human resource management ws all

Prof. Dr. Dr. Irina von Kempski

Human Resource Management WS 2013/14

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Lecture

Human Resource Management

Winter 2013/14

Contents

1 Introducing human resource management

Defining human resource management

HRM and the achievement of organisational effectiveness

Major themes in the HRM business environment

Major themes in contemporary HRM practice

The state of the psychological contract



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2 Organising a workforce

Workforce organisation

Flexibility for organisational benefit

Work-life integration



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3 Recruitment and retention

Recruitment in a tight labour market

Methods of recruitment

Employer Branding

Staff turnover rates and trends

Staff retention strategies



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4 Selection

Selection as a two-way process

Selection criteria

Selection methods

Final selection decision making

Validity and use of selection methods



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5 Performance management

Introducing performance management

Stages in a performance management system

Implementation and critique of performance management

Evaluation of performance management systems

Examples: MRA and 360-degree feedback



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6 People development

The learning and development context

The value of learning and development to organisations and individuals

The line manager and learning and development

The use of behavioural competencies in learning and development

Methods of learning and development

Is e-learning the future of learning and development?



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7 Reward management

Management objectives

Setting base pay

The elements of payment

Incentives

Benefits

Does performance-related pay work?Prof. Dr. Dr. Irina von Kempski


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8 Employee relations

Strategic choices

Employee involvement

Terminology

Information sharing

The role and future of trade unions and employee representatives



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9 Diversity in employment

What do we mean by diversity in employment?

Why is diversity in employment important?

Implications for line managers

Achieving sucessful diversity in organisations

Managing diversity or emphasing equality?



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10 Human Resource strategy

The nature of HR strategy and its link with organisational strategy

Theoretical perspectives of strategic HRM

What are the people management implications of downsizing?



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11 Leading people

Definitions of leadership and management

What are the traits of leaders and effective leaders?

What is the ‚best way to lead‘?

Do leaders need different styles for different situations?

Developing leadership skills

Do organisations need heroic or empowering leaders?Prof. Dr. Dr. Irina von Kempski


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12 The HR contribution

The role of line managers in HR

Analysis of HR roles and structures

Outsourcing HR

HR shared services – what‘s best for line managers and employees?



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12 Managing people internationally

The HRM dimension to international management

Different ways of working overseas

Managing an international workforce, away or at home?



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1. Introducing human resource management

Defining human resource management

The term ‘human resource management’ is not easy to define.

It is used in two different ways.

•Generically to describe the body of management activities

•Widely to denote a particular approach to the management of people. That means a distinctive philosophy towards carrying out people-oriented organisational activities



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The topics of human resource management have been mentioned in the “Contents” and visualised by the cycle discussed.

They can be grouped differently taking the role of human resource management as point of view. Then they are best explained by identifying the key objectives to be achieved:•Staffing objectives•Performance objectives•Change-management objectives•Administration objectives



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Staffing objectives

Human resource managers (and line-managers) are concerned with ensuring that the business is appropriately staffed.

This involves different tasks:

•Designing organisational structures

•Identifying under what type of contract different groups of employees should/will work

•Recruiting and retaining the best

•Development of employment packages



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Performance objectives

Human resource managers seek to ensure that people are well motivated and committed so as to maximise their performance in their different roles.

This involves different tasks:

•Training and development

•Reward systems

•Negotiations with employee representatives/trade unions

•Welfare functions

•Employee involvement initiativesProf. Dr. Dr. Irina von Kempski


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Change-management objectives

The third set of core objectives relates to the role played by the HR function in effectively managing change.

Change comes in different forms:

•Merely structural, requiring reorganisation

•Cultural change to alter attitudes, philosophies, norms

Both need special activities and special leadership to drive the change process.



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Administration objectives

The fourth type of objectives is focused on underpinning the achievement of the other forms of objectives. It is carried out in order to facilitate an organisation’s smooth running.

This includes:

•Maintaining accurate and comprehensive data on individual employees

•Record of their achievement, attendance, training, terms and conditions of employment, personal details

•Ensuring that legal requirements (i. e. health, safety, contracts, minimum pay, working time) are met



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For covering all the different tasks, different types of HR managers are needed and should be in charge:

•Human resource generalists•Human resource specialists•Subcontractors•Consultants and advisers•Line managers



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Human resource management and the achievement of organisational effectiveness

HR research has been dominated by study of links between HR practice and organisational effectiveness:

Mainly it is discussed, how what happens in the HR field impacts on an organisation’s ability to meet the objectives. The objectives will vary depending on the type of organisation and the situation.

