Human Resource Management (HRM)

• Chapter 1
• Responsibilities for Effective HRM

o Assigning the right person to the right role.

o Onboarding new employees.
o Training employees for unfamiliar tasks.
o Enhancing individual job performance.
o Building cooperation work relationships.
o Clarifying company policies and procedures.
o Managing labor costs.
o Developing employee abilities.
o Maintaining team morale.
o Safeguarding employee health and saf

• HRM in Small vs. Large Organizations:

o Small organizations: Line managers handle all HR duties.
o Large organizations: Specialized assistance is needed.
• HRM Trends and Challenges:
o Workforce Trends: Aging populations, changing participation rates.
o Work Dynamics: Rise of tech and service jobs demands managing human capital effectively.
o Technological Trends: Mobile and social media reshape recruitment, training, and employee management.
o Globalization: Success requires cultural knowledge, language skills, and diversity management.
• Key Competencies for HR Professionals:
1. Communication skills 9. Employment law knowledge
2. Technology proficiency 10. Record-keeping
3. Problem-solving abilities 11. Training and development
4. Forecasting skills 12. Customer Service Orientation
5. Leadership 13. Ethical practices
6. Compensation design 14. Cultural awareness
7. Recruiting and staffing 15. Relationship management
8. Benefits of design and administration
• Vision & Mission Framework:
o Strategy: Integrated major objectives.
o Objectives: Specific goals.
o Policies: Decision-making guides.
o Procedures/Rules: Detailed directions.
• Downsizing (a.k.a. rightsizing/restructuring):
• Aimed at creating lean, efficient organizations by removing inefficiencies.
• Reasons: Foreign competition, mergers, takeovers.
• HRM Role:
o Ensure clear communication.
o Minimize rumor effects.
o Prepare affected employees.
• Workforce Types:
o Core Employees: Full-time, committed to essential tasks.
 o Contingent Workers: Part-time, for specialized tasks.
o Decentralized Worksites: Work can occur anywhere with a computer (e.g., remote or online). Employees must
perform efficiently through delegation, participative management, teamwork, goal setting, and training.

Chapter 2:
• Managerial Focus: Effectiveness: Goal achievement. Efficiency: Best resource allocation.
o Managers achieve goals by planning, organizing, leading, and controlling.
• HRM Importance:
1. Hiring and training employees.
2. Supporting employee development.
3. Fostering loyalty and affiliation with the organization.
• HRM Functions:

• Staffing:
• Steps: Employment planning → Job analysis → Recruitment → Selection → Hiring.
• Define roles and required skills, filter candidates, conduct interviews, and select the best fit.
• Training & Development: Socialize new hires, and orient new employees to rules.
o Focus:
▪ Employee training for current roles.
▪ Employee development for future roles.
▪ Organizational changes.
▪ Career development for employee growth.
• Motivation: Key factors: Ability and Willingness.
o Align job requirements, training, and employee strengths.
o Use performance standards and evaluations for feedback and rewards.
o Job Design: positions, tasks, work, factors of work, when tasks are done
▪ Job enrichment: Increase responsibility (vertical expansion).
▪ Job rotation: Diversify tasks (horizontal rotation).
▪ Job enlargement: Add more activities (horizontal expansion).
o Compensation & Benefits:
▪ Link pay to performance through evaluations.
▪ Ensure fair salary and benefits based on job worth and employee output.
• Maintenance: Retain employees with a safe, healthy, and engaging work environment.
o Foster commitment through fair treatment, open communication, and employee activities (e.g., outings).
• This comprehensive approach ensures productive, motivated, and loyal employees.

