness to take bold risks for high returns have been hallmarks of effective
employees at JPMorgan Chase throughout its long history. The company took on the responsibility for
financing such risky large project as the Erie Canal, the Panama Canal, and the railroad expansion
throughout the US. The company has also been at the forefront of innovations such as credit cards,
automatic teller machines, and online banking.
Unfortunately, bold and creative behavior of employees has not always resulted in positive
consequences. In fact, the company has recently paid tens of billions of dollars in fines, settlements,
and legal fees due to questionable employee behavior. As an example, the company paid $13 billion
in a settlement for allegedly selling fraudulent mortgage backed securities to Fannie Mae and Freddie
Mac in the years leading up to the financial crisis of 2008. Oher highly publicised probes into the
company include its involvement in Bernie Madoff’s Ponzi scheme and the London Whale incident in
which a team of employees gambled on complex financial derivatives that results in more than $6
billion in trading losses.
As a response to these incidents, which obviously hurt the company’s reputation and bottom line,
company executives have taken a number of major steps. For instance, CEO Jamie Dimon published a
document acknowledging the company’s role in these incidents and outlined expectations of
employees with regard to compliance with legal and ethical standards. The company also set up phone
and e-mail lines so employees can anonymously report compliance concerns and related behavior.
Perhaps the most notable initiative has been the use of a computer algorithm, originally developed
for counterterrorism, that monitors and analyses a large set of employee behaviors to try to catch
employees before they actually do anything that would result in a costly problem.
Thus, employees who miss a compliance class, violate minor rules regarding personal trading, or
exceed risk limits may be flagged as being likely to violate a regulation or policy. Thus, effective job
performance at JPMorgan means that employees must not only perform their core job duties well and
engage in activities that support the company’s way of doing business, but they must also refrain from
engaging in behaviors that violate company policies and regulations.
Source: Colquitt et al. (2017: 32, 54-55)
Questions: What dimensions of job performance do you think JPMorgan Chase emphasised prior to
the financial crisis? In what ways did this emphasis contribute to both the company’s success and its
problems? Which dimensions of job performance do you think the bank is emphasising now? In what

ways will this shift in emphasis help the company? Which dimensions of job performance is the
company trying to manage with the computer algorithm? What are the potential unintended job
performance related consequences of using the system?
2.7 Situations
‘Situation’ in OB and HRM refers to an organizational setting in which work is performed. Situation
would encompass both the immediate work context (consisting of interpersonal relationships,
physical work conditions, and structural job characteristics) and the wider organizational context
(comprised of organizational structure and decision making, human resource management system,
organizational culture, and leadership and supervision).
Later in this course, we will examine work and organizational contexts and their impact on behaviors
in greater detail as we focus on work design, decision making, leadership, and organizational
structures and cultures. In this unit, we provide a more general framework for understanding
situations, using the concept of situational strength.
The term “situational strength” refers to the degree to which characteristics of the situation restrict
the expression of individual differences. The concept was originally defined by Walter Mischel (1977),
who suggested that, in terms of relative influence on behavior, the situation would matter more than
the person’s personality in strong situations, and the personality would matter more than the
situation in weak situations.
What situations are weak and what – strong?
• A strong situation is a situation that constrains options and provides clear signals about what
behavior is expected. In strong situations, most people behave in a similar way. Strong
situations are clear, consistent and have consequences. They lead actors to construe events
in the same way, engender uniform expectations about appropriate responses, and
incentivise expected and appropriate response patterns. In strong situations, everyone knows
what to do, how to do it and why. They are like a tightly-scripted movie.
• In contrast, weak situations are ambiguous. A weak situation provides fewer constraints and
weaker signals. In weak situations, people’s reactions diverge and are guided mainly by
individual traits. Weak situations are more like an improvised play and offer much fewer cues
and expectations of behavior.
To illustrate, a study by Hough and Schneider (1996) asked participants to assess the appropriateness
of 15 behaviors (e.g., running, kissing, belching, laughing) in 15 situations (e.g., in class, church,
elevators, restrooms). Participants reported that some situations were highly constraining (e.g.,
church, job interviews) and some were not very constraining at all (e.g., a park, one’s own room).
Some behaviors that were seen as generally acceptable were regarded as unacceptable in some

settings (e.g., eating in church) and some behaviors that were regarded as generally inappropriate
were seen as acceptable in some situations (e.g., belching in one’s own room). In short, people
reported they were sensitive to the situational strength. Funerals and weddings were considered
strong situations; being alone in one’s bedroom was not.
Characteristics of organizations generate strong situations if/when they define the stimuli, constrain
freedom, and provide resources and punishments. Organizations, for the most part, are “strong
situations”.
Organizations aim to minimise the influence of individual differences on behavior, and therefore try
to create situations in which most individuals, regardless of their specific characteristics, will act in a
similar way. Organizations do so by specifying rules and regulations and monitoring employee
adherence to those and by providing incentives for desirable behaviors and disincentives for
undesirable behaviors. Max Weber (1905) described organizations as “iron cages” that clarify
expectations, reduce latitude for discretion, limit opportunities for personal caprice, systematise how
behavior is enacted, and render behavior predictable.
Still, organizations do not completely predetermine how individuals act, and even within an iron cage
there is a considerable room for the operation of individual differences.
There are six aspects of work context that determine just how strong an organizational situations is
(Judge and Zapata, 2014). These aspects and the illustrative occupations are described in the following
table:

2.8 Individual differences: Overview
Each individual is in some respects similar to:
• all other people,

• some other people,
• no one else.
Here, we focus on what individuals have in common with some other people and examine similarities
and differences in individual characteristics that significantly influence individual behavior in
organizations.
There are many dimensions of individual difference – and many models depicting those. We present
two most popular models below; both models cover a fairly similar range of characteristics and
provide a good starting point for thinking about differences, identity and diversity.
Gardenswartz and Rowe’s (2003) “four layers of diversity” model divides individual characteristics
into: (1) internal dimensions that are relatively out of control of an individual and (2) external
dimensions that are more controllable. Both internal and external dimensions exert powerful impact
on individual behavior, on the opportunities that individuals have in organizations and on how people
treat each other.
Diversity: the ‘four layers’ model (Gardenswartz and Rowe, 2003)

Loden’s (1996) “diversity wheel” model divides individual differences into (1) primary dimensions that
constitute the core of an individual’s identity, and (2) secondary dimensions that provide additional
aspects of one’s social identity.
Diversity: the ‘wheel’ model (Loden, 1996)

2.9 Individual differences: Demographic characteristics
Organizational Behavior textbooks usually shy away from the discussion of demographic differences
in behavior, focusing instead on personality and ability. We, however, believe that the cause for
diversity is best served by understanding and appreciating the differences. So, before we proceed to
discuss abilities and personality we will devote some attention to establishing some facts (as they are
currently known, based on reliable evidence) and debunking some myths considering demographic
differences. It is not our intention to provide a systematic review; we will be merely sampling the
recent research. We hope that this will prove useful.
We will look, in particular, at age and gender differences in organizational behavior.
2.9.1 Age
Does age affect behavior in the workplace? Yes, it does. Age affects ability, and therefore
performance. Research on aging reveals that a person’s cognitive abilities, and hence performance,
change over time as a function of age.
The nature of the change differs with the type of ability:
• Fluid ability, which is associated with working memory, abstract reasoning, attention and
processing of new information, declines after peaking in one’s early twenties.
• In contrast, crystallised ability, which is associated with general knowledge, extent of
vocabulary and verbal comprehension, increases until approximately the age of 60 and then
declines.
Therefore, the impact of age on job performance depends on the ability requirements of the job:
performance in jobs that require primarily fluid ability will decline with age, whereas performance in
jobs requiring primarily crystallised ability will improve until shortly before retirement age (Dalal et
al., 2014).
Age also affects motivation. Older employees are less motivated by extrinsic job features, such as
material rewards, and more motivated by intrinsically rewarding job features, such as meaningful,
interesting or challenging job (Inceoglu et al., 2012).

2.9.2 Gender
Does gender affect behavior in the workplace? Yes, it does. Here are some examples.
• Gender affects perceptions of justice. For women, procedural justice (i.e. whether or not
processes are fair) matters more, whereas for men, distributive justice (i.e. whether the actual
outcomes are fairly distributed) is more important. One possible explanation is that these
differences reflect a functional response to the outcome, such as pay level. On average,
women earn less than men, so they may concentrate on procedural issues as a viable avenue
for redressing pay discrepancies. Men, in contrast, may focus on distributive justice because
they perceive that the procedures themselves give them an unfair advantage. Hence, if they
are dissatisfied with the outcome, they attribute its cause not to the procedures but to the
individual who implements it. Therefore, the most effective way for them to influence the
outcome is to influence the decision maker, such as their supervisor (Sweeney and McFarlin,
1997).
• Gender influences preferences for particular reward systems. Kamas and Preston’s (2015)
experimental research reveals that women are more drawn to the egalitarian distribution of
rewards, and men are more drawn to situations in which pay is determined competitively.
• Gender impact on the expression of emotions in the workplace. Are women more emotional
than men? Despite a lack of empirical evidence, the notion that women are more emotional
than men is prevalent in Western cultures, and the association of women with emotionality,
and of emotionality with the irrational, has hindered women’s opportunities in many types of
work. Recent sociological research has begun to examine gender differences (or their lack) in
emotionality. Studies have found that women do not experience more emotion than men, but
they tend to exhibit greater emotional expressivity than men. A potential explanation lies in
childhood, as boys and girls are socialised to express emotions that are socially appropriate to
their gender. Specifically, expressions of aggression and anger are viewed as acceptable for
men but not for women, and expressions of happiness, as well as negative emotions such as
sadness and depression, are more acceptable for women than for men. A recent study shows
that, in the workplace, men express more anger, while women express more happiness (Sloan,
2012).
Yet, the important thing to remember is that there is no evidence of gender differences in the key
work-related attributes such as work ethics and intelligence and there are no systematic gender
differences in the key work behaviors such as job performance.

Thus, Roth, Purvis and Bobko’s (2010) meta-analysis of gender group differences in job performance,
covering 61 previous studies (45,733 individuals), suggests that, on average, females are rated as
performing somewhat better than males (a mean corrected d of –0.11, the negative sign indicating
that men perform worse). However, there is substantial variation (with an 80% credibility interval
ranging from –0.33 to 0.12), which suggests that in some cases males perform better (positive values)
and in other cases females perform better.
2.10 Individual characteristics and organizational behavior
What individual characteristics have been proven to impact materially on organizational behavior and
can be assessed and used by organizations in their decision making?
The four categories of such characteristics are:
• knowledge, that is, what a person knows that is relevant to the job (e.g. a police officer’s
knowledge of legal procedures);
• skills, i.e. what a person is able to do on the job; these include both mental tasks (e.g. algebra)
and physical tasks (e.g. driving an automobile);
• abilities, i.e. the capacities to learn a skill (e.g. cognitive ability is the capacity to learn mental
skills);
• other –a ‘residual’ category of individual attributes not covered by the first three categories;
most prominent attributes in this category are personality and values.
These categories are often abbreviated as KSAO.
Notes Knowledge and skills are normally specific to a particular job or jobs; abilities and other
attributes are more general.
Therefore, here, we shall look more closely at abilities (the ‘can do’ factors) and at two ‘other’
attributes, namely, personality and values.
2.11 Abilities
Ability can be defined as the extent to which a person can efficiently carry out multiple processes in
coordination to achieve a specified goal. In work context, abilities are relatively enduring basic
capacities that are required for performing a wide range of different tasks.
Abilities are usually subdivided into four categories:

(1) physical (e.g., strength, stamina),
(2) psychomotor (e.g., arm-hand steadiness, finger dexterity),
(3) sensory (e.g., night vision, speech clarity), and
(4) cognitive.
Each category of abilities is then subdivided into sub-categories, and each subcategory consists of
specific abilities. Thu, the O*NET, a comprehensive system of information on occupations in the
United States, includes 15-sub-categories and 52 specific abilities.
Categories of abilities in the O*NET
Psychomotor, physical and sensory abilities are important to some, but not all jobs. In contrast,
cognitive abilities are crucial for all jobs. For that reason, we focus here only on cognitive abilities.
2.12 Cognitive abilities
The word “cognitive” refers to mental processes that include attention, memory, producing and
understanding language, learning, reasoning, problem solving, and decision making.
The most comprehensive and empirically supported model of the structure of cognitive abilities has
been created by three psychologists, Raymond B. Cattell, John L. Horn and John B. Carroll, and hence
bears their name (Cattell-Horn-Carroll model). According to this model:
• Individuals have numerous primary mental abilities – such as the ability to estimate lengths
of objects or the ability to spell words or the ability to recall items. Such abilities can be tested.
• These primary abilities can be grouped into broad categories, such as visual processing or
reasoning.

• There is also a general mental ability that is a single factor that underlies all more specific
abilities. This general mental ability, or GMA, or g, is what we would otherwise call
“intelligence”. General Mental Ability is latent, which means you cannot directly assess it. It is
also an abstraction in the sense that there is nothing in reality – say, no particular part of the
brain, or any of the brain’s facets – that directly corresponds to it. But individual performance
on various tests of mental ability would give us a glimpse of what it is.
The outline of this model is presented in the following figure:
Levels of mental ability: Cattell-Horn-Carroll model
Specific cognitive abilities are relevant for specific jobs. For instance,
• perceptual speed – the ability to quickly recognise similarities and differences in visual stimuli
– would be relevant for a designer to identify irregular patterns in a fabric
• number aptitude – the ability to work with numbers in a quick and accurate manner – would
be important for accountants to need to be able to quickly spot errors in a financial report
• spatial visualisation – the ability to imagine how various objects will look when rotated in
space – would be important for architects.
We can, however, also talk about General Mental Ability as a combination of various mental abilities
that is essential for all life and work tasks.
2.12.1 Measuring cognitive abilities
How do we measure general mental ability? One of the most widely used tests is the Wechsler Adult
Intelligence Scale, which was originally created in the 1950s and is now in its fifth edition. Although it
is habitually called an IQ test, we should note that the term IQ is somewhat outmoded. The old IQ
tests would calculate your ratio score by dividing your mental age by your chronological age and
multiplying the result by 100. Today’s IQ tests, including the Wechsler’s test and the Stanford Binet
test, produce deviation IQ scores rather than ratio IQ scores. This means that they chart each person’s
performance on a bell curve, against a standard distribution of other test takers.

It is also important to emphasise that intelligence tests – and Wechsler’s test is no exception –
measure intelligence not as a general capacity (how good you are potentially) but as performance –
how well you can perform on specific mental tasks.
The Wechsler Scale test consists of four sections: (1) Verbal comprehension, (2) Perceptual reasoning,
(3) Working memory, and (4) Processing speed.
Verbal comprehension test includes subtests such as similarities, where the respondent would be
asked to explain how common objects or concepts are similar. Say, “How are whales and lions
similar?” or “How are anger and delight similar?” It also includes vocabulary test – where you are
presented with a picture and have to name the object depicted or are given a word and have to explain
what it means.
Other parts of the test do not depend on language and knowledge and use various visual puzzles to
assess the abilities.
2.12.2 Importance of general mental ability
General mental ability (GMA) has significant impact on many important life and work outcomes.
GMA is strongly correlated with many important life outcomes, such as the person’s education level,
scores on secondary education examinations, occupation, income, socially liberal attitudes, and
health-related behaviors (e.g., smoking, alcohol intake). For instance, results from meta-analyses of
dozens of studies show that average correlation between GMA and the level of education are 0.46
and between GMA and income are 0.21 (Deary, 2012: 468-470).
Why does GMA affect life outcomes? A functional interpretation of the associations between GMA
and important life outcomes is that they reflect the complexity of the modern world, in which those
with advanced cognitive skills can more successfully navigate their environments over sustained
periods of the course of their life. Intelligence is said to influence the individual preferences and
choices in ways that favour success in various endeavours. Those with higher intelligence are more

patient, better at taking calculated risks, and better at predicting how other people would act and
how they should act as a result.
One, of course, also ought to remember that the impact of GMA on adult success is expressed within
a system of structured social inequality, in which social origins either open or close the doors to
opportunity. For instance, bright youngsters from lower-class backgrounds both aspire to and attain
fewer years of education – they “invest” less of their GMA into it – than equally bright peers from
higher social class family backgrounds do. Differences among individuals are real, but their impact can
be magnified or muted by the political choices a society makes. Under the current institutional
arrangements, individual differences in measured cognitive ability do matter, and perhaps
increasingly so.
2.12.3 GMA and work outcomes
Turning attention to the world of work, it is not surprising that intelligence has an important impact
on work-related behaviors and outcomes, such as job performance – measured using both objective
measures (such as work samples) and subjective indicators (such as the rating of performance by a
supervisor).
What is, however, truly remarkable is the extent of the impact. Literally thousands of studies of the
relationship between GMA and job performance have been conducted over the last 100 years. They
show that GMA is by far the best predictor of job performance. The predictive validity of GMA for job
performance – that is, the correlation between GMA and job performance – is in the region of 0.65.
This is a very high correlation. This value is the average of eight meta-analytic estimates (that is, it is
based on averaging the results from 8 meta-analyses, each of which in turn aggregated the results of
dozens of individual studies) (Schmidt et al., 2016a).
GMA is also an excellent predictor of job-related learning. It has been found to have high and
essentially equal predictive validity for performance (amount learned) in job training programs for
jobs at all job levels studied (as assessed by tests undertaken after completing training programme).
The average validity value across eight meta-analyses in Schmidt et al. (2008) is 0.67.
If you are wondering how high these correlations are, compare them with the following examples.
The association between Ibuprofen (the well-known antiinflammatory) and pain reduction is in the
region of 0.14, while the correlation between nearness to the equator and daily temperature
(something you would imagine is highly correlated) is 0.6.
These results concerning the association between GMA and work outcomes are of paramount
importance for selection – and we will return to this point in Section 5 Recruitment and Selection.
Effectively, when an employer uses GMA to select employees it can select individuals who will have a
high level of performance on the job and who will also learn the most from job training programs.

Of course, the impact of GMA on job performance would vary by occupation. The impact of GMA on
performance is particularly high for high complexity jobs (such as professional, scientific and upper
management jobs). However, it is also substantial for the lowest complexity jobs. After all, being able
to learn better and faster or to solve the problems quicker and with greater ingenuity would serve
you in good stead, regardless of whether you are a brain surgeon or a menial worker.
Here are the data from the meta-analysis covering the studies of various occupations in Europe
(Salgado et al., 2003). The validity does vary – but it is pretty high for all jobs.
Predictive validity of GMA for work performance
Now, why is police an exception? The problem here is with data: the performance data for police come
from supervisor ratings – and supervisors in police force usually do not observe their supervisees in
the field; so they may not provide a sufficiently accurate assessment of performance.
The data from the US is similar. Based on the results of meta-analysis for the US jobs, GMA validity
ranges from .74 for professional and managerial jobs down to .39 for unskilled jobs. The mean validity
for medium complexity jobs (62% of all jobs in the U.S.) was .66. The medium complexity category
includes skilled blue collar jobs and mid-level white collar jobs, such as upper level clerical and mid to
lower level administrative and managerial jobs (Schmidt et al., 2016b).
Why does GMA predict job performance?

• Firstly, GMA affects the process of acquisition of job knowledge – the higher the GMA the
quicker and better the person learns.
• Secondly, GMA affects the individual’s problem solving abilities – and every job, no matter
how complex or simple it is, requires problem-solving. “But what about job experience?”, you
may ask. Job experience, obviously, plays an important role in the determination of job
performance. Experience provides an opportunity to learn the job and hence to achieve a
higher level of job performance. GMA, however, matters here as well, because GMA affects
how quickly and how well the person learns. If one person learns faster than another, the
same amount of experience will produce a higher level of performance in the fast learner than
in the slow learner. Furthermore, job experience matters most strongly in the first years on
the job (roughly, between 0 and 5 years); afterwards, its influence on performance decreases.
In contrast, the correlation between GMA and performance remains constant over time or
even increases. GMA matters not only during the early stages of job learning, but throughout
the job tenure – and this pattern may become even more pronounced today as the job-related
knowledge is evolving more quickly and employees need to learn new methods at ever shorter
intervals (Schmidt and Hunter, 2004: 167-168).
To sum up: General mental ability is a latent factor that underlies specific mental abilities. An
individual’s GMA can be assessed through their performance on general mental ability tests. General
mental ability is important for life and for work. It matters for all jobs and is by far the best predictor
of task performance and performance in training.
2.13 Emotional intelligence
The concept of emotional intelligence has received a lot of popular attention. However, research
evidence on emotional intelligence is nowhere near as abundant, clear and conclusive as that for
general mental ability. There is a variety of different interpretations of emotional intelligence and
many misconceptions as to what it entails.
So, briefly, let us not what emotional intelligence is not. It is not about “thinking with your right brain”
– even if we accept that the left brain is more analytical and the right is more arty and creative. It is
also not about “thinking with your heart” (which is a logical – or physiological – impossibility).
Emotional intelligence is also not about being “warm”, “cuddly”, and, well, “emotional”. Finally,
contrary to what Daniel Goleman, the author of the bestseller that launched Emotional Intelligence
into the popular psychology (and other authors who follow him), say, emotional intelligence does not
and cannot possibly matter more than general mental ability.
Your textbook defines emotional intelligence as a combination of three facets: self-awareness, other
awareness, and emotion regulation.

This is a perfectly fine definition; but we present here a slightly different view. Neither viewpoint is
superior. The controversy around defining and measuring emotional intelligence and ascertaining its
impact on work-related behaviors is ongoing.
This different view suggests that emotional intelligence is the ability to accurately reason about
emotions and also the ability to use emotions and emotional knowledge to enhance your thinking. If
we take this approach to emotional intelligence then there may be a good reason to identify mental
abilities that are associated with perceiving, analysing and utilising emotions. Particular mental
abilities concern learning and reasoning about a particular type of material. For example, ‘verbal-
comprehension intelligence’ describes the capacity to learn words and to reason about words; and
‘perceptual-organizational intelligence’ concerns the ability to reason about visual patterns. So, in a
similar fashion emotional intelligence would signal, say, an ability to recognise emotions in faces and
an ability to understand the meanings of emotion words.
In more systematic terms, according to a model of emotional intelligence introduced by Mayer and
Salovey in 1997 (Mayer et al., 2016), emotional intelligence consists of the following four facets:
1. Perception – the ability to recognise emotions in yourself and in other people by observing them
– their faces, posture, tone of voice.
2. Understanding of emotions – how different emotions can combine together and how emotions
can change – say, how sadness can subside or how anger can build up.
3. Emotion management – being able to regulate your own emotions and help others do the same.
4. Facilitation – the most puzzling and the least explored facet of emotional intelligence – which
means using emotions to do things better. For example, apparently if you are sad you are better
at performing tasks that require attention to detail.
So, how emotionally intelligent are you? For instance, can you tell what a person is feeling just by
looking at their face? Generally, psychologists find that most people can fairly easily detect six basic
emotions – happy, sad, fearful, angry, surprised and disgusted. For example, people usually express
their happiness by drawing up their cheeks and stretching the mouth in a smile. Surprise is also easily
detected – a surprised expression includes wide open eyes and dropped open mouth. However, more
complex emotions may be more difficult to detect. American researchers have recently managed to
analyse – and computer-generate – the models for facial expressions for 21 different emotions
including emotions such as “happily surprised” -- which is a compound of the expressions for “happy”
and “surprised” – and even such seemingly contradictory emotions, such as “happily disgusted“.
Happily disgusted, apparently, is an expression that combines the scrunched-up eyes and nose of
“disgusted” with the smile of “happy.” This is apparently “how you feel when you watch one of those
funny movies and something happens that’s really disgusting, but you just have to laugh because it’s
so incredibly funny“ (Gorder, 2014).

2.13.1 Measuring emotional intelligence
There are specific tests that have been developed to test emotional intelligence. One of the most
developed and broadly used is Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT). (The test
is commercially available via MHS www.mhs. com.)
This test corresponds to the four-branch model of emotional intelligence we presented above. The
test measures how people perform on emotion-related tasks and solve emotional problems.
The test includes questions such as follows:
• Imagine that you need to figure out what caused a fight between three children. Each of the
children is telling a different story – and so naturally figuring out what happened requires you
to attend to the details of the stories and to weigh many facts. Now the question is: What
mood or moods might be helpful to feel when figuring out what caused a fight? The answer
options are: happiness, surprise, and sadness.
• Which of the following combination of emotions most closely reflect a feeling of concern? The
answer choices are:
a. love, anxiety, surprise, anger
b. surprise, pride, anger, fear
c. acceptance, anxiety, fear, anticipation
d. fear, joy, surprise, embarrassment
e. anxiety, caring, anticipation.
2.13.2 Importance of emotional intelligence
Research on EI is still in its infancy, and research evidence is quite limited. Initial findings (based on
very limited empirical research evidence) suggest that higher emotional intelligence may be
correlated with in children, better social relations and less social deviance (in children); greater self-
perception of social competence; being perceived as more compassionate and pleasant to be around;
better family and intimate relationships; more positive negotiation outcomes (in the laboratory
studies); greater life satisfaction and self-esteem and lower depression (Mayer et al., 2016).
Once emotional intelligence has gained ground, not just in popular imagination, but also in scientific
research, it has spurred the emergence of extension concepts. For instance, psychologists are now
suggesting that there may be such thing as personal intelligence (the ability to identify information
about personality, to reason about one’s own and others’ personalities, and to use that knowledge to
make personal choices and plans) and also social intelligence (the ability to identify, reason about and
use social information, such as group status, memberships, and dynamics).

And why not? If you can distinguish a separate ability to identify information about emotions, then
you may also separate an ability to identify information about personality – or about how people
interact in group. Of course, this may be just taking the concept of intelligence too far, but let’s not
judge prematurely – the future might will tell.
2.14 Personality
Personality is defined as a set of fundamental traits that endure over time and account for consistent
pattern of responses to everyday situations. It can be described as a set of traits that reflect the
person’s predispositions or tendencies to behave in a particular way in different situations.
Personality traits are patterns of thought, emotion, and behavior that are relatively consistent over
time and across situations. They can be described with familiar words such as “reliable,” “sociable,”
or “cheerful,” as well as more specialised terms such as “narcissistic,” “authoritarian,” or
“conscientious.”
Psychology has developed an impressive and useful technology for assessing personality traits, but
personality assessment is not limited to psychologists: Everybody does it, every day. We all make
judgments about our own personalities as well as of the personalities of people we meet, and these
judgments are consequential.
Many different personality theories have been suggested over the course of the 20th century. By the
1980s, however, these have been superseded by the five-factor theory of personality.
2.14.1 The Five Factor model of personality
The Five-Factor Model of Personality (FFMP), also known as “Big Five”, is the most widely accepted
model for understanding the structure of personality. It was developed in the 1980s by the personality
psychologists Robert McCrae, Oliver John, and Paul Costa, Jr.

The Five-Factor Model of Personality posits that an individual’s personality, with all its different traits,
can be comprehensively described using five dimensions: (1) openness to experience, (2)
conscientiousness, (3) extraversion, (4) agreeableness, and (5) neuroticism (McCrae, 2011).
Each of these dimensions is commonly described using a set of adjectives, as presented below:
• Openness to experience – curious, imaginative, artistic, original, having wide interests;

• Conscientiousness – efficient, organised, reliable, responsible, disciplined, thorough;
• Extroversion – active, assertive, talkative, energetic, outgoing, enthusiastic;
• Agreeableness – compassionate, warm, sympathetic, trustworthy, kind, generous;
• Neuroticism – anxious, self-pitying, tense, touchy, unstable, worrying.
2.14.2 Measuring personality
How can we assess personality on the Big Five dimensions? By using self-report and observers’ ratings
on a NEO-PI inventory (a test developed on the basis of Five Factor Model). How do you measure
personality? Normally, this is done using a personality inventory – a self-report questionnaire. Here
are some examples of questions from such personality inventory – called NEO Personality Inventory
(NEO-PI) – which is the official questionnaire used for assessing personality on the Five Factor Model
of Personality.
Examples of questions from NEO-Personality Inventory

There are two versions of the NEO Personality Inventory – a long version called NEO PI-R with 240
items, which takes an hour to 90 minutes to complete and a short 60- item form, NEO FFI, which takes
about 15 minutes. the NEO-PI.
These inventories have been extensively validated and are the gold standard in personality
assessment. A significant issue with the NEO-PI and NEO-FFI, however, is their cost. Although the NEO
is grounded in decades of publicly funded research, it is a proprietary measure and must be purchased
for clinical, research and commercial applications.
2.14.3 Personality FAQs
Is personality heritable? Yes, to some extent. Behavioral genetics has documented, that personality is
to some degree genetically influenced: Identical twins reared apart have similar traits. The tabula rasa
view of personality as a blank slate at birth that is written upon by experience, for many years a basic
assumption of various personality theories, is wrong.
Does personality have biological roots? Possibly. Research in neuro-anatomy suggests that particular
sites within the brain are important for particular personality traits (e.g., the amygdala for aggression

and certain types of emotionality). Research in physiology suggests that particular hormones are
related to particular traits (e.g., testosterone is important for sociability and positive affectivity, as
well as aggressiveness). However, this does not mean that biology causes particular personality or
behavior. The truth is more complex, because neuro-anatomy and physiology are complicated, and
behavioral patterns are every bit as complicated, if not more so.
Can training or other interventions change personality? Traditional view has been that “personality
traits are biologically programmed entities that cannot be altered”. According to this view, the only
way in which personality traits can and do change is as a result of “biological maturation processes”.
For instance, as “people get older, they tend to become more agreeable, conscientious, and
emotionally stable”. However, more recently (in the past 10 years or so) this view has been
increasingly challenged by research suggesting that “personality traits are malleable and change in
response to a variety of external factors”. A way in which this may happen is that people take on
different social roles (in their personal life, e.g., a spouse, a parent, or in their work life, e.g., new
position) and that these social roles “serve as consistent presses for new patterns of thoughts,
feelings, and behaviors”, and “promote the adoption of new identities.” In turn, “the modified sense
of self and the new patterns of thoughts, feelings, behavior … eventually crystalize into enduring trait
change”. “Supporting this notion, several studies have found that cognitive, affective, and behavioral
interventions – ranging from therapy to minor behavioral alterations, such as completing daily
crossword and Sudoku puzzles – are associated with changes in people’s personality traits” (Hudson
and Fraley, 2015).
2.14.4 Importance of personality
The Big Five are believed to be significant predictors of important life outcomes. Research shows, for
example, that individuals high on Extraversion are happier, live longer, are perceived as more
attractive, and are more likely to engage in volunteer work. The more Agreeable individuals are less
likely to engage in criminal behavior and are more prone to heart disease. The more Conscientious
individuals are more likely to exhibit conservative political attitudes and be religious and less likely to
engage in risky behavior and substance abuse. Individuals with greater Openness to experience tend
to be more forgiving and liberal (Ozer and Benet-Martinez, 2006).
As you are now engaged in studying, you may be interested to learn that a recent meta-analysis of
research on the impact of the Big Five on academic performance has shown that, controlling for
intelligence, Conscientiousness has a highly significant impact on academic success – and, what may
be of particular concern to you, that this is particularly so in tertiary education (undergraduate and
postgraduate studies). Indeed, when academic performance in secondary education was controlled
for, Conscientiousness added as much to the prediction of tertiary academic performance as did
intelligence! (Poropat, 2009). The bottom line? The more Conscientious you are, the more likely you
are to succeed in your studies.

2.14.5 Personality and work outcomes
In organizational context, what matters most is that the Big Five are significant predictors of work
behaviors and outcomes. What work behaviors and outcomes can the Big Five predict?
The three main types of outcomes and behaviors that Big Five can predict are:
• job performance;
• counterproductive behaviors, i.e. behaviors that can harm the organization or its members;
• organizational citizenship behaviors, i.e. behaviors that help organizations succeed.
Based on the results of meta-analysis (Ones et al., 2007), the validity of self-report personality scale
scores on the Big Five are:
• for objective measures of job performance – 0.23

• for organizational citizenship behaviors – 0.31
• for counterproductive behaviors – 0.44
• for entrepreneurship – 0.31
• for various aspects of leadership – between 0.30 and 0.49
Why does personality affect work behaviors? The explanation points to work motivation as the key
mediating mechanism between the two.
Firstly, personality influences what one chooses to do (i.e. the direction of behavior). For instance,
individuals high in Extraversion may seek excitement and social stimulation and therefore be drawn
to jobs and organizations where other highly energised and talkative people work.
Secondly, personality influences the amount of effort one puts into their work (i.e. the intensity of
behavior). For example, exacting, ambitious, and disciplined individuals, i.e. individuals that score high
on Conscientiousness, are more likely to exert more effort, believe they can succeed, choose difficult
goals and set high performance standards for themselves than people who score low on this
dimension.
Why do the Big Five dimensions correlate with these behaviors and outcomes? Researchers are just
beginning to uncover that.
Let’s also look at the individual traits:
• Conscientiousness is undoubtedly the single best, generalisable Big Five predictor of task
performance, counterproductive behaviors and organizational citizenship behaviors across all
types of jobs.

• Emotional Stability (Neuroticism) is the second best predictor, predicting task performance
and counterproductive behavior, but not organizational citizenship behaviors.
• Agreeableness is important in predicting some aspects of task performance in some (but not
all) jobs, but is a significant predictor of prosocial behaviors reflected in organization- and
individual-directed organizational citizenship behaviors.
• Extraversion, like Agreeableness, is important for predicting some aspects of performance in
some jobs.
• Openness to Experience is the least understood factor in terms of its impact on job
performance. However, together with Extraversion it is important for predicting change-
oriented organizational citizenship behaviors. This suggests that employees high on
extraversion and openness to experience make better change agents (Chiaburu et al., 2011).
According to the most recent meta-analysis (Shaffer and Postlethwaite, 2012) of the relative validity
of personality measures in predicting job performance (where job performance was measured as
supervisors’ ratings of performance), conscientiousness explained about 10% of the variance in
individual job performance, while emotional stability (the positive version of neuroticism) --about 7%.
These amounts are non-trivial, but, in comparison with GMA, personality dimensions explain less of
the variance.
Yet, although personality loses out to GMA in terms of predictive validity for job performance,
personality can predict two other types of work behaviors that GMA can’t – organizational citizenship
behaviors and counterproductive behaviors. Since these behaviors are varied and numerous, there
aren’t any overall assessments of the extent to which personality affects them. But we do know which
personality dimensions are particularly important for what types of behavior.
2.15 Implications for practice
When do organizations assess individual abilities and personal traits? Organizations do so in various
contexts and for various purposed. Most frequently, individual characteristics are assessed in selecting
new employees, team building (i.e. choosing individuals to work in teams), promotion (particularly to
leadership positions), succession planning, training and development.
Hence, the scope for application of knowledge about the personal attributes and their impact on
organizational behavior is vast. The theory and research evidence presented above provide strong
grounds for focusing attention in the assessment of individual attributes on GMA and the Big Five
personality traits.
Therefore we can recap the key implications of this knowledge for practice, supplementing them with
some additional evidence and its practical applications.