•Achievement and maintenance of competitive advantage, commercial success vis-à-vis principal competitors

•Ensuring survival



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• Meeting a service need as cost effectively as possible (public and voluntary sector)

• A positive long-term corporate reputation

• Grow the customer base

• Achieving a high level of corporate ethics and social responsibility

• Attract and retain a strong management team

• Planning for the future by having in place effective succession planning



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Major trends in the human resource business environment

We are now entering the era of hyper-competition. This is being driven by two major developments:

•Moves towards the globalisation of economic activity on a scale that has not been experienced before. Markets are becoming more and more international with the effect that competition is becoming more and more international too

•Technology moves forward. Development in i. e. information technology, energy production, chemical engineering are in process of revolutionising the way many industries operate



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What does that mean for the HR manager?

•Practices have to be developed continually and quality has to be improved

•Volatility and change is the norm, people in working organisations have to be prepared accordingly

•Managing in international workforce effectively with all aspects of human resource management: attract, retain, develop and motivate people in an international environment

Other major trends important for the HR function are the labour market trends and the evaluation of employment regulationProf. Dr. Dr. Irina von Kempski


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Major themes in contemporary HRM practice

Before starting to introduce the various areas of HRM activity, it is helpful to introduce some of the broader underlying issues which are having a significant impact in more general terms:•Skills shortages•Best practice versus best fit•Ethics, regulatory compliance and competitive advantage•Sustainable flexibility



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Skills shortages

Dominant feature of the current HRM environment in Germany, UK and other countries is the combination of increasingly competitive product markets with increasingly tight labour markets.

Employers have to compete harder to recruit and retain the staff they need. And highly competitive markets for goods and services are putting a premium on operational efficiency. Therefore organisations are unable to compete for talent simply by paying people more money.

This is not new, but new now is that the majority of organisations are effected and the problem is long-term rather than temporary.

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Best practice versus best fit

The debate between best practice and best fit is both – interesting and significant. Consequences are across the field of HRM.

Basically the question is whether or not there is an identifiable ‘best way’ of carrying out HR activities which is universally applicable.

The best practice approach states that there are certain HR practices and approaches to the operation which will invariably help an organisation in achieving competitive advantage.



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Following this approach there is a clear link between HR activity and business performance, but the effect will only be maximised if the ‘right’ HR policies are pursued.

It is strongly suggested that the same basic bundle of human resource practices or that a general human resource management orientation tends to enhance business performance in all organisations.

The main elements of the ‘best practice bundle’ are:

•More advanced selection methods•Serious commitment to employee involvement Prof. Dr. Dr. Irina von Kempski


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• Substantial investment in training and development

• Use of individualised reward systems

• Harmonised terms and conditions of employment

The ‘best fit’ approach is characterised by another way of thinking.

There is no belief in the existence of universal solutions. All is contingent on the particular circumstances of each organisation. What is needed is HR policies and practices which ‘fit’ and are thus appropriate to the specific situation of individual employers. What is appropriate (‘best’) for one will not necessarily be right for another.



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Key variables are:

•Size of the establishment

•Dominant product market strategy

•Nature of the relevant labour markets



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Ethics, regulatory compliance and competitive advantage

One element is part of an organisation to mange a commitment on the relationship with its people ethically and in accordance with the expectations of the law.

This can be a quite costly aspiration:

•It tends to reduce flexibility due to the requirement for lengthy procedures to be followed in cases of dismissal, recruiting and managing performance

•It restricts the ability of managers to take decisions purely in the interests of the organisation Prof. Dr. Dr. Irina von Kempski


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The more employment regulation that is introduced, the greater the number of situations in which dilemmas have to be faced and decisions made about how to proceed.

Sustainable flexibility

A contemporary issue in HRM is an apparent clash between two very different organisational imperatives:

•Development of a capacity for flexibility to compete effectively

•Approach to management which engenders high levels of commitment to staff, particularly over the long termProf. Dr. Dr. Irina von Kempski


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The key is to focus on ‘mutual flexibility’ by which is meant initiatives which increase an organisation’s capacity to be flexible, but which also benefit employees.

It might be provided by the so called ‘work-life balance’.