Chapter 5: Job Analysis:

Talent Management: A goal-oriented, long-term, integrated process of planning, developing, and managing talent.
Job Analysis: A systematic process to define and collect data about job duties.
Outputs of Job Analysis:
1. Job Description: A list of job duties based on tasks and responsibilities.
2. Job Specifications: The required human qualifications like education, skills, and experience for the job.
Process of Job Analysis
1. Types of Information Collected:
o Work Activities: Tasks performed (e.g., cleaning, selling).
o Human Behavior: Traits like patience, communication.
o Tools/Equipment: Devices or machines used.
o Performance Standards: Expected quality levels.
o Work Context: Physical environment, conditions.
 o Human Requirements: Skills, experience, education.
2. Uses of Job Analysis:
o Recruitment & Selection: Identifies skills and traits for hiring.
o Compensation: Helps set salaries based on required qualifications.
o Training: Determines specific training needs.
o Appraisal: Sets performance standards for feedback and improvements.
o EEO Compliance: Ensures non-discriminatory practices.
Methods for Collecting Job Information
A. Interviews:
• Individual Interviews: Job analysts collaborate with employees and supervisors.
• Group Interviews: Used for employees with identical roles.
• Pros: Direct and quick. Cons: Potential for distorted information.
B. Questionnaires: Employees self-report duties and responsibilities.
• Pros: Efficient for large groups. Cons: Expensive and time intensive.
C. Internet-Based Tools: Uses online platforms for minimal intervention.
• Pros: Efficient for geographically dispersed employees. Cons: Limited to internet-based roles.
D. Observations: Observing employees performing tasks.
• Pros: First-hand and accurate. Cons: Not suited for mental tasks or long job cycles.
E. Participant Diaries/Logs: Workers log activities and time spent on tasks.
• Pros: Comprehensive insights. Cons: Risk of distortion or inaccuracy.
F. Technical Conference Method: Extensive input from supervisors or subject matter experts.
Best Practice: Combine multiple methods to gather accurate and complete data.
Writing a Job Description: A detailed statement outlining what a job holder does, how they do it, and under what conditions.
• Purpose:
o Guides potential candidates.
o Serves as a benchmark for performance appraisal.
Components of a Job Description
Job Identification:
o Job Title
o Status Section: e.g., full-time, part-time
o Reports To: Direct supervisor or manager.
o Supervises: Employees under the job holder’s supervision.
o Preparation Date: Date the job description was created or updated.
Job Summary: General nature of the job. Major functions or activities involved.
Responsibilities & Duties: The core of the description, detailing all duties and responsibilities.
Relationships: Interaction within the organization (team, department). Interaction outside the organization (clients, partners).
Working Conditions: Environmental factors such as heat, noise, or physical demands.
Job Specifications: States the minimum qualifications required (education, skills, experience). May be included as part of
the description or as a separate document.
Competency-Based Job Descriptions
Competencies: Characteristics (knowledge, skills, abilities - KSA) that enable a person to perform the job successfully.
Why Shift from the Traditional Approach?
1. Jobs and tasks evolve frequently.
2. Organizations now emphasize multitasking and versatility.
Writing Statements Based on Competencies:
• Focus on worker capabilities rather than static tasks.
• Emphasize transferable skills that allow employees to perform diverse roles effectively.
Example:
Traditional: "Performs data entry tasks for sales reports."
Competency-Based: "Demonstrates proficiency in data management software to generate accurate sales insights."
Chapter 6:
Recruitment Process and Strategies
Recruiting: The process of identifying and attracting potential candidates for actual or anticipated job positions in an
organization
Recruiting Goals
1. Communicate job opportunities effectively to attract qualified candidates.
2. Increase the number of applications to enhance selection chances.
3. Provide enough job-related information for candidates to self-evaluate.
4. Attract qualified candidates while discouraging unqualified applicants.
5. Minimize the cost of recruitment by improving the efficiency of the process.
6. Promote the organization to potential employees.
Factors Affecting Recruitment Efforts:
1. Organization Size & Growth: Larger or expanding organizations attract more candidates.
2. Employment Conditions: Working conditions influence candidate interest.
3. Salary: Competitive pay is a significant attraction.
4. Benefits Package: Health insurance, retirement plans, and other perks.
Constraints on Recruiting Efforts
1. Job Attractiveness: Low-paying or manual labor jobs may be less appealing.
2. Internal Organizational Policies: Policies such as promoting from within can limit external recruitment.
3. Organizational Image: A poor reputation can deter candidates.
4. Government Influence: Laws and regulations affecting hiring practices.
5. Recruiting Costs: High expenses can restrict recruitment efforts.
Recruitment Sources
Internal Search: Promoting or transferring existing employees.
• Pros:
o Build morale and loyalty.
o Lower recruitment and training costs.
o Employees are familiar with organizational culture.
• Cons:
o May cause internal competition and resentment.
o Limited pool of talent.
Employee Recommendations: Employees refer to potential candidates.
• Pros: Recommendations are reliable, and candidates are often pre-vetted.
• Cons: Potential for favoritism or conflicts between friendship and job performance
External Searches
1. Advertisements: Posting job vacancies with detailed descriptions or specifications.
2. Internet Recruitment:
o Pros: Cost-effective, wide reach, immediate responses.
o Cons: High volume of unqualified applicants, privacy concerns.
3. Employment Agencies: Public, private, or nonprofit agencies help match candidates.
4. Offshoring and Outsourcing: Delegating jobs to other countries or third-party organizations.
5. Recruitment Alternatives:
o Temporary staffing for short-term needs.
o Independent contractors for specialized skills.
6. College Recruiting: Representatives visit campuses to recruit graduating students.
7. Unsolicited Applications (Walk-ins): Employers consider direct applicants for future positions
Human Resource Information System: A database system for managing employee information centrally and efficiently.
Uses of HRIS:
1. Supports new organizational strategies.
 2. Adapts to changing strategic directions.
3. Aids in promotions and succession planning.
4. Identifies current or future risks or opportunities.
Replacement Charts: Tools highlighting key positions likely to be vacant and potential successors.
Measuring Recruitment Effectiveness
1. Internal Costs: Time spent by employers during recruitment.
2. External Costs: Fees paid to agencies or advertising platforms.
3. Cost-effectiveness: Evaluate which recruitment sources provide the best value.
4. Performance of New Hires: Assess their contribution after one year.
5. Turnover Rates: Track employee retention based on recruitment sources.