2.15.1 Using GMA in practice
The paramount role of GMA in predicting job performance (above and beyond job experience and
personality traits) must be taken into account in all types of assessment of individual attributes,
especially in selection.
A particularly interesting example which is relevant to your career comes from a recent study of
several hundred executives from a variety of industries, including sales, manufacturing, engineering,
finance and accounting, distribution, transportation, research and development, procurement, and
real estate/property management.
The study examined the impact of accumulated work experience and cognitive ability on the
executives’ “strategic thinking competency”, assessed through five assessment centre exercises: an
extensive background interview, a simulated cross-functional task force team, a business
management simulation, and a series of simulated meetings with various stakeholders. The study
showed that cognitive ability was clearly the strongest predictor of strategic thinking competency and
was over three times as powerful in predicting strategic competency thinking as the accumulation of
work experience. This result is of great significance given the shortage of capable leaders and the
resulting need to place untested leaders into leadership positions. The import of this result, when
selecting for a position that requires strategic thinking competency and decision making, is clear:
“smart leaders, even if they lack the experience, are more likely to be successful” (Dragoni et al., 2011:
854).
2.15.2 Using the Big Five in practice
The impact of the Big Five on job performance and organizational citizenship behaviors must also be
taken into account in all types of assessment. Of particular relevance is the notion of fit between
specific personality profiles on the Big Five dimensions and the requirements of particular occupations
and jobs. This implies that the Big Five need to be considered by the individuals themselves, while
choosing their occupation and job, and the organizations, both in job analysis (to determine
personality traits crucial for success) and in matching individuals and jobs.
In addition, recent research also demonstrates that there is a fit between personalities and
organizational culture types, so that organizations should consider not only whether an individual
would fit the requirements of a job, but also whether she or he would fit in with the organizational
culture. Although organizational culture is discussed later in the module, it is worthwhile making a
brief foray into the future and point out the links between the current topic (individual difference and
behavior) and that future topic (organizational culture).
One of the typologies of organizational culture subdivides cultures into the following four types: clan,
market, hierarchy, and adhocracy. Clan culture emphasizes cohesion, morale, participation, and

loyalty. Market culture stresses production, competition and goal achievement. Hierarchy culture
focuses on rules, policies, procedures, efficiency and control. Adhocracy culture stresses innovation,
flexibility, creativity and risk taking.
Research evidence suggests that more agreeable and extraverted fit better with a clan culture, more
conscientious and less open persons – with a hierarchy culture, less agreeable persons – with a market
culture, and more open persons – with an adhocracy culture.
This evidence has important implications for recruitment and selection. It indicates that organizations
must try to communicate their culture type to prospective employees to increase the chances of
identifying the recruits who would be a good fit with the organization’s culture. A particularly
intriguing application of this is webbased recruiting, which, although decreasing recruitment and
application costs, has also generated an unwanted consequence of too many applicants applying for
a particular job position. Researchers suggest that web-based application may be supplemented by
voluntary self-report measures of personality to enable organizations to provide potential recruits
with customised information on their fit with organizational culture (Gardner et al., 2012).
2.16 Values
Broadly defined, values are conceptions of the desirable. The term “value” can be used in either of
two meanings: (1) value as preference or (2) value as principle.
• Values as preferences (also called “work values”) are essentially attitudes. They indicate the
preferences that individuals have for various environments. For example, someone who
values autonomy would be more satisfied with a job that provides considerable discretion.
Values as preferences have been studied extensively in relation to career choice and, more
recently, within the context of fit. Values as preferences are related to attitudes, such as job
satisfaction.
• Values as principles (often termed individual or personal values) are guiding principles
regarding how individuals ought to behave. For example, an individual who values honesty
believes that all people ought to be honest, while an individual who values achievement
believes that people ought to have many accomplishments that will be socially recognised
(Parks and Guay, 2009).
When trying to explain why individuals’ behave as they do, people often refer to attitudes, beliefs,
traits, or norms. A crucial way in which these concepts differ from values is that each concept varies
on a different scale.
• Attitudes are evaluations of objects as good or bad, desirable or undesirable. Attitudes can
evaluate people, behaviors, events, or any object, whether specific (ice cream) or abstract
(progress). They vary on a positive/negative scale. Values underlie our attitudes; they are the

basis for our evaluations. We evaluate people, behaviors, events, and so forth positively if
they promote or protect attainment of the goals we value. We evaluate them negatively if
they hinder or threaten attainment of these valued goals. For instance, if we value stimulation
highly and attribute little importance to security values, we are likely to have a positive
attitude toward bungee jumping.
• Beliefs are ideas about how true it is that things are related in particular ways. Examples of
beliefs are “war never solves problems,” “understanding of organizational behavior is
essential for management,” and “psychologists are wise.” Beliefs vary in how certain we are
that they are true. Unlike values, beliefs refer to the subjective probability that a relationship
is true.
• Norms are standards or rules that tell members of a group or society how they should behave.
Examples of norms are “children should be seen and not heard,” “we should stand up when
the national anthem is played.” Norms vary on a scale of how much we agree or disagree that
people should act in a specific way. Our values affect whether we accept or reject particular
norms. Because norms prescribe behaviors with specific consequences, we are more or less
inclined to accept them depending on whether these consequences are compatible or in
conflict with our valued goals. More generally, because norms are social expectations, we are
more or less inclined to accept them depending on how important to us are conformity versus
self-direction values.
• Traits are tendencies to show consistent patterns of thought, feelings, and actions across time
and situations. As noted above, the same term can refer to both a value and a trait (e.g.,
wisdom, obedience). However, people who exhibit a trait may not value the corresponding
goal and those lacking a trait may value the corresponding goal highly. For example, a person
may behave obediently yet not value obedience and behave foolishly yet value wisdom highly.
Traits vary in the frequency and intensity with which people exhibit them. They describe what
people are like rather than what people consider important. People believe their values are
desirable but may consider their traits positive or negative (Schwartz, 2012).
In contrast, values vary on importance as guiding principles in life.
Why are we looking at values?
Firstly, values are fundamental to behavior and are an important part of the studies of human behavior
in general and organizational behavior in particular – hence, a good example for our introduction to
the field of organizational behavior.
Secondly, values transcend levels: individuals have values, organizations have values, have values. This
helps to understand the linkages that cut across the different levels at which we consider behavior in
organizations: from a single person, to a group to an entire organization to the environment in which
the organization is embedded.

Thirdly, it is important for you as a manager to understand your own values and those of people you
deal with at work, both within and outside your organization. For that reason, following a more
detailed discussion of values, we will invite you to examine your own values and to reflect on their
role in your personal and professional life. We will also invite you to consider the values that
characterise different national cultures and to explore how they can affect behaviors in organizations
in various nations and cross-cultural communications and work.
Finally, a discussion of values will allow us to introduce some other fundamental concepts in
organizational behavior – beliefs, attitudes, norms, and traits.
When we think of our values, we think of what is important to us in life. Each of us holds numerous
values (e.g., achievement, security, benevolence) with varying degrees of importance. A particular
value may be very important to one person but unimportant to another.
Values have six main features (Schwartz, 2012):
(1) “Values are linked inextricably to affect. When values are activated, they become infused with
feeling. People for whom independence is an important value get angry if their independence is
threatened, despair when they are helpless to protect it, and are happy when they can enjoy it.
(2) Values refer to desirable goals that motivate action. People for whom social order, justice, and
helpfulness are important values are motivated to pursue these goals.
(3) Values transcend specific actions and situations. Obedience and honesty values, for example, may
be relevant in the workplace or school, in business or politics, with friends or strangers. This
feature distinguishes values from norms and attitudes that usually refer to specific actions,
objects, or situations.
(4) Values serve as standards or criteria. Values guide the selection or evaluation of actions, policies,
people, and events. People decide what is good or bad, justified or illegitimate, worth doing or
avoiding, based on possible consequences for their cherished values. But the impact of values in
everyday decisions is rarely conscious. Values enter awareness when the actions or judgments
one is considering have conflicting implications for different values one cherishes.
(5) Values are ordered by importance relative to one another. People’s values form an ordered system
of priorities that characterize them as individuals. Do they attribute more importance to
achievement or justice, to novelty or tradition? This hierarchical feature also distinguishes values
from norms and attitudes.
(6) The relative importance of multiple values guides action. Any attitude or behavior typically has
implications for more than one value. For example, attending church might express and promote
tradition and conformity values at the expense of hedonism and stimulation values. The trade-off

among relevant, competing values guides attitudes and behaviors. Values influence action when
they are relevant in the context and important to the actor”.
The basic social function of values is to motivate and control the behavior of group members – be it
members of a social group, a group within an organization, an organization itself or the society as a
whole. Firstly, values serve as internalized guides for individuals; they relieve the group of the
necessity for constant social control. Secondly, people invoke values to define particular behaviors as
socially appropriate, to justify their demands on others, and to elicit desired behaviors
2.16.1 The Schwartz Theory of Basic Values
We will explore here the theory of basic values, which has been proposed in the early 1990s by a social
psychologist Shalom H. Schwartz. The theory defines the following ten broad values:

The theory posits that these values are likely to be universal because they are grounded in three
universal requirements of human existence: individual biological needs, needs of coordinated social
interaction, and survival and welfare needs of groups. Individuals cannot cope successfully with these
requirements on their own. Rather, they must articulate appropriate goals to cope with them,
communicate with others about them, and gain cooperation in their pursuit. Values are the socially
desirable concepts used to represent these goals mentally and the vocabulary used to express them
in social interaction.
Some values conflict with one another (e.g., benevolence and power) whereas others are compatible
(e.g., conformity and security). The “structure” of values refers to these relations of conflict and
congruence among values. Values are structured in similar ways across culturally diverse groups. This
suggests that there is a universal organization of human motivations.
Although the nature of values and their structure may be universal, individuals and groups differ
substantially in the relative importance they attribute to the values. That is, individuals and groups
have different value “priorities” or “hierarchies”(Schwartz, 2012).
The ten values have been classified into three sets of higher-order values dimensions. Of these, two
sets are depicted ion the diagram called the Schwart’z circumplex:
1. collectivism (benevolence, tradition, and conformity) vs individualism (power, achievement,

hedonism, stimulation, and self-direction).
2. openness to change (stimulation and self-direction) versus conservation (conformity, tradition,

and security).
3. self-enhancement (power, achievement, and hedonism) versus self-transcendence (universalism

and benevolence).
The Schwartz’s values circumplex

The Schwartz’s theory of values is not the only theory of values. Apart from the Schwartz’s theory,
there are other values frameworks, of which three best known are Hofstede’s national culture
dimensions, the GLOBE project, and the Inglehart’s World Values Survey. All of these frameworks are
useful and illuminating in their own right; and we will use these frameworks elsewhere in the module.
There are, however, several points in favour of the Schwartz’s theory (Ralston et al., 2011):
• Firstly, the instruments used to assess the values per this theory – namely, the Schwartz Value
Survey (SVS) and the Portrait Values Questionnaire – have been validated across many
cultures, and the studies assessed the theory using samples from 82 countries around the
world.
• Secondly, the theory and the survey tool have been used extensively to examine the influence
of values in both work-related and other contexts. In particular, at the individual level, the SVS
has been used to study the influence of personal values orientations on moral behavior,
attitudes toward corporate social responsibility, pro-environmental attitudes and behavior,
fair trade consumption, trust in institutions, and diversity attitudes. At the societal level, the
Schwrartz’s values model has been used to study cross-national differences in moral
inclusiveness, corporate governance, democratization and social attitudes, work ideologies,
allocation of rewards in organizations, and cultural distance in international trade.

• Thirdly, there is a published SVS data set collected from the samples of business managers
and professionals across 50 societies that are culturally and socioeconomically diverse. These
data were collected from the respondents who were born, raised for the majority of their
childhood/adolescence (first 15 years), and live in the countries where they were sampled.
Respondents who did not meet these criteria were excluded from the data set. These criteria
were not considered in either the Hofstede’s or the GLOBE projects. These data are also newer
(with data collected between 2000 and 2008) than the Hofstede’s and the GLOBE’s project
data (though not as new as the data collected for the World Values Survey).
Note, however, that these “points in favour” do not unequivocally mean that the Schwartz’s theory is
“the best”, just that we have valid reasons to present it to you here. This is an important caveat to
make, from a critical thinking perspective.
2.16.2 Importance of values
Why are values important in organizational context? We mentioned earlier that values serve to
control behavior and affect attitudes. Here we provide two specific examples of the impact of personal
values (using the Schwartz’s framework) on attitudes towards diversity and attitudes towards ethics
and corporate social responsibility.
Values and diversity
Increased globalization and greater diversity within organizations has made the question of attitudes
towards diverse others more germane for management. What affects these attitudes?
Personal values are one of the important precursors of a positive attitude towards diversity. How do
you measure attitudes towards diversity? One way to do it is by assessing “Universal Diverse
Orientation” – “an attitude of awareness and acceptance of both similarities and differences that exist
among people”. Recognition of the similarities (universal) connects people. Differences (diverse) are
unique aspects among people due to cultural and individual factors (e.g., race, gender, sexual
orientation, national origin, personality).

Attitudes are comprised of cognitive, behavioral (or intent to behave), and affective components. In
the Universal Diverse Orientation:
• the cognitive component is the recognition, valuing, and acceptance of similarities and
differences;
• the behavioral component (or intent to behave) is associated with seeking a plurality or
diversity of interactions with others; and
• the affective component is the sense of connectedness resulting from the shared experience
of being human.
A study by Sawyerr, Strauss and Yan (2005) found that individuals who score higher on the values of
openness to change and self-transcendence have more positive diversity attitudes than those who
scored lower. In turn, individuals who score higher on self enhancement have less positive diversity
attitudes than those who score lower.
Values and corporate social responsibility
Personal values also significantly impact the attitudes towards corporate social responsibility. A study
by Shafer, Fukukawa and Lee (2007) showed that individuals who have self-transcendence values
(universalism and benevolence) tend to show greater support for corporate ethics and social
responsibility.
How did the researchers assess support for corporate social responsibility? By measuring attitudes
towards the role of ethics and social responsibility in organizational success – using the following scale:
Stockholder view (all items reverse scored):
1. The most important concern for a firm is making a profit, even if it means bending or breaking the
rules.
2. To remain competitive in a global environment, business firms will have to disregard ethics and
social responsibility.
3. If survival of a business enterprise is at stake, then you must forget about ethics and social
responsibility.
4. Efficiency is much more important to a firm than whether or not the firm is seen as ethical or
socially responsible.
5. If the stockholders are unhappy, nothing else matters.

Stakeholder view:
1. Being ethical and socially responsible is the most important thing a firm can do.
2. The ethics and social responsibility of a firm is essential to its long-term profitability.
3. The overall effectiveness of a business can be determined to a great extent by the degree to which
it is ethical and socially responsible.
4. Business ethics and social responsibility are critical to the survival of a business enterprise.
5. A firm’s first priority should be employee morale.
6. Business has a social responsibility beyond making a profit.
7. Social responsibility and profitability can be compatible.
8. Good ethics is often good business.

Country scores and ranks on the Schwartz’s Value Survey (Ralston et al., 2011)

2.17 TAKEAWAYS
1. In organizational behavior terms, Individual behavior, in and out of organizational context, is as a

function of continuous, multidirectional interaction between the person and the situation.
Similarly, from the HRM point of view, individual performance is a function of individual attributes
and work context. Situation strength is the degree to which characteristics of the situation restrict
the expression of individual differences. In strong situations, most individuals act in similar ways,
despite their individual differences; in weak situations, individual behaviors are guided more by
individual differences than by the situation (constraints and opportunities).
2. There are four types of individual organizational behaviors and job performance: (1) task
performance, i.e. individual behavior that is a required part of the job and encompasses behaviors
that are directly involved in the transformation of organizational resources into the goods or
services that the organization produces; (2) organizational citizenship behaviors, i.e. the behaviors
that are not within the person’s job description but that help the organization to achieve its goals
and contribute to the organization by improving the overall quality of the setting in which work
takes place; (3) counterproductive behaviors, i.e. the behaviors that intentionally hinder the
accomplishment of organizational goals, and (4) organizational commitment (i.e. the desire to
remain in the organization) and employee withdrawal behaviors (the actions that the individual
takes to avoid the work situation and that may culminate in quitting the organization).

3. There are many dimensions of individual difference and diversity in organizations, including age,
gender, race, ethnicity, sexual orientation, abilities, personality, appearance, marital status,
parental status, educational background, religion / spiritual beliefs, personal habits, work
experience, seniority, and union affiliation. The key categories of individual attributes that are
considered most influential for job performance are knowledge, skills, abilities and “other”
attributes (often abbreviated as KSAO). The most prominent attributes in the residual category
“other” are personality and values.
4. Cognitive abilities, and the overarching general mental ability (GMA), are the key predictors of
task performance and work-related learning. Personality is also an important predictor task
performance (though less so than GMA), but is more influential for predicting organizational
citizenship and counterproductive behaviors. The most widely accepted personality typology is
the Five Factor (or Big Five) typology, that identifies five fundamental personality dimensions:
conscientiousness, agreeableness, openness to experience, extroversion, and neuroticism
(emotional stability) It is paramount for organizations to take cognitive abilities and personality
into account when selecting new employees, choosing individuals to work in teams, promoting
employees (particularly to leadership positions), succession planning, training and development.
5. In addition to abilities and personality, individual behaviors are affected by individual’s attitudes
(evaluations of objects as good or bad, desirable or undesirable), beliefs (ideas about how true it
is that things are related in particular ways), norms (rules that tell members of a group or society
how they should behave) and values (i.e. guiding principles regarding how individuals ought to
behave. The Schwartz’s theory of basic values identifies 10 universal values: power, achievement,
hedonism, stimulation, self-direction, universalism, benevolence, tradition, conformity, and
security.
Note: Remember also to review Takeaways provided in your textbook Chapters 2, 3, 9 and 10.
Section 3: Strategic HRM and HRM system
• define human resource management (HRM) and differentiate between HRM systems, policies
and practices
• describe general and specific functions of HRM
• explain what strategic HRM entails
• discuss strategic choices in HRM and the considerations that bear on these choices

• critically appraise contributions and limitations of the five perspectives on strategic HRM
(universalistic, contingency, configurational, contextual and integrative) and their practical
implications
• explain the role of HRM in achieving the UN Sustainable Development Goals.
3.2 Linked readings
There are no linked readings for this section.
3.3 HRM fundamentals: HRM system, policies and practices
Human Resource Management (HRM) generally refers to the theory and practices relating to the way
people are managed at work.
When we talk about managing human resources in an organization we use terms ‘HRM system’, ‘HRM
policies’ and ‘HRM practices’. What exactly do we mean by these?
The relationship between these three terms (and phenomena) is hierarchical: HRM system is a term
that covers all HR activities in an organization. An HRM system comprises of specific HRM policies. An
HRM policy can contain one or more HRM practices.
Relationship between HRM system, HRM policy and HRM practice
An HRM system is a “pattern of (planned) human resource activities intended to enable an

organization to achieve its goals”. HRM systems vary across organizations, as they focus on different
objectives. For instance:

• An HRM system may be ‘control-oriented’, i.e. focus on increasing organizational efficiency
by ensuring that employees comply with regulations and by minimising the labour costs. How
do you achieve this? One way to do this is through work design, by defining simple and narrow
job tasks. If you define the tasks very narrowly then you would reduce the skill demands for
these tasks. If you have low skill demands, you can invest relative little into training. Another
way to reduce labour costs is to have no employment security. Yet another one is to reward
based on measurable output criteria. Controloriented systems are generally designed to
minimize the impact of employees on the organizational processes. In such system, workers
are commodity-like and are replaceable.
• Alternatively, an HRM system may be ‘high commitment’, i.e. focus on building employee
commitment by facilitating the convergence of employee interests and organizational goals.
Organizations that rely on a high-commitment strategy aim ‘at getting more from workers by
giving more to them’. High commitment systems use selective hiring procedures that seek to
find the ‘right’, broadly skilled employees. Such systems are based on a flexible job design,
where employees enjoy comparatively high involvement in managerial decisions. There is
intensive training. There is a considerable job security. Finally, rewards are based on firm-
wide, unit and team performance measures, and include superior benefits, with merit as a
central pay criterion for all staff (Hauff et al., 2014).
An HRM policy is an organization’s stated intention about how a particular peoplerelated issue should
be addressed. For example:
• A firm’s compensation policy might be to pay for performance or to pay based on seniority
• An organization’s recruitment policy might be to reach as many different applicants as
possible or to target specific groups of applicants.
An HRM practice is a way of implementing an HRM policy. Each HRM policy can be implemented in a
variety of ways. For instance:
• To implement the policy of pay for performance, an organization may use merit pay, piece
rate pay or stock plan.
• To implement a broad reach recruitment policy, an organization may use widely circulated
print publications or Internet.
HRM systems, policies and practices have significant impact on all aspects of organizational
performance.
Case: Wells Fargo
An attention grabbing case of how poor HRM can cost an organization dearly comes from the recent
Wells Fargo case. Wells Fargo is one of the biggest banks in the United States and offers many
consumer financial products and services, including savings and checking accounts, credit cards, and

onlinebanking services. In recent years, the bank has sought to distinguish itself in the marketplace as
a leader in “cross selling” these products and services to existing customers who did not already have
them. The bank’s CEO John Stumpf’s mantra was “eight is great” -- meaning that employees had to
get eight Wells Fargo products into the hands of each customer.
When cross selling is based on strong customer satisfaction and excellent customer service, it is a
common and accepted business practice. Bankers among you would probably agree with this.
However, in the Wells Fargo case, the bank’s compensation incentive programmes encouraged the
employees to sign up existing clients for as many accounts as possible. And the bank’s performance
management system also put a great pressure on the employees who struggled to meet demanding
quotas.
Pressured by sales targets and spurred on by incentives, employees started to boost sales figures by
covertly opening accounts and funding these accounts by transferring money from the existing
customers’ accounts without the customers’ knowledge or consent. Not one, not a few, but thousands
of bank’s employees were involved in this practice. Altogether from 2011 to mid-2016 Wells Fargo
employees created more than 1.5 million unauthorized deposit accounts and issued more than
500,000 unauthorized credit card applications. These accounts racked up $2.6 million in fees for the
bank.
These sham accounts may have gone unnoticed were it not for an investigation by a newspaper Los
Angeles Times, which helped uncover the fraud. The newspaper reporting led to a 2015 lawsuit against
Wells Fargo by the city of Los Angeles. Soon thereafter, federal regulators got involved and in
September 2016, Wells Fargo announced that it would pay full restitution to all victims ($ 5 million)
and $185 million in fines to city and federal regulators to settle the matter ($100 million fine to the
CFPB’s Civil Penalty Fund; an additional $35 million penalty to the Office of the Comptroller of the
Currency, and another $50 million to the City and County of Los Angeles).
Since the scandal emerged in September 2016 Wells has replaced its chief executive, reshuffled its
board, changed a string of senior executives and distanced itself from the aggressive culture of cross-
selling that fed the deception. But the damage has lingered. From the day the scandal broke, shares
in the bank have been flat.
The lesson? Well, there are many lessons for various parts of this bank’s operations, but there is a
clear and strong HRM lesson: poor performance management and poor reward management led to
fraudulent employee behavior, which in turn led the bank lose a massive amount of money in fines,
cost the bank its reputation, and continues to lose shareholder value.
Source: Forbes (2016) https://www.forbes.com/sites/maggiemcgrath/2016/09/23/ the-9-most-

important-things-you-need-to-know-about-the-well-fargofiasco/#1dc51d463bdc

3.4 HRM system: General and specific functions
What are the key components of an HRM system? What range of processes does such system
encompass? In other words, what does an HRM system do?
We need to start with what an HRM system is supposed to deliver – with the four general functions
of any HRM system.
1. Identify what behaviors are needed from employees.
2. Ensure that employees have the competencies (i.e., knowledge, skills, abilities, and other
attributes) needed to perform successfully.
3. Motivate employees to engage in the needed behaviors.
4. Empower employees to act and provide them with opportunities to perform successfully
(currently and in the future).
Each of these general functions correspond to one of more specific functions (or ‘processes’ or
‘activities’ that HRM performs).
1. General function: identifying the required behaviors
Specific functions
• Work analysis - the systematic investigation of work activities, worker attributes, and the
context in which work roles are enacted.
2. General function: ensuring that employees have the competencies to perform successfully
Specific functions
• Recruitment – actions intended to bring a job opening to the attention of potential job
candidates and influence whether these individuals apply for the opening and accept a
job offer.
• Selection – processes used to make decisions about which individuals from a group to
choose for a particular job or role within the organizations.
• Training and development – actions intended to affect individuals’ knowledge, skills, and
attitudes for the purposes of: improving individual, team, and organizational effectiveness
(training) or personal growth and future work roles (development).
3. General function: motivating employees to engage in the desired behaviors

Specific functions
• Performance management – continuous process of identifying, measuring, and

developing the performance of individuals and teams and aligning performance with the
strategic goals of the organization.
• Reward management – process of ensuring that people are rewarded fairly for the work
they do and for contributing to the achievement of the organization’s purpose and aims.
4. General function: empowering employees to act
Specific functions
• Work design – processes involved in developing the content and organization of one’s
work tasks, activities, relationships and responsibilities.
• Employee participation - the range of mechanisms used to involve the workforce in
decisions at all levels of the organization, whether undertaken directly with employees or
indirectly through their representatives.
There are also several specific functions that do not neatly fit into the general functions but represent
important elements of HRM system. These are:
• Employee relations – development and application rules, regulations and agreements by

which employees are managed both as individuals and as a collective group
• Health and safety – preventing, and protecting employees from, occupational risks to physical
and mental health and well-being; promoting health and safety culture
• Diversity management – actions designed to create greater inclusion of employees from
various backgrounds into the formal and informal organizational structures through
deliberate policies and programs
• Organizational development – managing change, through planned development,
improvement, and reinforcement of strategies, structures, and processes that lead to
organization effectiveness. Altogether these specific functions encompass the full range of
human resource management activities in an organization.
3.5 HRM and organizational strategy
Research and practice tell us that organization’s strategy – its vision, mission, goals, and plans – should
be the driving force of the HRM system. What do we mean by organizational strategy?
All organizations have a strategy, or at least some idea of the direction they wish to take going forward.
Although it may not always be written down or deliberately formulated, there is always some notion
of the future direction.

Organizational strategy ‘happens’ on three levels:
• On the corporate level, strategy identifies the business or range of businesses, in which the
organization wishes to compete.
• On the business level, strategy is concerned with the question of how to compete for the
hearts and minds of the customer.
• On the operational level, strategy is about making choices between different ways of
controlling and coordinating various functional areas (such as finance, accounting, marketing,
production, research and development, and human resource management) so that these
support the corporate and business strategies (Buller and McEvoy, 2012: 44).
3.6 Strategic HRM
In the context of HRM the term ‘strategic HRM’ is used to mean any or all of the following:
(1) that HRM system, policies and practices should derive from and align with the overall
organizational strategy;
(2) that managing ‘human resources’ is a key strategic issue because people are any organization’s
key asset; and
(3) that HRM has a significant impact on organizational performance and Notes effectiveness.
HR professionals also use the term ‘strategic HRM’ to their intention to work in close partnership with
line managers and to have ‘a seat at the table’ when business decisions are made.
3.7 HRM strategy
HRM strategy encompasses the direction and the general approach toward longer-term employee-
related issues in the organization.
Management of human resources – whether highly planned or emergent – always entails some
strategic choices, and these choices are inevitably connected to the organization’s performance.
It is helpful to think of two types of strategic choices:
1. choices that play a vital role in organization’s viability and survival (“make-or-break” choices).
2. choices that account for major differences in business performance (choices associated with
“sustained/sustainable competitive advantage”) .

An organization’s overall pattern of strategic choices in human resource management (including
critical ends and means) constitutes its HRM strategy.
To clarify the difference between strategic and non-strategic choices in HRM, consider a case of a
management consulting firm that aims to join the elite group of transnational management consulting
firms (such as KPMG, PwC, and McKinsey). There is no doubt that such a firm must have highly
selective recruitment and strong development of staff to ensure it can consistently offer clients high-
quality service on complex business problems. In this elite group, a synergistic blend of certain HRM
policies – such as proactive recruitment channels, high entry standards, high pay, employee ownership
and extensive professional education – are critical prerequisites to a firm’s credibility in its labour
market. On the other hand, the contracting out of payroll administration is not a strategic dimension
of this firm’s HRM. It is not difficult to meet the requirements of employment contracts in these areas,
and elite firms are not differentiated from lesser firms on this basis. What is critical, however, is that
the firm’s leaders put together and apply the system of broad-based HR policies that will help the firm
to join the elite group of professional firms in its sector (Boxall and Purcell, 2000: 184-185).)
3.8 Strategic HRM choices
Essentially, an organization’s strategy (its mission, vision, and goals) should define its HRM system,
which, in turn should comprise HRM policies that align with strategy and be implemented through
HRM practices that support these policies:
At each juncture – e.g., when translating organizational goals into an HRM system or an HRM policy
into HRM practices – managers face important choices, within certain constraints. Let’s look more
closely at some of these choices.
• Organizational goals → HRM system. Specific organizational goals can be achieved with
different HRM systems. For instance, to gain a certain set of skills, an organization may choose
either one of the following two options: (1) to pursue a ‘buy’ option and focus on sophisticated
recruitment methods and rigorous selection to bring the required skills in; or (2) to pursue a
‘make’ option and focus on imparting the skills to existing employees through training and
development.
• HRM system → HRM policies. An HRM system entails a range of HRM policies. For instance,
an HRM system that focuses on developing employees’ customer orientation might
encompass: a selection policy that assesses an applicant’s ability to engage with a customer;

a training policy that develops the customersupport skills; a performance management policy
that takes into account the customer feedback.
• HRM policy → HRM practices. Each HRM policy can be implemented through various HRM
practices. For instance, a training policy can be realized via particular training practices such
as on-the-job training, off-the-job training, online training, and/or classroom training. A
performance management policy can be implemented via formal evaluation, developmental
appraisal, 360° appraisal, and/or result-oriented appraisal. An involvement policy can be
realised through practices like empowerment, voice, employee participation, and/or
information sharing.
Take, for example, a firm in the information technology industry that has adopted the vision “Invent
new products” and has a mission statement that says “We Value Creativity.” This vision and mission
is then translated into a guiding principle for the HRM system, such as, say, “Promote creative learning
environment.” HRM policies should follow this principle; and so the firm may adopt an HRM policy
that emphasizes job security and promotes mutual commitments between the employees and the
employer so that employees will be more willing to experiment and innovate. Or it could adopt an
HRM policy that rewards employees for innovation. In turn, the policies will guide the choice of
practices. So, the policy of job security may be translated into a layoff practice that protects those
with long tenure; the policy of rewarding for innovation can be translated into the practice of awarding
cash bonuses to R&D employees for successful patent applications; and so forth. The choices that
organizations make when they translate organizational goals into HRM principles, policies and
practices are all strategic in the sense that they reflect the strategy and contribute to strategy
execution.
So, ‘strategic HRM’ means that the overall organization’s strategy shapes (or should shape) the
organization’s HRM system. However, strategic HRM also means that all aspects of HRM ultimately
shape the organization strategy, as well. How is that possible? Now, think about it. What organization
can achieve depends on its people – their knowledge, skills, abilities, and motivation. People are the
key asset -- they constrain and enable what the organization can do. They provide the boundaries
within which the strategic goals can develop. For example, organizational strategies are developed by
people. People who are charged with developing strategies are a product of the HRM system, policies
and practices. If an organization appoints to the key strategic roles from within, then who these people
are and what they are able to achieve reflects the opportunities that the HRM system provides for
developing the relevant knowledge and skills. If these people are recruited externally, then the HRM
system impacts on that through the recruitment and selection processes.
Therefore, HRM has a significant impact on who develops the strategies and what Notes strategies
are developed.
Thus, strategy and HRM go hand in hand (or follow each other as left foot follows the right) – both
strategy impacts HRM and HRM affects strategy.

3.9 Strategic HRM choices: ‘Best practice’ vs ‘best fit’ views
How should organizations make strategic choices in HRM? This is a critical HRM question, and it is no
wonder that it has generated much debate in HRM studies. The debate commenced in 1980s and is
still ongoing.
There are two contrasting answers to this question:
1. One answer argues that there are certain ‘best practices’ in managing people and that all
organizations will be better off if they adopt these practices. This is known as the ‘best practice’,
or universalistic perspective on strategic HRM. From this perspective, strategic choice is
effectively limited to identifying and implementing the prescribed best practices.
2. The other answer argues that, to be effective, HR strategy (and the ensuing practices) should be
designed to fit certain critical characteristics of the organization and its environment. This is
known as the ‘best fit’ framework. The framework encompasses four perspectives on strategic
HRM: contingency, configurational, contextual, and Integrative. Each of the four ‘best fit’
perspectives reflects a somewhat different outlook on what characteristics of the organization
and its environment should drive strategic choices in HRM.
Perspectives on strategic HRM
3.9.1 The best practice perspective
The universalistic perspective posits that there are certain ‘best HRM practices’ that universally
improve organizational performance, regardless of the specific features of the organization and its

environment. This perspective also posits that pay-off to these practices is greater if they are
implemented as a package.
The best practices are commonly known, individually, as High Performance Work Practices (HPWP)
and collectively as High Performance Work System (HPWS). Posthuma et al. (2013) have undertaken
a review of all academic and practitioner literature from 1992 until 2011 and discovered that during
this period 61 different practices were mentioned. Out of these 61 practices, researchers selected the
ones that have been mentioned most frequently across different countries, and ended up with the
following list:
High Performance Work Practices

How well do these practices work? Here is the latest best available research evidence. According to
the meta-analysis by Rabl et al. (2014), based on the results of 156 studies covering over 35 thousand
firms across 29 countries, there is a moderate (0.28) correlation between HPWPs and organizational
performance (measured by financial measures, specifically, accounting measures, growth and market
returns, and also operational measures, including productivity, quality and employee retention).
Case: HPWPs in Ghanaian banks We talk about correlations between HRM practices and
organizational performance, but the causal path is not that straightforward. The causality does not
shoot directly from introducing a formal HR practice on the books to having a whole company
experience a surge in performance. The path is more thorny: What the company says its HR practice
is does not always mean that the HR practice is actually operating. A lot of slippage and subterfuge
can occur in HRM, along with intelligent adaptation to circumstances on the ground. There are many
examples of line manager ‘reinterpreting’ HR practices – either to make them more workable in a
specific work context or, in a more negative way, for their own personal or political ends. What the
actual practice is and what employees perceive is not the same:
So, when Aryee et al. (2012) examined HPWPs in two banks in Ghana, they took into account this
complex path and examined both the official branch-level practices and the employee perceptions of
these practices. For the official practices they surveyed branch managers, and for employee
perceptions they asked the employees themselves. It turned out that the employees’ perceptions of
HPWPs explained more than a half (52%) of variance in individual performance. Obviously, individual
performance is also affected by multitude of other factors, so we wouldn’t expect that HPWPs would
explain all differences in performance between employees. But it does explain a good deal. What’s
more, the branch-level practices, together with individual employee performance, explain 20% of
variance in overall performance across bank branches!
Source: Adapted from Aryee et al. (2012)
The ‘best practice’ approach, however, has not been universally accepted. Aspects of ‘best practice’
perspective are widely acknowledged by researchers and practitioners. For example, in selection,
hardly anyone would advocate using graphology rather than structured interviews. Similarly, in
performance management, no one would advocate trait-based performance appraisal over processes
that examine key job behaviors or outcomes. Critics, however, point out that, beyond these sorts of
straightforward prescriptions, we enter into much more difficult terrain. For instance, what goals are
being served by ‘best practice’? Does ‘best practice’ serve organizational viability or a sustained
competitive advantage? If ‘best practice’ serves organizational viability, then all firms in a sector need
to implement it to remain viable. This, however, would be logically impossible. See for yourself: One

recommended best practice is ‘high pay’ -- often expressed as ‘pay in the upper quartile’. Obviously,
only limited numbers of firms can achieve it. And then there is the problem of interests. Whose goals
are being served? If ‘best practice’ serves both shareholder and worker interests, we can hardly object
to it. But what if a practice is good for corporate returns but bad for workers? The sort of practices
that are more desirable to employees – such as high levels of pay, training and security – are not cost-
effective across all sectors or, indeed, across all types of labour in a single firm.