An agenda has to be implemented accordingly, providing employees with part-time working options, flexible working hours, annual hours contracts and temporary career breaks.

Another area of development is in multiskilling jobs.



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Growing interest in the psychological contract

The term ‘psychological contract’ was coined in the 1960s, since two decades there has been significant interest in it.

It is understood as a broad explanatory framework for understanding employee-organisation linkages because of

•The shift in focus in the employment relationship to an individual

•The pace of change in product markets globallyProf. Dr. Dr. Irina von Kempski


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HRM has emerged as a mechanism for establishing the relationship between manager and employee at an individual level. This individual level focus is to which the psychological contract is ideally suited.

What is the psychological contract?

The psychological contract is influenced by:•HR practices: recruitment, training and reward

It leads to:•Commitment, motivation and performanceProf. Dr. Dr. Irina von Kempski


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The ‘old deal’ is: ‘job for life’.

The ‘new deal’ is: transactional, focused on pay, swapping employee loyalty and conformance for long hours and high performance.

The ‘new deal’ has made significant inroads into the employment relationship and has to be discussed.



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2 Organising a workforce

The traditional nine-to-five working day is in decline. New flexible working time is required and possible because of new flexible working rights legislation.

Business is struggling with

•Skills shortages

•Increasing demands to provide a family-friendly workplace



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On the other hand the following became the norm•Redundancies•Job insecurity•Stress•Long working hours

Therefore the HRM is confronted with significant challenges.



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Workforce organisation

Changes in workforce organisation to meet the need for workforce flexibility are required by the employer as well as the employee.

Employers •Provide less secure jobs•Use ‘flexible’ workers•Are enabled to greater control of workflow due to new technology•Require flexible working hours to extend capital utilisation•Require ‘24/7’ service availability

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Employees•Fact is the increased labour force participation of women•Increasing number of women with childbearing years•Increase of single parent families•Increase of dual career couples•Demographic influences (ageing population in western countries)•Increasing demands for childcare and elder care responsibilities



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Work organisation concerns the design of jobs and working patterns in order to meet both•Employer need for flexibility•Employee need for flexibility

The impact is that work organisation is central to the whole employment relationship.

Work organisation strongly influences organisational performance.

Tight labour markets increasingly require employers to accommodate employee demands for flexibility in order to recruit and retain scare labour.


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Organising flexibility means taking into account the approach of ‘work-life-balance’ or ‘work-life-integration’.

Part of the work organisation and flexibility debate is both

•Demand-driven flexibility

•Supply-driven flexibility

Employee-driven flexibility is emerging and becoming more and more critical for employers.



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Flexibility for organisational benefit

According to the ‘Model of the ‘flexible firm’’ of Atkinson (1984) different forms of flexibility are necessary

•Numerical flexibility

•Temporal flexibility

•Functional flexibility



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Numerical flexibility

Numerical flexibility allows organisations to respond quickly to the environmental changes in terms of the numbers of people employed.

Traditional full-time posts are replaced by •Short-term contract staff•Staff with rolling contracts•Outworkers•Leasing personnel

By this workforce can be reduced or expanded quickly and cheaply.Prof. Dr. Dr. Irina von Kempski


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The workforce of an organisation consists of

•Core employees, who form the primary labour market. They are highly regarded by the employer, well paid and involved in those activities that are unique to the firm or give a distinct character. These employees have improved career prospects.

As peripheral groups

•Employees who have skills that are needed but not specific to the particular firm. Organisations rely on the external labour market for these posts. The employee has a job but no career. The scope of these jobs is limited.Prof. Dr. Dr. Irina von Kempski


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• Employees with limited contracts of employment (i. e. short-term, part-time, job sharers).

• Contracting-out the work by temporary personnel from agencies (leasing), outsourcing the entire operation, split of make and buy.

Temporal flexibility

Temporal flexibility concerns varying the pattern of hours worked in order to respond to

• Business demands• Employee needs



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Temporal flexibility is crucial for organisations because of

•Increase of opening hours in retailing

•Growth of the leisure sector

•Internationalisation/globalisation

•Increase of export

Temporal flexibility can be realised by

•Annual hours contracts

•Part-time work

•Job sharing

•Flexible working hoursProf. Dr. Dr. Irina von Kempski


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Functional flexibility

Functional flexibility refers to a process in which employees gain the capacity to undertake a variety of tasks (multifunctional worker). The approach has been developed in Japan.