Chapter 7:
1. The Application Form
• Purpose: Collects biographical data to assess candidates' suitability for the job.
• Key Points:
o Effective for predicting job performance.
o Weighted forms help differentiate successful candidates from less suitable ones.
• Advantages: Simple, quick, and cost-effective for initial screening.
• Limitations: May not delve into deeper personality traits or skills.
2. Employment Tests
• Purpose: Measure intelligence, abilities, or traits to match job requirements.
• Types of Tests:
o Cognitive Tests: Evaluate mental abilities like reasoning and problem-solving.
o Motor & Physical Ability Tests: Assess physical tasks such as strength or coordination.
o Personality Tests: Gauge traits like teamwork, adaptability, and emotional stability.
o Achievement Tests: Measure knowledge or skills specific to the role.
o Assessment Centers: Use interviews and group exercises for comprehensive evaluations.
• Advantages:
o Objective and standardized.
o Tailored to simulate job scenarios.
• Limitations:
o Time-consuming.
o Risk of discrimination if not designed carefully.
3. Interviewing Candidates
• Purpose: Predicts job performance based on candidates' oral responses.
A) Based on Structure:
• Structured Interviews: Pre-determined questions and scoring criteria.
1. Pros: High validity, consistency across candidates, reduces bias.
2. Cons: Limits interaction and flexibility may feel impersonal.
• Unstructured Interviews: Open-ended format without fixed questions.
1. Pros: Allows deeper interaction, assesses adaptability.
2. Cons: Prone to bias, less reliable.
B) Based on Content:
• Situational Interviews: Hypothetical scenarios to assess problem-solving and decision-making.
• Behavioral Interviews: Based on past actions in real-life situations.
• Stress Interviews: Creates challenging scenarios to assess tolerance and composure.
C) Based on Administration:
• Traditional Interviews: One-on-one, face-to-face encounters.
• Sequential Interviews: Multiple interviewers evaluate candidates in turn.
 • Panel Interviews: A team of interviewers collectively assesses candidates.
• Mass Interviews: Several candidates are interviewed simultaneously.
• Phone Interviews: Remote evaluation for convenience and speed.
• Computer-Based Interviews: Online responses via systems or platforms.
• Web-Based Video Interviews: Real-time virtual interviews using tools like Zoom or Skype.
o Advantages: Flexible and versatile. Allows real-time interaction and assessment of interpersonal skills.
o Limitations: Time-intensive. May introduce bias if not conducted properly.
Errors That Undermine Interviews
• Snap Judgment Making decisions in the first few minutes of the interview or even before it begins (e.g., based on test
scores or resume data).
• Effect on Personal Characteristics Being influenced by personal factors such as gender, age, or physical attributes,
which may bias the decision regardless of the candidate's actual performance.
• Misunderstanding of the Job Decisions based on incorrect impressions when interviewers lack proper knowledge
about the job.
• Interviewer’s Behavior Examples include asking inappropriate questions, acting overly authoritative, or being biased
due to favorable pre-interview impressions.
Designing Structured Interviews
• Job Analysis Create a detailed job description listing all duties, required knowledge, and skills.
• Rate Job Duties Assign importance ratings (e.g., 1–5) to each job duty based on its relevance to success.
• Create Questions Develop specific questions targeting each job duty, focusing more on the highly rated duties.
• Rate Responses Prepare a rubric with ideal answers for Good (5), Marginal (3), and Poor (1) ratings.
• Select a Panel Assemble a panel of 3–6 members (ideally those who designed the questions). This ensures
consistency across all candidate evaluations.
Steps to Be a More Effective Interviewer
• Know the Job Study the job description thoroughly.
• Structure the Interview Base questions on actual job duties. Use situational, job knowledge, or behavioral questions.
o Maintain consistency by using the same set of questions for all candidates.
o Use standardized interview forms where possible.
• Establish a Relationship Break the ice with casual questions (e.g., about weather or traffic). Set expectations about
the interview format and duration.
• Take Notes Avoid snap judgments by recording key observations during the interview.
• Get Organized Minimize interruptions and distractions during the interview.
• Close the Interview Allow time for the candidate to ask questions.
• Review the Interview Reflect on your notes and make a well-informed decision.
Characteristics of a Good Applicant
• Non-Verbal Behavior Candidates should display confident body language and active listening.
• Respect for Interviewer’s Values Even if they disagree, candidates should respect the interviewer’s beliefs.
• Promoting Accomplishments Candidates should highlight their achievements effectively to convey competence.
Selection Tools
1. Background Investigation Verifies the accuracy of application form details.
o Methods include:
1. Internal investigations.
2. Questioning former employers.
3. External investigations.
4. Checking military or police records.
2. Medical & Physical Examination Ensures candidates are physically fit for essential job duties.
o Helps avoid hiring individuals with medical conditions that might incur high costs for the organization.
3. Realistic Job Preview (RJP) Offers candidates an honest overview of both favorable and unfavorable job conditions.
o Aims to reduce turnover by aligning expectations.
Notes & Cons About Interviews
• Low Reliability and Validity Interviews often fail to consistently and accurately measure candidates’ suitability.
• Expense and Inefficiency Interviews are costly and time-consuming.
• Impression Management Candidates may manipulate impressions, leading to biased assessments.
• Structured vs. Unstructured Structured interviews are more reliable and valid compared to unstructured ones.
• Inconsistencies in Interview Styles Different interviewers using varied styles may lead to conflicting decisions.
• Insights Gained: Despite flaws, interviews help gauge organizational fit, motivation levels, and interpersonal skills.

