Summary Human Resource Management part 1

Chapter A: HRM introduction

A.1       HRM Defined

HRM is an essential part of an organisation and contributes to profitability, quality, and other business goals. There are different ways of dealing with human resources. Some companies have a HRM department others see HRM as a daily responsibility.

Human Resource Management = Policies, practices and systems that influence employees behaviour, attitudes and performance. HRM is also called ‘’people practices.’’ The HRM department is responsible for:

• Analysing and designing work
• Human Resource planning
• Recruiting
• Selection
• Training and development
• Compensation
• Perfomance management
• Employee relations

HRM has a key role in an organisation; they help determine the effectiveness and competitiveness of businesses.

Competitiveness = a company’s ability to maintain and gain market share in its industry. This is linked to effectiveness, which is determined by whether the company satisfies the needs of the stakeholders.

HRM used to have a primary administrative function, but it evolves over time to play a more strategic role and to get the right employee to the right job. These roles are:

1. Management of company infrastructure (administrative service). This means designing and delivering efficient and effective HRM systems, processes and practices for selection, training, developing, appraising and rewarding employees with the lowest costs possible.
2. Management of business (business partner). Developing an effective HR system and helping implement business plans. This also includes talent management. 
3. Management of strategic human resources (strategic partner). HRM strategies have to be aligned with business strategies with for instance a bonus-plan or a profit sharing plan to get the best employees and keep them satisfied. HRM can analyse turnover, retention, productivity and customer service problems.

As you could have read above, a HR-professional needs to be able to adapt to a lot of things. This is displayed in a pyramid, shown in figure 1.3. He has to be a credible activist, this means being a good leader. On the next level are the organizational capabilities. The business ally: understands how the business makes money and understands the language of business. The talent manager: develop talent and designs a reward system. The strategic architect: recognize business trends and their impact on the business. On the next level are the systems and processes. The cultural and change steward: facilitates change, developing and valuing the culture.

The operational executor: implement workplace policies and advance HR technology. These are the basic roles of an HR managers, it gets tougher going up in the pyramid.

A.2       HRM changing through time

HRM used to be a department for the administration of personnel and to handle employees’ problems; it had a reactive function. Now it has expanded to a broad corporate competency to gain competitive advantage and achieve overall business goals

HRM managers face two challenges: shifting their focus from current operations to strategies for the future and preparing non-HR managers to develop and implement human resource practices. With the Internet and automation, the administrative function has decreased and HR-information is online accessible for every employee (self-service). The administrative role can also be given to another company (outsourcing).

A.3       Competitive challenges

The role of HRM increases with new business challenges. The three main challenges are sustainability, globalization and technology.

A.3.1    The sustainability challenge

Sustainability is the ability of a company to survive in a dynamic competitive environment. Based on an approach to organizational decision making that considers company’s ability to make a profit without sacrificing the resources of its employees, the community or the environment. Stakeholders are the various interest groups who have relationships with and consequently whose interests are tied to the organisation. These are for example employees, suppliers, customers, shareholders and the community.

If you want to compete through sustainability, you need to provide a return for shareholders, provide high-quality products, services and work experience for employees and you need to place increasing value on knowledge etc. Figure 1.4

Economic changes

The economy also has an influence on the HR function, it creates a lot of insecurities for the organisation. The recession experienced in was one of the worst ever with the unemployment rate extremely high. This also means that employers ask for more highly educated employees with more skills and experience. They are more hesitant to recruit new people; instead they train their own people to do more tasks.

Influences on HRM are for example: the development of e-business, growth in professional and service occupations, the global challenge meeting the stakeholders need, and the high-performance work challenge. With the new creation of jobs it is necessary to get the employees with the best skills.

Next are the most sufficient challenges these days for organisations:

Structure of the economy

Jobs are created by the growth and decline of industries. The number of persons and different skills of persons have an influence on the competition for jobs.

Employees with the most education will have the best chances in the job market and receive a high salary, employees who are low skilled and with low education can work in the retail.