Advantages are•Reduction of monotonous assembly-line work•Increase of motivation•Increased usage of working capacity of the employee•Employees are becoming multiskilled



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That means •Employees are kept busy throughout their working day•Absence is more easily covered•Employees being more stretched, fulfilled and productive

Organisations need to invest in training significantly to achieve multi- functionality within the workforce.



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Work-life integration

A number of high-profile organisations seek to position themselves as ‘employer of choice’ by adopting such as work-life integration policies.

Options for achieving work-life integration are•Flexibility in terms of the number of hours worked•Exact timing of hours worked•Location at which the work is carried out

Work-life integration means different things to different people, depending on their age, life circumstances, values, interests, personality and so on

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Options for achieving work-life integration

•Part-time

•Flexitime

•Compressed work

•Annual hours

•Term-time work

•Job share

•Self-rostering

•Shift swapping

•Unpaid leave

•Sabbatical

•Work from home

•Informal flexibility 52

Benefits of work-life integration

In some instances work-life integration practices lead to

•Raising moral

•Increasing level of job satisfaction

•Reduction of absence, esp. unplanned absence

•Positive impact on retention

•Positive impact on recruitment

•Positive impact on motivation

•Increasing level of performance

•Increasing effectivity

•Improve of productivity and qualityProf. Dr. Dr. Irina von Kempski


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Barriers to work-life integration

The demand for flexible work options is much greater than the take-up (take-up-gap).

Reasons for that are•Work-life integration strategies cost the company money•Difficulties in setting up teleworking at home•Tight management and measurement of home-based teleworkers is necessary•Access to work-life balance is limited to certain groups of employees•Usage in a fire-fighting manner•Limiting the career development•Management/managers

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Manager’s role in work-life integration

Often line managers are those who will be the one who decides whether or not work-life integration becomes a reality because of their attitudes and management practices.

The manager has to reconciling performance and flexibility. They have to

•Be fair

•Make decisions on who might work flexibly in an acceptable way

•Taking care of the company’s performance



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3 Recruitment and retention

In recent years the Western Europe economy has experienced a strong period of economic growth leading to the development of relatively tight labour market conditions.

Recruitment and retention issues have moved to the top of the HR agenda. Therefore more money is being spent on these areas of activity, leading to substantial growth in the recruitment industry.

Elsewhere in the world some of the largest economies are experiencing historically unprecedented rates of economic growth.Prof. Dr. Dr. Irina von Kempski


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The Chinese economy is growing by appr. 11 per cent a year, the Indian by appr. 7 per cent a year.

Skills shortages are the consequence, recruitment and retention issues are rising to the top not only on the HR agenda.

Contents of this chapter are•Major contemporary developments in the field of recruitment•Different approaches that can be adopted•Circumstances in which each is most appropriate to use•How organisations address the need to retain their staff•Policy prescriptions to reduce unwanted turnover

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Recruiting in a tight labour market

The Chartered Institute of Personnel and Development did a survey of recruitment practice and found out that the majority of companies are experiencing recruitment difficulties, particularly when it comes to finding appropriated management and professional staff.

The employer is more and more required to ‘sell’ its jobs to potential employees so as to ensure that it can generate an adequate pool of applicants.

Jobs have to be presented in an attractive way in terms of

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• Rate of pay• Likelihood of career development• Quality of the employment experience

The recruitment process is not by any means finished at the point at which a pool of applicants has been received.

It continues through the shortlisting and interviewing stages until an offer is made and accepted.

The offered job has to be ‘sold’ to the applicants but it is important to avoid overselling. This would be an easy trap to fall into and counterproductive.



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A balance always has to be struck in recruitment between putting over an attractive message to the target labour market and ensuring that people are not misled in any way about the what to expect if their applications are accepted and a job offer made.

In case of vacancies the like-for-like recruitment is the most obvious tactic. Appropriate may be also•Reorganise the work•Use overtime

•Mechanise the work

•Make the job part time

•Subcontract the work

•Use an agency to supply a temporary worker

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Methods of recruitment

Internal recruitment

Vacancies are often filled internally. Sometimes organisations advertise all vacancies publicly and consider internal candidates along with anyone from outside of the organisation who applies.

Management of internal recruitment practices is difficult to carry out effectively and smoothly in practice.



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External recruitment

Once an employer has decided that external recruitment is necessary, a cost-effective and appropriate method of recruitment must be selected.