Chapter 8:
Employee Orientation: A procedure to provide new employees with essential background information (e.g., work hours,
benefits, policies, and daily routines).
Purpose:
1. Welcome: Make new employees feel at home.
2. Basic Information: Provide fundamental details to help employees function effectively.
3. Understanding the Organization: Help employees understand the mission, culture, and values.
4. Socialization: Foster integration and comfort within the team and organization.
Employee Training: Learning experience aimed at fostering a relatively permanent change in an individual's ability to perform
on the job.
Importance:
• Increase skills and potentially salary.
• Ensure job-related training and equal opportunities for all employees.
Goals:
• Should be achievable, tangible, timely, measurable, and verifiable.
• Aligns with organizational strategy and employment planning.
Determining Training Needs
1. Focus on organizational strategy.
2. Assess employment planning (e.g., number of employees, tasks, and skills required).
3. Conduct performance analysis to identify deficiencies.
4. Evaluate training based on its contribution to performance improvement.
Training Approaches
1. On-the-Job Training:
o Learning by doing it in a real work environment.
o Simple, cost-effective, and practical.
2. Off-the-Job Training:
o Classroom lectures, informal learning, and programmed learning with immediate feedback.
o Virtual reality simulations to mimic real job situations.
3. Apprenticeship Training:
o Combines on-the-job and classroom training for a structured learning process.
Employment Development and Training
Employee Training Employee Development
Present-oriented: Focused on improving current job skills Future-oriented: Focused on personal growth and skills for
for immediate performance. future roles and responsibilities.
Enhance specific skills to make employees effective in Prepares employees for higher responsibilities and career
their current roles. advancement.