Skill requirements

The demand for specific skills is being replaced by a need for cognitive skills, reasoning and verbal ability to interact with clients and co-workers. Some companies who are unable to find qualified employees rely on training. A skill gap (unqualified personnel) decreases competitiveness.

Companies need to be able to adapt to change. Learning organizations embrace a culture of lifelong learning. It enables all employees to continually acquire and share knowledge.

Increased value placed on knowledge

With the ongoing innovations employees must also have the ability to learn. Intellectual capital (which refers to creativity, productivity and service provided by employees) is a high value source in a company. It is important to keep people informed and that they understand the organisation. Intellectual capital is used to gain competitive advantage. These companies are interested in knowledge workers to develop themselves. Knowledge workers are employees who own the means of producing a product or a service, they have specialised knowledge and collaborate with managers on solutions for example technical personnel. To totally benefit from an employees’ knowledge there is a new management style called empowerment, which means giving employees responsibility and authority to make decisions. Employees are then accountable for the products and services, so they do the best they can and share in the results. Managers must give employees all the information and training they need and link them to the resources within and outside the company.

Changes is the employee relationship

The psychological contract describes what an employee expects to contribute and what the company will provide in return. This is not a written contract. In the new economy the employees contributions are expected to be higher (like overtime, excellent service levels, creativity, higher productivity) in return the employee wants to have flexible work hours, better work conditions and education possibilities.The HRM challenge is how to build a productive workforce in the changing economy today. Employees are responsible for their own career.

In turn for this, they want employability: they want their company to provide training and job experiences to help ensure that employees can find other employment opportunities.

As a result of the changing psychological contract, alternative work arrangements are being made which includes, independent contractors, on call workers, temporary workers and contract company workers. The alternative work arrangements are usually standard work activities, but it provides flexibility for both employee and the company. Employees who may elect alternative work arrangements include those with a wide range and level of skills. The HRM challenge is how to build a committed, productive workforce in turbulent economic conditions.

Demanding work, but more flexibility

There used to be an 40-hour work week, but now is a 24/7 work week, more demanding work results in stressed workers, loss of productivity and more costs for companies. A flexible work schedule is necessary to protect the workers free time.

To find and keep the best employees, HRM has to create a positive workforce and expand the search for talent to the global labour force. Companies come up with creative ways to avoid layoffs, for example to provide another function within the organisation, rehiring bonuses, utilise retirees, motivating conduct performance evaluations, flexible schedules and possibilities to grow within the company.

Meeting stakeholders needs

The stakeholders of a company include stockholders, customers, employees and the community (environment). The balanced scorecard is a means of performance measurement that gives managers a chance to look at their company from the perspective of internal and external customers, employees and shareholders. It shows what company aspects need to be focused on, and in which degree stakeholders are satisfied. The four perspectives of the balances scorecard are customer, internal, innovation & learning and financial. The critical indicators are based on the business strategies and competitive demands. The card is also used by employees so they can see the goals and strategies of the company and how this is measured. It gives them information about the company and it products. When evaluating the employee’s performance the card is also used and this information is shared with the employee. Figure 1.8

HRM is using the card to see how the activities are linked to the company’s business strategy, and to evaluate the extent to which the HRM function is helping the company meet its strategic objectives. Measures of HRM practices relate to productivity, people and processes. Productivity determines output per employee (output divided by input). People assess behaviour, attitudes or knowledge of employees. Processes measure employee’s satisfaction with people systems within the company.

Today more and more companies are interested in using intangible assets and human capital as a way to gain an advantage over competitors. A company’s value includes three types of assets that are critical for the company to provide goods and services: financial assets (cash and securities), physical assets (property, plant, equipment) and intangible assets (a type of company asset including human capital, customer capital, social capital and intellectual capital. Table 1.6

Customer excellence requires attention to product and service features as well as to interaction with the customers. Providing a high quality product or service is very important to compete in today’s economy, the quality has to meet a certain level. To manage quality companies use total quality management (TQM): a cooperative form of doing business that relies on the talents and capabilities of both labour and management to continually improve quality and productivity.