There are a number of distinct approaches to choose from, each of which is more or less appropriate in different circumstances.

Most employers use a wide variety of different recruitment methods at different times.



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Usage of various methods of recruitment

•Advertisement in local press

•Corporate website

•Recruitment agencies

•Specialist journals and trade press

•Employee referral scheme

•Word of mouth

•Jobcentre

•National newspaper advertisements

•Apprentices work/work placements

•Search consultantsProf. Dr. Dr. Irina von Kempski


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Methods of obtaining a job

•Hearing from someone who worked there

•Reply to an advertisement

•Direct application

•Private employment agency

•Jobcentre



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Informal recruitment is not generally considered to constitute good practice. This is because in using the approach an organisation denies itself the opportunity to select the best possible candidate from the wide pool of applicants.

The approach is also strongly criticised on ethical grounds because it has the effect of favouring friends and relatives of existing employees.

When seeing purely from the perspective of the employer seeking a good worker cheaply and quickly, it is understandable that it is used extensively.

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There is plenty of research evidence which suggests that informal recruits are often stronger performers than those who are recruited formally and they are less likely to leave at an early date too.



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Employer branding

In recent years considerable interest has developed in the idea that employers have much to gain when competing for staff borrowing techniques long used in marketing goods and services to potential customers.

In particular, many organisations have sought to position themselves as ‘employer of choice’ in their labour markets with a view to attracting stronger applications from potential employees.

Central is the development over time of a positive ‘brand image’ of the organisation as an employer.



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The ‘employer branding’ consists the four p’s of the marketing mix

•Product

•Price

•Promotion

•Placement

adapted for recruitment and retention.



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Staff turnover rates and trends

The length of service is discussed extensively. It is said that the ‘job for life’ is rare and long term employment is decreasing.

Even if it depends on the specific situation in the different countries job tenure in Western Europe countries shows that more than 50 per cent of employment ends before 5 years of service are fulfilled. On the other hand nearly 25 per cent of the employees stay more than 12 years with their company.Prof. Dr. Dr. Irina von Kempski


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Reasons for staff turnover are

•Outside factors

•Functional turnover

•Push factors

•Pull factors



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Staff retention strategies

Organisations are more and more confronted with resignations. The strategy against this trend are staff retention strategies. They consist of•Pay•Managing expectations•Induction•Family-friendly HR practices•Training and development•Improving the quality of line management



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4 Selection

Recruitment, the attraction of candidates to apply for a position, and selection, the decision over which candidate to appoint to a position, are typically line-manager responsibilities.

Thus it becomes increasingly critical for line-managers to understand selection processes and their role in them.

They have to understand•The flaws in various selection methods•The need to exercise subjective judgement within an apparently objective process Prof. Dr. Dr. Irina von Kempski


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While the perfect method of selection still does not exist, HR and line managers continue to use a variety of imperfect methods to predict which applicant will•Meet the demands of the job most successfully•Be the best fit with the work group and culture of the organisation

Poor selection and therefore an early termination is costly due to•Poor performance•Additional training•Demotivation of others•High levels of absence•At least more than € 7.000 as cost of filling a vacancy

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Selection as a two-way process

The various stages of a selection process provide information for decision by both the employer and the potential employee.

Labour market shortages have promoted a concern for the organisation’s image and the treatment of applicants during the recruitment and selection process.

The employer has to be concerned with•The job to be done•The work•The organisational context 74

Employees are influenced by•The recruiter’s ability to supply adequate and accurate information•The way the recruiter managed interaction: control of interaction, listening, ability to allow candidates to present themselves effectively

Employers are influenced by the candidate’s•Hard skills•Soft skills•Personality Prof. Dr. Dr. Irina von Kempski


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Selection criteria

Unless the criteria against which applicants will be measured are made explicit, it is impossible to make credible selection decisions.

It will be difficult to adopt the most appropriate selection procedure and approach, and difficult to validate the selection process.

Selection criteria are•Person specification•Competency-based criteria



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Selection methods

There are a wide range of selection methods. The mechanics of each method is different, they are differently effective and have a different ‘predictive validity’.

The most popular selection methods are clearly based around interviews and application forms, with assessment centres and other forms of testing also being used.

Overall more traditional methods as well as more advanced methods are to be considered.