Employee Development Methods

On-the-Job Techniques:
1. Job Rotation:
o Moving employees between positions (horizontal or vertical).
 o Reduces boredom, improves skills, and provides a comprehensive evaluation of employees.
2. Assistant-to-Position Coaching:
o Working under experienced managers to learn by observation.
o Involves committee assignments and decision-making participation.
Off-the-Job Techniques:
1. Lectures and Seminars: Enhance analytical abilities and knowledge. Outside seminars offered by universities and
companies.
2. Simulations: Virtual reality training replicates job scenarios in a 3D environment.
3. Outdoor Training: Focus on teamwork and collaboration.
Evaluating Training Effectiveness
Performance Measurement Methods:
1. Post-Training Performance: Measure employee performance improvements after the training program.
2. Pre-Training vs. Post-Training: Compare employee performance before and after training.
3. Pre-Post Training with Control Group: Compare performance of a control group (no training) with an experimental
group (trained).
Evaluation Categories:
1. Reaction: Did participants enjoy and value the program?
2. Learning: Were the intended skills or principles acquired?
3. Behavior: Did training lead to a change in job behavior?
4. Results:
o Most critical measure: Did training achieve measurable, job-related outcomes?
Training is deemed successful only if it produces tangible, result-oriented improvements.

Chapter 10:
Performance Appraisal: A systematic process of setting work standards, assessing actual performance, and providing
feedback to employees to improve performance and align with organizational goals.
Performance Management: An integrated approach ensuring that employees' performance contributes to organizational
goals. It encompasses:
o Feedback: Communicates performance against established goals.
o Development: Identifies areas where employees can improve.
o Documentation: Addresses legal aspects of employee evaluations.
Importance of Performance Appraisal
1. Basis for pay raises and promotions.
2. Corrects errors and reinforces good performance.
3. Aids in career planning.
4. Central to performance management processes.
5. Develop plans for employees.
6. Identifies training needs.
Who Should Conduct Appraisals?
• Immediate Supervisors: Typically perform appraisals. Must be familiar with effective appraisal techniques.
• Rating Committees: Comprise multiple supervisors to reduce bias.
• Peers: Improve communication and motivation for tasks.
• Self-Appraisals: Employees assess themselves but often rate themselves higher.
• Subordinates: Provide upward feedback, improving managerial performance.
• 360° Feedback: Collects input from supervisors, peers, subordinates, and self-assessments for a holistic view.
Performance Appraisal Process
• Establish Standards: Develop SMART goals (Specific, Measurable, Achievable, Relevant, Timely)
• Communication Standards: Clearly explain performance criteria to employees.
• Measure Performance: Sources include personal observation, statistical reports, oral reports, and written reports.
• Compare Performance: Assess against established standards.
 • Discuss Results: Provide feedback, focusing on improvement.
• Take Corrective Actions: Address causes of poor performance and implement solutions.
Appraisal Methods
Absolute Standards:
• Essay Appraisal: Narrative evaluation of strengths, weaknesses, and suggestions.
o Pros: Simple and specific.
o Cons: Subjective, time-consuming, and provides qualitative data only.
• Critical Incident Appraisal: Focus on key behaviors influencing job effectiveness.
o Pros: Specific and behavior focused.
o Cons: Time-intensive, requiring regular documentation.
• Checklist Appraisal: Evaluator marks "Yes" or "No" to statements about employee behavior.
o Pros: Reduces bias through separate evaluation and scoring.
o Cons: Costly for diverse job roles.
• Forced Choice Appraisal: Evaluator selects between descriptive statements without knowing their weight.
o Pros: Reduces bias.
o Cons: Unpopular number of appraisers.
• Adjective Rating Scale: Rates employees on traits like quality of work using a scale (e.g., poor to excellent).
o Pros: Time-efficient, quantitative, and comparative.
o Cons: Subjective.
• Behaviorally Anchored Rating Scale (BARS): Description: Combines critical incident and rating scale methods.
o Pros: Specific, job-focused, and minimizes errors.
o Cons: Time-consuming and costly to develop.
Relative Standards:
• Individual Ranking: Ranks employees from highest to lowest.
o Cons: Challenging with small teams or similar performance levels.
• Group Order Ranking: Classifies employees into categories (e.g., top 20%).
o Cons: Can foster unhealthy competition.
• Paired Comparison: Compares each employee against others for specific traits.
o Pros: More precise rankings.
• Objective Methods: Evaluates performance against specific goals (e.g., MBO).
o Steps:
1. Set company-wide goals.
2. Cascade goals to departments.
3. Discuss and refine individual goals.
4. Conduct performance reviews.
5. Provide feedback and develop plans.
Challenges in Performance Management Systems
• Individual Focus: Negative emotions may arise during evaluations.
• Process Focus: Overemphasis on documentation can hinder constructive evaluation.
Common Errors and Biases:
• Halo Effect: Overemphasis on one trait.
• Leniency/Strictness: Consistently high or low ratings.
• Central Tendency: Avoiding extremes in ratings.
• Similarity Error: Favoring employees with similar traits.
• Inflationary Pressure: Avoiding negative ratings.
• Low Motivation: Unmotivated evaluators provide poor assessments.
• Inappropriate Substitutes: Using traits like enthusiasm as proxies for performance.
• Attribution Errors: Misjudging reasons for poor performance.
Effective Employee Evaluations
 • Schedule appraisals in advance. • Focus on behavior, not personality.
• Create a supportive, non-threatening • Use specific examples to support feedback.
environment. • Provide both positive and negative feedback.
• Clearly state the appraisal’s purpose. • Ensure employees understand the appraisal.
• Involve employees in discussions. • Develop actionable improvement plan
Improving Performance Management Systems
• Use behavior-based measures.
• Combine absolute and relative standards.
• Provide continuous feedback.
• Include multiple raters.
• Incorporate peer evaluations.
• Use 360° feedback for comprehensive appraisals.