The core values of the TQM are:

• Methods and processes are designed to meet the needs of internal and external customers.
• Every employee in the company receives training in quality.
• Quality is designed into a product or service so that errors are prevented rather than detected.
• Managers measure progress with feedback based on data.
• The company promotes cooperation with vendors, suppliers and customers to improve quality and hold down costs.

HRM plays an import role in quality management. Training and high performance are essential. To ensure the best quality, the company has to be innovative, creative and there has to be an open communication between employee and manager.

• The Malcolm Baldrige national quality award: an award established in 1987 to promote quality awareness, to recognize quality achievements of U.S. companies and to publicize successful quality strategies.
• ISO 9000:2000: quality standards adopted worldwide.

With these standards a customer can measure the quality of the product; the product guarantee’s a certain quality. A process used by companies to maintain quality is the six sigma process which is a system of measuring, analysing, improving and controlling processes once they meet the quality standards. This system has the goal to keep meeting the customers’ needs when they need it. Training is also a part of this system they have several levels of highly trained employees.

Lean thinking is a process used to determine how to use less effort, time, equipment and space but still meet customers’ requirements.

Changing demographics and diversity

There is a distinction between the internal labour force which are the employees within the company, and the external labour force, which includes all persons seeking work. The need to train the internal labour force or hire new personnel depends on the available labour market. The labour market has an influence on the HRM, if there is an ageing workforce there will be retirement planning’s, if there is a young workforce the company has to attract, train and retain them. The labour force also consists of foreign people. These may be illegal or legal, or workers attracted from different countries because they have a special talent. With a diverse labour force a different set of values evolves. Another source of diversity is disabled workers. The heterogeneous composition of the workforce challenges companies to create HRM practices that ensure that the talents, skills and values of all employees are fully utilized to help deliver high-quality products and services. There are a lot of minority groups coming to the workforce, like immigrants and women. They require different ways of communicating and cause some other difficulties. Work is a means to self development and to have a certain life style. Women and minorities usually have a disadvantaged position; they tend to bump to the glass ceiling, which is a fictive border they can’t pass. Women and minorities have to work twice as hard to achieve the same as others. Managing a divers labour force means creating a bias free environment with equal develop opportunities for everyone and acceptance of cultural differences. Discrimination is illegal and employees can understand other cultures better by attending work shops and work together on an equal base.

There are many laws protecting minorities and disabled but there are still discussions going on about what defines discrimination and when (exactly) privacy rights are broken. For the disabled who also have technological disadvantages there are ways to make technology accessible like touch screens. Therefore a new set of skills needs to be developed:

• Communicating effectively with employees from a wide variety of cultural backgrounds.
• Coaching and developing employees of different ages, educational backgrounds, ethnicity, physical ability and race.
• Providing performance feedback that is based on objective outcomes rather than values and stereotypes (prejudging).
• Creating a comfortable work environment where everybody can be creative an innovative.
• Recognizing and responding to generational issues.

Managing cultural diversity can provide competitive advantage through a costs, resource acquisition, marketing, creativity, problem-solving and system flexibility.

Ethical and legal issues

A company should be working with ethics: the fundamental principles by which employees and companies interact. These principles should be a part of the base of decisions made by a company and day-to-day values. To serve the customer the best, a company should act fair, responsible and ethical and emphasize mutual benefit in their relationships with customers, vendors and clients. HRM also has to satisfy three basic standards to work ethical. First HRM-practices should result in the greatest good for the majority, there has to be respect for beliefs and personal values and mutual understanding and there has to be equitably and fairness. A major influence on HRM is to retain job security. The Sarbanes-Oxley act is an example of a legal issue: the act sets stricter rules for business especially accounting practices.

A.3.2    The global challenge

If you want to compete through globalization, you need to expand into foreign markets and to prepare employees to work in foreign locations.

To compete in a global market, companies have to prepare employees for global assignments, and create a culture that reflects the characteristics of the global markets in which they operate. More companies are entering the global market and people are their most valuable asset. Technology has made global economy even easier with the Internet providing information and communication between companies all over the world.