3.9.2 The ‘best fit’ models
There are four variations on the ‘best fit’ model.
Contingency perspective
The contingency perspective argues that the optimal set of HRM practices for one organization may
not be optimal for another organization, because organizations differ in terms of various important
characteristics, or contingencies. In order to be effective and positively contribute to organizational
performance, HRM practices must be aligned with the key contingencies – they need to ‘fit’.
One key contingency is organizational strategy. For example, if an organization has chosen to compete
based on the quality of its products then it should provide extensive and continuous training and
development of employees. If an organization has chosen to compete on the cost, it should offer
minimal levels of employee training and development (to save the expense).
Another contingency is organizational age. For example, in the start-up stage, compensation should
meet or exceed market rates in order to attract needed talent, while in the maturity stage,
compensation should be more tightly controlled. Environmental conditions, such as the state of labour
market, also need to be taken into consideration when devising HRM systems.
The third contingency is environmental characteristics, such as industry competition, technology,

macro-economic conditions, and labour market. For instance, a recent Canadian study (Schmidt et al.,
2016) showed that labour market conditions mediated the impact of HRM practices on the
employees’ intention to quit: Where industry unemployment rates were lower, the HRM practices

that ‘induced’ employees to stay (e.g., extensive benefits) were, indeed, associated with lower
quitting; but where unemployment rates were high, the same HRM practices had little effect.
Case: HRM fit –a Dutch dilemma
The medical profession is becoming increasingly feminised. In most European countries, more women
enter the medical profession - ranging from 50% of all medical practitioners being female in Finland
to an average of 35% in other European countries, such as France, Germany and the UK.
Together with the feminisation of the medical profession, there is a worldwide trend among male and
female physicians to work less hours. This trend is in clear contrast with the increasing demand for
health-care services and the shortage of health-care professionals.
As a result of these two trends, hospitals in the Netherlands – and many other countries – heavily
depend on the growing number of female doctors and their willingness to work.
The Dutch health-care industry is characterised by cost-containment strategies, which include keeping
down labour costs. To reduce labour costs hospitals will first try to hire as many full timers as possible
because replacing one full timer with, say, two part timers involves twice the level of quasi-fixed costs
(such as administrative costs, costs for searching, hiring and training a new worker). In view of that,
the more contracted hours female doctors are willing to work, the greater it will benefit the health-
care institution’s competitive strategy.
So hospitals need to attract and retain female medical doctors by satisfying their need for work-life
balance – and at the same time ensure the optimal use of human capital. These two strategic pressure
are usually translated into HR policies of offering family-friendly arrangements.
Health-care institutions in the Netherlands are facing a strategic HR dilemma. They need to attract
female doctors from a tight, feminised labour market by offering family-friendly HR practices (such as
part-time employment), while trying to contain their labour costs by employing as many full-timers as
possible.
The challenge: How would you achieve both the fit with the environmental constraints and the fit with
the organizational strategy in this situation?
Compare your answer to the answer developed by the researchers who conducted this study and that
is provided at the end of the section under the “Answers to the cases” heading.
Source: Adapted from Pas et al. (2011)

Configurational perspective
The configurational perspective emphasises that an HRM system must be internally coherent – i.e.
that HRM practices should be configured in such a way that each practice fits with and supports all
others. This perspective emphasizes the role of complementarity and synergy between HRM practices
as an important influence on the choice of HRM practices. It argues that the performance effects of
HRM practices depend on assembling the right combination of practices such that all individual HRM
elements (e.g., selection, compensation, training, employee relations) fit together and support each
other.
According to the configurational perspective, performance effects of HRM practices are multiplicative
rather than additive: Returns would be low if all but one or two of the HRM elements fit together;
returns would be high if all elements are implemented as a complete package. This perspective advises
to avoid ‘deadly combinations’ of HRM practices, i.e. practices that pull in different directions. An
example of such a deadly combination is an HRM system which incorporates training for teamwork
but rewards only individual performance. Organising work flow around teams and yet rewarding
employees only for individual performance may lead to negative outcomes because employees will
be unsure whether to focus on maximizing their own outcomes or on supporting their teammates.
In contrast, in a ‘powerful combination’ different practices complement each other and produce a
synergistic effect. An example of a powerful combination is an HRM system that includes training in
leadership skills and recruitment that emphasises promotion to managerial ranks from within rather
than external hiring. Here, the message is clear: the organization values its employees and encourages
employee development.
A combination of contingency and configurational perspectives on strategic HRM choices results in a

model that requires an organization to ensure that its HRM policies and practices are aligned with:
• Environmental fit, i.e. fit with organizational environment (e.g., labour market conditions and
labour laws);
• Organizational fit, i.e. fit with other organizational systems (e.g., production system,
marketing system);
• “Vertical fit”, i.e. fit with strategic priorities on three organizational levels: (a) organizational
(organizational capabilities and culture); (b) group level (group competencies and norms); and
(c) individual level (individual knowledge, skills, abilities, motivation and opportunities)
• “Horizontal fit”, i.e. fit among HRM policies and practices, ensuring that they all work in unison
(Buller and McEvoy, 2012).
Strategic HRM that promotes “fit” would start with a definition of the organization’s vision, mission,
and strategies, and an examination of internal resources and external developments. Given an
organization’s strategies, the process would involve assessing how HRM practices would fit with the
multiple contingencies.

For example, a strategic objective of improving customer relations would need to be supported by
HRM practices that encourage customer relations (vertical fit). All HRM practices would need to be
consistent with this objective (horizontal fit). The customer relations orientated HRM system would
require support of other organizational systems (organizational fit). For instance, the marketing
system would need to equally focused on customer relations. The HRM system would need to take
into account environmental conditions, e.g., how the organization’s competitors address the issue of
customer relations in their HRM practices (environmental fit).
Case: ABC Company – attaining a vertical and horizontal fit
ABC Company (not its real name) offers certification programs in a variety of different fields to
enrolled students from across the United States. It provides student assessment, training,
certification, and employment services.
ABC Company attracts students to its programs by leveraging the names of reputable universities
across the United States and brands the certification achieved by successful students with one of its
collaborating universities. In addition, ABC Company develops relationships with large institutions
(predominantly not-for-profit organizations) that market the certification programs to its clients who
are eligible to receive lower tuition fees as a result of mass enrolment.
ABC has two types of students: (1) those who enrol themselves based on their desire to complete a
certification in an area in which they would like to gain or improve their skills and (2) those who are
selected by large institutions of which they are a member and are thus eligible to be enrolled directly
by that institution into a certification program. The vast majority of students who enrol through ABC
Company’s institutional clients are either unemployed or underemployed. Students are of various
demographic backgrounds (gender, ethnicities, etc.), drawn from regions across the United States.
ABC Company employs approximately 70 full-time employees throughout North America. This
classifies the organization as a small-sized firm. The core employees of ABC Company are the
“advisors” who provide education and training support and employment services to the students. The
advisor’s job role is to provide services on a one-to-one basis to each student from a remote location,
given that the programs are only offered online. The advisors represent approximately 15% percent
of ABC Company staff. The focus of this case is on these core employees (advisors) and the HR
practices that govern them.
The business goal of ABC Company is to achieve high certification and employment rates for its
students/clients.
The ABC Company employees range from recent college/university graduates to employees with
extensive experience. Their age range from 23 to over 50 years. About 80 percent of the advisors were

female. Advisors come from various backgrounds, but most commonly from social work, teaching,
and/ or psychology backgrounds.
The description of the ABC Company’s recruitment and selection, training and development,
performance management and reward management is provided next.
Recruitment and selection. ABC Company invests significant resources into the recruitment and
selection process. The HR administrator spends a lot of time with recruitment agencies explaining the
job roles, screening the resumes and responding to questions from job applicants. The shortlisted
candidates undertake a telephone interview, followed by online testing and two in-person interviews
with senior management. Considerable attention is devoted to person-organization fit, as well as the
knowledge, skills, and abilities of the job applicant. The company strives to hire talented and
motivated applicants and to assess the fit between applicants and the corporate culture to minimise
the risk of employee turnover. The recruitment and selection process send positive signals to
prospective employees. They create the image of a professional, technologically advanced
organization, with great opportunities and a challenging work environment.
Training and development. The company provides the advisors with between four and eight hours of
initial training, which includes technical training to learn the software application systems and some
background training on marketing, sales and customer service. There is no general orientation.
Employees are required to being performing their actual job duties in either their first or second day
of being hired. Some employees complain about their training: ‘There is no training plan or training
manual. You are just put on the job and have to ask other advisors what to do’. Due to its small size,
ABC Company offers little to no opportunities to move elsewhere within the organization to develop
a skill set. It also does not provide any corporate support for professional development.
Performance management. Over the past few years, performance appraisals at ABC Company have
evolved from a short meeting with one’s direct supervisor to standardised formal reviews, including
discussion on development, goal setting, and succession planning. These reviews are extensive and
lengthy and allow employees to voice their concerns and developmental interests.
Rewards management. ABC Company pays successful job applicants based on an increase on their
salary with their previous employer. This has resulted in substantial differences in salary across
advisors. Performance appraisals are not linked with compensation, and high performers do not
receive extrinsic rewards based on their performance. Moreover, in some cases, these employees are
also earning significantly less than those who are performing poorly but were initially hired at a higher
salary. This is because a few of the highest performers are fairly young and, when recruited, did not
have a lengthy salary history.
Now, based on the information provided above on the ABC Company’s business objective and four
elements of its HRM system, try to identify whether these elements fit with the objective – and with

each other. In the following table, write “yes” if you think there is a good fit between the column and
the row category or ‘no’ if they are in misfit.
Check your answers at the end of the section.
Source: Based on Samnani and Singh (2013)
Contextual perspective
The contextual perspective builds on the contingency and configurational perspectives but highlights
that HRM strategies and practices in an organization are not independent from what happens in
organizational environment. They are affected and in turn affect the environment.
Therefore, organizations/managers are not entirely free to adopt ‘the best’ practices (as the
universalistic perspective would recommend) or to develop the bundles of practices that fit various
external and internal contingencies (as the contingency and configurational perspectives would
advise). This perspective brings in a wider environmental context, incorporating an entire country’s
national culture and institutional system into the picture. This is how some of the key proponents of
this perspective articulate their position (Vaiman and Brewster, 2014):
Some aspects of organizational environment are beyond the organizational control; take, for instance,
levels of corruption in a society, respect for hierarchy and the importance of networking between key
elites. Organizations can do something to affect these factors; for instance, they can introduce anti-
corruption policies or hire people who have links with the local elites. These strategies, however, can
ameliorate the environmental impact only to a limited degree. Other aspects of cultural beliefs in the
country, however, can be more easily offset. Any organization, but multinational companies in
particular, can ensure that they do not recruit employees ‘typical’ of the culture or cultures of that
country. MNCs can perhaps look for locals who share some of the values and beliefs of their home
culture. The extensive induction and training programmes about the organization and its philosophies
and ways of working, and the widespread ‘corporate culture change’ programmes, are designed to
modify employees’ national cultural beliefs. And, if they do not work, extensive monitoring and

appraisal programmes attempt to force employee behavior into a common mould, despite cultural
differences.
There are also other aspects of the environment organizations can do little about. In any society, the
size of the landmass of the country and the population and the general infrastructure will affect the
way business can operate and HRM can be conducted. The wealth of the country and the mix of formal
and informal economies, the basic education system, the role of the government through tax and
other fiscal regimes, social security programmes, the healthcare system, skills levels and the labour
market in general are all largely beyond the control of individual businesses, however dominant they
may be in the local economy. The nature of the legal system is fundamental to the way society works
and businesses have to adapt to that and to the legislation that exists. The kind of politics and the
political leanings of the government are critical factors. Organizations have to adapt to the programme
of the existing government, while also being conscious that they do not want to get caught on the
wrong side if the government changes. And beyond all these embedded general institutional factors
there are specific issues applying to HRM more directly. Employment laws differ between countries
so that, for example, the laws on equal opportunities for women require different behaviors from
organizations in the USA and the European Union – what is required on one side of the Atlantic is
unlawful on the other. If we add in Latin American countries or the Gulf states the picture changes
again. Trade unions are illegal in some countries, required in others and may be more or less
supported in yet others. Their role, their objectives, their structures and their activities vary from
country to country. Government-provided child care, training and employment support, and a range
of other programmes vary significantly between countries.
Of course many of these aspects are not completely beyond the control of the organization.
Businesses can and do build roads to their locations, lobby governments on tax or employment
legislation, recruit only from educated elites or import labour – although all of these have their costs.
Businesses can work hard to avoid having to deal with trade unions: though generally, in countries
where the unions are stronger, business can do so only by offering terms and conditions of
employment largely on a par with or better than those the unions would have negotiated. In many
cases, however, the business, or its subsidiaries in other countries, has little choice but to cope with
the institutional setting in which it operates.
For instance: the extent to which the employment relationship is seen as a longterm arrangement
varies across countries. Thus, in the so-called coordinated market economies (CMEs) (also referred to
as Rhineland, Continental European, regulated, or stakeholder economies) and in the mixed market
economies (MMEs) of the Mediterranean countries and Portugal, there is extensive legislation making
it difficult and/or costly to sever that relationship. In the CMEs there is also considerable force put
behind making sure that the laws are effective. This is much less the case in the MMEs. In the MMEs
employment is more often seen as ‘familial’, where the firm operates more paternalistically but, as
with families, it is expected that all will continue to cope with those who contribute less. In the social
democratic economies (SDEs) of the Nordic states, which have features in common with the CMEs but
have less employment protection and yet a much stronger state role in continuous skills development,

adherence to social norms is enforced more by a widespread consensus about what constitutes
decent and proper behavior by an employer, reinforced by influential trade unions. In contrast, in
liberal market economies (LMEs) (also called the Anglo-Saxon, shareholder or stock market
economies) employment is easily terminated and employees are more mobile. In the countries where
employment is seen as a long-term arrangement, substantial investment in firm-specific training and
development, from both firm and employee, becomes much more attractive – the ‘pay-off’ time is
longer. In the countries where employment is easily terminated, training is likely to be less frequent
or restricted to repeated short-term induction and technical skills programmes”.
We take up some of these issues when we consider international HRM in Unit 3.
Case: Should line managers do HRM? A universal question with a contextual answer
To what extent are line managers involved in HRM?
By line managers, we mean here all managers who are not in the HRM department. But on such a
definition, why should such people be involved in HRM?
This is in a way a strange question. It is difficult to see how managers, the people who are responsible
for getting things done through others, could not have HRM responsibilities. That has always been
part of the managerial role. It is line managers who deal on a daily basis with allocating roles and
monitoring the performance of their subordinates.
Nevertheless, as organizations develop separate specialist roles and departments specifically for
handling HRM, the allocation of responsibilities between the line managers and HRM specialists
becomes contentious and contested. For example, line managers often accuse “bureaucratic
overheadcost HRM departments” of trying to “police” the activities of wealth-creating line managers;
while HRM specialists frequently complain that line managers refuse to accept appropriate HRM
policies.
A universalistic, ‘best practice’ approach to HRM suggests that line managers should be involved in
HRM. Does anything stand in the way of adopting this recommendation?
To answer this question, Brewster, Brookes and Gollan (2015) investigated to what extent contextual
factors impact the devolution of HRM responsibilities to line managers. They analysed the survey data
covering 1643 organizations in 11 countries: United States, United Kingdom, Ireland, Austria, Belgium,
Germany, the Netherlands, Denmark, Finland, Sweden, and Norway.. The researchers hypothesised
that line managers would be more likely involved in HRM in:
• smaller organizations – why?

• less unionized organizations – why?
• organizations where the HRM function is considered strategic – why?

Think of your own answers and then check with the answers at the end of this section.
The researchers found that around half of the organizations studied assign HRM responsibilities to the
line managers and that organizations appear to have considerable latitude in making choices in this
area. However, these choices operate within constraints imposed by the ‘context’ – i.e. organizational
environment, in particular the country’s institutional characteristics.
In the “Nordic model” countries – such as Denmark, Finland, Sweden, and Norway – there are high
levels of compliance with employment legislation, and line managers are well-educated and rusted to
act correctly. In these countries, organizations are more likely to devolve HRM responsibilities to line
managers.
In the “liberal market economies“ – such as the US, the UK, and Ireland – trade unions retain some
influence, but are often antagonistic to employers. Employment legislation is taken very seriously but
line managers are not expected to know about it; and trust is in short supply. In such situations,
organizations frequently decide that leaving things to line managers is too risky.
The “coordinated market economies“ (typically, European countries) – such as Germany and Austria -
- are placed somewhere between these two extremes, and so the line managers‘ involvement in HRM
is intermediate between that in the Nordic model countries and that in the liberal market economies.
Source: Adapted from Brewster et al. (2015)
Integrative perspective
Finally, the integrative perspective (Jackson et al., 2014) incorporates a broader set of organizational
outcomes of HRM and a broader range of stakeholders in the formulation and implementation of
human resource strategies.
This perspective treats HRM as a system that a system comprised of the following primary elements:
• overarching HRM philosophies, which specify the values that inform an organization’s
management approach;
• formal HRM policies, which are statements of the organization’s intent, serving to direct and
partially constrain the behavior of employees and their relationship to the employer;
• actual HRM practices, which are the daily enactment of HR philosophies and policies.
In a system, elements are interrelated, so that each element influences the system’s functioning and
is affected by other elements in the system. Although composed of discrete, identifiable elements,
emergent properties create synergies among the elements to yield a whole that is more than the sum
of its parts.

Integrative perspective also highlights the importance of HRM context. Organizations are dynamic
entities that must balance the often competing demands for responsiveness to forces in the external
environment with the challenge of maintaining adequate internal coherence and stability. Constantly
in flux, an organization’s external and internal environments create a dynamic context for the
development, evolution, and demise of HRM policies and practices.
This perspective emphasises the role of multiple players in an HRM system. HRM systems come alive
in social interactions among organizational members, including those involved in formulating,
communicating, and responding to elements of the HRM system. This set of players – HR
professionals, line managers, and target employees – is sometimes referred to as the “HR Triad”.
Finally, it highlights the fact that each organization has multiple stakeholders that affect and are
affected by HRM system. So far, the concerns of owners and investors have received the most
attention, but the views of customers, members of the broader society, and other organizations are
increasingly recognized as relevant (Jackson et al., 2014: 2-5).
Below we offer a graphical representation of the integrative perspective. Scholars call this framework
“aspirational” because “it captures a multitude of elements strategic HRM scholars recognize as
important, notwithstanding the impossibility of incorporating all of these elements in any particular
theoretical or empirical piece of work” (Jackson et al., 2014: 2).
Integrative perspective on strategic HRM
Source: Based on Jackson et al. (2014), Martín-Alcázar et al. (2005), and Guest (2013)

Case: Shareholder value or stakeholder interests
The Economist’s columnist Schumpeter distinguishes between 6 types of organizations in terms of

their emphasis on shareholder value vis-à-vis stakeholder interests:
1. Corporate fundamentalists focus on boosting profits and share price in the short term. Such firms
rarely do well for long.
2. Corporate toilers believe in the primacy of shareholder value, but are prepared to be more
patient. Examples are Shell and Intel, investing on a ten-year time horizon.
3. Corporate oracles want to maximise profits within the law but with a twist, as they think the law
will evolve with public opinion. Thus most energy firms have become greener to anticipate
changing public expectations on pollution and safety.
4. Corporate king are in a luxurious position. They are so successful at creating shareholder value
that they have a licence to ignore it periodically. Thus Jamie Dimon, the boss of JPMorgan Chase,
the world’s most valuable bank, gave its lowest paid staff a pay rise, to enable “more people to
share in the rewards of economic growth.” Paul Polman describes Unilever as a nongovernmental
organization committed to cutting poverty. He can do so only because Unilever makes a return on
equity of 34%.
5. Corporate socialists exist outside Western boardrooms. These firms are controlled by the state,
families or dominant managers. They think that shareholder value is not as important a social
objectives such as employment, high pay or cheap product. But they recognise that institutional
investors have some legal powers. So profits are set according to an informal quota system –
outside shareholders get the minimum required to avoid a revolt, but no more. Chinas state firms
book an ROE of 6-85. Goldman Sachs is a corporate champagne socialist, as it pays it shareholders
the least it can get away with an allocates what is left as bonuses for its staff.
6. Corporate apostates are organised in a corporate form but don’t care about shareholders at al.
Usually this is a result of political dysfunction. PDVSA, Venezuela’s state oil firm, pays for much of
the country’s welfare state and cronyism. Fannie Mae and Freddie Mac, two state-owned
American mortgage firms , are run to make cheap loans, not profits.
Source: Adapted from Schumpeter (2017)
Question: What approach to stakeholder interests does your organization espouse?

3.9.3 Strategic challenges in the financial services
A recent report by Deloitte (Deloitte Centre for Financial Services, 2018) identifies six strategic themes
that will be critical for long-term growth in the financial services industry:
• Focusing on customer: Long-term sustainable growth in the banking industry is only possible
with a radical departure from a sales- and product-obsessed mindset to one of genuine
customer centricity, and rationalisation of strategies to target the right customer segments
and solutions. The core objective for most banks is to achieve organizational agility, and to do
so they should consider embracing innovation, managing talent differently, and pursuing key
partnerships within a broader ecosystem to manufacture and deliver solutions for customers.
• Complying with regulations: Compliance expectations, especially around fair treatment of
customers and executive accountability, are expected to stay elevated. Regulators are also
expected to maintain vigilant enforcement programs and to demand more data from banks
to test the operational integrity of complex institutions. Banks must consider integrating
regulatory compliance goals – from the standpoint of ownership and accountability – with
strategic initiatives such as growth, operational simplification, risk management, and cost
efficiency. In other words, regulatory compliance should be aligned with business strategy.
Not doing so could put banks at risk of unmet regulatory expectations and subpar
performance.
• Managing technology: Technology resources at most banks are becoming difficult to manage,
with a hodgepodge of systems, platforms, software, and tools – much of it legacy
infrastructure that demands significant resources and capital to ensure that operations run
smoothly. As such, modernizing core operating infrastructure is an obvious priority.
• Mitigating cyber risk: The potential for cyber risk has been increasing with greater
interconnectedness in the banking ecosystem, rapid adoption of new technologies, and
continued reliance on legacy infrastructure designed for a different age. Cyber risk is a top
concern for financial services risk managers. Staying ahead of changing business needs and
addressing threats from increasingly more sophisticated actors are top challenges.
• Competing against fintechs: Fintechs continue to lead innovation in the banking industry by
sharpening their focus on customer experience. Banks face a number of choices: replicate
what fintechs are doing, respond with equally innovative solutions, become more symbiotic
and less competitive, or pursue a mix of these strategies that fit their unique capabilities and
market positions.
• Reimagining workforce: Banks should consider rethinking their workforce strategy given how
work is evolving – with increasing automation18 and greater diversity in the labour pool.
All of these challenges, but particularly changes in work and employment, are impacting both the
overall business strategies in financial services and the HRM strategies.
In particular with regard to HRM, automation is rapidly transforming work, and advances in
technologies such as quantum computing will likely only accelerate this change. A seemingly natural

reaction to the inevitability of an increasingly automated world could be to speculate about the impact
on jobs, yet alleviating “automation anxiety” in banking is far from new. For example, ATMs allowed
banks to reorient tellers to sales and advisory roles from purely transactional activities.
Diverse forms of employment potentially widen opportunities: both for employers to structure work
in the way that best meets their operational requirements and for individuals to find a form of work
that best suits their needs. However, they can also increase the complexity of HR management.
While it is tempting to think that technical talent might be all that a bank really needs to succeed in a
technology-driven world, it would be short-sighted to ignore the value of enduring human skills. Banks
should continue to align the organization more deliberately with the values of employees as part of
corporate social responsibility (CSR) and environmental, social, and governance (ESG) efforts.
Bankers need upskilling to work more effectively in a digital environment. One global example is
Singapore’s DBS Bank, investing SG$20 million to train its existing workforce in digital banking and
emerging technologies, via an artificial intelligence (AI)-powered e-learning platform, curated
curriculum, and module delivery.
As part of this transformation, banks will likely need to reorient existing workforces to be collaborative
and inclusive, while providing them with more integrated employee experiences – from recruitment
to retirement – to mirror the richer customer experience that the workforce is enabling. This
workforce experience would have to be designed to accommodate a work-life balance, a purpose-
driven career, and of course it should be digitally enabled.
3.10 HRM and sustainability
Sustainable HRM can be defined as the adoption of HRM strategies and practices that enable the
achievement of financial, social and ecological goals, with an impact inside and outside of the
organization and over a long-term time horizon while controlling for unintended side effects and
negative feedback (Ehnert et al., 2015). Here, we will put HRM into a wider context of sustainability.
We will begin by discussing the Sustainable Development Goals and then zoom on the issue of
business and human rights.
3.10.1 Sustainable Development Goals
In September 2015, all 193 Member States of the United Nations adopted a plan for achieving a better
future for all – laying out a path over the next 15 years to end extreme poverty, fight inequality and
injustice, and protect our planet. At the heart of “Agenda 2030” are the 17 Sustainable Development
Goals (SDGs) which clearly define the world we want – applying to all nations and leaving no one
behind. “On 1 January 2016, the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for

Sustainable Development officially came into force. Over the next fifteen years, with these new Goals
that universally apply to all, countries will mobilize efforts to end all forms of poverty, fight inequalities
and tackle climate change, while ensuring that no one is left behind.
The SDGs build on the success of the Millennium Development Goals (MDGs) and aim to go further to
end all forms of poverty. The new Goals are unique in that they call for action by all countries, poor,
rich and middle-income to promote prosperity while protecting the planet. They recognize that ending
poverty must go hand-inhand with strategies that build economic growth and addresses a range of
social needs including education, health, social protection, and job opportunities, while tackling
climate change and environmental protection.
While the SDGs are not legally binding, governments are expected to take ownership and establish
national frameworks for the achievement of the 17 Goals. Countries have the primary responsibility
for follow-up and review of the progress made in implementing the Goals”
(http://www.un.org/sustainabledevelopment/ development-agenda/).
3.10.2 The UN Global Compact
The UN Global Compact a United Nations initiative launched in 2000 to encourage businesses
worldwide to adopt sustainable and socially responsible policies, and to report on their
implementation. The UN Global Compact is a principle-based framework for businesses, stating ten

principles in the areas of human rights, labour, the environment and anti-corruption. Under the Global
Compact, companies are brought together with UN agencies, labour groups and civil society. As of
2016, the Global Compact participants included 9,000 businesses and 3,000 non-businesses.
The UN Global Compact Vision is to “create a sustainable and inclusive global economy that delivers
lasting benefits to people, communities and markets”.
To make this happen, the UN Global Compact supports companies to:
• Do business responsibly by aligning their strategies and operations with Ten Principles on
human rights, labour, environment and anti-corruption; and
• Take strategic actions to advance broader societal goals, such as the UN Sustainable
Development Goals, with an emphasis on collaboration and innovation”.
The 10 Principles of the UN Global Compact

3.10.3 The role of HRM in achieving the SDGs
Human Resource Management is and should be implicated, to various degrees, in achieving all
Sustainable Development Goals and following the UN Global Compact’s principles. One important
area is human rights. Each of the 17 Sustainable Development Goals has links to the Human Rights.

How do businesses impact on human rights? The United Nations Office of the High Commissioner for
Human Rights (2012) provides some stark examples of negative impact:
Examples of situations where business enterprises may be deemed to have caused adverse human
rights impact:
• Routine racial discrimination by a restaurant in its treatment of customers;

• Exposure of factory workers to hazardous working conditions without adequate safety
equipment;
• Being the sole or main source of pollution in a community’s drinking water supply due to
chemical effluents from production processes.
Examples of enterprises being accused of contributing to adverse human rights impact:
• Providing data about Internet service users to a Government that uses the data to trace and
prosecute political dissidents contrary to human rights;
• Performing construction and maintenance on a detention camp where inmates were allegedly
subject to inhumane treatment;
• Targeting high-sugar foods and drinks at children, with an impact on child obesity;
• Changing product requirements for suppliers at the eleventh hour without adjusting
production deadlines and prices, thus pushing suppliers to breach labour standards in order
to deliver.
Examples of adverse impact that is directly linked to an enterprise’s operations, products or services
by its business relationships, but where the enterprise itself may not to have contributed to it:
• Providing financial loans to an enterprise for business activities that, in breach of agreed
standards, result in the eviction of communities;
• Embroidery on a retail company’s clothing products being subcontracted by the supplier to
child labourers in homes, counter to contractual obligations;
• Use of scans by medical institutions to screen for female foetuses, facilitating their abortion
in favour of boys.
The business responsibilities with regard to human rights have been identified in the United Nations
Guiding Principles on Business and Human Rights, adopted in 2011. The Guiding Principles set out a
three-pronged framework for delineating between the roles of the state and business with respect to
human rights.
The framework is known as “Protect, Respect, Remedy”.
• Protect. States have a duty to protect people from human rights violations by corporations.

• Respect. Corporations have a responsibility to respect, uphold and not interfere with human
rights.
• Remedy. Both states and corporations have a responsibility to ensure that people who are
victims of corporate violations have access to an effective remedy.
This demarcation between a state’s duty and a corporation’s responsibility explicitly acknowledges
the traditional primary role of states in protecting human rights but also recognises the urgent need
for the private sector to take a prominent role in advancing respect for rights (United Nations Office
of the High Commissioner for Human Rights, 2012).
Developing human rights is a new territory for many companies. A survey conducted by Economist
Intelligence Unit in 2013 found that while 83% of business executives recognise the importance of
their company’s impact on human rights, one of the main barriers to achieving progress is a lack of
employee training and understanding around human rights. One way in HRM can play a lead role in
improving the human rights situation in organizations is by developing and delivering human rights
training.
Implementation of the UN Guiding Principles on Business and Human Rights in banking
BankTrack (http://www.banktrack.org/) is the international tracking, campaigning and support

organization focused on banks and the activities they finance. It aims to promote fundamental
changes in the banking sector so that banks adopt just and sustainable business practices.
In June 2016, BankTrack produced the second edition of its report “Banking with Principles?”, assesses
to what extent banks have integrated the Guiding Principles on Business and Human Rights
unanimously endorsed in June 2011 by the UN Human Rights Council. The report identifies some
positive developments, but also finds that the overall level of implementation remains poor.
The report benchmarked 45 of the largest banks globally against a set of 12 criteria, based on the
requirements of the UN Guiding Principles. These criteria are grouped into four categories: policies,
due diligence commitments, reporting and access to remedy. The key report findings are that:
• Most banks are less than half way towards full implementation of the Guiding Principles. 35
of the 45 banks assessed (78%) scored less than 6 points out of a possible 12, indicating that
they are implementing about half of the requirements of the Guiding Principles. Given that
the Guiding Principles represent a baseline of UN-endorsed responsibilities, the authors
regard this as a poor level of implementation after five years.
• Many laggards; no true leaders. The authors categorised banks which scored up to a quarter
of the available points as “laggards”; those which scored more than a quarter and up to a half
as “followers”, and those which scored more than half and up to three quarters of the points
as “front runners”. There were 24 laggards, 13 followers and eight front runners. The “true

leaders” category, for banks scoring more than three quarters of the available points, remains
an empty field.
• There are three alarming gaps in implementation by even the front runners. Several
requirements from the UN Guiding Principles are not being met by even “front runner” banks.
These are: including meaningful consultation with potentially affected people in due diligence;
ensuring reporting on specific human rights impacts is good enough to evaluate the bank’s
response; and establishing grievance mechanisms that meet the effectiveness criteria of the
Guiding Principles (Brightwel, 2016).
3.11 Moving forward
In this section, you have learned the fundamental terms, concepts and perspectives of human
resource management. In the rest of the module you will explore the functions of HRM in greater
depth.
3.12 TAKEAWAYS
1. Human Resource Management (HRM) generally refers to the theory and practices relating to the
way people are managed at work. An organization’s HRM system covers all human resource (HR)
activities in an organization. An HRM system may be control-oriented (i.e. focused on employees’
compliance with regulations and on labour cost minimisation) or high commitment (i.e. focused
on building employee commitment by facilitating a convergence between organizational goals
and employee interests). An HRM system comprises of specific HRM policies (i.e. stated intentions
about how particulate people-related issues should be addressed). In turn, an HRM policy can
contain one or more HRM practices (i.e. ways of implementing a policy).

2. Any HRM system has four general functions: (1) identify what behaviors are needed from
employees; (2) ensure that employees have the competencies (i.e., knowledge, skills, abilities, and
other attributes) needed to perform successfully; (3) motivate employees to engage in the needed
behaviors; and (4) empower employees to act and provide them with opportunities to perform
successfully. Specific HRM functions include: work analysis; recruitment; selection; training and
development; performance management; reward management; word design; employee
participation; employee relations; health and safety; diversity management; and organizational
development.
3. The term “strategic HRM” implies that HRM system, policies and practices should derive from the
overall organizational strategy; that managing human resources is a key strategic issue; and that
HRM significantly affects organizational performance. An organization’s HRM strategy is its
general approach toward long-term employee-related issues.
4. There are two approaches to strategic choice in HRM: (1) the best practice, or universalistic,
approach that suggests that strategic choice in HRM is limited to identifying and implementing
the universally applicable best HRM practices, and (2) the best fit approach that strategic choice
requires an organization to design its HR strategy and practices in a way that would fit some critical
characteristics of the organization and its environment. The best fit approach encompasses four
different perspectives: contingency, configurational, contextual and integrative. Each of these
models highlights a particular set of requirements for HRM system. Thus, contingency perspective
suggests that HRM practices must be aligned with organizational strategy, organizational age, and
characteristics of organizational environment. Configurational perspective emphasises that each
practice HRM practice needs to fit with and supports all others. Contextual perspective suggests
that HRM strategies and practices are affected and in turn affect the organizational environment.
Integrative perspective attempts to capture the entire multitude of elements strategic HRM
scholars recognise as important. It draws attention to the fact that HRM strategies, policies and
practices need to be differentiated between different categories of employees. It also draws
attention to a variety of internal (e.g., different groups of employees, managers) and external
(e.g., customers, suppliers, local communities) stakeholders who are affected and affect an
organization’s HRM system.
5. Sustainable HRM entails the adoption of HRM strategies and practices that enable an organization
to attain its financial, social and ecological goals, while controlling for potential negative effects of
its operation. HRM can and should be a significant contributor to the achievement of the
Sustainable Development Goals. It should follow the UN Global Compact principles, focusing, in
particular, on the issues of human rights.

3.13 Answers to the cases
Case: HRM fit –a Dutch dilemma
We will now offer a solution to the problem, which is based on research evidence. A group of
researchers from Radboud University (Nijmegen, the Netherlands) (Pas et al., 2011) investigated
which family-friendly arrangements serve health-care institutions’ HR strategies best in terms of
retaining female doctors’ working hours. To identify the arrangements that would suit both the
hospitals and the female doctors, they conducted a survey 1,070 Dutch female doctors.
Their analysis led them to divide the relevant family-friendly HR practices into two types: (1) ‘reduced
participation’ arrangements and (2) ‘full participation’ arrangements.
Reduced participation arrangements include:
• part-time work;
• reduced hours;
• part-time training programs;
• additional leave (e.g., extra maternity, care, and adoption leave on top of the statutory
minimum);
• saving up holidays;
• sabbatical(s);
• part-time management positions (job sharing).
These result in a reduction of employees’ contracted working hours.
Full participation arrangements include:
• flexible start and end of working day / ‘mother contracts’ (working during school hours);
• teleworking;
• onsite child care facilities / financial support for child care;
• leave of absence;
• having a mentor / coach;
• work–life balance courses;
• support programs for women (getting) in top positions.
These do not result in a reduction of employees’ contracted working hours.
The researchers found that offering full participation arrangements (in contrast to reduced
participation arrangements) minimises the strategic HR dilemma: It allows scope for improving the
work–life balance without encouraging female doctors to work less hours. It also better suits the

interests of female doctors because ‘full participation’ arrangements do not hinder their career (while
part-time work does).
Follow-up questions: Does your organization face a similar challenge? Would the solution identified
by the Dutch researchers work in your case? Does your organization have family-friendly HRM
practices? Do these tend to lead to reduced participation or full participation of female employees?
Source: Adapted from Pas et al. (2011)
Case: ABC Company
Recruitment and selection and
• business goals: Yes/Fit. There is a good fit between recruitment and selection policy and
practices and the business goals. Rigorous recruitment and selection practices enable ABC to
select applicants who have relevant knowledge, skills and abilities and are motivated and
committed.
• training and development: No/Misfit. With its rigorous and extensive recruitment and
selection practices, it sends a signal that it cares about the quality of its human capital. This
signal is contradicted by poor training and development. The inconsistency in the signals
undermines employees’ trust in the company. Insufficient training and lack of developmental
opportunities also do not match the expectations of employees who have been recruited and
selected based on their knowledge, skills, motivation and commitment.
• performance management: Yes/Fit: Rigorous recruitment practices fit extensive performance
appraisals. Both signal a commitment to invest in human resources.
• reward management: No/Misfit: The company’s recruitment and selection practices are
geared towards creating a motivated and committed workforce. However, reward
management practices – pay levels linked only to prior salary and no rewards for superior
performance – undermine motivation and may force employees to leave.
Training and development and:
• business goals No/Misfit: Minimal training and lack of developmental opportunities do not
support the company’s goals of achieving high certification and employment rates for the
students/clients.
• performance management: No/Misfit: A lack of developmental opportunities meant that
employees had to improve the skills identified in their appraisal on their own.
• reward management: Yes/Fit: Odd as it might sound, a lack of developmental opportunities
does fit with static pay since limited development aligns with limited pay increases.
• Performance management and
• Business goals: Yes/Fit: The practice of extensive performance appraisals is aligned with
eliciting motivation and commitment”.