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Traditional methods of selection

Often referred to as ‘the classical trio’, traditional methods of selection comprise

•Application form

•Interview – face-to-face or telephone interviewingoStructuredoHalf-structuredoUnstructured

•References – factual check, character reference



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Advanced methods of selection

The increasing cost of selection, coupled with the increasing recognition of the problems associated with ‘the classical trio’, have led organisations to consider more sophisticated methods of selection.

Some of them are•Testing

o Aptitude/ability testsoGeneral intelligence testso Special aptitude testso Attainment/achievement testso Personality tests

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• Group selection methodsoGroup methods to provide evidence about the

candidate’s ability To get on with others, Influence others Express themselves verbally Think clearly and logical Argue from past experience and apply themselves

to a new problem Identify the type of role they play in group situations

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oAssessment centres

•Work sampling/portfolios

•Other methodsoGraphologyoBody language



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Validity and use of selection methods

Selection method and predictive validity



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Selection method Predictive validity Usage %

Assessment centres 0.68 47

Structured interviews 0.62 88

Work samples 0.55 80

Ability tests 0.54 72

Personality questionnaires

0.38 92

Unstructured interviews 0.31 92

References 0.13 45

The different methods show different predictive validity as a single used method.

Modern and advanced methods of selection achieve a higher level of validity by combining different methods, i. e. assessment centres.

If a company does not want to use advanced methods of selection they might use a combination of a couple of different traditional methods to come to more valid results than using only one or two methods.

This is the approach of the modern model: multi-methodical selection process.



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5 Performance management

The term ‘performance management’ is used in two different ways:

1. To imply

organisational targets, frameworks like the balanced scorecard, measurements and metrics, with individual measures derived from these.

2. To align

the individual and the organisation, with the developmental and motivational approach

The focus in this chapter is on the second understanding. 84

Introducing performance management

The idea of performance measurement is not new. It exists since years and annual review of objectives between manager and team member has been revolved.

The traditional performance appraisal systems are usually•Centrally designed by specialists•Backwards focused on historic performance•Elaborating forms completed as a record of the process (no “living” documents)Prof. Dr. Dr. Irina von Kempski


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In the last two decades the concept of performance management has emerged to a system•Future-oriented•Strategically focussed•Applied to all employees in an organisation•Line-manager owned

The focus of performance management is•To maximise current performance•To maximise future potential•A preoccupation which arises from the pressure of globalisation•To survive in an international marketplace 86

Defining performance management

Performance management can be defined as proposed by Clark (2005):

“Establishing a framework in which performance by human resources can be directed, monitored, motivated and refined, and that links in the cycle can be audited”, wherein performance means both behaviour and results.

Therefore managing performance requires a focus on•The outcomes, the ‘whats’•The behaviours adopted, the ‘hows’



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Characteristics of performance management systems

Performance management systems (PMS) are closely tied into the objectives of the organisation, so that the resulting performance is more likely to meet organisational needs.

PMS is integrated with performance planning, which links an individual’s objectives to business objectives. The employees efforts are directed towards organisational priorities.

The employee is enabled to be successful by•Development plans•Coaching•Ongoing review 88

Performance has to be •Assessed •Rewarded if successful •Reinforced

For a successful performance management goal setting is key.

The theoretical base on goal setting includes two aspects•Goals are seen to provide motivation – this view is based on goal setting theory originally developed by Locke in 1968•Individuals will be motivated to act provided they expect to be able to achieve the goals set 89

Characteristics of performance management systems•Top-down link between business objectives and individual objectives•Line manager driven and owned rather than being owned by the HR function•A living document where performance and development plans, support and ongoing review are documented as work progresses, and prior to annual review•Performance is rewarded and reinforced

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Stages in a performance management system

Definition of business role- Job description

- Objectives of department/group

Formal assessment and reward Planning performance - Annual assessment - Individual objectives

- Link to pay - Development plans

Delivering and monitoring

- Ongoing manager support

- Ongoing review 91

Business mission, values, objectives and competencies

Before it is possible to plan and manage individual performance the organisation will have made significant steps in identifying the performance required of the organisation as a whole.

In most cases this will involve a mission statement so that performance is seen within the context of an overriding theme.

Many organisations will also identify core values of the business and the key competencies required.Prof. Dr. Dr. Irina von Kempski


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Organisational objectives are particularly important, as it is common for objectives contribute to their achievement.

The objective-setting cascade

Board level

Functional level

Department level

Team level

Individual level

The direction of objectives cascading is top down, of feedback going upwards.



