badm310 session 2-3 hrm ch 12 slides
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lecture slides fall2015TRANSCRIPT
Human Resource
Management
chapter twelve
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
BADM 310
Management and Organizational
Behavior
Learning Objectives
1. Explain why strategic human resource management can help an organization gain a competitive advantage.
2. Describe the steps managers take to recruit and select organizational members.
3. Discuss the training and development options that ensure organization members can effectively perform their jobs.
4. Explain why performance appraisal and feedback is such a crucial activity, and list the choices managers must make in designing effective performance appraisal and feedback procedures.
5. Explain the issues managers face in determining levels of pay and benefits
6. Understand the role that labor relations play in the effective management of human resources
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Human Resource Management
• Human Resource Management (HRM)– Activities that managers engage in to attract and
retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals.
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Components of a Human Resource Management System
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Figure 12.1
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Human resource management and competitive advantage
• Strategic Human Resource Management– Designing the components of a HRM system to be
consistent with the organization’s architecture, strategy and goals.
– Aims to use HR to build competitive advantage• Contrast with HRM as “personnel” where the focus is
on administering policies – Major but uneven trend in the past two decades
• But companies vary in degree to which they have embraced this idea
• It requires changes in power and management paradigms
How Does Strategic HRM Actually Work?
• Who: HRM managers work closely with the “line” managers to improve efficiency, quality, innovation, and responsiveness.– “Line” managers = managers who are directly involved in
production & sales of products / services: (for example, operations; production; sales; logistics).
– “Staff” managers = support the line: (e.g., marketing; finance; HRM; R&D).
• What: HRM managers support high performance work practices– For example, Cross-functional and self-managed work teams,
TQM, employee involvement, training, information sharing6
HRM Systems and Market Value
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$250,000
$270,000
$290,000
$310,000
$330,000
$350,000
$370,000
$390,000
$410,000
Market Value
in Dollars
per Employee
Quality of the HRM System
TopQuintile
LowestQuintile
MiddleQuintileFirms with excellent
HRM Systems have greater market value per employee
Source: Adapted from M. A. Huselid and B. E. Becker. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38, 1995, pp. 635-672
Components of a Human Resource Management System
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Figure 12.1 • Recruitment– Activities that managers
engage in to develop a pool of candidates for open positions.
• Selection– The process that managers
use to determine the relative qualifications of job applicants and their potential for performing well in a particular job.
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Human Resource Planning
• Recruitment is driven by human resources planning • Human resource planning involves forecasting of
current and future staffing needs– Driven by organization’s strategy and goals– Top-down forecasts of overall needs– Individual job analysis
Recruitment
Internal Recruiting└ Hiring existing employees to fill open positions.
External Recruiting└ Hiring people who have not worked at the firm
previously.└ Sources: Newspapers advertisements, open
houses, on-campus recruiting, employee referrals, and through the Internet.
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Internal RecruitmentAdvantages & Disadvantages
Advantages:└ Managers already know candidates and thus have a
better idea of their capabilities and fit└ Internal applicants are already familiar with the
organization and how it works└ Provides clear evidence of a career path – so can help
boost levels of employee motivation and morale. Disadvantages / concerns
└ Learning (skills & gaining experience) on the job can be (very) expensive
└ You may know how the candidate performs at their current job, but what about in the new job? 12-11
External RecruitmentAdvantages & Disadvantages
Advantages└ Accesses a large applicant pool└ Can access people who have skills, expertise, and
experience that the organization lacks└ Newcomers can bring fresh ideas & perspectives
Disadvantage: └ Search can be expensive└ Outsider’s actual technical capabilities and their
fit (e.g., with organizational culture) are unknown
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The Selection Process
Selection process└ Managers find out
whether each applicant is qualified for the position and likely to be a good performer
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Selection Tools
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Reliability and Validity
Reliability └ the degree to which
the tool measures the same thing each time it is used
Validity └ the degree to which
the test measures what it is supposed to measure
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Each selection tool has strengths and weaknesses
• Standard Tools:– Resumes and application forms – initial screening– Interviews – almost universal and reasonably valid– Written tests - measure intelligence, ability, personality,
interest, etc. – popular; validity varies– Reference checks – tough to get negative information
• Performance-simulation tests– Work sampling - perform key tasks (non-managerial jobs)– Assessment center - simulate challenges of managerial jobs– Most valid – Most expensive
The Legal Environment of HRM(We focus on this later)
Equal Employment Opportunity (EEO)└ The equal right of all citizens to the opportunity to
obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities.
└ Equal Employment Opportunity Commission (EEOC) enforces employment laws.
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Retaining employees
Realistic Job Preview└ An honest assessment of the advantage and
disadvantages of a job and organization.• vs. temptation to present a rosy view
└ Perhaps counterintuitively, honesty is seen to be more effective, as tends to reduce the number of new hires who quit when jobs and organizations fail to meet their unrealistic expectations• Losing the new hire and rehiring is costly in multiple ways
Socialization (covered already in culture)12-18
Components of a Human Resource Management System
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Figure 12.1 • TrainingTeaching organizational members how to perform current jobs and helping them to acquire skills and knowledge they need to be effective performers.