• Reward management: No/Misfit: Extensive performance appraisals signal HR investment.
However, Static pay signals that performance is not rewarded.
Reward management and
• Business goals: No/Misfit: Static compensation and a lack of rewards for high performance led
to low motivation and commitment”.
Case: Should line managers do HRM? A universal question with a contextual answer
Which organizations are more likely to delegate HRM functions to lines managers?
• Smaller organizations. Why? Because smaller organizations tend to be dominated by line

managers, often the founders or their offspring, and even where the HRM job is seen as a full-
time one, there tends to be an absence of sophisticated HRM specialists. In the largest
organizations the complexity of human resource management and the cost of getting human
resource management matters wrong may be very high, creating significant reputational
concerns.
• Less unionized organizations. Why? Because unionization increases the requirement for
consistency, since unions will use differences in treatment to claim unfairness, which will lead
to disputes. Consistency is best achieved with centralised HRM, rather than delegating HRM
functions to line management.
• Organizations in which the HRM function is considered strategic. Why? Because in
organizations where the role of the HRM function is more strategic, HRM specialists are more
likely to adopt the role of business partner. Fundamental to the business partnering role is the
involvement of line managers in HRM, with the HRM specialists acting as mentor/advisor to
line managers.
Section 4: Workforce planning and work analysis
• explain the importance of workforce planning

• identify the stages of workforce planning
• examine the factors affecting workforce planning
• justify the importance of work analysis to all HRM areas

• identify the data and evaluate the data sources and data collection methods for work analysis,
depending on the purpose of analysis
• plan a work analysis project.
4.2 Linked readings
There are no linked readings for this section.
4.3 Introduction
As people are an organization’s best asset and also likely to be the most expensive resource within an
organization, ensuring the right number of suitable staff is a key priority for business success. In
attracting and selecting the broadest pool of talent, resourcing and selection are therefore key HRM
processes within any organization with particular challenges emerging for those organizations who
operate internationally.
Resourcing is concerned with HR planning and the mechanisms around recruitment and selection. In
this section we discuss workforce planning. In next section we deal with the issues of recruitment and
selection.
We also discuss here work analysis – an essential HRM practice that needs to underpin the process of
workforce planning and most of other HRM functions.
4.4 Workforce planning
Workforce planning is a core business process to align changing organization needs with people
strategy. It can be the most effective activity an organization can engage in. It can provide market and
industry intelligence to help organizations focus on a range of challenges and issues and pave the way
for operational initiatives to directly support longer term business goals.
Workforce planning is a process of analysing the current workforce, determining future workforce
needs, identifying the gap between the present and the future, and implementing solutions so that
an organization can accomplish its mission, goals, and strategic plan. It’s about getting the right
number of people with the right skills employed in the right place at the right time, at the right cost
and on the right contract to deliver an organization’s short and long-term objectives (Chartered
Institute of Personnel and Development, 2018h).
Larger organizations may have dedicated workforce planning teams. Others may start the process as
a result of a specific event such as a merger, acquisition or a transformational change project. But a

focus on broader workforce planning can be important to an organization at any time. It can uncover
obstacles or unrealistic targets that could hinder strategic change and provide solutions to mitigate
risks to support future strategic objectives.
Workforce planning processes can:
• reduce labour costs in favour of workforce deployment and flexibility

• identify and respond to changing customer needs
• identify relevant strategies for focussed people development
• target inefficiencies
• improve employee retention
• improve productivity and quality outputs
• improve employees’ work-life balance
• make recommendations to deliver strategic value through talent.
In turn, this will inform HR practices such as:
• organizational design and development

• succession planning
• work-life balance initiatives such as flexible working and well-being
• recruitment and selection
• retention planning
• talent management
• job design
• career planning
• learning and development focus
• reward and recognition.
Workforce planning can vary in timeframe, scale and the types of roles it considers. It may be viewed
in fairly basic operational terms, ensuring the right number of people with the right skills are allocated
to projects or work areas to fulfil dayto-day customer needs or demand for products and services.
Examples might include the need to ensure call centres are appropriately staffed or that sufficient
people are recruited to fulfil a predicted demand for certain products or services. An alternative
approach is to create a longer-term plan that ensures that the best talent is in the right roles and
develop a better understanding of what sort of future workforce is likely to be needed. Many HR
practitioners link workforce planning to talent planning or succession planning and feed the results
into resourcing plans implemented locally by line managers.
Whatever its precise form, workforce planning should be linked to the organization’s goals and viewed
as an important part of the strategic business planning process.

4.4.1 Workforce planning practice
Workforce planning is about generating information, analysing it to inform future demand for people
and skills, and translating that into a set of actions that will develop and build on the existing workforce
to meet that demand.
Commonly, a distinction is made between ‘soft’ and ‘hard’ workforce planning:
• ‘Hard’ workforce planning is about numbers: predicting how many people with what skills are
likely to be needed. In recent years, the use of basic numerical or statistical data forms has
become embedded in management information systems that can help understand cause and
effect of certain phenomena, together with an understanding that metrics alone are not
enough, but rather they need to be analysed and understood in context.
• ‘Soft’ (or strategic) workforce planning is about defining a strategy or developing a strategic
framework within which information can be considered. With an increased emphasis on agility
and responsiveness, there is a growing realisation that good-quality management information
set within such a framework is the key to identifying and maximising the drivers of
performance. This approach to planning gives managers the opportunity to consider a range
of possibilities before reaching a stage where they are forced into action by circumstance.
A number of key issues are associated with the start of the process:
• Workforce planning flows from organizational strategy and links people management into the
operational business process.
• Workforce planning is an integral part of people management and provides the context for
most other activities concerned with acquiring, developing and deploying people.
• The planning process must be organization-wide and requires effective communication
between HR and the rest of the business as well as input from a variety of stakeholders.
• Good-quality information is vital for good planning and this information must flow both from
within the organization and from external sources.
4.4.2 Stages of workforce planning
The workforce planning process can take many forms but is essentially about operationalising the
business strategy into a set of actions to ensure a workforce capable of delivering the organization’s
strategic goals and objectives.
The process should not be overly complicated. It’s important to involve stakeholders from all parts of
the organization and ensure that they can understand the data and what it means for both short- and

long-term resourcing needs. It is customary to describe workforce planning as a series of steps.
However, it is equally important to realise that it’s an iterative process, not a rigidly linear one.
The main stages are:
• Understand the organization and the operating environment: What does the organizational
structure look like now and what’s likely in future? What are the plans to increase
productivity, including changes to organization structure and processes? Are there intentions
to introduce or update technology, remembering that people remain at the heart of the
process?
• Analyse the workforce. Identify the knowledge, skills, abilities, demographics, talent profiles,
attrition rates and other factors, such as employees’ views on job security, satisfaction and
intention to leave. Include other parameters, such as people by geographical location or
business division, demographic differences within the workforce or contractual differences in
how work is resourced. Collecting and analysing workforce data can provide organizations
with the information they need to develop capability in the areas where organization needs
to retain or gain a competitive advantage.
• Determine future workforce needs. Identify future skills and capabilities and predict the
timeframes involved. Scenario planning can be used to show different futures affecting people
requirements. Such an exercise can help to formulate contingency and adaptive plans to
mitigate potential risks.
• Identify gaps in the workforce. Identify current and potential shortages in skills and knowledge
to deliver future business plans. Bear in mind that future roles will often involve a greater use
of technology and require a greater digital awareness. When recruitment, retention or both
present a resourcing challenge, greater focus will be needed to build required skills via staff
development or by borrowing the staff via outsourcing or the ‘gig economy’.
• Develop an action plan that allows for functional, numerical and adaptational flexibility. An
agile workforce who can adapt to change will contribute greatly to a change-ready
organization, which can proactively restructure.
• Monitor and evaluate action plans and solutions: A set of actions should be developed and
agreed with appropriate support and information for managers and regular reviews of the
outcomes. It’s important that clear evaluation processes should be designed and embedded
into all stages of the process.
Case: Challenges of modern workforce planning
To say budget airline Ryanair hit some turbulence lately would be an understatement. In mid-
September 2017, the company cancelled up to 50 flights per day, and then dropped a further 18,000
at the end of the month. The reason was surprisingly rudimentary. Ryanair had failed to plan for its
pilots’ holidays, meaning there simply weren’t enough to fly the planes. It offered a bonus payment
to entice pilots to change their leave, and outspoken boss Michael O’Leary even penned a letter of
apology to employees promising better terms and conditions and “improved rostering” – but

thousands of passengers were forced to change their plans and many pilots jumped ship to other
airlines. And it wasn’t just a PR disaster: £320m was wiped off Ryanair’s stock market value after it
emerged the company had known about its staffing issues months before it cancelled the flights.
Workforce planning is becoming more challenging, not just for Ryanair or other airlines, but for many
employers that have moved away from operating a few standard shift patterns to a more complex
patterns, reflecting continuous but fluctuating customer demands.
In retail, for example, shops that used to close on a Sunday now operate a 24/7 online empire or open
late into the evening, while other businesses work across borders and time zones, with a tapestry of
zero-hours contractors, homeworkers and contingent staff on top of their permanent workforce.
Angel Hoover, practice leader in talent management at Willis Towers Watson, argues that it’s only
really businesses that are used to swings in workforce demand that have truly got to grips with it. “The
concept of workforce planning has been around a long time. Energy and utility companies have always
had to plan for demand, as have organizations with a seasonal workforce,” she says. “Now the world
of work has changed – there are lots of forms of alternative employment – so that dynamic is no
longer just seasonal, it’s constant. You need to analyse data to ensure you have the right talent
through the door at the time you need it.”
The challenge of getting workforce planning right is two-pronged: on the one hand, line managers and
HR have to meet immediate need or react to unexpected busy periods; on the other, they have to
keep an eye on recruiting and retaining enough people with the right skills to ensure that needs are
met months and years down the line.
Source: Adapted from Faragher (2017)
4.5 Factors affecting workforce planning
To understand the context of workforce planning you need to understand the two key sets of factors
that affect workforce dynamics: the labour market and the employee retention and turnover.
4.5.1 Human resources in the labour market
The macro-economic context provides a useful indicator of labour market activity, which in turns
shapes the scope of how organizations recruit, retain and develop their people in line with the wider
organizational strategy. (The following presentation is based on the latest CIPD factsheet on the labour
market (Chartered Institute of Personnel and Development, 2018g).)

Economic conditions provide the background to the everyday business of HR. What happens in the
macro economy, or in individual product and labour markets, ultimately determines how many staff
organizations need to recruit, retain and develop in order to meet customer demand.
That’s why it’s important for organizations and HR practitioners to monitor the state of the labour
market and keep an eye on likely developments in the economy. In the UK, official statistics, mostly
published by the Office for National Statistics (ONS), or evidence drawn from independent surveys can
help with this. Most official statistics are backwards-looking and indicate how the economy has been
doing. Independent surveys, such as those by the Confederation of British Industry, the British
Chambers of Commerce and the CIPD can provide intelligence on future market conditions. Our
quarterly Labour Market Outlook survey collects data on pay and employment expectations from
around 1,000 organizations in the private, public and voluntary sectors. However, the most influential
forecasts are contained within the Bank of England’s quarterly inflation report, and the Office for
Budget Responsibility‘s Economic and Fiscal Outlook that accompanies the government’s annual
Budget.
The human resources that contribute to GDP are bought and sold in the labour market. The greater
the amount or quality of human resources supplied to the market the higher the potential level of
GDP. But this potential will only be realised if there is sufficient demand for these resources, which is
itself derived from the demand for goods and services.
The market demand for labour is measured by the number of people in work (employment), how
much they work (hours) plus the number of unfilled job vacancies. Supply is measured by employment
plus the number of people who are looking for work (unemployment).
The balance of demand and supply in the labour market is reflected in the level (or rate of change) of
wages and salaries (earnings). If demand is high relative to supply, earnings will rise. This will increase
the cost of employing people (assuming no change in their productivity) which in turn will cause
demand for human resources to drop, easing the upward pressure on wages. If, by contrast, supply is
high relative to demand, we would expect employment costs to fall and hence increase the demand
for labour.
In periods of relatively high demand, the labour market is ‘tight’. Unemployment will be low and there
will be many unfilled job vacancies. When the supply of labour is relatively high, the market is ‘slack’
with few vacancies and lots of jobseekers.
Frictional and cyclical unemployment
There will always be some unemployment because jobs cannot be advertised and filled
instantaneously and it takes time for people to move from one job to another. This minimum level of
unemployment is called frictional unemployment (commonly estimated at around 3-4% of the

workforce). A higher rate of unemployment than this suggests that some human resources are going
unused.
Unemployment tends to rise and fall over the course of the economic cycle and is referred to as a
lagging indicator of the economy because it takes a while (normally about six to nine months) for a
slowdown in demand for goods and services to translate into a fall in demand for labour. The
unemployment that emerges in this way is called cyclical unemployment.
Structural unemployment and labour market flexibility
In principle the existence of cyclical unemployment should cause the rate of growth of earnings to
moderate and thereby create renewed demand for any unused human resources. Because of this the
Monetary Policy Committee (MPC) of the Bank of England closely monitors labour market indicators
such as unemployment, vacancies and the rate of pay increases when making decisions on interest
rates.
However, even when unemployment is high, the necessary adjustment of earnings may not always
occur and unemployment may persist. This structural unemployment is more problematic than
cyclical unemployment because it cannot be corrected simply by a cut in interest rates or extra
government expenditure. The remedy is to improve the employability of job seekers, match them
effectively to the vacancies available and minimise any barriers that stop this process from happening
– often called improving labour market flexibility.
Full employment
An economy operating at full capacity with no cyclical or structural unemployment is said to be at full
employment. This situation was close to the norm in the UK and most other developed countries in
the 1950s and 1960s and some of the 1970s.
Full employment defined in this way implicitly assumes that everybody who can work or wants to
work is participating in the labour market. However, while this might have been a reasonable
assumption a generation ago, today there is a much higher number (7.9 million) and greater
proportion (more than 1 in 5) of people of working age who don’t participate in the market, a group
classified in official statistics as the ‘economically inactive’. In addition, the UK labour market has a
large number of people who are underemployed, meaning they would prefer to work more hours
than they do at present – including more than a million part-time workers who say they would like
more hours.
Currently, the UK’s unemployment rate has fallen to a record low. (As of November 2018, the
unemployment rate, i.e. the number of unemployed people as a proportion of all employed and
unemployed people, was 4.1%.) However, despite the gradual tightening of the labour market, this
has not led to wage growth during the same period, due in large part to the UK’s lacklustre

productivity. It also seems that employers are still not under a great deal of pressure from workers to
raise wages, which may be partly explained by a relatively strong labour supply which has been driven
by welfare claimants, older workers and EU nationals.
4.5.2 Labour market trends
More generally, the labour markets are shaped by various long-term trends. The discussion below is
based on the UK data. The trends presented below have been present in most advanced industrialised
economies, although the timing and extent of these changes differ. (The presentation below is based
on a recent CIPD analysis (Chartered Institute of Personnel and Development, 2014).)
De-industrialisation and the rise of knowledge-based services
The UK was the first nation to industrialise and was also the first nation to undergo a process of
deindustrialisation, whereby output and employment is increasingly concentrated in services rather
than manufacturing. Since the mid-twentieth century, there has been a decline in manufacturing
employment, so that by 2011 less than a tenth of people in employment in England and Wales were
employed in this sector, compared with over four fifths in services.
Change in the jobs by industry, 1978–2013
This trend is common across all advanced economies. Historically, it has been driven by rising incomes
creating greater relative demand for services, combined with low productivity growth in labour-

intensive service industries (compared with manufacturing), which tends to shift employment into
services. More recently, technological change and removal of trade barriers have led to most labour-
intensive manufacturing being located in emerging markets. The manufacturing activity that remains
in the UK is increasingly highly skilled and knowledge-intensive.
The general trend in the service sector has been for the fastest jobs growth to be in relatively highly
skilled knowledge-intensive areas. This has, however, been accompanied by growth in some less
skilled areas such as recruitment agencies, personal services and the care sector, which reflect
increases in demand for these services – driven by changes in the organization of markets (such as
outsourcing), higher incomes and an ageing population.
Technological change and globalisation
Technological change reduces the costs of transport, communication and exchange and is hence one
of the factors behind increased globalisation – greater movement of goods, services, people and
money across frontiers. It has also been accompanied by changes in government policies in many parts
of the world that have liberalised economies and opened them up to international trade and
investment.
Technology and globalisation have direct effects on the nature of work. ICT has opened up new
channels of communications and transformed business models in some industries, creating new
services and new jobs (such as social media consultants). ICT has also facilitated the outsourcing of
work overseas as well as enabling more employees in the UK to work remotely.
Globalisation means that supply chains can be located across the globe. Labour markets are becoming
increasingly international. More people are migrating for work as well as non-work-related reasons.
The pool of skilled labour that employers potentially can draw from has expanded greatly. For
example, Asia now produces a greater number of science and engineering graduates than the US and
Europe combined.
Demographic change: an ageing population and migration
As people live longer, the UK – along with many other countries – has seen a process of population
ageing. The mean age of the population has risen and the proportion of the population in older age
groups has increased. This has led to an ageing of the workforce.
Employers face a labour market with fewer young people and more older employees. The flow of
young people joining the labour market may not be sufficient any longer to be the principal means of
meeting demand for higher skills levels among the workforce. This implies a greater focus will be
needed on retaining skilled workers and re-training the existing workforce. In addition, the societal
need to provide continued welfare support for an ageing population will depend in part on how well
employers provide employment opportunities for older workers and those caring for the elderly.

The impact of population ageing has been mitigated by net in-migration, as immigrants are typically
younger – and have larger families – than the resident UK population.
Increased female labour market participation
A hundred years ago it was common for women to be required to resign from paid employment when
they married. The two world wars, when women were employed in increasing numbers while male
workers were in the armed forces, saw more women participating – if not entirely accepted – in a
wider range of industries and jobs. Since the 1970s there have been legal moves to support the
position of women in the workplace, such as the Sex Discrimination and Equal Pay Acts and a series
of legislative steps to ensure and enhance maternity rights and parental leave. Together, these have
transformed the employment prospects of women. The labour market participation rates of men and
women have narrowed since 1971 – from a difference of almost 40 percentage points in 1971 to just
over 10 percentage points by early 2013. As a result, the workforce is now split almost evenly by
gender, with women making up nearly 47% of all in employment.
Employers have a much wider talent pool available to them, with more women joining and staying in
the labour force. Nevertheless, declining – but still significant – differences remain between men and
women in terms of pay and access to senior positions in both the public and the private sector.
Increased educational participation
Successive generations of UK workers have, on average, spent more time in full-time education. The
proportion of young people in full-time education has doubled in the last 20 years. In 2010, the adult
population of the UK had, on average, received 13.5 years of schooling – the highest figure for the
entire OECD alongside Canada, Switzerland, Australia and German.
Rising educational achievement has facilitated the shift in demand towards more highly skilled,
knowledge-intensive occupations arising from de-industrialisation, technological change and
globalisation. In 2012 26% of jobs required a degree, compared with just 10% in 1986. However, rising
educational attainment is also likely to have been a cause of this shift in the composition of
employment – as more highly educated people have sought work that fits their abilities and
aspirations. A better educated population is potentially a benefit to UK employers in terms of quality
of workforce, but management challenges can arise if employees do not think their work is making
sufficient use of their skills.
The decline of collective workplace institutions
Within the UK, the last 30 years or so have seen a transformation in the conduct of employment
relations. In many industries, collective forms of employment relations – involving negotiations and
bargaining between employers and trade unions – have been replaced by individualised employment

relations. Trade union membership reached a peak of 13 million at the end of the 1970s; but has
halved since then. Falling individual union membership has been accompanied by declining union
presence and collective bargaining between employers and employee representatives over pay and
other working conditions.
These changes will in part have been facilitated – if not encouraged – by changes in legislation
introduced during the 1980s and 1990s that discouraged union membership – such as abolishing the
closed shop arrangements that forced employees to join trade unions – and by a series of measures
that reduced the ability of unions to take and sustain industrial action. Nevertheless, other broader
economic and social factors have also played a part, including de-industrialisation, a shift in the
composition of employment towards small and medium-sized enterprises (SMEs) and a decline in the
relative size of the public sector.
Greater diversity in employment relationships
The employment relationship has become less homogeneous. The full-time, 9-to-5 job with open-
ended employee status is less common than it was in the past. This is not to say that such permanent
and stable forms of employment have died away, but they are part of a richer and more variegated
pattern of employment relationships.
The proportion of the workforce that has full-time, permanent employee status – which might be
taken as a proxy for the ‘standard’ employment relationship - has remained around 60% since 1997.
The two-fifths of the workforce not in this category are mainly part-time or temporary employees or
the self-employed. Part-time employment has increased in relative significance over the last 30 years.
Although it is more common for women – around two-fifths of women work part-time – it is the
increasing share of part-time work among men that has been responsible for the growth in the overall
share of part-time work. The past decade has seen a substantial growth in the use of zero-hours
contracts and an increase in the number of homeworkers – those working mainly in their own home
or using home as a base. In addition, more people now work in small firms than in the past. Between
1998 and 2010, the proportion of private sector employees working in firms with one to four
employees increased from 11% to 22%.
Diverse forms of employment potentially widen opportunities: both for employers to structure work
in the way that best meets their operational requirements and for individuals to find a form of work
that best suits their needs. However, they can also increase the complexity of HR management.
4.5.3 Employee turnover and retention
Employee turnover refers to the proportion of employees who leave an organization over a set period
(often on a year-on-year basis), expressed as a percentage of total workforce numbers. At its broadest,
the term is used to encompass all leavers, both voluntary and involuntary, including those who resign,

retire or are made redundant, in which case it may be described as ‘overall’ or ‘crude’ employee
turnover. It’s also possible to calculate more specific breakdowns of turnover data, such as
redundancy-related turnover or resignation levels, with the latter particularly useful for employers in
assessing the effectiveness of people management in their organizations.
Employee retention relates to the extent to which an employer retains its employees and may be
measured as the proportion of employees with a specified length of service (typically one year or
more) expressed as a percentage of overall workforce numbers.
Turnover levels can vary widely between occupations and industries. The highest levels are typically
found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector
services groups. Levels also vary from region to region. The highest turnover rates tend to be found
where unemployment is lowest and where it is relatively easy for people to secure desirable
alternative employment.
According to the CIPD, currently in the UK (as of 2018) the median rate of labour turnover is on the
increase, following a steady decline since 2005.
The following discussion has been adapted from the latest CIPD guide on employee turnover and
retention (Chartered Institute of Personnel and Development, 2018a).
Measuring employee turnover
Organizations may track their ‘crude’ or ‘overall’ turnover rates on a month by month or year by year
basis, expressed as a percentage of employees overall. The formula is simply:
The total figure is for all leavers, including those who retire, or leave involuntarily due to dismissal or
redundancy. It also makes no distinction between functional (that is, beneficial) turnover and that
which is dysfunctional.
However, it’s also useful to calculate a separate figure for voluntary turnover (resignations), as such
departures are unplanned and often unpredictable (unlike planned retirements or redundancies for
instance) and can have a particularly adverse impact on the business. It may also be helpful to consider
some of the more complex employee turnover indices, which take account of characteristics such as
seniority and experience, or calculate figures for different functions and locations of the business to
highlight areas where turnover is higher than others.
When does turnover become a problem?

There is no set level at which point employee turnover starts to have a negative impact on an
organization’s performance. Much depends on the type of labour markets in which the organization
competes. In some cases, employee turnover can have positive benefits organizations – for example
when a poor performer is replaced by a more productive employee.
Where it is relatively easy to find and train new employees quickly and at reasonably low cost (that is
where the labour market is ‘loose’), it’s possible to sustain high quality levels of service provision
despite having a high turnover rate.
Especially where skills are relatively scarce, where recruitment is costly or where it takes several weeks
to fill a vacancy, turnover is likely to be problematic for the organization. The more valuable the
employees in question are – for instance where individuals have specialist skills or where they have
developed strong relationships with customers – the more damaging the resignation, particularly
when they move on to work for competitors.
Employers should pay attention to the turnover of staff regardless of industry. The reasons behind
turnover may highlight issues within the workforce such as dissatisfaction with career progression
opportunities. Employers should still strive to address any issues and create a positive working
environment for their employees.
Costing employee turnover
The costs associated with employee turnover related to resignations rather than redundancies may
be estimated by calculating the average cost of replacing each leaver with a new starter in each major
employment category. This figure can then be multiplied by the relevant turnover rate for that staff
group to calculate the total annual cost of turnover.
The major categories of costs are:
• administration of the resignation

• recruitment and selection costs, including administration
• covering the post during the period in which there is a vacancy
• induction training for the new employee.
Many of these costs consist of indirect management or administrative staff time (opportunity costs),
but direct costs can also be substantial where advertisements, agencies or assessment centres are
used in the recruitment process.
More complex approaches to turnover costing give a more accurate and invariably higher estimate of
total costs. These could include measures estimating, for example, the relative productivity of new
employees during their first weeks or months in a role and that of resignees during the period of their
notice (both likely to be lower than the productivity levels of established employees). In practice,

however, the vast majority of employers do not calculate the specific costs of employee turnover; this
is a problem.
Causes of employee turnover
Employees resign for many different reasons. Sometimes it is the attraction of a new job or the
prospect of a period outside the workforce that ‘pulls’ them. On other occasions they are ‘pushed’ as
a result of dissatisfaction in their present jobs to seek alternative employment. These ‘push factors;
range from a lack career opportunities to organizational changes. The move might also be prompted
by a combination of both ‘pull’ and ‘push’ factors. One key factor behind an individual’s decision to
leave the organization may be a poor relationship with a line manager, leading to disengagement.
Find out more on in our factsheet on employee engagement and motivation.
Turnover in the first year of employment
In high-turnover industries in particular, a great deal of employee turnover consists of people resigning
or being dismissed in the first few months of employment.
Poor recruitment and selection decisions, both on the part of the employee and employer, are usually
to blame, along with poorly designed or non-existent induction programmes. Even when people stay
past the first few months, the first impressions of a business can influence an employee’s decision to
leave a business sooner rather than later.
Expectations are also often raised too high during the recruitment process, leading people to compete
for and subsequently to accept jobs for which they are in reality unsuited.
Investigating why people leave
It’s important to understand why people leave the business. However, obtaining accurate information
on reasons for leaving can be difficult. It’s important to appreciate that the reasons people give for
their resignations can be untrue or only partially true. Individuals may be reluctant to voice criticism
of their managers, colleagues or the organization generally, preferring to give some less contentious
reason for their departure.
Where exit interviews are used to ask about the reasons for leaving, the interviewer should not be a
manager who has responsibility for the individual or who will be involved in future reference writing.
Confidentiality should be assured and the purpose of the interview explained. Using an external
provider to conduct exit interviews will help employers capture more accurate data about why people
are leaving, as individuals are more willing to be truthful when there is reassurance of anonymity.

Alternative approaches to collecting exit data involve the use of confidential attitude surveys for
current employees including questions on intentions to leave, or confidential questionnaires sent to
former employees on exit or a period of time after their departure.
It’s also important to consider the experiences of those still employed at the business; conducting an
exit interview will gather useful data, but using information from current employees (such as
employee surveys) will help pinpoint retention issues before they lead to people leaving.
Improving employee retention
The first steps when developing an employee retention strategy are to establish:
• why employees are leaving

• the impact that employee turnover has on the organization, including the associated costs.
This data can be used to develop a costed retention strategy that focuses on the particular issues and
causes of turnover specific to the organization.
Examples of retention activities are offering more appealing pay and benefits and improving induction
processes. However, many organizations do not have specific retention strategies.
As well as basic pay and benefits, organizations should consider the following elements, all of which
have been shown to play a positive role in improving retention and are likely to impact the working
environment:
• Job previews – Give prospective employees a realistic job preview at the recruitment stage –
don’t oversell the job or minimise aspects of the role.
• Career development and progression – Maximise opportunities for employees to develop
skills and careers. It’s also important to understand and manage people’s career expectations.
Where promotions are not feasible, look for sideways moves that vary experience and make
the work more interesting.
• Employee consultations –- Ensure that employees have a ‘voice’ through consultative bodies,
regular appraisals, attitude surveys and grievance systems. Where there is no opportunity to
voice dissatisfaction and influence outcomes, resigning may be the only option. See more in
our employee voice factsheet.
• Flexibility – Wherever possible, accommodate individual preferences on working hours and
times. As part of this, it’s also important to monitor workload and ensure it is manageable
within working hours.
• Employee well-being – Avoid a culture of ‘presenteeism’ where people feel obliged to work
longer hours than are necessary to impress management.

• Fairness – A perception of unfairness, whatever the management view of the issue, is a major
cause of voluntary resignations. For example, perceived unfairness in the distribution of
rewards is very likely to lead to resignations.
4.6 Work analysis
Work analysis is “the systematic investigation of work activities, worker attributes, and the context in
which work roles are enacted” (DuVernet et al., 2015: 1603).
Organizations conduct work analyses to describe the nature of work to be performed and to identify
worker requirements for accomplishing that work.
As a manager, you may be asked to lead a work analysis – on your own or with the support of an
expert work analyst. You may also be requested to provide data for such analysis, either for your own
work role (as a role incumbent) or for the jobs of your subordinates (as their supervisor).
Work analysis forms the foundation on which all human resource systems are built because the data
produced through work analysis are the fundamental input needed to design these systems. Work
analysis focuses on answers to questions such as: Selection for what? Compensation for what?
Appraisal of what? Research demonstrates that the HR systems built on work analysis data are
associated with more effective organizational performance.
Work analysis should be the preceding step in every HRM process. Work analysis also provides a
foundation and starting point for understanding organizational behavior. By examining worker
attributes, you gain an understanding of the individual characteristics that affect behavior in
organizations. By exploring work activities and context, you gain an insight into the situational aspects
that impact behavior.
You may have heard of “job analysis”. Job analysis is the traditional term and is narrower than work
analysis. Work analysis is the new term, popularised in the 21st century. It has been proposed as a
replacement for the term “job analysis” to indicate that “the analysis is not limited to a fixed set of
tasks that defines one job within clear boundaries”. Work analysis reflects the realities of the modern
world of work, where the boundaries of jobs are becoming more blurred and changeable (DuVernet
et al., 2015).
In the context of work analysis, we talk of “work roles” rather than “jobs”.
In many work settings, job boundaries have become blurry, Employees take on broader
responsibilities, new jobs emerge frequently, and work is described in flexible and changeable work
roles. However, in some work settings a tight and detailed description of tasks and responsibilities
within jobs may be inevitable. Take, for example, areas with high safety risks, such as an oil refinery

or in medical world (e.g., surgical setting), where safety rules prescribe in detail the actions of the
workers – and where creativity and flexibility might result in disasters. Alternatively, take areas where
people work under time pressure (e.g., the chef‐cook and the apprentice in the kitchen of a
restaurant) (Voskuijl and Evers, 2009: 157-158).
4.6.1 Describing jobs and work roles
Jobs and work roles are the unit of analysis for most human resource decisions (Fay, 2016):
• staffing is based on the knowledge, skills, abilities and other attributes required to perform
the job or role,
• performance management focuses on how well the job/role has been performed,
• training is based on improving skills impacting performance of current or future jobs/roles,
and
• base pay is built around the value of jobs in the marketplace and to the organization.
But how would you describe a job or work role – yours or any other? You might describe it in terms of
the abilities necessary to do the work (e.g., “physically demanding job”) or in terms of the context in
which it occurs (e.g., “office job”) or in terms of activities (e.g., “teaching role”) or in a variety of other
ways.
Work analysis acts as “multiple windows” into jobs/work and describes jobs from a variety of different
viewpoints to derive a comprehensive picture.
Work analysis entails gathering, analysing, synthesising and reporting information on:
• work activities – tasks and responsibilities that make up a job or a work role
• worker attributes – individual attributes required to successfully perform work activities
• work context – conditions under which work is performed.
The aim of work analysis is to provide information input for various HRM processes, including (but not
limited to) the development of selection, training, performance evaluation, job design, and
compensation systems (Sanchez and Levine, 2012).
The two best known “outputs” that are based on work analysis are:
1. Job or role description that defines the job/role in terms of its task requirements, such as the
procedures, methods, and standards of performance.

2. Job, or role, or person specification that defines the job/role in terms of behaviors, knowledge,
abilities, skills and other personal characteristics that are required for a person to be able to do
the job.
4.6.2 Applications of work analysis
The results of work analysis can – and should be – used in every HR area:
• Workforce planning: to identify the human resources needed to accomplish organizational

goals
• Job/work design: to design and redesign jobs. For example, work analysis may support
splitting a job into two jobs with different worker requirements in order to better utilize
worker skill sets. It may also identify jobs that are candidates for increased flexibility (in time
or place of work), nonstandard work arrangements (e.g., job sharing), and greater self-
management
• Recruitment: to design job descriptions that properly reflect what people are being hired to
do and what KSAOs they must have to effectively fulfil their roles
• Selection: to help identify relevant selection methods and develop relevant tests.
Compensation: to evaluate a job’s worth based on tasks, duties and qualifications for
successful job performance
• Training and development: to pinpoint KSAOs required to perform the work duties and design
the training accordingly
• Employee relations: to identify authority and responsibility for task accomplishment, specify
what jobs are to be performed by whom and design work rules and policies accordingly (this
is particularly important in unionised settings)
• Health and safety: to identify work hazards inherent in the job and any required personal
protective equipment and thereby inform worker selection and training for those jobs; to
identify essential and non-essential job functions so that reasonable accommodations can be
made when needed (e.g., for persons with disabilities)
• Regulatory compliance: to evaluate job relatedness in employment decisions and to assure
that such decisions are free from adverse impact and bias (in order to comply with non-
discrimination statutes)
• For example, research shows that virtually all organizations in Western Europe and North
America that use assessment centres for selection conduct some form of job analysis to design
features of assessment centre exercises and tests (Krause and Thornton, 2009)
• Diversity: to provide the foundation for creating equal employment opportunities
• Performance management: to identify duties and performance standards for assessing work
performance.

4.6.3 Work analysis design choices
To undertake a work analysis you need, firstly, to define why you are doing the analysis, and then to
decide what data you need to collect, how and from what sources, depending on the purpose of work
analysis.
In other words, you need to make work analysis design choices, addressing the following four
questions (Morgeson and Dierdorff, 2011): why, what, how, and who. We provide the details in the
following diagram:
Work analysis design choices: Key questions
The choices you make crucially affect the quality of data generated by the work analysis. The latest
meta-analysis of results from 205 studies (DuVernet et al., 2015) shows that the choice of work
analysis descriptors, methods, sources, and purpose is strongly associated with the quality of work
analysis (as judged by 8 data quality indicators).
4.6.4 The “what” of work analysis: Work analysis descriptors
Recall that work analysis gathers data on all three aspects of job/work role: work activities, worker
attributes, and work context. These are the “what” of work analysis, called “descriptors”.
In the following we will explore what each set of descriptors entails.
Work activities
Work activities are tasks and responsibilities that make up the job/work role. Many different terms
such as job, duty, function, responsibility, and task are often employed to refer to work activities.
These terms reflect work activities at different levels of generality.
• at the very specific level, we speak of tasks – collections of specific work elements and include
actions, the object of the action, and the purpose or results of the action. For example, the
tasks for an industrial machinery mechanic would include disassembling machinery and

equipment to remove parts and make repairs; and repairing and replacing broken
components of machinery and equipment.
• at a medium level, we speak of responsibilities – collections of related tasks that represent a
set of generic behaviors applicable across a variety of work roles. For example, responsibilities
for an industrial machinery mechanic would include inspecting equipment and repairing and
maintaining equipment.
• at the general level we speak of groupings of activities that comprise a job or a work role.
Worker attributes
Worker attributes are the types of attributes that are required to successfully complete work tasks.
Worker attributes include:
• knowledge – collections of discrete but related facts and information about a given domain
(e.g. biology, mathematics).
• skills – the level of proficiency to perform a task.
• abilities – relatively enduring basic capacities for performing a range of activities, including
cognitive, psychomotor, physical and sensory (e.g. auditory) abilities.
• “other” – a catch-all category that encompasses other potentially relevant factors that might
be important for successful performance, such as personality, work experience or
certification.
These worker attributes are often abbreviated as KSAOs (for Knowledge, Skills, Abilities and Other).
Work context
Work context refers to the situational opportunities and constraints that affect the occurrence and
meaning of organizational behavior. It includes:
• Task context – the structural and informational conditions under which work roles are
enacted.
• For example: task autonomy, level of accountability, the consequences of errors inherent
in the work, and the resources available to perform the task.
• Social context – the nature of role relationships and interpersonal contingencies that exist
among workers.
• For example: different forms of communication, the extent and type of interdependence
with others, and the degree of interpersonal conflict present in the work environment.
• Physical context – elements of the material space of built environment within which work
roles are enacted.
• For example: general environmental conditions (e.g., noise, air quality), presence of
hazardous work conditions (e.g., radiation, high places), and overall physiological job
demands (e.g., sitting, standing, climbing).