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Planning performance: a shared view of expected performance

Individual objectives derived from department or team objectives and an agreed job description can jointly devised by manager and employee and may focus on outcomes or behaviours.

Objectives which are outcome/results oriented are tightly defined and include measures to be assessed.

The objectives are designed to stretch the individual, and offer potential development as well as meeting business needs.

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Often organisations use the ‘SMART’ acronym for describing individual objectives or targets.

S – specific

M – measurable

A – appropriate/achievable

R – relevant/realistic

T – timed

Moving staff to a different view of how their personal objectives contribute to team and organisational objectives is an important part of the performance management.

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The critical point about a shared view of performance suggests the handing out a job description or list of objectives to the employee is not adequate.

Performance expectations need to be understood and, where possible, to involve a contribution from the employee.

That employees might achieve their goals, necessary and imperative is the planning of•Support•Development/personal development plan•Resources 96

Delivering and monitoring performance

The manager’s role is key in the performance management. His role is to enable the employee by i. e.•Organising the resources•Off-job training•Being accessible•Ongoing coaching

Sometimes the situation will demand that the expected performance needs to be revised.



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Formal performance review/assessment

Regular formal reviews are needed to concentrate on developmental issues and to motivate the employee.

An annual review and assessment is needed, of the extent to which objectives have been met. This may well affect pay received.

Methods and instruments on which to base performance review are•Managers give an overall rating to staff at all•Linking ratings with behavioural at workProf. Dr. Dr. Irina von Kempski


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Reward

Performance management may have a number of aims, the most common are

•Developmental (training, employee growth)

•Judgemental (pay, promotion)

The functioning of rewards depends on the question if employees motivation is intrinsic or extrinsic triggered.



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360-degree feedback

A special kind of performance measurement is the 360-degree feedback. It is a all-round feedback given by the stakeholders of the employee concerned.

The stakeholders are

•Supervisor/manager (= higher level)

•Colleagues (= equal level)

•Customers (= equal level)

•Team-members (= lower level)100

The formal process is a survey using a carefully constructed questionnaire of all the contributors of feedback.

The questionnaire has to answer on certain requirements. Each question•Has to be relevant to the recipient’s job•Should be concise•Should be used to measure a particular competency•Should set standards



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6 People development

Remedying skills deficiencies requires that both organisations and individuals commit themselves to people development, yet this has often been a neglected area.

Therefore the value that employee development has for employers and individuals to be explored.

The focus is on•The line managers role•Competencies in people development•Specific development methods and e-learning

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The value of learning and development to organisations and individuals

The problem with people development is that it is very difficult to provide compelling evidence that it really does improve performance and provide a clear business benefit.

Supporters claim that it improves recruitment, motivation and retention; enhances individuals’ skills, knowledge and attitudes appropriate for the job they are doing to enable them to do it better; and prepares employees to take on different and sometimes higher-level roles in the organisation.

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Learning and development can bee seen as an investment in improving business performance.

In a more general sense the pace of change in business today means that there is a constant need for new skills to be developed in order for the organisation to remain competitive.

Continuous development is a key part of enhancing the value of the employee capital in any organisation and this is generally seen as the way in which organisations gain competitive advantage.



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In the everyday business problems are associated with development activities. •People may require time off the job•Costs of internal learning•Costs of external learning•Costs of development specialists, courses and materials•Employees might be provided with skills and qualifications they need to get a better job elsewhere



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Learning and development has changed during the last decades.

In the past the focus was on instructor-led training, with an emphasis on trainers identifying the content of what is delivered to learners.

The modern approach to learning and development is to implement self-directed development with the emphasis on integrating learning with job tasks.

So it becomes highly relevant to the job and job performance.

This involves learners and their managers taking the lead and identifying what they need to learn.

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The line manager and learning and development

As the focus of learning and development has shifted from the development specialist or the HR-function to the line manager and from the trainer to the learner, the importance of learning on the job has risen.

The role of the line manager becomes critical as they work with an individual •To determine the learning needs•To agree on the best ways to meet the needs•To support and enable the application of skills learned•To provide ongoing feedback, guidance, coaching and review

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Line managers are also increasingly responsible for their group’s learning and development budget.

The line manager has a coaching role too.

Coaching is an informal approach to individual development based on a close relationship between the individual and one other person, internal or external.