• DevelopmentBuilding the knowledge and skills of organizational members to enable them to take on new responsibilities and challenges.
Training
12-20Figure 12.4
Development
12-21Figure 12.4
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Action Learning: Training that “Sticks”
• Problem: How do you ensure training is brought back to the job?– The “now what do I do on my real job” problem is common
with non-technical training.– For instance, established routines and inertia can suppress
changes inspired by training or development.• Action learning: Training designed to link conceptual
learning with actual job tasks (not in text)– Action learning addresses this problem because employees
learn techniques and concurrently use them on an actual project in their job.
– Example: General Electric – presenting to your boss’s boss.
Components of a Human Resource Management System
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Figure 12.1 • Performance AppraisalThe evaluation of employees’ job performance and contributions to their organization.
• Performance FeedbackProcess by which managers share performance appraisal information and (with subordinates) develop plans for the future.
Illusory superiority bias
People tend to believe their performance is better than it actually is, relative to other people. └ “Lake Wobegon effect” – where everyone is
above average└ Among the reasons: you see all of your positive
actions, but only some of others’ positive actions. It turns out this is really important where
performance evaluation is concerned.12-24
Performance Appraisal & Feedback
• Performance Appraisal– Evaluation of employees’ job performance and
contributions to their organization.• What do you evaluate?
– Results (“The bottom line” / outputs)• Best if 1) measurable and 2) under employee’s control
– Behaviors (“What the person does” / inputs)• Useful when conditions 1) and/or 2) above are not true
– Traits (“Who the person is” / personality)• AVOID! We tend to attribute traits, but this introduces
bias (e.g., stereotyping), and hinders action planning 12-25
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Effective Performance Appraisal:Subjective vs. Objective Evaluations
• Subjective = (manager’s perceptions, esp. of behaviors)– + Rich information => can adjust for situations where
results are not a valid indicator of individuals’ job performance
– - Potential for bias because managers perceptions can be unfair (e.g., favoritism), inconsistent (e.g., across managers) and /or biased (e.g., stereotypes, halo)
• Objective = (measurable results)– + Less bias– - Information is less rich => more difficult to adjust
when results are not indicative of individuals’ job performance
• Recommendation: Incorporate both types
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Effective Performance Appraisal:Effective subjective / objective evaluation
• To use subjective evaluation effectively:– Evaluate behaviors rather than traits– Describe specific, important job-related behaviors– Avoid making overall judgments or citing outlying
incidents. • To use objective evaluation effectively:
– Work with employees to set goals (=> commitment)– Assess whether employee controls goal achievement
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Example of subjective evaluation:Graphic Rating Scale
Scores poorly on criteria for subjective evaluation
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Better subjective evaluation:Behaviorally Anchored Rating Scale
Better subjective evaluation: Behavioral Observation Scale
12-30Figure 12.5
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Two additional performance evaluation techniques:
• Forced ranking: Each manager is required to categorize employees in a standardized way.
• Multiple Evaluators: Expand evaluation beyond bosses, to include coworkers, subordinates, etc.
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Forced Rankings
• Each manager is required to categorize employees in a standardized way.– Example: Each manager must rate 10% of subordinates
as excellent, 20% as exceeds requirements, 50% meets requirements, and 20% below requirements
– Examples: General Electric, Microsoft• Typically adopted because managers typically rate
most of their people highly– E.g., mostly 4’s or 5’s on a 5 point scale, virtually no 1’s
or 2’s.• Advantages:
– Better discrimination between high and low performers.
– Deters retention of low performers
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Problems with Forced Rankings
• Inflexible: Assumes that each manager has an equal # of high / low performers– But this can vary (demo)
• Creates competition rather than collaboration among employees – (e.g., hurts information sharing)
• Employee Dissatisfaction with ratings– Clashes with illusory superiority bias – Consider reaction of a good employee who is told
they “meet requirements.”
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Forced Rankings Exercise
• Imagine you are a manager with 4 direct reports. Your firms’ forced-ranking system means you can only give out 2 high-performer ratings. But how many of your reports are actually high (above average) performers?
• We can assume that each of your direct reports has a 50% chance of being a high performer. To see how many are actually high performers, flip a coin 4 times. Heads indicate high performers!
• What did you get? Your team:A. 4 Heads D. 1 or 0 HeadsB. 3 Heads E. Could not get a coinC. 2 Heads
Who Appraises Performance?
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Figure 12.6
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Multiple Evaluators (360 degree feedback)
• Expand evaluation beyond bosses, to include coworkers, subordinates, etc.– Why valuable: Managers do not have the only, or even the
best, information to evaluate an employee’s performance.• Especially when work is done in teams, virtually, etc.
– Most common type: 360 degree feedback: You receive feedback from everyone you work with.
• With arrangements to provide anonymity.– Limitations:
• Not appropriate for evaluation (potential for “settling scores” & retaliation), is much better for good for development.