Case: Ophthalmologists
Ophthalmologists diagnose, treat, and help prevent diseases and injuries of the eyes and related
structures.
Here are the examples (not the complete list) of their work activities, worker attributes, and work
context:
• Work activities
• Activity: Making Decisions and Solving Problems
• Responsibility: Diagnose medical conditions
• Task: Perform, order, or interpret the results of diagnostic or clinical tests
• Task: Perform comprehensive examinations of the visual system
• Task: Document or evaluate patients’ medical histories
• Activity: Assisting and Caring for Others
• Responsibility: Operate on patients to treat conditions
• Task: Perform ophthalmic surgeries such as cataract, glaucoma, refractive,
corneal, vitro-retinal, and eye muscle
• Task: Perform laser surgeries to alter, remove, reshape, or replace ocular tissue.
• Worker attributes
• Knowledge: medicine, biology, customer and personal service
• Skills: active listening; judgement and decision making; problem solving
• Abilities: inductive reasoning; near vision; finger dexterity
• Other: education: doctoral degree; training: post-doctoral training
• Work context
• Task – daily decision making, with a lot of freedom to make decisions
• Social – in constant contact with others; working with work group or team
• Physical – working indoors, in environmentally controlled conditions; with daily exposure
to diseases or infections
4.6.5 The “how” of work analysis: Methods of collecting work data
There are four key methods of collecting the data for work analysis:

• Observation. In an observation, someone not involved in the task performance (a supervisor
or a job analyst) observes an individual as they complete their tasks and records (using notes
or checklists) various aspects of the work. Variations on an observation could be: video
recording (e.g. for hazardous jobs); work samples (i.e. observing small segments of the total
job that represents the typical tasks; critical incidents (recording particularly effective or
ineffective behaviors).
• Interview. Interviews could be individual or panel . In an individual interview respondents
(such as workers and supervisors) are interviewed one at a time and asked similar types of
questions about the work. In a panel interview, a number of workers, supervisors or technical
experts are gathered together to discuss various aspects of work; meetings are usually
facilitated by a job analyst.
• Questionnaire. A questionnaire is a structured survey instrument that may be paper and
pencil or computer based and is administered to workers, supervisors and technical experts.
• Documentary research. Documentary research entails data mining the existing records, such
as current job descriptions, organizational charts, training manuals, and so forth. to get a
sense of how the job is structured.
Advantages and disadvantages of these data collection methods are outlined in the following table.
Advantages and disadvantages of methods of data collection for work analysis

4.6.6 The “who” of work analysis: Sources of work analysis data
The data for work analysis can be collected from the following sources:
Job incumbents. Jobholders are a useful source of information because of their familiarity with the
role and specific knowledge about what is done on a day to day basis. However, they should not be
taken at their word without verification. Incumbents may not be objective, and they may have a bias

toward their own particular credentials and background. Some incumbents may not be able to
effectively articulate exactly what they do. Former jobholders can be informative as well because they
have performed the job tasks. They are less likely to bias the information in their own favour.
However, if they performed the job some time ago or before methods or tools changed, the accuracy
of their information must be verified.
Documents and records. A valuable source of information is the existing organizational documents
and records. For example, the existing job descriptions would be a good starting point to help the job
analyst understand what is currently expected on the job. Reporting relationships can be ascertained
from the organizational chart. Training manuals would highlight the important KSAOs needed to
perform the job. Call sheets and production records would provide some background information
relative to how the worker’s time is allocated and what results have been typically achieved on the
job. A rich source of information about the job/work roles is the publicly available databases, such as
those maintained by industry and professional associations.
Subject matter experts. Subject matter experts (SME) are individuals who do not perform the role but
have some sort of specialised expertise with the work. These may include, for example, engineers who
design a manufacturing process, professors who are experts in the discipline that underlies the work
being studied, lawyers who write and approve contracts. Such experts are likely to provide an
important perspective on the technical aspects of the work, particularly in terms of ‘ideal’ functioning
and performance. Supervisors. Either the immediate supervisor or a higher level manager can provide
a useful perspective on the work role requirements. Given their hierarchical position, they are likely
to have a broader perspective with respect to differences among the work roles and the attributes
needed for successful role performance. However, they may also have less detailed and nuanced
information about the work role because they do not actually perform the work (and may not even
know how to perform the work).
Work analysts. Professional work analysts – if you use them – would probably be involved in collecting
the data from the start or at least compile all the information and draw relevant conclusions. Work
analysts can be either HR professionals inside the organization or outside consultants/experts. In a
typical work analysis, work analysts serve as an integrative role by designing and implementing the
work analysis. Work analysists tend to produce highly reliable ratings, have little motivation to bias
the results and are able to integrate the large amounts of information that typically result from a
thorough work analysis. However, they may lack adequate information to make good decisions (unless
they accumulate enough information about the work) and may be subject to pre-existing stereotypes
about the work (because of prior exposure to similar work roles).
4.6.7 Matching “why”, “what”, “how” and “who” in work analysis

The uses of work analysis discussed earlier in this unit provide an indication of the variety of purposes
for which work analysis can be conducted. Depending on the purpose, specific descriptors, methods
and sources may be emphasised or have particular relevance.
For example, work analysis is used to determine physical employment standards and tests. These tests
are developed and administered to ensure that an employee’s physical and physiological capacities
are commensurate with the demands of their occupation. These capacities are crucial in physically
demanding occupations such as firefighting, police, and military occupations. For this purpose, the
focus of work analysis would be on the individual’s physical abilities and on the physical tasks. The
goal of the work analysis would be to help identify the relevant tests (e.g., arm dynamometer tests,
sit-ups, lift and carry tests and stair climb) (Beck et al., 2016).
In order to determine the most appropriate selection tools, work analysis would need to focus on the
attributes (e.g., knowledge, skills, ability, other characteristics) needed to effectively perform the
work and the extent to which certain attributes (e.g., skills) are needed immediately on the job and
others can be learned once on the job. If the work analysis is conducted for the purposes of developing
a training programme, the analysis needs to focus on the actual activities performed. If the aim of the
analysis is to produce a job description and person specification, then the analysis should cover a full
breadth of descriptors (activities, attributes and context) to ascertain their importance to work role
performance (Morgeson and Dierdorff, 2011).
4.6.8 Work analysis: Other considerations
In addition to the purpose, there are other considerations to be taken into account in a work analysis
design:
• Quality and cost. Although one would always like to obtain as high a quality of information as
possible, quality considerations often must be balanced against cost considerations. All else
being equal, the highest quality work analysis information will be the most costly.
Organizations have to make pragmatic decisions about when a work analysis is good enough.
• Acceptability. If the work analysis has major implications for current workers (e.g., if it is being
conducted to redesign jobs or determine pay levels), then choices should be made to include
the interested parties. These can include incumbents whose jobs are being redesigned or
whose pay is being affected and labour unions representing job incumbents.

• Legal defensibility. If the HR system resulting from work analysis might be subject to legal
challenge (e.g., if a work analysis is being conducted to revise a performance management
system where there have been allegations of gender discrimination), then fully documenting
a detailed and thorough work analysis would be advised.
4.6.9 Work analysis: Limitations
Are the work analysis data objective and stable?
Work analysis is based on human judgement and requires one to make inferences:
• Decisions about the work description are inferential: To what extent a description of work
activities faithfully represents the physical and mental activities underlying role performance?
• Decisions about the work specification are based on inference: To what extent a specification
of worker attributes (i.e. knowledge, abilities, skills, and other characteristics) reflect the
underlying work-related aptitudes?
• Linking attributes to activities is an inferential decision: To what extent the identified worker
attributes are needed to perform the identified work activities?
Inferences require inferential leaps. For instance, how do we leap from observations of work activities
to inferences about role requirements?
All types of work analysis judgements require some sort of inferential leap, in part because even the
most observable aspects of a role (e.g., the performance of very specific tasks) usually require one to
move from observable behavior to judgements about such behavior (e.g., importance to the role).
This brings about the issues of reliability, carelessness, consensus, and discriminability of work analysis
ratings. For example, ratings of less specific and directly observable descriptors (e.g., traits) require a
larger inferential leap than more molecular and visible descriptors (e.g., tasks). The inferential leap
also systematically varies because of the data source (e.g., analysts vs. role incumbents) and work
context (e.g., amount of discretion in one’s role).
Nevertheless, work analytical data can be meaningful for any research on the nature of job
performance and any attempts to account for performance differences across individuals. Work
analysis data can be linked to performance data at the multiple levels that are of interest to managers
and researchers – i.e. individual, team, and organizational (Morgeson and Dierdorff, 2011) (Morgeson
and Dierdorff, 2011).
TAKEAWAYS

1. Workforce planning is a process of analysing the current workforce, determining future workforce
needs, identifying the gap between the present and the future, and implementing solutions so
that an organization can accomplish its mission, goals, and strategic plan. Workforce planning may
be viewed as an operational process of ensuring that the right number of people with the right
skills are allocated to projects or work areas; or as a strategic process of ensuring that the best
talent is in the right roles and establishing the future workforce needs.
2. The main stages of workforce planning include: (1) examining the organization and its operating
environment; (2) analysing the organization’s workforce; (3) determining future workforce needs;
(4) identifying the gaps in the workforce; (5) developing an action plan; (6) monitoring and
evaluation the action plan.
3. Two sets of factors that affect workforce planning are the labour market and the employee
retention and turnover. The key labour market trends in advanced industrialised economies are:
deindustrialisation and the rise of knowledge based services; technological changes; globalisation;
demographic changes (including the ageing population and cross-country migration); increasing
female labour market participation; increasing participation in education; decline in collective
forms of employment relations; and increasing diversity in employment relationships.
4. Employee turnover refers to the proportion of employees who leave an organization over a set
period of time. Employee retention relates to the extent to which an employer retains its
employees and may be measured as the proportion of employees with a specified length of service
(typically one year or more). Employee turnover significantly impacts organizational performance.
The main costs associated with employee turnover are the costs of administration of the
resignation; recruitment and selection costs; the costs of covering the post during the period in
which there is a vacancy; and the costs of induction and training for the new employee.
5. To develop an employee retention strategy one needs to establish why employees are leaving.
Employees resign for many different reasons. Sometimes it is the attraction of a new job or the
prospect of a period outside the workforce that ‘pulls’ them. On other occasions they are ‘pushed’
as a result of dissatisfaction in their present jobs to seek alternative employment. The move might
also be prompted by a combination of both ‘pull’ and ‘push’ factors. To improve retention,
organizations should provide realistic job previews; maximise opportunities for career
development and progression; ensure that employees have a ‘voice’ through consultative bodies,
regular appraisals, attitude surveys and grievance system; develop flexible working arrangements,
accommodating individual preferences on working hours and times; ensure fairness in the
distribution of rewards.
6. Work analysis entails systematic gathering, analysing, synthesising and reporting of the
information on (1) work activities (tasks and responsibilities that make up a job or a work role),
(2) worker attributes ( individual attributes required to successfully perform work activities) and
(3) work context (conditions under which work is performed). The aim of work analysis is to

provide information input for various HRM processes, including recruitment, selection, training,
performance evaluation, job design, and compensation systems.
7. There are four key questions that one needs to answer when designing a work analysis: (1) “why”,
i.e. what is the purpose of work analysis; (2) “what”, i.e. what data one needs to collect; (3) “how”,
i.e. what data collection methods should one use, and (4) “who”, i.e., from whom should these
data be collected. Depending on the purpose of work analysis, one would emphasise particular
descriptors, methods of data collection, and/or data sources.
Section 5: Recruitment and selection
• identify the key stages and considerations in the recruitment process from the point of view
of a recruiting organization and from the applicant’s point of view.
• demonstrate awareness of the use of information technology in recruitment (e-recruitment)
and its effect on applicants and recruiting organizations.
• discuss recommendations for sustainable recruitment practices.
• describe a psychometric approach and a person-environment approach to selection and
identify their strengths and weaknesses.
• identify criteria for evaluating selection methods; compare and contrast different selection
methods; identify valid selection methods appropriate to the situation.
• explain how to make selection based on person-job, person-group and personorganization fit
5.2 Linked readings
Organizational Behavior, Chapter 9 Personality and Cultural Values, section Application: Personality
Tests
Organizational Behavior, Chapter 10 Ability, section Application: Selecting High Cognitive Ability
Employees
5.3 Introduction

The words “recruitment” and “selection” are often used interchangeably. However, properly
speaking, these are two separate processes. Recruitment entails attracting a suitable pool of
applicants. Selection, on the other hand, means choosing the best from that pool – or, in more formal
terms, determining whether a particular individual is suitable for the job using various methods of
collecting information about the person.
Effective recruitment and selection are crucial to the successful day-to-day functioning of any
organization. They depend upon finding people with the right skills, expertise and qualifications to
deliver organizational objectives and to contribute positively to the values and aims of the business.
Recruitment and selection should also take into account the future needs of the organization,
identifying individuals with potential for development. Professionals involved in recruitment and
selection should always be aware of organizational strategy and the implications this has for
resourcing.
Hiring the right individuals is crucial to organizational performance, and is a critical activity, not just
for the HR team but also for line managers who are increasingly involved in the selection process. All
those involved in recruitment and selection activities should be equipped with the appropriate
knowledge and skills required to make effective recruitment decisions.
5.4 Recruitment
External recruitment is defined as “an employer’s actions that are intended to:
• bring a job opening to the attention of potential job candidates who do not currently work for
the organization,
• influence whether these individuals apply for the opening,
• affect whether they maintain interest in the position until a job offer is extended, and
• influence whether a job offer is accepted” (Breaugh, 2008: 103-104).
5.4.1 Stages of the recruitment process
There are five stages in the recruitment process (Breaugh, 2013):
1. Conduct job analysis. Before recruiting for a new or existing position, it’s important to invest time
in gathering information about the job from a variety of sources. This means thinking not only the
duties involved in the job, but also the job’s purpose, the outputs required by the job holder and
how it fits into the organization’s structure. This analysis should form the basis of a job description
and person specification/job profile.

Job description explains the requirements of the job to potential candidates, and aids the
recruitment process by providing a clear overview of the role for all involved. It can also be used
to communicate expectations about performance to employees and managers to help ensure
effective performance in the job and clarity during induction.
Person specification or job profile states the necessary and desirable criteria for selection. The
characteristics specific must be clear, demonstrable and avoid bias in wording.
Competency frameworks are sometimes substituted for job or person specifications.

‘Competency’ and ‘competencies’ are defined as the behaviors that individuals must have, or must
acquire, to perform effectively at work – that is, the terms focus on the personal attributes or
inputs of the individual. A ‘competency framework’ is a structure that sets out and defines each
individual competency (such as problem-solving or people management) required by individuals
working in an organization or part of an organization. When a competency framework is used, it
should include an indication of roles and responsibilities.
2. Establish recruitment objectives. These objectives are customarily divided into pre-hire and post-
hire objectives.
Pre-hire objectives include: filling a certain number of job openings, and attracting applications
from certain types of individuals (with particular knowledge, skills, and abilities, work experience;
diversity).
Post-hire objectives include: attracting individuals who will perform at a certain level; recruit
individuals who will have a certain retention rate.
3. Develop a strategy for filling open positions. To develop the recruitment strategy, you need to
answer the following questions:
• When to begin recruiting?

• Where to recruit?
• What message to communicate to potential job applicants?
• Whom to use as recruiters?
• How to reach target individuals?
4. Carry out the recruitment activities.
5. Evaluate the recruitment results. Compare the recruitment objectives (i.e., what it hoped to
accomplish) against the recruitment outcomes (i.e., what it actually accomplished), in order to
learn from experience and recruit more effectively in the future. It is good practice to monitor
applications and recruitment decisions to ensure that equality of opportunity is being allowed.
Where issues are highlighted in the process, action should be taken. Using metrics such as cost of

hire, candidate experience ratings and time to hire can also provide insight into the effectiveness
of recruitment processes.
5.4.2 Recruitment process: The applicant’s point of view
The candidates’ experience is an important aspect of recruitment. The recruitment process is not just
about employers identifying suitable employees, it’s also about candidates finding out more about
the business, and considering whether the organization is one they would like to work for. Often, the
first interaction a potential employee has with an organization is the recruitment process, so e ort
should be made to ensure the process is transparent, timely and creates a good impression of the
organization, regardless of whether the candidate is successful or not.
In the recruitment process, it is essential to “put yourself in the applicant’s shoes”, that is, to consider
the process from the applicant’s point of view and to understand the applicant’s characteristics,
including their interests (e.g., what are they looking for in a job), self-insight, attention and
expectations.
Applicant’s interests. You need to consider: (a) how attractive the position is to prospective applicants;
(b) what other options your prospective applicants may have; and (c) how likely they are to get an
offer.
Applicant’s self-insight. You also need to take into account whether the applicants are able to properly
assess their fit with the job and organization. (We discuss the notion of person-job and person-
organization fit later on in the section, when we address the issues of selection.)
Applicant’s attention. If you are aiming to attract the attention of individuals who are not currently
looking for jobs, many recruitment methods (e.g., newspaper advertisements, job fairs) may not be
particularly effective.
Applicant’s expectations regarding the position. Research has found that many job applicants have an
incomplete and/or inaccurate understanding of what a job opening involves, are not sure what they
want from a position, do not have a selfinsight with regard to their knowledge, skills, and abilities, and
cannot accurately predict how they will react to the demands of a new position. Research suggests
that a realistic job preview (i.e. a presentation, brochure or video that highlights both the advantages
and the disadvantages of the job) considerably improves the applicants’ understanding of the position
and reduces subsequent turnover (Breaugh, 2013).
5.4.3 Recruitment sources
There are many ways to generate interest from potential candidates.

Internal recruitment
It’s important not to forget the internal talent pool when recruiting. Providing opportunities for
development and career progression increases employee engagement and retention, and supports
succession planning.
Employee referral schemes
Some organizations operate an employee referral scheme. These schemes usually offer an incentive
to existing employees to assist in the recruitment of friends or contacts. But employers should not
rely on such schemes at the expense of attracting a diverse workforce and they should complement
other attraction methods.
Advertising
According to the CIPD Resourcing and talent planning survey the most common ways for attracting
candidates include employer’s website, commercial job boards, recruitment agencies, and
professional networking sites such as LinkedIn (although this will vary by sector and seniority). There
is growing expectation from candidates to be able to search and apply for jobs online and via mobile
devices, and this shift means that more and more, employers need to pay attention to their corporate
website and their employer brand Many organizations also use social media to identify candidates,
but employers need to exercise caution.
Outreach and networking
Other common ways to attract applications include building links with local colleges/universities,
working with the local jobcentre and using local networks. Using multiple and non-traditional
outreach methods can increase the talent pool.
External recruitment services
Some organizations use external providers to help with their recruitment. Traditionally, most
organizations conducted their own recruitment activities. Currently, many organizations employ the
services of specialised recruitment agencies and consultancies, effectively outsourcing their
recruitment function (and often part of the selection function).
Recruitment agencies can provide a full-service cycle, from identifying recruitment criteria to
attracting and selecting the candidates and evaluating the results. They need to have a good
understanding of the organizations and its requirements. Advantages and disadvantages of
recruitment (and selection) outsourcing has not yet been properly researched, so we can’t offer any
advice on that score. However, even if your organization opts to outsource recruitment, it important

that, as organizational leader, you understand the key principles of recruitment, so that you can
knowledgeably contribute to the design and evaluation of recruitment strategies.
5.4.4 Advertising a job
Advertisements should be clear and indicate
• the organization’s activities and values

• requirements of the job
• necessary and desirable criteria for job applicants
• job location
• reward package
• type of employment offered (e.g., whether it is a short term contract or a fulltime position)
• details of how to apply and the deadline.
Care should be taken to ensure that the wording and specification of the job is clear, accurate and
does not inadvertently deter candidates from applying.
When writing a job advert, think about your audience – who do you want to reach and attract – and
choose your words wisely. Even subtle word choices can have a strong impact on the application pool.
For instance, research shows that masculine language, including adjectives like “competitive” and
“determined,” results in women “perceiving that they would not belong in the work environment”.
On the other hand, words like “collaborative” and “cooperative” tend to draw more women than men.
In one study (Gaucher et al., 2011), researchers tested two different wording of an advert for a retail
sales manager position. The masculine worded advert included sentences such as, ‘We will challenge
our employees to be proud of their chosen career’ and ‘You’ll develop leadership skills and learn
business principles.’ The feminine worded version of the same job advert included sentences such as,
‘We nurture and support our employees, expecting that they will become committed to their chosen
career’ and ‘You will develop interpersonal skills and understanding of business.’ When a job advert
included stereotypically masculine words, women were less attracted to these jobs compared with
when the same job advert was constructed to include stereotypically feminine words. To counteract
this effect and reduce the gender bias in your wording you can use special software programs that
highlight stereotypically gendered words. Then you can either remove the words and replace them
with something more neutral, or strive to strike a balance by using the same number of gendered
descriptors and verbs. For example, go back and forth between the words ‘build’ and ‘create. The goal
here is to “explore and see how these changes affect your applicant pool.
5.4.5 Managing the application process

There are two main formats in which paper or online applications are likely to be received: a
curriculum vitae (CV) and covering letter or an application form. Some organizations allow candidates
to apply with their LinkedIn profile.
1. Application forms. Application forms allow for information to be presented in a consistent format,
and therefore make it easier to collect information from job applicants in a systematic way and
assess objectively the candidate’s suitability for the job. Application form design and language is
also important - a poorly designed or unnecessarily long application form can mean applications
from good candidates are overlooked, or that candidates are put off applying. To comply with
discrimination law, it may be necessary to offer application forms in different formats.
2. CVs and LinkedIn profiles. The advantages of CVs and LinkedIn profiles is that candidates are not
restricted to a standard application form. However, CVs and LinkedIn profiles may include surplus
material and vary in format which undermines their consistent assessment.
Managing applications
All applications should be treated confidentially and circulated only to those individuals involved in
the recruitment process. All solicited applications, such as responses to advertisements, should be
acknowledged and, where possible, so should all unsolicited applications. Prompt acknowledgment is
good practice and presents a positive image of the organization.
5.4.6 Information technology in recruitment
Over time, various forms of technology have been introduced to attract applicants, ranging from
passive, one-way technologies (e.g., web-based job ads, job boards) to more interactive techniques
(such as virtual job fairs). Some estimates indicate that approximately 90% of large organizations use
one or more forms of technology to advertise jobs and enable applicants to submit online applications.
Following custom, we will refer to the use of technology in recruitment as electronic recruitment, or
e-recruitment.
One of the primary goals of HR is to attract and retain a talented workforce. The first step is thus
recruiting a qualified, diverse, and motivated applicant pool. Effective recruitment can not only
enhance the skills and diversity of the workforce, but can also help build customer satisfaction, foster
innovation, and encourage creativity.
Therefore, perhaps the most essential question regarding the e-recruiting is “Does it attract talented
and diverse applicants who can perform successfully in organizations?“ Let’s see what research
evidence tells us:

• Attracting high calibre candidates. Although few studies have addressed this question, those
results indicated that e-recruiting attracts greater numbers of applicants, but not higher
quality applicants as compared with traditional recruiting technologies. Furthermore, the
increased volume of applicants increases administrative and transaction costs. Even though
one study did find that e-recruiting attracted applicants with higher levels of drive,
achievement, and persistence than traditional recruiting, that same study found that e-
recruiting also appealed to job hoppers with unfavourable backgrounds
• Attracting diverse applicants. In terms of diversity, research thus far suggested that e-
recruiting may not help organizations increase workforce diversity. For instance, some studies
found that older applicants, ethnic minorities and women were less likely to use e-recruiting,
thus limiting the degree to which organizations meet their diversity goals. These studies
suggest that this may be related to the lack of Internet access, higher computer anxiety and
lower computer self-efficacy among these groups. However, these causes may diminish in the
future, and the differences between traditional and e-recruiting may become less problematic
as younger, more technology-oriented applicants enter the workforce.
How can e-recruiting technology affect the applicant satisfaction and attraction to the organization?
One way is to customise or personalise e-recruiting information. Research shows that this encourages
applicants to apply for jobs, persuade poor-fitting job seekers to eliminate themselves from the
applicant pool, and influence well-fitting applicants to apply for jobs.
Another way is to use interactive technologies. Currently, e-recruitment uses mostly static, one-way
communication processes, that merely provide information to applicants about job opening and
enable them to apply for jobs online (e.g., websites, job boards). These technologies do not give
applicants the opportunity to ask questions or interact with organizational members. As a result,
applicants do not have the opportunity to clarify the nature of jobs or the benefits of working for the
organization. These one-way practices are impersonal, passive and create an artificial distance
between applicants and organizations.
In contrast to one-way technology, some new interactive technologies may enhance the
personalization of e-recruiting, and increase its overall effectiveness (e.g., Web 2.0, social media,
virtual reality, blogs, virtual job previews). For instance, Web 2.0 enables applicants to attend virtual
job fairs, develop interactive dialogues with organizational members, and experience a virtual preview
of life in the organization. A virtual job fair is an online event where employers and potential applicants
connect in a virtual environment using computer-based simulations, chat rooms, webinars, and
webcasts to browse company booths, upload resumes, and meet with employers. Some organizations
are already using Second Life Virtual Environments to conduct job fairs (eBay, Verizon, U.S. Army). The
trend toward using more interactive technologies for e-recruiting is a positive step toward enhancing
the organization’s image as a warm and welcoming place to work, and ensuring that e-recruiting
meets its intended goals. Research findings regarding traditional recruiting highlight the effectiveness
of techniques in terms of interpersonal style of recruiters and their perceived credibility, both of which

are possible with interactive technology. Likewise, studies found that some applicant groups (e.g.,
Hispanic-Americans, women) are very relationship-oriented and prefer interacting with individuals
rather than information technology. In this way, the two-way communication processes available with
interactive e-recruiting should help attract a more diverse pool of applicants. Overall, the use of
interactive technologies should have a positive impact on applicants’ motivation to apply for jobs and
their subsequent satisfaction levels.
A third recommendation is to make e-recruiting more proactive. To date, e-recruiting has been largely
a passive process in which organizations post information and wait for applicants to apply for jobs. E-
recruiting needs to become much more proactive and use social media (e.g., Linkedin) to scan
individual profiles, identify talented employees, and contact them about job openings. In this way,
organizations can use technology to reach out to qualified and diverse job applicants, and motivate
them to apply for jobs. Moreover, this proactive strategy should be especially effective in terms of
enhancing the diversity of the applicant pool. One reason for this is that some minorities may have
reward preferences that are different from the dominate group. Therefore, data from social media or
crowdsourcing can be used to identify the reward preferences of diverse applicants, and recruitment
strategies can be tailored to meet their needs.
5.5 Selection
5.5.1 Defining selection
Selection is defined as the placement of individuals into jobs using one or more methods to collect
information about an individual in order to determine this individual’s suitability for employment in a
particular job.
The word “selection” is most commonly associated with hiring new people. However, this is not much
different from assessing people within the organization for an open position and then transferring the
successful applicant(s) to fill the opening. A similar selection decision is made when one of several
people already in the organization is promoted to a higher level position. Even a termination decision
is a selection decision: before firing the individual, some form of assessment (e.g., performance
evaluations, recommendations of supervisors) is done and a decision is made. In a larger reduction in
workforce, when certain people are to be terminated, they are somehow assessed (e.g., performance,
seniority, uniqueness of contribution) and choices are made. Different kinds of decisions may require
different kinds of assessment, but in all of them, the quality of the decision is enhanced if the
assessments are valid and relevant.
When there are more applicants than openings, some basis for choosing among them is necessary.
Choices could be random, or quasi-random – like ‘first come, first chosen’. Choice might be based on
social values (e.g., giving preference to veterans, women or minorities). The choice might be based on
nepotism, prejudice, or a similar-to-me bias. (Obviously, we would not recommend this; we are just

enumerating various possibilities that occur in reality. In other words, we are describing, not
prescribing.)
Case: Connections in selection
In November 2016, business press reported that the US regulators have fined JPMorgan $264 million
in settlement of alleged foreign corrupt practices. Between 2006 and 2013 the Asia-Pacific wing of the
bank operated a socalled “Sons and Daughters Programme” to hire sprogs of powerful Chinese
officials. According to the Securities and Exchange Commission, JPMorgan hired children of Chinese
political elite, known as “princelings”, for their family connections to state businesses, not their
knowledge and skills. The princelings were referred to by colleagues as “the photocopiers”.
Duplication was the only task they seemed fit for. However, they were also expected to provide
information on the flotations of state-owned enterprises, orchestrated by their dads.
Financial Times noted: “The naked commerciality of the relationships described by the SEC is shocking.
Evidence that investment banks employ some staff for their connections is not. There has always been
a cohort in banking employed for who rather than what they know… Watchdogs have no problem
with financial groups hiring ex-politicians and public servants. Lord Mandelson works for Lazard, Sir
Mervyn King for Citigroup and Manuel Barroso for Goldman Sachs” (Guthrie, 2016).
Question: Can you think of any cases – in your organization, your industry, or your country – where
hiring decisions were made on the basis of connections rather than merit?
Source: Guthrie (2016)
5.5.2 Approaches to selection
Alternatively, selection can be based on a more sound principle. In fact, there are two sound principles
– or two competing (but potentially complementary) approaches to selection: a psychometric
approach and an interactional approach.
A psychometric approach to selection
This approach considers selection from the perspective of the organization. The goal is to find the
person who best fits the selection criteria. This approach is based on the following key assumptions:
• People do not change very much. They possess attributes that can each be objectively
measured independently of each other. Individual attributes predict work performance.
Individual differences are the biggest single source of variability in performance.
• Jobs do not change very much. Jobs consist of a specific set of tasks. Job performance can be
measured in terms of output and value. Job tasks require specific attributes.

• Selection is carried out by the applicant’s organization. The main purpose of selection is to
predict job performance. The best performers are the most suitable employees. The better
the selection, the better the performance.
Therefore, the focus of selection is on assessing individuals against knowledge, skills, abilities and
other attributes required for performance in the post.
An interactional approach to selection
An interactional approach looks at both parties in the recruitment and selection encounter – the
applicant and the organizations – with the goal is to achieve a “fit” between the person and the
organization that suits both parties. The key assumptions of this approach are as follows:
• Organizations, jobs and relationships between employees and employers are constantly
changing. It is impossible to predict the future with any degree of success.
• Organizations need employees who grow and develop with them. The fit between employees
and employers influences how people grow and develop with the changing organization. An
employee’s fit is influenced by interactions between the individual and work environment in
a wide range of domains (e.g. job, work-life balance, values, supervisor, team members). It is
seldom possible to isolate specific factors contributing to prolonged high performance.
Interactions between people and work environments are the biggest source of variability in
performance.
Therefore, the focus of selection for both parties should be in finding a relationship that is mutually
beneficial. Employers seek to recruit ‘whole people’ Employees seek an employer with which they
thrive.
We consider, in turn, each of these approaches and the associated selection practices and research
evidence.
5.5.3 Psychometric approach to selection
The psychometric approach is a traditional, well-established approach to selection. It considers

selection from the perspective of the organization and shows how good selection decisions should be
made.
This approach focuses on predicting desired outcomes, such as particular measures of performance,
aspects of performance, or valued behaviors associated with the work role (e.g. production quantity
or quality, success in training, punctuality, workforce stability, adaptability to change).

The predictions are based on the assessment of individual characteristics, mainly knowledge, skills,
abilities and other factors (such as personality). Many aspects of this approach are enshrined in law.
The following example provides a good illustration of this approach.
Case: Selecting for strategic leadership
Personality matters at all levels of the organization, including the very top. Because CEOs have a
disproportionate, sometimes dominating, influence on firms’ activities, their personalities have a
major effect on strategic behaviors. CEOs with broad information-processing capabilities, divergent
thinking and creativity, high tolerance for ambiguity, and motivation to combat inertial forces are
more likely to recognise the need for strategic change and to push the strategic change agenda than
CEOs without these capabilities.
Research suggests that these capabilities are linked to the Big-Five personality traits. Some of these
traits (e.g. conscientiousness) dispose individuals to follow established rules and become intolerant
of ambiguity, hindering their capacity to change. Other traits dispose individuals to engage in
divergent thinking and actively seek and enjoy change (e.g. openness to experience and extraversion).
Thus, some traits may foster strategic change, whereas other traits may promote the status quo.
How does CEO personality influence the behavior of employees in an organization?
Firstly, CEO’s personality shapes the way the CEO motivates, rewards and communicates with
“proximal” employees (i.e. top management team and middle managers), who then who serve as
‘gents of change and determine the success or failure of implementation. Some Big-Five traits (such
as conscientiousness) dispose CEOs to instil strong direction, task focus and achievement orientation.
Others encourage flexibility and risk taking proximal employees (e.g. emotional stability). Yet others
foster passivity and conflict avoidance (e.g. agreeableness) or dominance (e.g. extraversion),
hindering successful implementation. Thus, CEO’s traits create adaptive or disruptive conditions for
strategic change implementation.
Secondly, personality shapes how CEOs define strategic vision and goals, in turn determining the
personality of people attracted to, selected, and retained by the organization’, who may then recruit
and assign prominent roles to employees with similar personalities.
In a study of 120 small and medium-sized enterprises in Ecuador, Herrmann and Nadkarni (2014)
found that CEO’s extraversion and openness positively influenced the initiation of change (but not its
implementation), while emotional stability and agreeableness increased the effectiveness of change
implementation. Conscientiousness had dual effects: low conscientiousness contributed to the
initiation of change, while high conscientiousness contributed to the implementation of change. These
results indicate the differences between the CEO traits needed to initiate strategic change, and those
needed to improve performance in strategic change implementation.