Chapter 11, 12:

Compensation: Compensation includes all forms of pay or benefits provided to employees as a result of their employment.
Types of Employee Compensation and Rewards
1. Intrinsic vs. Extrinsic Rewards:
o Intrinsic Rewards: Personal satisfaction derived from the job itself. Examples:
▪ Job enlargement.
▪ Job enrichment.
▪ Teamwork.
▪ Empowerment.
o Extrinsic Rewards: Tangible rewards like money and promotions.
2. Financial vs. Non-Financial Rewards:
o Financial Rewards:
▪ Direct Financial Payments: Wages, salaries, and commissions.
▪ Time-Based: Pay tied to hours worked (e.g., hourly workers, salaried managers).
▪ Performance-Based: Pay based on output (e.g., piece-rate or commission).
▪ Merit Pay: Salary increases based on individual performance.
▪ Bonuses: One-time payments, often more motivating than merit pay.
▪ Indirect Financial Payments: Benefits like medical or life insurance.
▪ Employee Services: Transportation, legal services, etc.
o Non-Financial Rewards:
▪ Enhancements that improve job satisfaction (e.g., recognition programs, performance feedback).
3. Performance-Based vs. Membership-Based Rewards:
o Performance-Based: Rewards tied to individual or team results.
o Membership-Based: Rewards based on tenure, seniority, or market conditions
Incentive Compensation Plans
• Competency-Based Pay: Encourages skill acquisition and job rotation.
o Key Elements:
1. Define specific skills.
2. Establish pay based on skills.
3. Provide training for skill development.
4. Use competency testing.
5. Allow job movement to apply skills.
• Team-Based Compensation: Rewards based on team performance.
o Advantages:
▪ Promote teamwork and shared goals.
▪ Facilitates training for new members.
 o Disadvantages:
▪ Free-rider problem (team members benefiting without contributing equally).
Compensation Administration Goals
1. Attract, motivate, and retain competent employees.
2. Design cost-effective and equitable pay structures.
3. Ensure alignment with organizational goals.
Job Evaluation and Pay Structure: Job evaluation determines the relative value of jobs to establish fair pay structures using
information from job analyses.
Steps in Job Evaluation:
1. Identify the need for evaluation.
2. Gain cooperation from stakeholders.
3. Form an evaluation committee.
4. Conduct the evaluation.
Compensable Factors: Common elements used to determine job worth, including:
o Effort, Responsibility, Working Conditions, Skills.
Methods of Job Evaluation:
• Ordering/Ranking Method: Ranks jobs relative to each other.
o Pros: Simple and quick.
o Cons: Subjective and not suitable for large organizations.
• Classification/Grading Method: Categorizes jobs into classes or grades based on similar value.
o Pros: Facilitates pricing of similar jobs in groups.
o Cons: Requires judgment and complex grade descriptions.
• Point Method: Assigns points to compensable factors and sums them for job evaluation.
o Pros: Quantitative and objective.
o Cons: Requires detailed analysis and weighting.
• Factor Comparison Method: Uses benchmark jobs to assign relative values to compensable factors.
o Pros: Quantitative and consistent.
o Cons: Complex and time-consuming.
Market-Competitive Pay Plans
• Conduct salary surveys to compare competitors’ pay for similar roles.
• Align pay structures with market rates based on evaluation data.
Challenges in Compensation Management
1. Balancing intrinsic and extrinsic rewards.
2. Addressing inequities in pay structures.
3. Managing the free-rider problem in team-based incentives.
4. Ensuring pay structures remain competitive and equitable.
By integrating these elements, organizations can design effective compensation systems that motivate employees, foster job
satisfaction, and align with strategic goals.