The coach is often the immediate manager, who experienced in the task, and as a coach helps the learner to develop by giving them the opportunity to perform an increasing range of tasks, and by helping them to learn from their experience.

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They work to improve the learner’s performance by• Asking searching questions• Actively listening• Discussion• Encouragement• Understanding• Counselling• Providing (‘inside’) information• Providing honest feedback



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Boundaries to the manager’s coaching role:

•The extent to which the manager takes a counselling role (when does it become more personal)

•Enhancing of the relationship between the line manager coach and the individual

•Adopting different (managerial) styles/behaviour at times



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Methods of learning and development

Off-job methods

•Education•Training courses•



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Learning on the job•Coaching (manager’s coaching, other coaching internal or external)•Mentoring•Peer relationships•Self-development•Self-development groups•Learning logs•Learning contracts•E-learning•



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People development is not only important for company’s developments it can also contribute to (organisational) change.

In such a process the role of leaders is key.

They can plan and manage change by giving the right process and the right tools to use.

The tools and processes have to be defined by focussing on the following stages:



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• Identify the need for change• Define the company’s current state• Envisage the future desired state• Identify the gap• Diagnose capacity for change including barriers and

how they can be overcome• Plan actions and behaviours needed to close the gap

This list of stages is by principle applicable for any development task and not only for change management processes.

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7 Reward management

Reward is central to the employment relationship. Most of the employees work mainly because it is their only means of earning the money they need to sustain them and their families in the style to which they are accustomed.

How much employees are paid and in what form therefore matters hugely to them.

It helps determine which jobs people choose to do, which employers they seek work with and, to a significant extent, how much effort they put into their work.



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Effective reward management is therefore very important for employers.

Getting it wrong makes recruiting and retaining good people much harder, demotivation can easily arise.

Pay also matters to the employer because money spent on salaries, benefits and other forms of reward typically amounts to well over half an organisation’s total costs. Prof. Dr. Dr. Irina von Kempski


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There are two central questions that employers should ask when determining the approach they intend to take in managing reward:•What principals should the company use to determine how much each person in the organisation should be paid?•What form should the reward package the company offers take?

This is not an area of HR activity in which ‘best practice’ is readily identified.

It is necessary for managers to devise distinct reward strategies which are tailored to meet the needs of their circumstances and the expectations of the people, employees and applicants. 117

What kind of payment system the company choose is one of the most difficult decisions to take. Manager’s thinking has to start about what objectives should be achieved. These are likely to include the following:

•To minimise expenditure on wages and salaries over the long term

•To attract and retain staff of the desired calibre, experience and qualifications

•To motivate the workforce so as to maximise organisational performance

•To direct effort and enthusiasm in specific directions and to encourage particular types of employees behaviour

•To underpin and facilitate the manager of organisational change



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There is no one payment system or form of incentive that can achieve all of the objectives for all groups of staff in an organisation.

Total pay includes normally three components:•Base pay•Incentives/variable pay•Benefits



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Setting base pay

One of the most important decisions in the development of reward strategies concerns the mechanism or mechanisms that will be used to determine the basic rate of pay for different jobs in the organisation.

Base pay can be designed in accordance to•External market comparisons/external relativities (‘the going rate’)•Internal labour market mechanisms/internal differentials (pay of fellow employees)•Job evaluation (size and significance)•Collective bargaining



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Incentives/variable pay

One of the most fundamental questions is whether or not the company wants to use an incentive payment system at all.

The major types of incentive payment systems are •Payment by results•Performance-related pay•Skills-based pay•Profit sharing with cash-based schemes (bonus on annual profits) and share-based schemes



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Benefits

Benefits or ‘fringe benefits’ include additional perks, allowances and entitlements mostly paid in kind rather than in cash.

Often benefits are provided as

•Occupational pensions (defined benefit schemes, defined contribution schemes)

•Flexible benefits/cafeteria plans



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Performance-related payment

Performance-related payment is difficult to implement but it is possible.

It is one of a range of tools that have a useful if limited role to play in some situations.



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The following conditions are favourable:•Where individual performance can objectively and meaningful be measured•Where individuals are in a position to control the outcomes of their work •Where close team-working or corporation with others is not central to successful job performance•Where there is an individualistic organisational culture

Nowadays companies implement performance-related pay even if these conditions are not or only partially given.

The different components should be part of a strategic rewarding.

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Strategic reward



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(Torrington, D. et al., 2009, p. 171)