Dilbert on 360-Degree Review
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Screen clipping taken: 5/29/2014 3:20 PM
Components of a Human Resource Management System
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Figure 12.1 • Performance AppraisalThe evaluation of employees’ job performance and contributions to their organization.
• Performance FeedbackProcess by which managers share performance appraisal information and (with subordinates) develop plans for the future.
Effective Performance Feedback
Goal└ Improve employee performance
Formal appraisals└ An appraisal conducted at a set time (i.e., annual,
semi-annual) and based on performance dimensions that were specified in advance
Informal appraisals└ An unscheduled appraisal of ongoing progress
and areas for improvement
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How do you deliver feedback?
• When I give feedback I usually:
1 a. Describe the behavior
b. Evaluate the behavior
2. a. Focus on the feelings that the behavior evokes
b. Tell the person what they should be doing differently
3. a. Give specific instances of the behavior
b. Generalize
4. a. Deal only with behavior that the person can control
b. Sometimes focus on something the person can do
nothing aboutSource: DEVELOPING MANAGERIAL SKILLS IN ORGANIZATIONAL BEHAVIOR by Mainiero/Tromley, © 1994. Adapted by pernussion of Prentice-Hall, Inc., Upper Saddle River, NJ.
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How do you deliver feedback?
Source: DEVELOPING MANAGERIAL SKILLS IN ORGANIZATIONAL BEHAVIOR by Mainiero/Tromley, © 1994. Adapted by pernussion of Prentice-Hall, Inc., Upper Saddle River, NJ.
When I give feedback I usually:5. a. Tell the person as soon as possible after the behavior b. Sometimes wait too long6. a. Focus on the effect the behavior has on me b. Try to figure out why the individual did what he or she did7. a. Balance negative feedback with positive feedback b. Sometimes focus only on the negative
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Barriers to Effective Performance Feedback
• Barrier #1: The skills required to deliver effective performance appraisals are very different than those required for effective feedback:– Appraisal requires objectivity & difficult evaluation
decisions. Managers must play the role of judge.– Feedback calls for supportive behaviors, in order to
encourage growth and development. Managers must play role of coach.
– It is difficult to do both tasks well, especially when they must be done concurrently.
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Barriers to Effective Performance Feedback
• Barrier #2: Appraisals often generate conflict (differing perceptions, illusory superiority bias)– Managers may avoid conflict and so not address core
problem issues.• Barrier #3: Performance management is “indirectly
productive” (doesn’t directly generate outputs) – So can be delayed or taken lightly
• High-performing organizations devote enormous attention to these problems– Notably through performance management systems
and training managers to give feedback
Best Practice for Effective Feedback
• Approach feedback as an exercise in problem solving and solution finding, not criticizing.
• Be specific and focus on behaviors or outcomes that are correctable and within a worker’s ability to improve. – Also set a timetable for agreed changes.
• Express confidence in subordinate’s ability to improve.– Treat subordinates with respect & praise achievements.– Example: “Sandwich” method
• Provide performance feedback both formally and informally.
• Does chewing someone out have its uses?12-44
Components of a Human Resource Management System
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Figure 12.1 • PayIncludes employees’ base salaries, pay raises, and bonuses, based on job & performance
• Benefits Other compensation, usually based on membership in an organization.
Pay and Benefits(refer to textbook)
Pay└ Includes employees’ base salaries, pay raises, and bonuses└ Determined by characteristics of the organization and the
job and levels of performance Benefits
└ Benefits are based on membership in an organization└ Legally required: social security, workers’ compensation,
unemployment insurance└ Voluntary: health insurance, retirement, day care└ Cafeteria-style benefits plans allow employees to choose
the best mix of benefits for them, but can be hard to manage.
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Pay Level and Structure
Pay Level└ The relative position of an
organization’s incentives in comparison with those of other firms in the same industry employing similar kinds of workers
Pay Structure└ The arrangement of jobs into
categories based on their relative importance to the organization and its goals, level of skills, and other characteristics.
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CEO
Director Director
Dept Mgr
Dept Mgr
Director
VP VP
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Pay for performance
• Traditional pay:– Salary with (permanent) increases based on
individual performance• Pay-for-performance:
– Variable compensation based on individual, group and/or organization performance.
• For example, commissions; bonuses; stock options
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Benefits of Pay for performance
• Increased motivational leverage– Large changes in compensation (tied to current
performance) rather than small ones– Can emphasize team or organizational goals
• Flexible– Allows costs to naturally vary with firm success, so
reduces need for downsizing or salary “cuts”.
Components of a Human Resource Management System
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Figure 12.1 • Labor RelationsThe activities managers engage in to ensure they have effective working relationships with the labor unions that represent their employees’ interests.
Unions(refer to textbook)
Unions└ Represent worker’s interests to management in
organizations.└ The power that organizations have over individuals
can lead workers to join together in unions. Collective bargaining
└ Negotiation between labor and management to resolve conflicts and disputes about issues such as working hours, wages, benefits, working conditions, and job security.
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