Chapter Establish and Maintenance.

Establish a Job Benchmark:

1. Choose benchmark jobs: Select representative jobs to evaluate.

2. Select compensable factors: Consider skills, working conditions, and strategic needs; define factors clearly for
consistency.
3. Assign weights to compensable factors: Allocate total points (e.g., 100) among factors.
4. Evaluate the job: Assess the degree of each factor in jobs based on skills and points, then calculate total points for
each job.
5. Draw internal wage curve: Plot job points and wages to visualize how pay correlates with job evaluation; identify
outliers.
 6. Conduct salary survey: Gather pay data from similar firms to assess market rates.
7. Draw external wage curve: Compare internal wages to market pay to assess competitiveness.
8. Adjust pay rates: Compare internal and external wages to decide on adjustments.
9. Develop pay grades: Group similar jobs into grades to simplify pay structure

Maintenance:
Retention Strategy: Aims to reduce turnover by understanding why employees stay or leave through surveys and focus
groups.
Reasons for Leaving & Solutions:
• Pay: Uncompetitive or unfair pay.
o Fix:
1. Review pays based on market surveys.
2. Link performance to rewards.
3. Ensure fairness and clear job evaluations.
4. Adapt pay systems for short-term employees.
• Job Design: Jobs feel unrewarding.
1. Fix: Design jobs for skill variety, task significance, and growth.
• Performance: Unclear responsibilities or standards.
o Fix:
1. Set attainable performance goals.
2. Provide regular, constructive feedback.
3. Train managers in performance reviews.
• Learning and Development: Lack of growth opportunities.
o Fix:
1. Provide training to meet performance standards.
2. Offer new skills and tasks.
• Career Development: Dissatisfaction with career prospects.
o Fix:
1. Offer wider experiences, fair promotions, and career advice.
• Commitment: Low engagement.
o Fix:
1. Communicate mission and values.
2. Foster open discussions and employee involvement.
• Group Cohesion: Employees feel isolated.
1. Fix: Set up self-managing teams and promote effective team members.
• Manager Conflicts: Poor leadership or unfair treatment.
o Fix:
1. Select and train managers with strong leadership skills.
2. Improve conflict resolution and grievance procedures.
• Recruitment and Promotion: Poor selection leads to turnover.
o Fix: Ensure selection and promotion procedures align with employee capacities.
• Over-marketing: Unrealistic career expectations.
o Fix: Use realistic job previews during recruitment.