The results of this study aid practitioners in their strategic change efforts by identifying the CEO
personality profiles required to initiate change and maximise the performance benefits of change
implementation. Selecting CEOs with appropriate personality profiles may help firms to successfully
carry out their strategic change agenda and reap the benefits of change efforts.
Selection methods
The main focus of the psychometric approach to selection is to identify or design the methods of
selection that allow to predict individual performance in the post. Let us look at the common selection
methods and discuss how well they can serve this purpose.
Many selection methods are available, and you are likely to have first-hand experience of some of
them. We start with an overview of the major selection methods.
Accomplishment record
The accomplishment record is a systematic procedure used to collect information about applicants’
training, education, experience, and past achievements related to critical job competencies.
Applicants are often required to provide written descriptions of what was accomplished, including
detailed information about the problem or situation, the specific actions taken, and the results or
outcomes achieved by those actions. Accomplishment statements are evaluated by a panel of trained
raters using competency-based benchmarks created for the targeted occupation.
The method is based on the behavioral consistency principle that past behavior is the best predictor
of future behavior.
To give you an example, the following is an excerpt from an accomplishment record:
An excerpt from an accomplishment record

Assessment centre
Assessment centre is a combination of several techniques (e.g., psychometric tests, interviews, work
samples) that measure knowledge, skills, and abilities, through a series of work samples/exercises that
reflect job content and types of problems faced on the job, cognitive ability tests, personality
inventories, and/or job knowledge tests.
Candidates are usually dealt with in groups and some of the techniques require the candidates to
interact (e.g., in simulated group decision making exercises or group presentations).
Each technique works on its own principles. For details, see specific methods.
Biodata
Various definitions of biodata exist, and some of these confound biodata with personality, knowledge,
abilities and other factors. Biodata should be defined only in terms of an applicant’s past behavior and
experiences. These past behaviors and experiences can reflect events that occurred in a work context
(e.g., quit a job without giving notice), an educational setting (e.g., graduated from college), a family
environment (e.g., travelled considerably growing up), community activities (e.g., led a cub scout
troop), or other domains (e.g., active in local politics, religious activities). Defining biodata in terms of
historical events does not mean that a job applicant’s past experiences are unrelated to such variables
as interests, personality, values, knowledge, and skills. Rather, it is likely that an individual who
possesses certain interests, personality traits, values, and/or KSAs will be more likely to seek out

certain situations that are captured by biodata (e.g., the type of job held, getting a college degree)
than an individual who may not fit the situations as well. Similarly, having had certain experiences, an
applicant may be more likely to have developed certain interests, values, and KSAs.
The explanatory model for why biodata works runs like this: At a given point in time, an individual
possesses several attributes (e.g., knowledge, values, goals). Based on these attributes (e.g., a
consideration of one’s abilities and goals), the ecological model suggests the individual will actively
choose to enter a new situation/ environment (e.g., take a new job, begin an MBA program, start
volunteering with a community organization) that is perceived as likely to aid his/her development
(e.g., satisfy goals, increase important skills). Alternatively, the person may not actively choose a new
environment, but might be pushed into it (e.g., losing a job). Having experienced the new
environment, some attributes of the individual are likely to change. Therefore, person is likely to be
different than at the beginning on one or more attributes (e.g., increased interpersonal skills, different
career goals, a diminished work ethic).
Biodata items reflect external actions that may have involved, or were observable by, others and are
objective in the sense there is a factual basis for responding to each item. An item might ask “How
many books have you read in the last 6 months?” or “How often have you put aside tasks to complete
another, more difficult assignment?” Test takers choose one of several predetermined alternatives to
best match their past behavior and experiences. A response to a single biodata item is of little value.
Rather, it is the pattern of responses across several different situations that give biographical data the
power to predict future behavior on the job. For this reason, biodata measures often contain between
10 and 30 items and some wide-ranging instruments may contain a hundred or more items.
For example, based on a study of 414 individuals who worked full-time as customer service agents for
a large call centre in the United States, Breaugh (2014) established that individuals who had previously
applied for jobs at the call centre, submitted additional personal history information, and been
referred by current employees were less likely to leave their jobs than first-time applicants or
applicants who had not submitted additional personal history information or been recruited through
the call centre’s website. These findings suggest that, in terms of reducing voluntary turnover, an
organization may benefit from considering personal history information in making selection decisions.
Even a small employee turnover difference is likely to have significant impact in terms of financial
costs and the efficient operation of the call centre. And, when contrasted with the potential costs of
post-hire turnover reduction strategies (e.g. job redesign) and the difficulty of implementing some of
these strategies effectively (e.g. training supervisors to be more supportive), the results suggest that
employers should make greater use of biodata. This is particularly the case when one considers that
the use of biodata need not involve lengthy scales or the purchase of a specific test instrument.
Cognitive ability tests
Cognitive ability tests assess abilities involved in thinking (e.g., reasoning, perception, memory, verbal
and mathematical ability, and problem solving). Such tests pose questions designed to estimate

applicants’ potential to use mental processes to solve work-related problems or to acquire new job
knowledge. test often includes various item types which measure different and more specific mental
factors often referred to as “specific mental abilities.” Examples of such items include arithmetic
computations, verbal analogies, reading comprehension, number series completion, and spatial
relations (i.e., visualizing objects in three-dimensional space). Some cognitive ability tests sum up the
correct answers to all of the items to obtain an overall score that represents a measure of general
mental ability. If an individual score is computed for each of the specific types of abilities (e.g.,
numeric, verbal, reasoning), then the resulting scores represent measures of the specific mental
abilities.
General mental ability (GMA) is one of the strongest predictor of overall job performance, regardless
of occupation or job. The paramount role of GMA in predicting job performance - above and beyond
job experience, and personality traits - must be taken into account in all types of assessment of
individual KSAOs, especially in selection.
According to the latest meta-analysis by Rojon, McDowall and Saunders (2015), GMA validity for
overall job performance is 0.27 (less than in earlier estimates). However, for specific performance
dimensions it is much higher. Thus, for job specific task proficiency, GMA validity is 0.76 (although for
maintaining personal discipline it is only 0.06).
A particularly interesting evidence on the importance of GMA, relevant to your career, comes from a
recent study by Dragoni et al. (2011). The authors examined the impact of accumulated work
experience and cognitive ability on the executives’ “strategic thinking competency”, assessed through
five assessment centre exercises: an extensive background interview, a simulated cross-functional
task force team, a business management simulation, and a series of simulated meetings with various
stakeholders. The study covered several hundred executives from a variety of industries, including
sales, manufacturing, engineering, finance and accounting, distribution, transportation, research and
development, procurement, and real estate/property management.
The findings show that cognitive ability was clearly the strongest predictor of strategic thinking
competency and was over three times as powerful in predicting strategic competency thinking as the
accumulation of work experience. This result is of great significance given the shortage of capable
leaders and the resulting need to place untested leaders into leadership positions. The import of this
result for selection is clear: When selecting for a position that requires strategic thinking competency
and decision making, select on cognitive ability, because: “smart leaders, even if they lack the
experience, are more likely to be successful” (Dragoni et al., 2011: 854).
Emotional intelligence tests
Emotional intelligence (EI) is defined as a type of social competence involving the ability to monitor
one’s own and others’ emotions, to discriminate among them, and to use the information to guide
one’s thinking and actions.

Some consider EI to be a fairly specific ability that connects a person’s knowledge processes to his or
her emotional processes. As such, EI is different from emotions, emotional styles, emotional traits,
and traditional measures of intelligence based on general mental or cognitive ability (i.e., IQ).
EI involves a set of skills or abilities that may be categorized into five domains (Joseph et al., 2015):
• Self-awareness: Observing yourself and recognizing a feeling as it happens.

• Managing emotions: Handling feelings so they are appropriate; realizing what is behind a
feeling; finding ways to handle fears and anxieties, anger, and sadness.
• Motivating oneself: Channeling emotions in the service of a goal; emotional self-control;
delaying gratification and stifling impulses.
• Empathy: Sensitivity to others’ feelings and concerns and taking their perspective;
appreciating the differences in how people feel about things.
• Handling relationships: Managing emotions in others; social competence and social skills.
The commonly administered emotional intelligence tests are either ability tests (testing the abilities
to recognise and interpret information about emotions) or personality tests (including measures
similar to those in standard personality testing).
Emotional intelligence has been a very popular concept in business media and among practitioners.
However, most psychologists, including personnel psychologists, do not accept that emotional
intelligence is a separate trait or construct. They view emotional intelligence measures as arbitrary
amalgamations of items measuring some aspects of intelligence (GMA) or personality.
Research evidence suggests that ability-based measures of EI are highly correlated with GMA and
hence are indicators of intelligence, just as verbal or quantitative ability tests are (Schmidt et al.,
2016b). Research evidence also indicates that personality-based measures of EI are measures of other
personality constructs. Take, for instance, the version of EI proposed by Daniel Goleman in his 1995
book, which became a bestseller and ended on The Times (2011) list of 25 most influential
management books of all time. What it purports to measure is already measured by
conscientiousness, extraversion, general self-efficacy, emotional stability and cognitive ability. After
controlling for these constructs, the relationship between EI and job performance is near zero (Joseph
et al., 2015).
Integrity tests
An integrity test is a specific type of personality test designed to assess an applicant’s tendency to be
honest, trustworthy, and dependable.
A lack of integrity is associated with such counterproductive behaviors as theft, violence, sabotage,
disciplinary problems, and absenteeism. Integrity tests have been found to measure some of the same

factors as standard personality tests, particularly conscientiousness, and perhaps some aspects of
emotional stability and agreeableness.
Across a range of selection procedures, integrity tests may provide the largest amount of incremental
validity beyond cognitive ability tests. Furthermore, relative to some types of selection procedures
(e.g., structured interviews, work sample tests), integrity tests tend to be cost effective and easy to
administer and score.
To give you a flavour of what questions integrity tests ask, we provide below a compilation of items
from seven most widely used integrity tests.
Examples of integrity test items
Two meta-analysis have been conducted on the relevance of integrity testing for predicting
performance, by Ones et al. (1993) and van Iddekinge (2012). Both offer evidence that integrity test
scores are related to performance and to counterproductive behavior outcomes but that the

magnitude of the relationships is presently uncertain. For instance, the results suggest that, on
average, there is a 72 percent probability that job applicants who score well on overt integrity tests
will participate in less unethical and/or deviant behaviors than those who score poorly. There is also
a 70% probability that employees who score well on integrity tests will outperform those who score
poorly (Ones et al., 1993). However, the basis for expecting a high correlation with performance has
not been fully explicated conceptually. Research also shows that integrity tests provide the greatest
incremental validity beyond cognitive ability tests. Furthermore, relative to some types of selection
procedure (e.g. structured interviews, work sample tests), integrity tests tend to be cost effective and
easy to administer.
Job knowledge test
Job knowledge tests, sometimes referred to as achievement or mastery tests, typically consist of
questions designed to assess technical or professional expertise in specific knowledge areas. Job
knowledge tests evaluate what a person knows at the time of taking the test.
Job knowledge tests are used in situations where applicants must already possess a body of learned
information prior to being hired. They are particularly useful for jobs requiring specialized or technical
knowledge that can only be acquired over an extended period of time.
Examples of job knowledge tests include tests of basic accounting principles, computer programming,
financial management, and knowledge of contract law.
Personality tests
Personality tests are designed to systematically elicit information about a person’s motivations,
preferences, interests, emotional make-up, and style of interacting with people and situations.
Personality measures can be in the form of interviews, in-basket exercises, observer ratings, or self-
report inventories (i.e., questionnaires).
Personality self-report inventories typically ask applicants to rate their level of agreement with a series
of statements designed to measure their standing on relatively stable personality traits. This
information is used to generate a profile used to predict job performance or satisfaction with certain
aspects of the work.
We have already examined how personality affects behavior when we considered individual
differences and behavior. Here we provide some further evidence that underscores the links between

specific traits and performance in different occupations. Does the importance of particular personality
traits in terms of predicting job performance differ for different occupations? Yes, it does. For
professionals and sales jobs, only Conscientiousness appears to be predictive of overall job
performance. For skilled and semi-skilled job, in additional to Conscientiousness, Emotional Stability
is a good predictor. For police and law enforcement jobs, Conscientiousness, Emotional Stability, and
Agreeableness are useful personal characteristics. In customer service jobs, all the Big Five dimensions
predict overall job performance (Ones et al., 2007).
What about managerial jobs? A recent study examined the performance of ‘middle managers’ (those
above front-line supervisor but below the level of vice president) in a large energy company (Oh and
Berry, 2009). These managers had between 40 and 100 employees below them; some were plant
managers and others held managerial positions in various departments such as HR, IT, finance and
public affairs. Their performance was rated using the 360-degree method, aggregating the scores from
supervisor, peer and subordinate ratings and self-ratings. Performance was assessed on two
dimensions: (1) task performance (getting things planned, organised, done and controlled) and (2)
contextual performance (supporting, team-building, negotiating, coaching and mentoring). The
results suggest that the best predictor of managers’ task performance is emotional stability, followed
by (low) agreeableness and conscientiousness. In terms of contextual performance, emotional
stability is again the best predictor, followed by extraversion.
These conclusions are fairly general. To understand the impact of particular personality traits on job
performance, it is important to consider not only the general evidence but also to examine specific
requirements of particular jobs.
Case: Matching personality traits to job characteristics
General principles notwithstanding, it is important to analyse a specific job in a specific organization

in order to determine the relative importance of particular personality traits. An instructive example
comes from a study of sales consultants in a leading chain of private health-and-fitness clubs in Britain
(Furnham and Fudge, 2008).
Success in sales jobs is commonly viewed as determined by interpersonal skills, such as listening and
the ability to build rapport with a client. However, the jobs of sales consultants in the study were
somewhat different from this general profile. The specific requirements of the sales consultants’ jobs
were to chase leads, ‘cold call’ and liaise with companies in order to generate new business.

The study found that the most important personality trait to achieve superior performance was
conscientiousness, which conforms with the general evidence on the significance of this trait to all
jobs. More organised and hardworking sales consultants achieved better results because, in this job,
success was determined as much by what was said on the phone as by sheer persistence and the
number of phone calls made.
Better performing employees were also less agreeable. In roles that require team working, having a
character that strives for harmony with others would be advantageous. However, in the context of
the study, the sales consultants worked individually rather than in teams, and people who were more
selfish and less concerned with the welfare of others tended to perform better. A contributing feature
of agreeableness, which helps understand the findings of the study, is that more agreeable individuals
are more susceptible to feelings of rejection when a sale is not made, and so may take the failure
personally and lose confidence.
Openness, a trait usually considered less influential on performance, was the third most important
factor showing a positive correlation with sales. The authors interpret this finding as suggesting that
the imagination and creativity associated with openness helped the sales consultants devise new sales
techniques or adapt their technique to a wider range of clients, and so succeed in sales.
Finally, although extraversion is commonly considered to be an essential trait for a salesperson, the
study found no relationship between this trait and sales performance. It may be that sales people with
very high extraversion are perceived as overly ‘nice’ or ‘false’ by customers, which will be detrimental
to their success.
Overall, the results of this study are broadly in line with generic evidence on the importance of
personality traits (such as the role of conscientiousness). However, some a priori expectations about
the importance of specific traits (such as extraversion) proved incorrect in the context of specific job
requirements, and the study also highlights the importance of traits usually considered less influential
(such as openness).
Source: Adapted from Furnam and Fudge (2008)
Reference checking
Reference checking is an objective evaluation of an applicant’s past job performance based on

information collected from key individuals (e.g., supervisors, peers, subordinates) who have known
and worked with the applicant.
Reference checking is primarily used to:
• Verify the accuracy of information given by job applicants through other selection processes
(e.g., résumés, occupational questionnaires, interviews)

• Predict the success of job applicants by comparing their experience to the competencies
required by the job
• Uncover background information on applicants that may not have been identified by other
selection procedures.
Situational judgment tests
A situational judgement test typically consists of the items that describe challenging work situations
and present alternative actions that someone might take to deal with them. For each situational item,
a test would ask an applicant to judge the effectiveness of alternative actions by indicating which they
would be most likely perform, which they would be least likely to perform, which is most effective or
best, which is least effective or worst, or how effective each action is.
How does this work? A scoring key for a situational judgement test (SJT) will compare applicants’
judgments with subject experts’ judgments. Assuming that subject experts know how effective the
actions described in SJT response options truly are, scores representing the similarity between
applicants’ judgments and subject experts’ judgments are interpreted as measures of applicants’
knowledge about effective action in the work situations described by the SJT.
SJTs measure effectiveness on social functioning dimensions such as conflict management,

interpersonal skills, problem solving, negotiation skills, facilitating teamwork and cultural awareness.
They are particularly effective measures of managerial and leadership competencies.
We provide here an example of an item from a situational judgement test.
Example of an item from a situational judgement test

Structured interview
Employment interviews are one of the most widely-used methods of assessing job applicants. A
structured interview is an interview that follows specific rules for eliciting, observing and evaluating
interviewee’s responses.
Two types of question are used in structured interviews: (1) behavioral questions and (2) situational
questions. We provide the examples here (Kluemper et al., 2014: 555-556).
Examples of behavioral interview questions:
• Tell me about a time when you were challenged to get somebody to do something they really
did not want to do.
• Please describe a time when you had to work with someone who was difficult to get along
with.
• At times we are put in situations where we find ourselves correcting someone’s behavior
because it is inappropriate, offensive, or just plain wrong for other reasons. Tell me about a
situation where you had to confront someone who was doing something wrong.

• Please explain something you have done in a work situation that shows how creative or
innovative you can be.
• Please explain a recent decision that you had to make that was particularly challenging or
complicated.
Examples of situational interview questions:
• Imagine you were working with a fellow worker whom you knew greatly disliked performing
a particular job task. You were in a situation where you needed this task completed, and this
employee was the only one available to assist you. What would you do to motivate the
employee to perform this task?
• Imagine being in a situation with both a co-worker and a client in which the client is being
unreasonable. Your co-worker appears frustrated and begins to make comments that may be
construed as sarcastic and offensive. How do you handle this situation?
• Suppose you are working on an important report and become increasingly uncertain whether
or not you will complete the project by the stated deadline set for you by your supervisor.
How would you deal with this situation?
The responses to either situational or behavioral questions are then rated on a rating scale that has
been designed to measure to what extent the response reflects a desired characteristic.
For example, to assess proactive behavior (i.e. activities that reflect a focus towards scanning the
environment for opportunities to improve, showing initiative or taking action, and persevering until
one reaches closure by bringing about the change), an interview may include the following behavioral
question:
“Tell me about a time when you were involved in a project that resulted in a positive change?
What role did you play in this project? How did you facilitate the change? What actions did
you take to overcome the challenges along the way?”
The rating scale for responses may look as follows (Hamdani et al., 2014: 173-174):
• Excellent (5). The rating is given if the following elements are present: The candidate
expresses a keen focus toward making things better; takes personal initiative to identify
opportunities for change and plays a major role in identifying and implementing the change;
acts on the identified opportunities and resists opposition and persists until the change is
brought about; deals with obstacles positively rather than complaining or giving up. Example:
“Last year, I proposed to organize a music show for the charity organization I volunteer for. I
went out and talked to some of my friends who had arranged similar events in the past. This
helped me prepare a budget to present to my committee who were initially lukewarm toward
the idea. My numbers convinced them to consider this event as a serious option. I took the
responsibility to manage the entire show. My biggest challenge was to gain the necessary

support. I talked to my friends, family members, and professional contacts that I knew would
be of help. It was tough doing all this with my other commitments. But I believe when you are
sincerely making an effort, many people will be willing to help you because they will see your
commitment to deliver. The music event generated the largest amount of funds for the charity
organizations from an event.”
• Acceptable (3). If the following elements are present: The candidate shows a desire to make
things better; might not have played a significant role in the change, or comes up with ideas,
makes some effort to get them implemented, but gives up when challenges arise. Example:
“The charity organization I volunteer with asked to help in arranging a music event. Although
it was difficult with my other commitments, it was worth the effort to do something for
others.”
• Poor (1). The rating is given if the following elements are present: The candidate does not
show a desire to make things better; waits for others to highlight what needs to be done and
barely does what is expected; comes up with ideas but never takes the initiative to implement
these ideas; no clear evidence of a concrete change. Example: “I am an active member of
various charity and community service organizations.”
Work samples and simulations
Work sample tests require applicants to perform tasks or work activities that mirror the tasks
employees perform on the job.
Because work samples require applicants to perform tasks identical or highly similar to tasks from the
job, great care is taken in trying to mimic the work environment to the greatest extent possible. As
with job knowledge tests, work sample tests should only be used in situations where applicants are
expected to possess the required competencies upon entry into the position.
We provide an example of work simulation exercise below.
Example of a work simulation exercise

Evaluating selection methods
There are several criteria/standards for evaluating selection methods:
1. Validity. Validity (or criterion-related validity) refers to the strength of the relationship between
the predictor and the outcome (e.g., between interview ratings and subsequent work behaviors).
There are several types of validity:
• Criterion-related validity: this is the strength of the relationship between the predictor
(e.g., psychological test scores or interview ratings) and the criterion (e.g., subsequent
work behavior).
• Face validity: whether the test ‘looks right’, i.e. relevant for the work role.
• Content validity: whether a predictor covers a representative sample of the behavior
domain being measured (e.g., a test of car-driving ability that did not include an
emergency stop and a reversing exercise would be lacking in content validity).
2. Reliability. This refers to the extent to which it measures consistently under varying conditions.
3. Legality and fairness. The method or measure must not discriminate unfairly against members of
any specific subgroup of the population (eg ethnic minorities). Applicant reactions should be taken
into consideration. Dissatisfied candidates are likely to speak negatively about their treatment or
to take legal action to challenge the outcome.
4. Administrative convenience/practicality. The procedures should be acceptable within the

organization and capable of being implemented effectively within the organization’s

administrative structure. Those administering the procedures are likely to need appropriate
training. (Note, however, that the administration and interpretation of test can be outsourced).
5. Cost and development time. Given the selection decisions (e.g., number of jobs, number of
candidates, type of jobs ) involved, the costs involved and the tie taken to develop adequate
procedures need to be balanced with the potential benefits.
6. Applicant reactions. These have important consequences for an organization. If the best
candidates reject the job offer, then the utility of the selection system is reduced. Dissatisfied
candidates are more likely to speak negatively about their treatment or may take legal action to
challenge the outcome.
5.5.4 Comparison of selection methods
To help you decide between different selection methods, we provide here an evidence-based
comparison of the main selection methods on most of the main assessment considerations.
Comparison of selection methods

5.5.5 Interactional approach to selection
We now turn our attention to the alternative approach to selection - the interactional approach. The
interactional approach treats recruitment and selection as a two-way process, with individuals looking
for jobs, and organizations looking for employees. What individuals and organizations are trying to
achieve is a two-way fit: the fit between what the person wants and has to offer and what the
organization needs and can provide.
According to the interactional approach, this two-way fit is complex and obtains on several levels:
between the person, on the one hand, and the job, the work group, the supervisor, and the
organization as a whole, on the other. Altogether these four fits are described as ‘person-environment
fit’ (this is also an alternative name for the interactional approach).
Four levels of person-environment fit
Person-job fit
Person-job (PJ) fit is defined as the compatibility between individuals and the jobs (work role, work
activities and tasks) they are expected to perform.
Why look for person-job fit? The answer might be intuitively obvious, but it is worth explaining.
Research evidence shows that PJ fit has strong positive correlations with job satisfaction and
organizational commitment, and a strong negative correlation with intent to quit (voluntary turnover).
It is also strongly correlated with applicants being attracted to the organization and with the
organization’s intent to hire an applicant who shows a good fit.

Person-job fit
Person-organization fit
The notion of person-organization fit refers to the degree of congruence between values of an
individual and values of the organization.
Let us briefly introduce a model for classifying organizational values, called the Competing Values
Framework. This framework distinguishes between four types of organizational culture: clan,
adhocracy, market and hierarchy.
As depicted in the figure below, each culture type has a specific orientation (e.g. an adhocracy culture
is oriented toward creativity) and its own set of values (e.g., market culture values competence,
achievement and competition.
The Competing Values Framework: Types of organizational culture

Each culture type also has a particular “theory of effectiveness” that identifies how an organization
can achieve its goals: In clan, organizational members associate effectiveness with human
development and high commitment. In adhocracy, people believe that effectiveness comes from
innovation, vision and continuous change. In market, members believe that effectiveness results from
aggressively competing and focusing on customers. In hierarchy, members believe that control and
efficiency with capable processes produce effectiveness.
Each culture encourages certain behaviors: clan encourages teamwork, participation, employee
involvement and open communication; adhocracy promotes risk taking, creativity and adaptability;
market privileges gathering customer and competitor information, aggressive pursuit of goals and a
focus on task; hierarchy endorses rulefollowing and discipline.
How does this relate to person-organization fit? Research on PO fit shows that when individuals
perceive that the things they value in life are very similar to the things their organization values (i.e.
when there is PO fit), they are more satisfied with their jobs, and experience greater organizational
commitment. PO fit also has a correlation of 0.46 with the applicant’s attraction to the organization
and 0.61 with the organization’s intent to hire applicants with PO fit.
When making selection decisions using ‘multiple fits’, you may face certain tradeoffs. At one time, a
candidate may be a perfect match for the job, but may lack PO fit; at other times, the person may be
a perfect fit organizationally, but may lack some attributes relevant to the job. How do you weigh the
different criteria? Sekiguchi and Morley (2007) offer a useful contingency perspective on PE fit. They
suggest that the relative importance of PJ versus PO fit depends on three factors: (1) type of human
capital, (2) individual loyalty, and (3) type of contract.
• Human capital. Organizations can be looking for knowledge, skills and abilities (‘human
capital’) that are either generic or firm-specific. Generic human capital is associated with KSAs
that are applicable to a broad range of jobs across organizations. The more general the human
capital, the more easily it can be obtained from the external labour market. In this case,
organizations tend to rely on contingent workforce that they can easily ‘buy’ on the market.
Firm-specific human capital is associated with KSAs that can be applied only in a specific firm
and are not easily transferred outside the firm. The more firm-specific the human capital, the
less likely it is to be available on the external market. In this case, organizations tend to ‘make’
their own human capital by developing employee KSAs internally through training.
• Individual loyalty. Individuals can be divided into two groups based on where their loyalty
resides into “cosmopolitans” and “locals”. Cosmopolitans are the individuals who are loyal to
their occupation and have little loyalty to the organization. Professionals, such as lawyers and
engineers, are most commonly cosmopolitans. Cosmopolitans value autonomy, collegiality in
decision making, client orientation and conformity with occupational standards and ethics –
and expect their employer to provide those. In contrast, locals are mainly loyal to the
employing organization. Executives and managers are usually locals. In contrast to

cosmopolitans, locals are more dependent on and accountable to their employing
organization than their occupations. The tasks of locals, and their interpersonal, informational
and decisional roles, are often deeply embedded in the organizational context. Non-managers
may be locals if they identify strongly with their employing organizations rather than with
their occupation.
• Type of contract. Employment contracts could be transactional or relational. In transactional
contracts, job requirements and expectations are clear and specified in advance, allowing
individuals to assess the personal costs and benefits associated with the exchange and to
calibrate their contributions accordingly. An example of a transactional psychological contract
is the employment relationship with contingent employees. Typical psychological contracts
between contingent workers and organizations are characterised as: ‘You tell me specifically
what tasks you want done in what period and I will do them. Don’t expect me to go beyond
those tasks.’ In relational contracts, details of the exchange are unlikely to be specified in
advance. Relational psychological contracts typically occur in long-term employment
relationships.
Putting this together we can deduce that person-organization fit will be more important than person-
job fit for firm-specific human capital, ‘local’ employees, and relational contracts. In turn, person-job
fit will be more important than person-organization fit for generic human capita, ‘cosmopolitan’
employees, and transactional contracts.
5.6 Current trends in recruitment and selection
5.6.1 Sustainable recruitment
One of the latest trends is “sustainable recruitment”. A recent review of peerreviewed literature and
interviews and focus group with experts in HR and sustainability has identified the following
recommendations for sustainable recruitment practices (Jepsen and Grob, 2015).
1. Paperless processes: Using technology to reduce paperwork is perhaps the most obvious
environmentally preferable practice. Recruitment- related activities that are now frequently
conducted electronically include advertising vacancies, receiving and distributing applicant
resumes, reference checks, letters of offer and employment contracts.
2. Technology to reduce travel: The need for in-person interviews is changing as technology allows
for improved remote communication. Whether the two parties are located across the city, the
country or are spread internationally, technology such as teleconferencing, video conferencing
and Voice over Internet Protocol (VOIP) calls mean high-quality discussions may be conducted
without the environmental costs of air and motor vehicle travel. Webcamenabled, home-based
applicants will save energy, carbon and greenhouse gas emissions by reduced travel occurrences

and will increase their personal time. The number of in-person interviews may be reduced by
introducing at least some electronic and video interview.
3. Green interviews: The interview setting and way in which it is conducted will create a strong
impression on candidates and contribute to the psychological contract of the newly hired
employee. Reusable crockery, direct keyboard entry and an interview environment that
demonstrates sustainability practices that exhibits leadership by the recruitment team gives an
impression to the candidate and sets the tone for later employment.
4. Recruitment from within: Creating an organization that develops its own employees not only
provides increased opportunities for personal growth but also is more likely to become an
employer of choice, more easily able to attract high-quality applicants and retain high-quality
employees. 5. Sustainability competencies: Many organizations are recruiting people who will be
sustainability champions in their organization; yet, many managers and recruiters are not aware
of the technical skills they are seeking. Beyond specific education requirements and research,
communication, organizational change and political skills needed for such roles, candidates should
show awareness and understanding of sustainability.
5.6.2 Name-blind recruitment
To reduce discrimination and promote social mobility, some recruiters in the UK are experimenting
with the ‘name-blind’ recruitment. Deloitte has eliminated names as well as schools and universities
from the application form. This is an attempt to stop recruiters from being prejudiced against women
or those with foreignsounding names, as well as from judging the candidates by their background,
which an educational establishment might reveal. Critics, however, point out that social background
and polish are easily detected at interview stages and that such measures will not work unless bias
within an organization is also tackled.
5.6.3 Gamification
Organizations are increasingly using “recruitment games” – a hybrid recruitment and selection tool.
“Such new tools increase efficiency by simultaneously attracting and screening applicants early in the
hiring cycle, thereby creating more compressed hiring and socialization cycles for both individuals and
organizations. At the same time, high technological recruitment games have a marketing intent as
they might brand the organization’s image, help with public relations, and strategically position the
organization in the local job market” (Derous and De Fruyt, 2016).
Tech companies have been challenging software engineers and developers to compete for jobs by
showcasing their technical and creative skills. Google, for example, implemented “The Google Code
Jam,” a global online software-writing contest that attracts over 7,500 people each year. The top 25

finalists are invited to the Mountain View campus to compete for $50,000 in prizes, as well as a chance
to work at Google. Another example is Facebook’s “Programming Challenge,” in which candidates can
solve programming challenges to “get noticed” by potential employers.
Online platforms
The global labour market is rife with inefficiencies. At the top of the list are information failures at
both the micro and macro levels. Employers often do not have a very clear sense of where to find the
talent they need or what skills any given candidate might have. Meanwhile, job candidates have poor
information on which jobs and skills are in demand and the pathway to get there. They also do not
have clarity on which educational and career choices would be best for them.
Decisions on all sides of the market can be ad hoc and based on faulty assumptions. Hiring sometimes
comes down to having attended the right school or sharing the same interests as an interviewer. While
these data points can provide insights, they are not always good proxies for the key factors firms are
concerned about, namely worker productivity and likelihood of retention. Data and analytics can
enable more informed decision making on all sides.
Enter online talent platforms. Online platforms take the form of websites, mobile apps, or proprietary
corporate systems. They gather a huge volume of information regarding both individual workers and
employers work projects, then synthesize this data to match individuals with job opportunities. They
can bring greater transparency and efficiency to labour markets. There are three types of such
platforms:
The largest segment by far is made up of talent platforms that match individuals with traditional jobs.
This includes sites such as Indeed, Careerbuilder, Monster. com, Germany’s Xing, and France’s Viadeo.
LinkedIn is the largest platform of this type, with more than 364 million members worldwide, and it
facilitated nearly one million new hires in 2014. Through these platforms, employers can access not
only the same information as on traditional resumes but also reputational information about job
seekers. This may include endorsements from colleagues on hard and soft skills, customer ratings, and
data gleaned from social media activities. Recruiters and HR professionals increasingly use these talent
platforms to seek out and contact individuals they want (rather than placing an ad and waiting to see
who responds).
• Another category of online talent platforms connects contingent workers with specific
assignments. Although the number of people employed on such platforms is still small, these
are growing rapidly. Traditional employers and start-ups can use these platforms to call in
specialists for an assignment on short notice. Upwork, for example, has created online
marketplace connecting four million businesses with more than nine million freelancers from
180 countries, performing tasks such as web development, graphic design, and marketing.
Some of these platforms are aimed at consumers rather than companies. Individuals can turn
to TaskRabbit and Amazon Home Services, among others, to hire someone nearby for errands

or home repairs. A growing number of these platforms deliver one type of specialized service,
such as Uber, Lyft, and Sidecar for taxi services and UrbanSitter and Care.com for child care.
• The third category of online platforms assists organizations with talent management.
Platforms such as Good.co, PayScale, Pymetrics beta, and ReviewSnap help to assess
candidates’ attributes, skills or fit, personalise onboarding, and determine the best options
for training and skill development.
Online talent platforms offer a number of benefits to individual workers. The availability of
comprehensive online job listings provides them with more options and a better understanding of the
wages they can command on the open market. Talent platforms such as Glassdoor and Vault gather
anonymous reviews and salary information provided by current and former employees of specific
organizations.
This gives individuals an insight into what it would be like to work for a given company, increasing the
odds that they will choose a work environment they will enjoy. The accumulated ratings and feedback
provided to contingent workers through online marketplaces could be valuable, particularly for young
people with little other work experience as they seek permanent employment. Accumulating and
codifying these reputational elements can help individuals distinguish themselves in the job market
and can help employers identify people who are a better fit for the positions they are filling.
Online platforms also benefit companies. For organizations with a large share of highly skilled workers
they provide opportunities to improve recruiting and personalise various aspects of talent
management, including training, incentives, and career paths. For companies with large low-skilled
workforces and high attrition rates online platforms facilitate better screening and assessment of job
candidates. Online talent platforms can also provide benefits to small businesses that lack dedicated
HR departments.
Companies, however, also need to prepare for a whole new phase in the war for talent now that
workers have publicly visible profiles. Competitors can more easily lure away valued employees (and
even entire teams), and so some companies may face increased costs due to higher employee
turnover. This makes it more important than ever for companies to create a compelling value
proposition for their workforce. Those that do are likely to be net beneficiaries of the digitization of
talent markets. Just as they carefully manage their consumer brands, companies now have to be
conscious of managing their reputations as employers. (The individual platforms, companies, and
functionalities described here represent a snapshot of where this fast-moving field stood in 2015,
based McKinsey Global Institute reports (McKinsey Global Institute, 2015; 2016).
5.7 TAKEAWAYS

1. Recruitment is an employer’s actions intended to bring a job opening to the attention of potential
job candidates and influence whether these individuals apply for the opening, maintain interest
in the position until a job offer is made, and accept the job offer.
2. From the recruiting organization’s point of view, recruitment process consists of five stages: job
analysis; establishment of the recruitment objectives; development of a strategy for filling the
open position; actual recruitment activities; and evaluation of the recruitment outcomes. It is also
important to consider the recruitment process from the applicant’s point of view and to
understand the applicant’s interests, self-insight, attention and expectations.
3. Recruitment sources include: internal recruitment; employee referral schemes; advertising;

outreach and networking; and external recruitment providers.
4. Job adverts should indicate the organization’s activities and values; requirements of the job;
necessary and desirable criteria for job applicants; job location; reward package; type of
employment offered (e.g., whether it is a short term contract or a full-time position); and details
of how to apply and the deadline. Job adverts must be clear and accurate and care should be taken
so that the wording does not inadvertently deter candidates from applying.
5. The use of information technology and social media in recruitment allows to personalise
recruitment information and make recruitment process more interactive and proactive.
6. Selection is the placement of individuals into jobs using one or more methods to collect
information about an individual in order to determine this individual’s suitability for employment
in a particular job. There are two approaches to selection: the psychometric approach and the
interactional approach.
7. The psychometric approach views the process of selection from the perspective of the hiring
organization and shows how good selection decisions should be made. This approach focuses on
predicting desired outcomes (e.g. production quantity or quality, success in training, adaptability
to change) on the basis of an assessment of individual characteristics (mainly knowledge, skills,
abilities and other factors, such as personality). Selection methods include: accomplishment
record; assessment centre; biodata; cognitive ability tests; emotional intelligence tests; integrity
tests; job knowledge tests; personality tests; reference checking; situational judgement tests;
structured interviews; and work samples and simulations. There are six criteria for comparing
selection methods: validity; reliability; legality and fairness; administrative convenience/
practicality; cost and development time; and applicant reactions. It is advisable to choose
selection methods that perform best on most of these criteria.
8. The interactional approach treats selection as a two-way process, with individuals looking for jobs,
and organizations looking for employees. What individuals and organizations are trying to achieve
is a two-way fit: the fit between what the person wants and has to offer and what the organization

needs and can provide. This two-way fit is complex and obtains on several levels: between the
person, on the one hand, and the job, the work group, the supervisor, and the organization as a
whole, on the other.
9. Current trends in recruitment and selection include: (a) sustainable recruitment (which entails
using paperless technologies, minimising the amount of travel associated with recruitment;
internal recruitment; and recruiting for sustainability competencies); name-blind recruitment (to
reduce discrimination in selection; and “gamification”, i.e. using games for recruitment and
selection.
Note: Remember also to review Takeaways provided in your textbook Chapters 9 and 10.
Section 6: Learning, training and development
• explain what is learning and how people learn

• consider different styles of learning and recognise their relevance to learning, training and
development in organizations
• explain the importance of strategic approach to learning, training and development
• identify the stages of learning, training and development process
• analyse and assess different methods of learning, training and development
• explain the determinants of learning behavior in organizations, and apply them to diagnose
and solve problems pertaining to training and development
• explain the importance and challenges of creating a learning organization.
6.2 Linked readings
Organizational Behavior, Chapter 8 Learning and Decision Making
6.3 Introduction
Learning may be broadly defined as a process of acquiring new, or modifying existing, knowledge,
skills, behaviors, values, or preferences.

In the organizational and HRM context, learning, training and development (LT&D) are concerned with
enhancing and widening employees’ skills, knowledge and competencies, and enabling them to make
better use of their skills and abilities.
Good provision of LT&D gives multiple benefits to different parties:
• to employers in terms of higher performance and quality,

• to national economies in terms of increased competitiveness,
• to employees in terms of increased employability.
For individuals, learning and developing in work is becoming increasingly important, as the notion of
a ‘job for life’ becomes less and less common. As concepts such as ‘life-long learning’ and
‘employability’ imply, the contemporary workplace is less stable with people often having several
careers in their working lifetime. Consequently, individuals feel more and more pressure to remain
employable in different contexts by developing transferable skills. Even staying in one organization
means continuing to learn as the organization changes, as technologies develop, or as the individual
takes on new responsibilities.
In addition, as organizations become flatter in structure, individuals need a larger repertoire of skills
and the ability to multi-task. Consequently, there is a dynamic relationship between the individual and
the workplace with respect to learning needs. Managers therefore need to acquire and develop the
skills to manage and develop their own learning and to supervise and encourage the learning and
development of others.
6.4 Defining the key terms
Change it to CIPD (2017) Learning methods
https://www.cipd.co.uk/knowledge/fundamentals/people/development/learningmethods-factsheet
The terms ‘training’, ‘development’ and ‘learning’ are used broadly, but can be summarised as follows
(Chartered Institute of Personnel and Development, 2017):
• Training is an instructor-led, content-based intervention designed to lead to skills or behavior

change.
• Learning is a self-directed, work-based process that leads to increased adaptive potential (as
might be provided by coaching or mentoring opportunities or being part of an online
community or personal learning network, for example).
• Development implies a longer-term or broader process – acquiring skills or knowledge by a
range of different means such as coaching, formal and informal learning interventions,

education or planned experience. The purpose of development may relate to personal growth
or future jobs or work roles.
These are broad definitions, and it is important for organizations to know what these terms mean to
them. In recent years, there has been a change of emphasis from a limited concept of formal training
to a broader concept of learning and development and towards a focus on learner. There has also
been a shift from course-led learning experiences to bringing learning directly into everyday work.
This shift means a greater role for line managers in the delivery of learning. This is a new role for many
managers who still see learning as a separate activity provided by HR professionals and happening
away from the workplace.
Other key terms include.
• The terms “education and training” used together describe the overall system that aims to
develop peoples’ intellectual capability, conceptual and social understanding and work
performance through the learning process.
• The term “learning process” refers to the process by which an individual’s attitudes, behavior
and performance is changed.
• Skills are the aspects of behavior that are practiced in a work situation which individuals need
to be able to perform to do the job satisfactorily.
• Competency is a newer term and refers to a way of translating what is required for the success
of the organization in terms of individual characteristics. A competency is an observable skill,
ability or predisposition judged necessary to complete a task successfully.
Bloom’s et al. (1956) influential taxonomy views learning as comprised of the following ‘building
blocks’:
1. Knowledge – of relevant information, terms, theories etc.
2. Comprehension – understanding the meaning of this knowledge.
3. Application – the ability to apply this knowledge and comprehension in new situation.
4. Analysis – breaking down material into constituent parts and seeing relationships between them.
5. Synthesis – reassembling the parts into a new and meaningful relationship. 6. Evaluation – the
ability to judge of the material.
Different forms of knowledge are distinguished:
• Explicit knowledge is the knowledge can be captured and described. For example, this might
be the grammar of a language.

• Procedural knowledge is the knowledge that derives from familiarly with the processes and
procedures of doing something.
• Tacit knowledge refers to the ability to perform a task without necessarily being aware of how
it is done.
The types of knowledge can be associated with the types of learning.
• Explicit knowledge might be memorised and tested through a formal evaluation process.
• Procedural knowledge is learned through observation and then extended practice.
• Tacit knowledge is difficult to specify and pass on to others. It might be developed through a
social process whereby practices and understandings are gradually surfaced through
interaction and discussion.
Thinking about different types of knowledge encourages us to recognise the different mechanisms of
learning that might be used by organizations. For example:
• Formal learning refers to organised learning programmes such as training courses or courses
leading to qualifications. These may be organised and facilitated by others and be directly and
explicitly linked to wider company objectives.
• Informal learning refers to a less systematic, more ‘on the job’ process by which people learn
through doing and through working with and observing others.
6.5 Theories of learning
In order to design effective training and development programmes it is important to understand how
people learn. These ideas about learning have been primarily developed within psychology and
broadly fall into two categories.
• Behaviorist theories of learning rest on notions of conditioning and reinforcing desired

behaviors. They primarily consider observable behaviors rather than internal mental states.
Desired behavior is usually encouraged thorough the application of appropriate rewards. For
example, high quality performance in a job might be reinforced by the provision of a bonus.
This is hoped to led to the continuation (or conditioning) of this behavior. Under behaviorist
theories the trainer/teacher is in control of the process of learning.
• Cognitive theories of learning focus on the internal thought processes that produce learning
and view learning as a process that consists of an active perception stage which gives attention
to stimuli from the environment, followed by a mentally active stage which makes sense of
the information, and a restructuring and storage phase.
The following table provides a comparison between the two types of theories:

Behaviorist and cognitive theories of learning: A comparison
Of course, these theories considerably simplify the process of learning. Most of us learn in different
ways depending on what is being learned. These theories also neglect the many external factors that
influence learning. Social learning theory, for example, recognises that people learn by observing and
interacting with others and through imitation. Thus, a trainee mechanic might observe the practices
of a senior colleague, and build up an understanding of a process as a consequence.
In practice learning is also influenced by personal preferences, culture, past experience and previous
education amongst other factors.
6.6 Learning cycle and learning styles
Perhaps, the most well-known learning theory is the theory of experiential learning developed by
David Kolb. The theory is called “experiential learning” to emphasize the central role that experience
plays in the learning process.
6.6.1 Learning cycle
Kolb posited that learning proceeds through four stages of a learning cycle (Kolb, 1976; 1984):

1. The learning cycle starts with a concrete experience. In other words it begins with doing
something in which the individual, team or organization are assigned a task. Key to learning
therefore is active involvement. In Kolb’s model one cannot learn by simply watching or reading
about it. To learn effectively the individual, team or organization must actually do something.
2. The next stage is reflective observation. This means taking time-out from “doing” and stepping
back from the task and reviewing what has been done and experienced. The concrete experience
is handled using existing knowledge recalled through memory and then applied. The learner
reflects on the outcome and implications of the experience. When learning in a team, at this stage
lots of questions are asked and communication channels are opened to others members of the
team.
3. The third stage is abstract conceptualisation, in which rules, theories and frameworks may be
used to try and better understand the experience. Abstract conceptualisation is the process of
making sense of what has happened and involves interpreting the events and understanding the
relationships between them. At this stage the learner makes comparisons between what they
have done, reflect upon and what they already know. They may draw upon theory from textbooks
for framing and explaining events, models they are familiar with, ideas from colleagues, previous
observations, or any other knowledge that they have developed.
4. The final stage is when the learner considers how they are going to put what they have learnt into
practice. Planning enables taking the new understanding and translating it into predictions as to
what will happen next or what actions should be taken to refine or revise the way a task is to be
handled. For learning to be useful most people need to place it in a context that is relevant to
them. If one cannot see how the learning is useful to one’s life then it is likely to be forgotten very
quickly. When the learner encounters the same (or similar) situation in future, the learning from
the previous experience can be applied through active experimentation to try and achieve a more
satisfactory outcome. Active experimentation produces new concrete experience – and thus the
new cycle of learning begins.
The following figure provides a visual representation of the learning cycle.
Kolb’s learning cycle

To offer a simple example, think about how children learn. If a toddler touches a hot radiator the
following stages are likely to occur:
1. Touches the hot surface of the radiator and feels pain – a concrete experience.
2. Associates pain with the radiator – reflective observation.
3. Forms a general rule that touching radiators hurts – abstract conceptualisation.
4. Cautiously puts hand close to other radiators to test the rule – active experimentation.
Arranged like this, these actions complete a full learning cycle, which is an ongoing process of learning,
trying things out, relating them to previous experiences and modifying our rules. Suppose the child in
the example next touches a hot oven. The chances are that – after reflecting on the new experience
– it would be incorporated into the same general rule as the radiator.
6.6.2 Kolb’s learning styles

The learning cycle has also been applied to understand the preferences of individual learners. Kolb
suggested that individual’s may have a preference for one stage in the cycle. This then described their
preferred learning style.
Kolb (1984) identified four different styles of learning:
• Accommodating = doing + feeling (hands on and intuitive). Accommodators enjoy

experimentation and trying things out for themselves. They like to learn by talking and asking
questions, but don’t like strict rules and timetables. Their greatest strength is in getting plans
actually implemented, but weaknesses can include when they ignore the acknowledged
theory, instead relying on their own previous experiences, and not keeping within time
schedules or budgets.
• Diverging = watching + feeling (hands-off and intuitive). Divergers learn by receiving
information through their senses and then reflectively thinking about what they have seen or
felt. They tend to be very imaginative and like brainstorming, sharing ideas, working in groups
and thinking through how their ideas will actually impact. A weakness can be that they have
too many ideas and become indecisive.
• Assimilating = watching + thinking (hands-off and logical). Assimilators gather together as
much information as they can, think about it and then develop theoretical responses to a
problem. They prefer working alone and are particularly good at developing new theory.
However, relating the theory to practice tends to be a weakness for them and they are more
concerned with a robust theory rather than its potential in solving a problem.
• Converging = doing + thinking (hands-on and logical). Convergers prefer to select another’s
idea and test it out in practice. They learn by trying, doing and then thinking. They are
particularly uncomfortable with ambiguity, working in groups and wasting time. Their
strength is practical application but a weakness is sometimes acting before they have
sufficient information or have reflected on possible outcomes of their actions.

Scoring
Scoring Norms
Use the following norms to identify your preferred learning style (or styles):
Comparing norms for concrete experience (CE):

6 – 11 = Low
12 – 15 = Moderate
15 and above = High
Comparing norms for reflective observation (RO):

6 – 10 = Low
15 and above = High
Comparing norms for abstract conceptualisation (AC):

6 – 15 = Low
21 and above = High
Comparing norms for active experimentation (AE):

6 – 14 = Low
18 and above = High

Source: Adapted from Buelens et al. (2011)
6.6.3 Honey and Mumford’s learning styles
Kolb’s ideas were further developed by Peter Honey and Alan Mumford (1986) and applied to the
specific context of management. They identified particular behaviors associated with learning styles:
• Activist = Accommodating – “I’ll try anything once”. Activist learners thrive on new
experiences and like to get fully involved as well as being the centre of attention. They are
enthusiastic and open-minded and prepared to give most things a chance without being too
critical. They learn best by active involvement in concrete tasks and from relatively short
activities such as business games and competitive teamwork exercises.
• Reflector = Diverging – “I need some time to think about this”. Reflectors are thoughtful and
cautious individuals who like to spend a lot of time collecting and analysing data before
reaching conclusions, making decisions or acting. They prefer to consider a range of different
perspectives and to observe other people in action. They learn best by reviewing and
reflecting upon what has happened in a situation in circumstances where they are able to
stand back, listen and observe.
• Theorist = Assimilating – “How does this relate to that”. Theorists are always looking for logical
explanations for things, developing theories and frameworks to make sense of what they
observe. They seek to integrate facts into coherent models and theories, and are seldom
satisfied until things appear to be completely rational and without ambiguity. They learn best
when new information can be located within the context of particular theories and
frameworks and where they are able to absorb new ideas while distanced from the demands
of real life situations.
• Pragmatist = Converging – “How can I apply this in practice”. Pragmatists like to try out new
ideas and theories in a practical situation to see if they work. They have little time for in-depth
analysis and reflection which they often see as wasting time and getting in the way of action.
They learn best when they see a link between new information and real-life problems and
issues and from being exposed to techniques that can be applied immediately.

6.6.4 Application
The learning models remind us that learning is an interactive and ongoing process that involves
different styles, preferences and orientations. They undermine simplistic behaviorist approaches and
show that people have different ways of taking in and processing information. They also help us
recognise that learning results as much from our reflection upon information as the information itself.
Note that the frameworks represent ‘ideal types’. It is unlikely that individuals will conform to a single
learning style. Context is important too: individual’s learning styles might differ depending on what is
being learned. For example, an individual may be a reflector in response to certain situation, and a
pragmatist in others.
Ideas about learning styles are useful when considering training and development needs. They
highlight that there is not one “best way” of training or one single best approach to learning.
Indeed, focusing on a single training methods will exclude learners whose style is more conducive to
a different method. Therefore, it is helpful to provide a range of methods in order to provide
opportunities for learning to people with different styles and learning strategies.
Using a variety of methods will also increase involvement. Practitioners are advised to adopt a number
of different formats when presenting information to accommodate all learners’ preferences. Using a
variety of techniques can also encourage staff to experiment with approaches to learning with which
they are less familiar but which might challenge them to think outside of their comfort zone.
Consequently, it is necessary to view learning as an ongoing iterative process. It involves individuals

constantly evaluating what they have done, deciding what was effective and making appropriate
improvements. This iterative process of “active learning” in the workplace has been captured by
Schön’s (1983) concept of the reflective practitioner. The reflective practitioner is someone who is
able to “to reflect on an action so as to engage in a process of continuous learning”.
Schön made a distinction between ‘reflection-in-action’ and ‘reflection-on-action’:
• Reflection in action is the process of thinking about an issue as it happens and reacting straight
away.

• Reflection on action is a retrospective process of developing new understandings that will
influence future actions in similar situations.
A reflective practitioner captures their experiences so that they can reflect upon them and develop
further. Ways of recording and reflecting on learning include keeping a diary, developing a personal
development plan, and discussing experiences with a mentor. Your learning development portfolio is
a reflective practice tool. In this way, nearly all aspects of working life offer potential opportunities for
learning.
6.7 Psychology and neuroscience of learning
Until recently, applying psychology to the design and delivery of learning has often been limited to a
small number of models that we have reviewed above. Lately, however, these key models have been
critiqued as they are considered to:
• be an oversimplification of the complexity of how we learn

• have no secure evidential base to support the theory (although it’s important to be aware of
the limitations of any learning model and the field as a whole)
• be, at best, one of a range of factors determining how learners engage and react to learning,
which also includes the environment, context, instructional methods and learning aims
• not result in consistent learning gains
• stereotype learners, which can limit the learner’s perceptions of effective learning strategies
HRM research and practice are increasingly looking to psychology and neuroscience for new models
and insights into how to facilitate effective learning and there’s a growing body of evidence that is
giving organizations opportunities to enhance learning effectiveness.
However, it’s an area where research is continually advancing so there’s a need to constantly seek
evidence and assessment of such methods and approaches. Cognitive insights and neuroscientific
findings are much less prescriptive than the learning styles approach.
6.7.1 Cognitive styles
Cognitive styles are similar to learning styles in that they’re thought to be physiologically based and
therefore relatively stable. As with learning styles, there are competing and overlapping theories.
Although different authors may use different terms to describe them, two of the more widely
accepted types of cognitive style are the verbal-imagery dimension and the holist-analytic
dimension:

• Verbalisers represent information in the form of words, while imagers tend to think
pictorially. Verbalisers therefore learn best through text or the spoken word, while imagers
learn best from graphic representations of information.
• For the holist-analytical dimension, the organization of information is the key consideration.
Holists take a global, top-down view of information; analytics break information into its
component parts. Holists therefore tend to prefer a breadth-first structure that gives an
overall view of a topic before introducing detail. Analytics prefer a depth-first approach,
where each topic is explored fully before moving on to the next (Chartered Institute of
Personnel and Development, 2018f).
There are various tools on the market for diagnosing cognitive styles, but again there are issues with
their reliability and validity. And, like learning styles, what this means for instructional practice is a
more difficult question.
6.7.2 Learning to learn
If you accept that it’s better to deliver learning interventions in multiple ways at multiple times, you’ll
achieve better learning outcomes. Perhaps more importantly, those who support people learning
effectively can add value by encouraging learners to reflect on how they learn. Most theorists agree
it’s beneficial to support learners to do this.
An increased awareness of how each of us think and learn, sometimes known as ‘metacognition’, is
perhaps the most important advantage of applying learning theories from neuroscience. Learners who
are aware of a range of different learning strategies are more likely to better prepare for their learning
experience.
The fundamental difference between the concept of fixed learning styles and flexible learning
strategies is that instead of adapting instruction to the learner, the learner chooses the approach
that’s most appropriate to the task at hand. The issue becomes as much one of learning skills as
learning styles or strategies. The challenge, then, is to provide metacognitive support for learners that
enables them to reflect not just on what they learn, but also how they have learned something and
why.
6.7.3 Models that apply neuroscience to learning
There are a number of models emerging from neuroscience ideas that can be applied to learning
design and delivery. Below we provide the brief summaries of these models based on the information
provided by the CIPD (Chartered Institute of Personnel and Development, 2018f).
RAD

This model refers to specific brain functions and highlights particular characteristics related to
effective learning.
• R (Reticular activating system [RAS]): All information enters the brain through sensory inputs
but only a fraction makes it through the unconscious RAS filter. Effective learning content
should therefore be non-threatening, novel and engaging.
• A (Amygdala): The part of the brain’s limbic system which acts as a filter to send information
to the reactive or reflective areas of the brain. Learning requires reflection, which is supported
by stress-free environments in which positive past experiences and strengths are highlighted.
Stressful environments should be avoided, which lead to a fight, flight or freeze response.
• D (Dopamine): This chemical neurotransmitter, linked to our sense of pleasure, is released
during pleasurable experiences. Effective learning is supported by creating positive
associations with existing knowledge and past success, and through engaging and creative
activities.
SCARF
This model focuses on how the brain responds to threat and reward.
• S (Status): Learning that’s perceived to enhance status (leading to a promotion, for example),
will be motivational.
• C (Certainty): If we lack certainty about a situation our impulse may be to disengage, whereas
clear steps and a sense of order can increase learning transfer.
• A (Autonomy): A degree of autonomy in learning is a key factor in reducing stress, as it means
we have some influence over what is taking place. There’s a contrary impact if we are denied
autonomy; effective learning involves some choice and control.
• R (Relatedness): If we feel trust, empathy and social connection during learning, oxytocin is
released in the brain, which increases engagement.
• F (Fairness): A sense of unfairness stirs hostility and threat, but learning which is perceived as
fair and justified is motivational.
AGES
This model proposes that learning is more effective when the following four factors are considered in
the learning design and delivery.
• A (Attention): We need to ensure minimal distractions and avoid cognitive overload;

undivided attention is essential for effective learning. Novelty and varied techniques and
approaches enhance attention.
• G (Generation): We maximise the likelihood of positive engagement and formation of long-
term memories when learning has personal meaning and significance. L&D practitioners

should relate learning to existing knowledge and support personal, meaningful associations
and applications.
• E (Emotion): This is a key factor in fostering attention and enhancing memory function.
Generating positive emotional experiences and social activities is key to effective learning
transfer. Conversely, if learners have a negative emotion associated with learning, such as a
fear of failure, they are less likely to engage.
• S (Spacing): It’s better to distribute learning in discrete blocks delivered over short time
periods than cram lots of content into a prolonged session. ‘Chunked’ learning results in more
effective transfer and aids long-term memory.
6.8 Learning in the workplace
In the context of the workplace, learning needs to be specifically designed to support the
organization’s strategy. Accelerating and facilitating learning for individuals or groups to achieve
organizational goals is seen as critical for an organization’s productivity and performance (Chartered
Institute of Personnel and Development, 2018e).
Given that high levels of workforce skills are critical to business productivity and economic prosperity,
supporting learning at work is high on the agenda of policymakers and employers in many parts of the
world. For organizations, the skills of the workforce are vital to meet current and future business
demands. For individuals, skills levels help to determine their employment and earnings potential.
To improve a country’s skills profile, it’s not enough to simply focus on preemployment education and
training. It’s also crucial for employers to continually invest in and develop the skills levels of their
employees through methods such as on-the-job training, in-house development and coaching.
The nature of work is changing with disruptive approaches undermining previously successful business
models and past achievements no longer guarantee future success. Globalisation and technology are
forcing organizations to embrace new competition and complex challenges. The workforce is at its
most diverse with the greatest age range of workers than at any time in history resulting in a variety
of needs. Employees are demanding more flexible working and the more frequent transition from one
organization to another creates a constantly evolving workforce. And, the necessity of fixed
geographic workplaces is challenged by dispersed staff who must be supported to work and interact
using virtual and online solutions. All these forces create pressures towards greater workplace
learning.
6.9 Importance of learning, training and development

Human Resource Management is a strategic approach to managing people. Therefore, different
elements of HRM need to be integrated within wider business strategy. For LT&D to be effective it
cannot be seen as an ad hoc operational issue, or a luxury that is only contemplated in times of growth.
LT&D is central to the philosophy and credibility of HRM and its pursuit of flexibility, quality and
commitment. It has been suggested that investment in training and development is a test of whether
or not an organization is treating its employees as resource rather than cost or commodity. Hence,
investment in LT&D has an important symbolic function: it demonstrates to employees by that they
are worth investing in and that their contribution is important to organizational success. Seen from
the employee perspective, LT&D can have a positive impact on commitment and intention to stay.
LT&D has also been high on the political agendas in the context of the increasing importance of the
“knowledge economy”. It is often argued that economic and technological changes over the last few
decades have increased the demand for skilled, educated workers (Adams and Demaiter, 2008). In
particular, the expanding use of information technologies is said to increase the need for problem-
solving and analytical skills. In this knowledge economy workers are required to be flexible, highly
skilled, and able to engage in self-learning (Castells, 2000). It is widely believed that continuous
learning and skill development are key methods to enhance productivity and raise living standards
Consequently, LT&D is a central element in governmental strategies for improving economic and
competitive success.
6.9.1 Benefits of LT&D
Effective LT&D can have numerous benefits:
• helping employees learn the job more quickly and efficiently.

• improving work performance of employees and keeping them up to date in specialist skills.
• freeing management time, less of which is spent correcting errors.
• reducing wastage as employees can be trained to monitor the quality of their work.
• reducing labour turnover.
• reducing recruitment cost through retraining and retaining existing staff.
• attracting talented employees.
• as a perquisite for flexible working where employees may be expected to deal with different
jobs or tasks, or to take on additional responsibilities.
• enabling organizations to equip their staff to adapt more easily to changes in the environment.
However, these benefits are not always realised, because in practice LT&D is often deficient in a
number of aspects. For example:
• Training courses tend to be of a short duration.

• Much of the training is ‘personal training’ initiated by employees themselves and carried out
in their own time.
• Training is perceived to be inadequate to deal with new technology and job enlargement.
• Training is rarely linked to recognised qualifications.
• There is little evidence that training was integrated into an overall strategic approach to HRM
and closely linked to rewards or career.
• Many employees feel that training is the preserve of those higher in the hierarchy; the further
down an organization ladder one goes, the less money is spent on training.
• When training is provided, the organizations do not properly evaluate its effectiveness
(Grugulis, 2009).
6.10 Strategic approach to learning, training and development (LT&D)
The emphasis on the strategic rather than ad hoc LT&D and on the long term development of people
at work as opposed to a short term focus on job demands are central to best HRM practices.
Furthermore, for LT&D to be effective, it needs to be closely integrated with the organizational
objectives. Hence, as part of strategic HRM, design, development and implementation of LT&D in the
organization should begin with the articulation of a learning and development strategy.
A learning and development (L&D) strategy is an organizational strategy that identifies the workforce
capabilities, skills or competencies required, and how these can be developed, to ensure a sustainable,
successful organization (Chartered Institute of Personnel and Development, 2018d) (CIPD, 2018).
The L&D strategy must reflect and reinforce the approach within the broader HRM strategy and also
link with other strategies (for example, reward). Ultimately the L&D strategy has to reflect the
overarching business strategy and drive success directly towards that.
The starting point for an effective L&D strategy is to understand both the internal and external context
of the organization. There are many factors governing this, but the key ones are: the business needs
and the understanding of what gives the organization its competitive advantages; the customers’
needs and expectations; and the business environment and changes predicted in this environment
(e.g., the rate of growth or decline in the industry, the competition and the degree of technological
change), including the industry, business needs and the rationale that drives organizational strategy.
The L&D strategy must also align with organizational culture and address operational realities and
constraints. In particular:
• All work can be considered as a process of continual learning and improvement. This can be
the starting point for creating a learning organization – the concept we introduce later in this
section.

• Expenditure on learning and development needs to demonstrate a measurable benefit to the
organization. This, however, does not necessarily imply a ‘bottom line’ commercial benefit;
rather, it should be viewed as a means to build ‘human capital’ and an engaged workforce.
Talent development is an investment for the future, so an organization may continue to build
future skills even during an economic downturn. L&D also may entail supporting the
organization’s corporate social responsibility (e.g., taking community needs into account
when offering apprenticeships).
• Individuals are more likely to engage with learning which addresses ‘immediate’ performance
needs, but learning should also be linked to an individual’s career aspiration. Personal career
development is critical for retention and engagement.
The L&D strategy and associated policies and programmes must be kept up to date as the business
environment changes and as information is gathered on the effectiveness of learning interventions.
This is important to avoid ‘drift’ where regularly-run learning or training programmes may fail to keep
pace with changing organizational needs.
Developing L&D strategy requires the engagement of key stakeholders:
• Senior management – L&D strategy needs to align with a wider business strategy;
• HR professionals – a company-wide L&D strategy is normally managed by the HR function or
by a specialist L&D function in larger organizations;
• Line managers – line managers are crucial as the ‘gatekeepers’ to individual learning and
development, and people development is increasingly considered as part of any manager’s
role. Line managers can – and often do – contribute to coaching and work-based learning of
their subordinates. The people development responsibilities need to form part of leadership
expectations for line managers and to be recognised and rewarded.
• Individual learners themselves.
An overall L&D strategy is a statement of intent and more detail is needed to provide guidance on how
it will be implemented and who will translate this intent into practice. These details are often set out
in a ‘learning policy’ document that identifies how often organizational, team and individual learning
needs are analysed; who sets the priorities that form the learning plan for the next period;
responsibilities for learning and development; methods used to facilitate learning and development;
personal development plans; equality of opportunity in learning and development; and monitoring
and evaluation of learning and development.
L&D also needs to be integrated with performance management, and individual learning and
development needs may be included in appraisal or development reviews based on the setting of
learning goals and personal development plans.
It is also important to ensure that L&D strategy, policies and practices are fair and equitable. In some
organizations, learning opportunities may be restricted to high-potential or high performing

individuals. In such circumstances, the L&D strategy needs to ensure that no unlawful discrimination
occurs in learning resourcing between individuals (for example, based on gender or ethnicity). Some
organizations may go further than preventing unlawful discrimination in selection for learning
opportunities by making provision to offer extra resources to develop the skills of under-represented
groups. Creating an ethically sound L&D strategy will encourage all to engage with learning.
6.11 Learning, training and development system and process
As part of the overall HRM system, LT&D system and process stem from the L&D strategy and comprise
four main steps:
1. Identifying learning, training and development needs.
2. Devising plans for learning interventions that would address the identified LT&D needs.
3. Delivering learning interventions.
4. Evaluating the outcomes of learning interventions.
6.11.1 Identifying learning, training and development needs
Identifying learning and development (L&D) needs is based on an assessment of the current prevailing
levels of knowledge, skills, and attitudes and knowledge, and an assessment of any current or
anticipated gaps in knowledge and skills (CIPD, 2018).
Such assessment can use formal and/ or informal method. A formal needs analysis – known by terms
such as learning needs analysis (LNA), training needs analysis (TNA) or training and learning needs
analysis (TLNA) – is based on the systematic gathering of data about employees’ capabilities and
organizational demands for skills, alongside an analysis of the implications of new and changed roles
for changes in capability.
The outcomes of analysis inform the choice and development of the appropriate learning provisions
required to enable sustained organizational performance (Chartered Institute of Personnel and
Development, 2018c).
A LT&D need is identified where there is a gap between the current and projected requirements of
the job and the current capabilities of the job holder. The needs analysis must also judge whether the
provision of LT&D is the best solution for the problem or whether other alternatives, such as job
redesign, improved systems of communication and accountability, should be considered.

Analysis of LT&D needs can be done at four different levels:
• For the organization as a whole – to analyse the amount and types of learning needed to
ensure that all employees have the right capabilities to perform in line with the organization’s
strategy. An organizational LT&D need analysis starts with the organizational goals and
strategy, and translates these in terms of required human resources: what attributes, skills,
knowledge will be needed to achieve the organizational strategy. This may involve a “global”
review in which the organizational short and longer term goals are examined to determine
the appropriate skills and knowledge required to meet objectives. Then, each employee is
assessed against the produced criteria. Alternatively, the organizational needs analysis may
be based on the analysis of job descriptions to identify broader core competencies: the key
skills, knowledge and attributes that the organization will require of its staff, at various levels,
to achieve its objectives. Performance can then be reviewed against the competency
framework in order to identify LT&D needs.
• For a specific department, project or area of work – new projects and opportunities require
new ways of working or reorganization, while restructuring also necessitates changes in roles.
This is similar to the organizational needs analysis, but is confined within a part of the
organization.
• For a specific job or occupation – the purpose of job or occupation analysis is to identify
specific training needs. It is the “process of identifying the purpose of a job and its component
parts, and specifying what must be learned in order for there to be effective work
performance” (Harrison 2005: 18-20).
• For individuals – linking their own personal learning and development needs to those of the
business. (Note that it is important to distinguish between the LT&D needs that are identified
for the job, irrespective of who undertakes it, and those that specifically relate to the person
who is currently in the post.) Whilst the organizational need analysis aims at identifying the
skills, knowledge and attributes required by organizations, an individual analysis aims at
identifying the actual level of employees’ skills, and the gaps which exist between actual and
required levels. An individual need analysis therefore attempts to find out who needs LT&D in
the company. The individual need analysis may be carried out as part of performance
appraisal or development review. Note, that if employees are encouraged to identify the areas
of their work that are not being performed acceptably, or with inadequate knowledge or skills,
then appraisal interviews can help identify learning and development needs; but where
appraisal is linked to rewards, employees are unlikely to identify weaknesses.
Depending on the circumstances, a learning needs analysis may for a specific aspect (such as an
organizational or project-based skills audit), an ongoing operation (for example as part of an
organization review process) or a combination of approaches.
It is important to ensure that analyses carried out at any of these levels are integrated and not seen
in isolation. Analysis should also be seen as an iterative process rather than a single event.

Knowing which jobs will be done now as well as those proposed in the future is the first step in
reviewing LT&D needs. Keeping an open mind helps future proof in this process; nobody knows for
certain what jobs will exist in the future, however being agile and prepared for change is important.
Next, for each category of employees covered, the following questions can be considered:
• Which capabilities will be required to carry out the job? (the person specification)
• Which capabilities do existing employees possess? (a capabilities analysis)
• What are the gaps between existing capabilities and new/future requirements? (the learning
specification).
Capabilities can be broken down into ‘knowledge, skills and attitude’. For example, when looking at
the competence requirements in a project manager:
• Knowledge elements might cover the nature of the projects managed, techniques of project
management and the system used to manage projects, plus being well-networked to find any
knowledge gaps.
• High levels of skill in dealing with other people, managing the project team and influencing
important stakeholders would be expected.
• Certain attitude requirements would be relevant, such as attention to detail together with
drive or persistence to overcome obstacles and see the project through.
After planning the extent and nature of the analysis, the next stage is to decide how the information
can be collected. The sources and methods of data collection are similar to those used in work analysis
(indeed, work analysis may be employed for learning needs analysis) and include:
• examining the existing documentation, including job descriptions and person specifications,
organization business plans, objectives and new work standards;
• collating the existing data, e.g., from management information systems or virtual learning
environments, making sure to utilise performance management and appraisal data;
• conducting interviews and/or focus groups and/or surveys with employees, employee
representatives, managers, and, where relevant/appropriate, customers and clients.
Inappropriate training is not only expensive; it can produce dissatisfaction if employees are unable to
use their new skills or are unable to catch up on their work having spent time away on training
programmes.
Based on the LT&D needs analysis, a variety of outputs can be produced, such as
• report of overall learning needs for the organization or department - to form the basis of an
L&D strategy and to prioritise the needs that have been identified

• LT&D plans for learning interventions that would detail content and methods or processes to
meet the identified needs
• Personal Development Plans (PDPs), i.e., plans for individual learning, aligned with the
resources available.
The MAGIC model
The MAGIC Model is a tool which can be used to identify when it might be necessary for an employee
to undergo a more formal LT&D needs analysis. It seeks to identify whether there are changing
circumstances affecting a job role which require the acquisition of new skills or knowledge.
The acronym MAGIC outlines different changes that might impact on job roles (Rees and French,
2013):
• Mandatory skills and knowledge are those required by all new employees and include
induction/orientation, basic job learning to reach competent employee status and legislation-
driven learning such as in health and safety. So whenever a new employee comes on board,
thought should be given to learning needs analysis.
• Adapting to changes in processes, materials, equipment, demand levels and so on could all
lead to a need for new or amended KSA. So whenever any organizational changes are planned,
learning needs analysis should be considered.
• Growing into a new role or developing for future career moves will inevitably demand changes
and development of KSA. So learning needs analysis should be part and parcel of any career
planning activities, either company or individually driven.
• Improvements to current work practices and activities may require new or amended KSA. So
both day-to-day performance management and the formal review process should include
learning needs analysis as standard.
• Corrective coaching for shortfalls in performance may require an intervention to increase or
refocus KSA. So any poor performance or conduct issues may flag up the need for learning
needs analysis.
6.11.2 Devising LT&D plans for learning interventions

Having identified the existence of training needs, the next step is to devise a learning plan. Formulating
a learning plan requires determining clear aims, objectives and targets for particular learning
interventions:
• Aims are expressions of general intent which explain why a learning intervention is taking
place (e.g., ‘to improve customer service’).
• Objectives are more precise and measurable learning outcomes which specify the attitudinal,
behavioral or performance outcomes to be achieved. The clearer the objectives, it is argued,
the better the chance of success and ease of evaluation. Examples might include: to enable
staff to handle difficult customers.
• Targets clearly specify the desired results - for example: ‘to decrease customer complaints by
10%’ (Gibb 2008: 49).
A major consideration when devising plans is the characteristics of the learners themselves and their
prior knowledge, skills, attitudes, motivations and expectations. Awareness of their learning
preferences as outlined earlier in the module will also be relevant.
The key element of an LT&D plan for learning interventions is the choice of learning and training
methods. Many methods exist covering LT&D needs ranging from, for example, customer service
training for call centre operators to continuing professional development programmes for specialist
and professionally-qualified staff.
The choice of method for each particular need will depend on several factors including (Chartered
Institute of Personnel and Development, 2017):
• the nature and degree of priority of the learning needs

• the required expectation and impact on performance post-intervention
• type of occupation and the respective needs and accessibility
• background of learners
• organizational culture and budget provision
• evaluation of the effectiveness of previous learning interventions
• complexity of knowledge, skill or behavior the learning intervention covers
• learner preference and perception.
For example, employees may prefer to learn from experience – being shown how and then given a
chance for practice – rather than from formal classroom methods. Understanding the cognitive
processes associated with learning is important when selecting, developing and delivering learning.
Knowing your people and organization well feeds into methodology decisions. For example, engineers
may prefer structure and order and yet artists and designers may feel constrained by that. Learners
need to relate to the learning interventions to maximise the performance required. However, it’s
important to note that preferences not always can be accommodated. A learner may like self-directed
learning such as reading or watching videos, but to master a practical skill they have to practise it!

6.11.3 Types of learning methods
Learning methods may be categorised in various ways including:
• internal or external provision of learning

• team or individual arrangements
• formal or informal techniques
• digital or face-to-face
• learning directly at the place of work or away from the workplace.
In the following we cover the main types of learning methods arranging them into two categories: (1
workplace-based methods and (2) non-workplace-based methods.
Workplace-based learning methods
On-the-job training
Typically, on-the-job training is learning through observing and/or being assisted by a colleague with
more experience of performing a task. It’s usually:
• delivered on a one-to-one basis at the trainee’s place of work

• allocated time to take place, including potential periods when there is little or no useful output
of products or services
• a specified, planned and structured activity.
This method may prove useful in certain circumstances and is usually immediately relevant to basic
job needs. However, work colleagues or line managers who do the training need to ensure that:
• trainees are able to practise what they have learned immediately to enhance recall
• instruction is paced to avoid information overload
• the trainees current level of knowledge, skill or behavior is taken into account and can be used
in the training
• positive feedback is given to encourage the trainee.
In-house development programmes
This category covers a very diverse range of learning interventions that are longer term, broader
and/or of a higher level than basic on-the-job training. Development programmes could include
techniques such as coaching and mentoring or secondment, often with more formal or off-the-job
learning or educational arrangements. In-house programmes are often used for management or
leadership development activities but are not limited to these.

Coaching and mentoring
Coaching and mentoring are development techniques based on one-to-one discussions to enhance an
individual’s skills, knowledge or work performance – often for the current job, but also to support
career transitions. Whilst there is much debate about definitions and who should/shouldn’t be a coach
or a mentor, there is broad agreement on the following two descriptions:
• Coaching describes a relationship in which the coach will listen and question to enable
learning to come from the coachee.
• Mentoring describes a relationship in which a more experienced colleague (rather than line
managers or external coaches) uses their greater knowledge and understanding of the work
or workplace to support the development of a more junior or inexperienced member of staff
by sharing experiences. Reverse mentoring may also be used to enable cross-generational
learning.
Job rotation, secondment and shadowing
Learning from the experience of secondment – that is, the temporary loan of an employee to another
department or role, or sometimes to an external organization – is widely recognised as valuable for
both employee development and organization development.
Job rotation and shadowing are similarly useful forms of development, particularly in supporting
employees in developing the skills and competencies required for moves to new or higher-level roles.
The support process for the learners here is important and time needs to be factored in for achieving
the desired performance outputs.
Learning methods away from the workplace
Learning away from the workplace is generally the easiest to record and cost, although this visibility
doesn’t mean it should be perceived as the main way in which learning happens.
Courses and classroom training
Formal courses away from the workplace have advantages in certain circumstances, They offer:
• protected time for learning

• opportunity to practise, share ideas and experience in a structured risk free setting
• the capacity for a course leader to give feedback immediately and in a nonthreatening way
• the ability to signal what matters to the organization – essential courses in health and safety
for example, send out a strong signal that this knowledge is important.

Internal courses provide an opportunity to focus on organization-specific issues, which may increase
the possibility of learning transfer. External courses involving interaction with people from other
organizations may help individuals see situations from a fresh perspective and develop skills in a
different knowledge sharing context.
Formal education and qualifications
A variation on the theme of formal courses, vocational and management education may be a useful
way of meeting learning needs while allowing learners to acquire qualifications. Understanding the
application of learning and the actual skills developed will help decisions about the best course and/or
qualifications to choose.
Formal courses may be delivered face-to-face, via distance or e-learning, or in a blended mode.
Distance learning involves the use of learning materials delivered through the post or electronically.
These methods are able to provide large groups with consistent material, and access is flexible so that
people can learn in their own time, if appropriate. Against this, digital learning or other forms of
distance learning do not appeal to everyone. One of the main issues is that learner motivation can slip
without contact with fellow learners and tutors, so tutor support (remote or faceto-face) is important.
Effective distance learning engages learners in a forum or collaborative environment in some way,
perhaps via interactive classroom or webinars, as well as through materials provided for self-directed
learning.
Action learning and learning projects
Action learning is a form of collaborative learning where a small group of learners (an ‘action learning
set’) meet regularly to reflect on real work issues. Its basic philosophy is that the most effective
learning takes place when individuals are faced with a real problem to solve.
For example, putting managers to work in cross-functional teams, exposing them to different areas
and enabling them to learn about other aspects of the organization is a way of broadening their
experience, though choosing the right project for individuals needs careful thought.
Knowledge management
Organizations often gather teams together at the end of projects to review how they’ve worked and
to record ‘lessons learned’. These events allow for participants to learn better ways of working
together or improve processes. They can also help the learning and development of individuals and
teams, and create useful learning assets to be shared amongst future project teams.

Self-led knowledge management is increasingly commonplace. Social tools, selfauthoring tools and
learning management systems allow learners to be curators of knowledge and to share amongst their
networks. L&D professionals are moving to become facilitators rather than controllers of this space.
E-learning
E-learning straddles workplace and non-workplace based methods as it can be accessed and
undertaken “anywhere, anytime”.
E-learning is generally defined as “learning facilitated and supported through the use of information
and communication technology”, but is commonly used to refer Internet-based, online forms of
learning. E-learning offers a cost effective method of delivering a consistent leaning experience to a
large number of geographically dispersed learners while minimising disruption to their working lives.
A number of benefits have been associated with e-learning:
• available ‘just in time’ and can be used continuously for learning and reference
• flexibility of access from anywhere at anytime
• ability to reach simultaneously an unlimited number of employees
• uniformity of delivery of training
• can achieve cost reductions
• reduction in time to deliver training
• ability to log or track activities
• possibilities of global connectivity and collaborative opportunities
• ability to personalise the training for each learner.
Research into the effectiveness of e-learning practice has shown mixed outcomes. It is argued that
there needs to be greater awareness of the particular qualities of methods of e-learning and a greater
understanding of its strengths and weaknesses. For example, while the method is good for the
acquisition of knowledge, there are doubts about its appropriateness for developing social skills. There
is also the temptation to use e-learning as a cost-effective “tick-box” solution to some required
training (e.g. health and safety policies). Here the method is not seen as a serious and substantive
engagement with the issues. In an organizational context, effective e-learning is achieved when it
supplements existing methods recognising the respective qualities, strengths and weaknesses of
different approaches. For example, it is particularly effective when used as pre-course preparation or
post course evaluation.
Blended and ‘bite-size’ learning
Some forms of learning work best together in a technique that has become known as ‘blended
learning’. For example, digital social learning is often more effective when blended with more formal
types of learning. A blend offers an effective way of moving learning away from one knowledge dump

event such as a one day course towards a programme which helps the learner to retain and use the
knowledge over a longer time period.
A related approach is to offer small chunks of formal training of an hour or two and in varying formats,
perhaps linked with other techniques such as online resources.
6.11.4 Recent trends affecting learning methods
Gamification
‘Gamification’ is the process of applying game design theories to everyday situations, including
business. It can support learning and development by enabling employees to build competence in a
safe environment. Gamification is starting to be introduced to both physical and online learning to
encourage greater learner engagement and retention. Whilst often perceived as applying to digital
learning, simple gamified principles such as a leader board or competition ideas are easily
incorporated into offline learning too, playing towards competitive human nature.
MOOCs
Massive open online courses, or MOOCs, are free-open access courses available to anyone. There’re
available in business or language skills as well as a vast range of other topics which can be good at
getting adults back into the habit of learning. Organizations can connect employees to existing MOOCs
or create bespoke corporate MOOCs.
Social learning and content curation
Many organizations are introducing online collaboration tools which enable employees to learn from
each other through sharing material. Social media platforms support the development of online
communities of practice where shared ideas support learning and practice.
There are also free tools such as animation, infographics, video, word clouds, and self-authored e-
learning, which enable anyone to create learning content. In some cases this means that the L&D
function has moved into the role of ‘content curator’. Rather than selecting and designing learning
methods, they are providing the tools and content for employees to direct their own learning.
6.11.5 Popularity and effectiveness of learning methods
In the UK, according to the latest CIPD survey (2015), the three most commonly used and deemed
most effective learning methods were:

1. on the job training (48% quoted it as most used, and 47% as most effective).
2. in-house development programmes (46% and 34% respectively).
3. coaching by line managers or peers (32% and 40%).
The two least popular and effective were formal education courses (17% and 12%) and coaching by
external practitioners (12% and 16%).
Larger organizations are particularly likely to favour internal over external activities, presumably due
to economies of scale.
Use of the current most popular methods is expected to grow further, particularly the use of coaching
by line managers or peers. The preference for internal over external development activities is also
expected to grow.
6.12 Evaluating learning, training and development
The evaluation of learning, training and development is the formal or informal assessment of the
quality and effectiveness of an organization’s LT&D provision, usually by some measure of the merit
of the provision itself (the input, for example the quality of course content and presentation) and/or
by monitoring its impact (the outcomes, for example improved skills/qualifications or enhanced
productivity/ profitability) (Chartered Institute of Personnel and Development, 2018b).
It is often argued that training evaluation is one of the most important yet commonly neglected
aspects of LT&D. And If training is not assessed, it is difficult to prove that it has been worthwhile and
to convince others that investment should be repeated.
The most popular and widely used model for evaluating LT&D effectiveness, developed and first
published in the 1950s by US academic Don Kirkpatrick, includes outlines four levels of evaluation
(Kirkpatrick, 1979):
• Reaction. This assesses learners’ immediate views of the learning programme. A familiar type
of evaluation at this level is the post-course questionnaire. The problem with this level of
analysis is that it evaluates the course itself, but not participants’ actual learning.
• Learning. Here the evaluation focuses on the extent to which learners have mastered relevant
concepts, knowledge and skills. This could be measured through pre- and post-training tests.
Whilst the evaluation of learning is useful, it is partial: learners may have learned and
understood new concepts and ideas but not transferred these to the workplace.

• Behavior. This is where evaluation seeks to assess the impact of learning on behavior. It
involves comparing learners’ behavior before and after training and assessing the extent to
which their performance has improved. This could be done through performance appraisal.
• Organizational results. This is the extent to which the learning intervention had an impact on
organizational effectiveness. Information can be collected on a wide range of organizational
measures such as customer satisfaction, productivity, staff turnover, or quality improvements.
However, this level of evaluation is particularly difficult since any change in these organization
wide measures could have been caused by factors other than the learning intervention.
While this model remains influential, it has also attracted a considerable critique (e.g., critics note that
the relationships between the levels is weak because each level is neither definitely nor always linked
positively to the next). Other models have been developed over the years. Recently, the CIPD
(Chartered Institute of Personnel and Development, 2018b) has proposed a new approach to learning,
training and development, abbreviated as RAM, which focuses on the need for:
• Relevance: how existing or planned learning provision will meet new opportunities and
challenges for the business.
• Alignment: how LT&D is aligned with wider business plans and organizational strategy, as well
as with the HRM strategies, such as reward, organizational development, engagement and
other aspects of the management of human resources.
• Measurement: how effectively and consistently LT&D interventions are measured.
Within this framework, the CIPD suggests to use a mixture of evaluation methods and to link LT&D
outcomes to key performance indicators. In particular, the CIPD proposed the following measures for
evaluating LT&D outcomes:
Learning, training and development outcome measures

6.13 Learning culture
Committed employees who understand the organization’s objectives, have the requisite skills, and
operate in an environment where they have the opportunity to use them creatively, produce powerful
business advantages. This describes a “learning culture”, in which a motivated and committed
workforce is created and employees appreciate and recognise the investment that is being made in
them (Sloman, 2005).
Developing a ‘learning culture’ has the following demands:
• ‘Upskilling’ of staff as an ongoing process.

• Empowerment of the individual in their taking responsibility for their development.
• Lower cost of training – more in-house training, coaching, on-the-job learning rather than
expensive training courses.
• Better use of existing skills of staff, both in the use of the skills they already have, and by
sharing skills with other members of staff.
• An attractive environment for staff, due to the prioritisation of learning, resulting in higher
job satisfaction and lower staff turnover.
• Better relationships within teams where staff share learning.

The notion of learning culture shifts the emphasis from training (which suggests an organizational
responsibility) to a stronger individual focus on learning; a move from delivering “courses” to
facilitating the individual to learn, while being supported by the organization.
A learning culture therefore involves different stakeholders, all taking an active part in the learning
process:
• Employer expresses clear commitment to learning as a business driver and ensures that
sufficient resources are available.
• Line Manager initiates opportunities for individuals to develop and apply their learning at
work; provides on-the-job coaching.
• Individual Learner takes ownership and responsibility; seeks and acts on relevant learning
opportunities.
• Trainer/Facilitator supports, accelerates and directs learning interventions that meet
organizational needs and are appropriate to the learner and the context.
6.13.1 Developing competencies
One way in which organizationally essential learning can be embedded in the culture of an
organization is through the creation of competency frameworks. Competency is a relatively new term
used within LT&D. However, it reflects earlier attempts to capture the nature or essence of
management via systems of classification. The turn to competency is motivated by the desire to make
the assessment, and development of management ‘more scientific’.
Competencies are a way of translating what is required for the success of the organization in terms of
individual characteristics. A competency is an observable skill, ability or predisposition judged
necessary to complete a task successfully. Proponents believe that it is possible to objectively identify
clusters of competencies or sets of behavior which differentiate poor and excellent performers, which
are relevant across an entire organization, or even common to several organizations.
This is achieved through establishing criteria for performance, based on a systematic analysis of
successful performance, and then isolating significant or important dimensions.
Usually generic competencies are then broken down into behavior indicators. In principle, a set of
competency measures could be used as a reference point for a company’s entire HRM strategy and
certainly in relation to LT&D practice.
Competencies are often developed through development centres. These involve a combination of
exercises, tests, interviews, usually conducted over a few days, in which candidates have to practice
certain pre-defined skills and abilities considered important. Exercises are designed to include co-
operative and competitive situations; they may include presentations, group-decision making or

discussion, simulation. Assessors rate the candidates on various dimensions (competencies) during
the exercises. The exercises are designed to simulate job situations realistically and to elicit behavior
important to the role. They are based on prior job analysis, and skill identification of major activities,
responsibilities and tasks associated with the position. The advantage claimed is that assessment
centres place candidates in realistic settings (e.g. group work which is supposed to be typical of
managerial work) (Hunt and Baruch, 2003).
Challenging competency frameworks
Although competency frameworks are increasingly used to identify and develop organizational talent,
the approach has been subject to several criticisms.
• The process of drawing up a set of competencies can be rather subjective. The competencies
may serve to reproduce senior managers’ self-image or bias and may create discrimination
and limit diversity.
• The competency approach is informed by a mechanistic rationale where understanding
human performance involves ‘taking it apart’, analysing its basic constituents and then
reassembling it. Consequently, it tends to overemphasise performance that can be measured
and neglects abilities that are incapable of direct observation and measurement.
• This emphasis on technical aspects of management, and consequent neglect of qualities such
as creativity, imagination, ethics, has led to attempts to include these ‘softer’ qualities in
competency frameworks. Despite these attempts however, there is the danger that important
intangible aspects are lost in attempts to codify them. The emphasis on the use of scientific
methods and measurement creates a rather narrow view of managerial behavior.
• There is limited acknowledgement that employee strengths and weaknesses arise from social
context rather than individuals only. By trying to define and measure managerial behavior in
terms of uniform characteristics, the competency framework leaves little scope to recognise
the importance of context and the political dimensions of work.
Nevertheless, competency frameworks are a major means used by organizations to translate

corporate values and objectives into desired employee conduct and behavior. They have become
increasingly popular in large organizations as a tool for assessing and developing employees and
developing a learning culture.
6.14 Organizational learning and learning organization
Organizational learning focuses on the values, beliefs and norms shared by work groups. Hence,
organizational learning is concerned not only with change, innovation or new ways of doing things but
also with sustaining the group itself and its activities, whilst providing localised meanings for
modification of activities.

An organization that has senior managers who are supportive of learning, provides adequate
resources and in which line managers are enabled to support LT&D will promote a learning culture.
Human resource professionals and line managers are required to be proactive in encouraging this
culture rather than simply responding to line manager “demands” for training. They must champion
the centrality of learning to achieving organizational objectives and improving performance. The
ultimate aim is to create a “learning organization”.
This idea was popularised in the 1990s by the American scientist Peter Senge who defined learning
organization as an organization “where people continually expand their capacities to create the
results they truly desire, where new and expansive patterns of thinking are nurtured, where collective
aspiration is set free, and where people are continually learning how to learn together” (Senge, 1990:
3).
The idea of the learning organization has caught on because in many economies:
• the production of goods and services increasingly involves sophisticated knowledge;

• knowledge is, therefore, as valuable a resource as raw materials;
• many organizations have lost knowledgeable staff through retirements and delayering;
• information technologies are knowledge intensive;
• some knowledge can have a short life span and can quickly be made obsolete by innovation;
• flexibility, creativity and responsiveness are now prized capabilities;
• knowledge can thus be a source of competitive advantage for an organization.
6.14.1 Creating a learning organization
Senge argued that that there are a number of ‘disciplines’ that underpin a learning organization.
1. Personal Mastery – aspiration, concerning what you as an individual want to achieve.
2. Mental Models – reflection and inquiry, concerning the constant refinement of thinking and
development of awareness.
3. Shared Vision – collective commitment to a common sense of purpose and actions to achieve
that.
4. Team Learning – group interaction, concerning collective thinking and action to achieve common
goals.
5. Systems Thinking – understanding interdependency and complexity and the role of feedback in
system development.

It is the fifth discipline, “systems thinking” that Senge identified as the most significant. This means
understanding how complex organizations function and how they can work more effectively. As Senge
(1999: 33) argued:
“The practice of organizational learning involves developing tangible activities: new

governing ideas, innovations in infrastructure, and new management methods and tools for
changing the way people conduct their work. Given the opportunity to take part in these
new activities, people will develop an enduring capability for change. The process will pay
back the organization with far greater levels of diversity, commitment, innovation and
talent.”
6.14.2 A new view of learning organization
Recently, the CIPD, based on longitudinal research of over 5,000 organizations by a research and
advisory organization Towards Maturity, has proposed a new model of learning organization, updating
the Senge’s model taking into account the 21st century challenges (Daly and Overton, 2017). The
argument for proposing a new model is based on the fact that, despite the popularity of Senge’s
model, his vision of learning organization has not been realised in 25 years since the publication of his
work. The new model is said to be more attuned to the realities of modern organizations and their
environments.
The defining characteristics of this model are presented in the diagram below.
Six characteristics of the new learning organization

The elements of this model are:
1. Clarity of Purpose: a shared vision and open dialogue on how people are valued and need to adapt
to deliver the organization’s performance.
2. Holistic people experience: a trusted brand that keeps to its promises and develops innovative,
commercial and continuous learning opportunities.
3. Thriving ecosystem: a people-led system that enables its people, teams and the extended
enterprise to thrive and learn, linked to common goals.
4. Agile, digitally-enabled infrastructure: a virtual environment that enables a fluid exchange of

knowledge, ideas and the adaptation of competence.
5. Continual engagement: a dynamic community that continually builds on business relationships,

resulting in energy, resilience and growth.
6. Intelligent decision-making: a robust platform using insight and performance analytics to drive
organizational performance and customised experience.

It remains to be seen whether this model will prove as popular as the one proposed by Senge, but the
CIPD research suggests that the organizations that follow this new model respond faster to change
through effective problem solving, demonstrate increases in productivity, and show notable
improvements in profitability, sustainability and customer satisfaction (Daly and Overton, 2017).
Case: Creating a learning organization at Bankco
Read the case below and then answer the following questions:
1. With the new business realities, do you think that Bankco is making the right decision in
attempting to become a learning organization?
2. What are the barriers that Bankco has to overcome to become a learning organization? Provide
some recommendations as to what they might do to overcome these barriers.
3. Consider yourself and the organization for which you work. Should your job development be
directed by others or by yourself through personal development plans with determined resource
allocation? Why?
(Note that this is a long and complex case and you may need to read it more than once, probably
taking notes during your second reading.)
Background
As a result of changes in the financial services sector, Bankco has undergone numerous operational
and strategic changes over the past few years. One of the most significant has been the cultural shift
from being operational to becoming more sales oriented. This entailed a restructuring and closure of
branches to simplify operations and facilitate inter-organizational speed and delivery of services, with
newly established customer services centres taking a large part of the administrative work out of the
branches. This shift has been reflected in the redesign of Bankco’s premises and in particular the
branch network and the technology for delivering services, resulting in a substantial reduction of staff.
The composition of staff has also been changed dramatically. Bankco lost many of its older and more
experienced managers and became a ‘younger’ organization (most managers now are in their mid-
thirties). These changes have led to a reconsideration of training and development policies and
practices and a greater emphasis on learner- centred approaches.
HRM strategy and its implications for training

Bankco’s HRM strategy aims to secure “skilled, motivated and professional staff. We recognise that
staff are our key resource and have the power to differentiate us from the competition in the minds
of our customers”.
The HRM function in Bankco is organised in four main units: human resource planning; training and
development; employee relations; and personnel operation. Training, in particular has been seen as
a central platform for implementing the HRM strategy both historically and currently. Traditionally
and still being practiced, training is seen as a key communication tool and means of providing staff
with the necessary knowledge and skills to respond to the new requirements.
The training and development policy states that the purpose of Bankco’s training and development
investment is “to ensure that we have an appropriately skilled, highly motivated and professional staff
who deliver consistently to required national standards. To do this we ensure that: each individual
understands exactly what their job requires; each individual is trained to perform their current job to
required standards; staff are prepared for future challenges created by the business; and each
individual is enabled to develop his/her potential”.
An emphasis on learning
A unique feature of the training process within Bankco is the emphasis placed on learning. This is a
recent change in training orientation which resulted from a survey which suggested that 60% of
Bankco’s employees felt that ‘training and learning meant attending courses’. These results
encouraged Bankco to reconsider its training methods (such as computer-based training, residential
and non-residential courses, seminars, interactive video and so on) and to introduce a wider range of
flexible approaches (for example self-development and self-directed learning, learning resource
centres) which enable mangers to have access to learning material and packages (books, video tapes,
audio tapes, self-study packages and work based learning activities such as coaching, job shadowing,
job rotation, secondments, project work). The shift to more flexible training methods was intended to
encourage staff at all levels to explore other learning opportunities and not rely on training courses
alone in order to learn. The new training policy explains that “Learning is not just about going on
courses. It is about consciously using your work activities to develop yourself. Making the most of
other support and learning resources now available. Taking responsibility for your own learning means
you will be able to fulfil your development needs’.
This new training policy, which reflected a major cultural change effort was driven by the HR
department, which had considerable power. Bankco embraced the notion of the learning organization
in the belief that becoming a learning organization would enable it to remain competitive and
successful in the light of the current upheaval in the sector. This led to a series of initiatives intended
to encourage staff at all levels to take responsibility for their own learning and to encourage them to
seek to learn from diverse sources.

The new initiatives were intended to support Bankco’s objective “to move away from a push strategy
towards a pull strategy”. In other words, instead of sending people on training courses because their
line manger believed they needed it, the individual would actively seek to further his or her own
development and would take responsibility for this. A senior training manager remarked that “recent
changes in the training philosophy have sought to create a partnerships between the individual, the
line manager and the T&D department.” The training policy states explicitly that ‘the responsibility of
line managers is to guide individuals in how best to equip themselves for their current and future
roles. They are also responsible for ensuring that appropriate action takes place. The prime
responsibility for learning rests with individuals in partnership with their line manager”.
The aim in introducing self-development is not purely improvement of financial performance, but a
concern with changing individual attitudes towards training and learning. The transition is recognised
by training managers as a cultural change for the bank, because “managers are not used to taking
responsibility for their self development” (training manager). One of the mechanisms adopted to
assist this transition is the ‘continuous learning’ project. The project aims to develop a package of
audiovisual aids, as well as a booklet guiding managers and staff on how to utilise the various learning
opportunities that are available to them. A key feature of this process is the introduction of personal
development plans (PDPs) and specialist development programmes designed to cultivate
responsibility for self development at all levels.
The manager’s perspective
It was clear from the interviews with managers in Bankco that, in relation to learning as a process,
they perceived that people learn primarily as a result of on the job experiences, modelling or copying
others and traditional teaching through training. A significant proportion of managers (62%)
suggested that practical on the job experiences were the most significant, because they provided
‘hands on learning’, coming across new situations and acting upon them’. Managers also believed that
experience in a social context was important and suggested that discussion with others was an
important learning experience. Observing listening and copying were important activities in the
learning process. Managers taking this view of learning recognised the influence of other managers,
particularly line managers. Finally, managers in Bankco perceived that learning took place in formal
teaching environments, most commonly on training courses pointing out that: ‘people learn because
they are told to and that people do not often take the initiative.’ Some managers recognised that
organizational structures and systems may have forced people to develop similar learning patterns.
One manager made the following comment: “Individuals learn very much in the same way; by
absorbing information, by making it interesting, relating it to real life situations. Absorption involves
recollection, using key words, revision, competition and reward in the end”.
At the personal level, managers gave particular emphasis to the individual’s ‘willingness and desire to
learn’ and ‘the commitment to improving one’s self’. At the organizational level a significant
proportion of mangers (42%) felt that the organizational context made all the difference to managerial
learning. The organization was perceived to ‘provide the resources and the space for learning’ and ‘to

set the boundaries and the standards that individuals need to follow’. Therefore, the organizational
context ‘channels ability in to the direction which is in line with organizational needs’. Training was
also felt to have a significant influence. Managers referred specifically to ‘participative training
methods where everyone can have an input and can gain a broad perspective’. Ideal training courses
‘employed a variety of learning methods’ and ‘enabled managers to relate the knowledge acquired to
real life’. The use of a variety of learning methods facilitated the development of a team spirit and
‘encouraged participants to share experiences and to learn from each other. Managers taking this
view claimed that training courses enabled managers to ‘dedicate time to education without being
interrupted’. A large proportion (77%) of the managers in Bankco supported a strong connection
between learning and training primarily because they considered training as an opportunity for
learning, for them training and learning were ‘one and the same thing’. However, others noted that
training was an obstacle to learning because it was perceived that there was no link between training
and future career development. Additionally there was limited recognition for learning; a source of
de-motivation, reducing willingness to learn.
Evaluating the learning initiatives
Bankco had not yet systematically evaluated the success of the PDP initiative partly because it was
new and partly because there no systematic evaluation for training provision generally within the
organization. The performance appraisal remained the main mechanism for identifying individual’s
training needs. One training manger made the following remarks:
“The biggest barrier at the moment is that they say the individual takes responsibility and the
individual drives the responsibility, but the poor individual doesn’t have any time at all to do it and
the pressure’s certainly that in saying to the individual it is your responsibility to plan your learning
and come up with suggestions about what you should do…. It’s a good idea but it just isn’t working..
We have a performance management system and this system is very sophisticated and there are nine
sections that people’s performance in managerial practices is rated. The least valued section is self-
development. So what this is saying is that if your performance on self development is rated good and
your performance against the other managerial practices is rated medium, then you will come out as
medium overall. That’s how we demonstrated a year ago that self development was the least valued
of the managerial practices.”
A large proportion of managers within Bankco felt that the organization encouraged them to learn
(54%) and to develop themselves (73%). This would suggest that the emphasis placed by Bankco on
learning and self-development is acknowledged by managers. Managers explained that ‘self-
development had been a major theme over the last couple of years’, as evident through company
magazines, internal circulars, conferences and team meetings. On closer examination however, the
managers felt that the ‘organization expected [them] to learn, to remain up to date and to be able to
respond positively to the new requirements set upon [them]’. This view was derived from the
association of self-development with performance appraisals. Managers explained that during the
performance appraisal process they had to demonstrate that they recognised their strengths and

weaknesses and were clear about what they needed to do in order to improve themselves. One
manager commented that, “you have to show you do something, otherwise you are scored low and
your salary is affected”. A senior manager said: “you’re not encouraged, you’re expected to know
things… you do it for your own protection”. These views show that not only do managers believe that
there is an expectation for them to learn new things but that the organization‘s approach has also
affected their interpretation of what learning and self-development mean and how they should go
about them. In short, the very attitude that is trying to be changed ; that training should be held for
learning; is being reinforced by the new approach.
Source: Adapted from Antonacopoulou (2002).
6.15 TAKEAWAYS
1. Learning is as a process of acquiring new, or modifying existing, knowledge, skills, behaviors,

values, or preferences. In HRM context, it is customary to differentiate between (a) learning as a
self-directed process; (b) training as an instructor-led process; and (c) development as a longer-
term broader process of acquiring/modifying knowledge, skills, and behaviors by all possible
means (e.g., formal or informal, through education or experience).
2. There are two types of learning theories: behaviorist and cognitive. Behaviorist theories focus on
observable behavior and on encouraging a desired behavior through the application of rewards.
Cognitive theories focus on internal mental processes and on encouraging an active perception of
external stimuli (e.g., information), making sense of these stimuli, and assimilation and
accommodation of new information to existing cognitive structures.
3. Classic learning theories are Kolb’s learning cycle (comprised of four stages: concrete experience,
reflective observation, abstract conceptualisation, and active experimentation) and learning styles
(accommodating, diverging, assimilating, and converging) and Honey and Mumford’s learning
styles typology (activist, reflector, theorist and pragmatist). These theories emphasise that
learning is an interactive ongoing process and that different people have different preferences for
processing information. Recent theories include a cognitive styles typology (verbalisers, imagers,
holists, and analytics), and neuroscience models that specify conditions for improving the
effectiveness of learning (e.g., AGES [attention, generation, emotion, and spacing] model).
4. The best practice approach to learning, training and development (LT&D) suggests that LT&D
should support not only short-term acquisition of knowledge and skills required for specific jobs
but also the long term employee development. For LT&D to be effective, it needs to be strategic,
i.e. closely integrated with the organizational objectives. Design and implementation of LT&D
should begin with the articulation of a learning and development strategy.

5. LT&D process should stem from the LT&D strategy and include four main steps: (1) identifying
learning, training and development needs; (2) devising learning interventions that address the
identified LT&D needs; (3) delivering these interventions, and (4) evaluating their outcomes.
6. Learning interventions are categorised into (a) workplace-based methods (on the job training; in
house development programmes; coaching and mentoring; and job rotation, secondment and
shadowing) and (b) methods away from the workplace (classroom courses and training; formal
education and qualifications; action learning; and knowledge management). E-learning straddles
workplace and non-workplace methods and offers a cost effective way of delivering a consistent
leaning experience to a large number of geographically dispersed learners while minimising
disruption to their working lives.
7. The quality and effectiveness of an organization’s LT&D provision should be regularly evaluated.
The traditional evaluation method calls for the assessment of four outcomes: learners’ immediate
reaction to the learning programme; the actual amount of learning; the impact of learning on
behavior; and organizational results. A new CIPD evaluation scheme focuses on three parameters:
relevance of learning to the business; alignment of LT&D with organizational and HRM strategies;
and effectiveness and consistency of measuring LT&D interventions. 8
8. A learning organization is an organization where people continually expand their capacities to

create and are continually learning how to learn. Senge proposed that, to become a learning
organization, “five disciplines” are needed: personal mastery, mental models, shared vision, team
learning, and systems thinking. The CIPD’s recent update of this model identifies six prerequisites
for a learning organization: clarity of purpose; holistic people experience; thriving ecosystem;
digitally-enabled infrastructure; continual engagement; and intelligent decision making.
Note: Remember also to review Takeaways provided in your textbook Chapter 8.
6.15.1 Answers to the case
Case: Bankco
Your answers to the three questions in relation to this case may include some of the points mentioned
below. You may also have thought of some other equally valid responses
1. With the new business realities, do you think that Bankco is making the right decision in
attempting to become a learning organization?
The objective of the learning organization promotes and encourages a culture for continuous learning
and transformation. A learning organization (see McKenna & Beech, Chap. 10 pp 239) emphasises self-
development, continuous development, the sharing of knowledge and this implies that organizational

problems are dealt with in a systematic manner, the promotion of team learning and double loop
learning.
In the Bankco case, there has been a change in the business culture becoming more sales oriented,
whilst restructuring, customer focus, redesign of branches and a change in worker composition, i.e. a
younger set of workers signals time for a change in how the organization develops its workers and
how this in turn charts the organization’s future.
While the learning organization concept has many benefits, there exists a tension as to whether the
self-development espoused addresses the needs of the staff or the organization of Bankco.
Nevertheless, in light of the changes in Bankco’s business environment and internal environment, the
learning organization can provide benefits as long as its implementation stays true to its underlying
philosophy and is not driven by organizational requirements alone.
2. What are the barriers that Bankco has to overcome to become a learning organization? Provide
some recommendations as to what they might do to overcome these barriers.
There are a few challenges that take up centre stage in Bankco’s effort to become a learning
organization. Clearly, training has historically been the source of learning, rather than learning taking
place based on the employee’s own initiative. There is reluctance to engage in this seen as
unstructured type of learning because employees perceive a lack of recognition and reward for their
efforts. The fact that the only method of assessing needs is the performance appraisal, signals that
the self-development espoused has to be in line with organizational needs. Additionally, self-
development seems so little valued in the appraisal process that it is questionable whether the whole
concept is just management rhetoric with no real foundation.
Another challenge that is significant is the changing role of the line manager within this process. The
line manager plays a crucial role in guiding their subordinates into recognising what they need for both
current and future roles, it is therefore no less important that they should be assessed and trained to
appropriately carry out this role. The case also highlights that incorporating the PDP’s as part of the
appraisal process makes self- development an expectation, deviating from its original objective of
encouraging rather than forcing the learning process. Whilst the performance appraisal is a very
important feature of any organization wanting to motivate and direct employee efforts for overall
strategic objectives, in this case there is an inconsistency in the manner in which the self development
objective as part of the organizational development strategy is measured within the appraisal system,
thus giving out conflicting messages to the employee.
From a HRM point of view, it is important for Bankco to review the entire human resource
development policies and practices to ensure that the elements are aligned and consistent with each
other in giving out the same message of promoting, acknowledging and rewarding self development
for the larger learning goal.

3. Consider yourself and the organization for which you work. Should your job development to be
directed by others or by yourself through personal development plans with determined resource
allocation? Why?
Your response to this question will depend very much on your current occupational role, the type of
organization for which you work and your preferred learning and development ethos. But remember
to consider your organization’s best practice to meet its strategic objectives as well as your own
preferences.
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Corporate Finance

Bangor Business School – Executive Education

Chartered Banker MBA

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Olga Suhomlinova is currently Associate Professor of Management at the University of Leicester

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1.1 Learning objectives

After completing this section you will be able to:

• define organizational behavior and human resource management

1.2 Linked reading

Organizational Behavior, Chapter 1 What Is Organizational Behavior?

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The term ‘organizational behavior’ (OB) has two meanings: it refers to

1. the actual behavior – behavior of individuals and groups in organizations

2. the study of behavior of people in organizations.

Organizational behavior as a domain of study and scholarship is “devoted to understanding individuals

Major topics include

1.4.1 Organizational behavior as multidisciplinary field

Organizational Behavior draws on different disciplines.

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Together these different perspectives suggest an important point: to understand organizational

1.4.2 Goals of organizational behavior research

1. To describe various organizational behavior phenomena

Description is fundamental to understanding. Describing behavior, however, is challenging.

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Organizational behavior research findings have a capacity to prompt change. Organizations

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• help us understand how organizations affect us and we affect them

1.4.3 Organizational behavior research methods

The key methods of studying behavior are by:

2. Observing behavior in its ‘natural’ environment (e.g., in organizational context)

3. Asking questions through interviews or surveys

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An observation is a study conducted by a researcher in an organizational setting, where researcher

A good example of a survey is Denison’s Organizational Culture Survey. Organizational culture is

• Most employees are highly involved in their work

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1.5 Management and organizational behavior

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Work activities of chief executives

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What does ‘people management’ entail?

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1.7 Altogether now: OB, HRM and management

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1.8 Organizations and organizational environment

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But what is an organization?

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The eight metaphors are as follows:

• Organizations as machines – Organizations here are seen as a set of interrelated components

• Organizations as brains – Organizations may be regarded as networks of information., as they

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• Organizations as political systems – An organization may be interpreted as an arena where