The new technology also gives underdeveloped countries the opportunity to develop and take part in the economy. Cross-cultural training and development are important. Globalization also means more off shoring because of labour costs. Off shoring is the exportation of jobs to less developed countries. Nowadays also high-skilled manufacturing is off shored. Onshoring: exporting jobs to rural parts of the country.

To succeed in the global market it is important to understand cultural differences, the local markets, the government rules, language and to train personnel to deal with foreign countries.

A.3.3    The Technology challenge

If you want to compete through technology, you need to change employees’ and managers’ work roles, to integrate technology and social systems and to develop e-commerce and e-HRM.

New technology is often used to achieve product diversification and customisation. It causes changes in basic skill requirements and work roles and often results in combining jobs, redesigning work structures and changing reporting relationships. Companies are competing through high-performance work systems: work systems that maximise the fit between employees and technology. With this new technology comes computer integrated manufacturing which requires monitoring, sharing information, and a better understanding of the manufacturing process (job specific product knowledge).

Changes in the required skills are: Problem solving skills become more important even as communicating with customers to meet their demands. Technology makes information accessible to every worker so they are more responsible for their performance. To increase and control the performances work is done in work teams with employees with various skills who interact, plan and co-ordinate activities to assemble a product or a service. Work teams replace managers. They also perform inspection and quality control activities. Virtual teams are a form of work teams without face-to-face interaction they rely on telecommunication. Another advantage of these work teams is the reduction of labour costs. More companies are replacing assembly lines with all-round employees who have different skills (cross-training) and work in teams. This change also means employees are being held accountable for their performances and share in the positive or negative results. Managers have a more co-ordinating role, and provide information, resources and interactions across departments.

The traditional organisation should be replaced by an adaptive organisation where employees are constantly learning and can move around jobs. Besides working in teams is working in partnerships (with other companies) also a good thing.

Adaptive organisations work form one set of values but there are no more boundaries everyone (employee, manager, supplier) is working together to achieve the best results.

A human resource information system (HRIS) is a system used to acquire, store, manipulate, analyse retrieve and distribute HR information to support decision making and daily operating concerns. With a HRM database it is easy to place the right employee at the right job. The database can also consist of workers from different countries.

Electronic human resource management (e-HRM) refers to the processing and transmission of digitized information used in HRM like text, sound and visual images from one computer to another. Employees can be recruited on-line and respond through email (which is faster). The Internet also helps to analyse markets, this is cheap and fast. When technology or a new work design is introduced, it has to be integrated in the company structure to fully benefit from it. It is more effective to improve HRM as a whole and be aligned with other company departments.

HR Dashboard: HR metrics such as productivity and absenteeism that are accessible by employees and managers through the company intranet or human resource information system.

A.4       Meeting competitive challenges through HRM

Increasing competitiveness by investing in new technology and quality control means also investing in staffing and training. Some major competitive challenges are the global challenge, stakeholder challenge, the new economy challenge and the high performance work system challenge.

For a company to compete it is important to work at a global base satisfy the stakeholders while working and participating in the new economy and have a high performance work system challenge organisation. Figure 1.8

HRM practices are investments that directly affect employees motivation and performance and contribute to competitiveness.

These practices can be divided in four dimensions.

• Managing the HRM environment.

Creating a positive internal and external environment for employees to perform at best by linking HRM practices to the businesses objectives, complying them with the law and maximise customer service, quality and productivity.

• Acquiring and preparing human resources.

Predict and manage the number and type of employees needed to meet the customers demand. This means identifying human resource requirements through planning, recruiting and selecting and then training employees.

• Assessment and development of human resources.

Employees and managers must fit to work in teams and have adaptive skills to perform mutual tasks. Work and non-work activities need to be supported. Employees’ performance has to be measured. Employees are prepared for future work. Both the interests of the worker and the company has to be represented, with career possibilities and preparation of future roles.

• Compensating human resources.

The employee has to be equally rewarded for their performances, to motivate workers and have an positive influence on the job. This means creating pay systems and providing employees’ benefits.

Sometimes employees are represented by a union, so the HRM department has to have knowledge about laws, contract administration and a collective bargaining process. HRM practices need to be effective and contribute to the business strategic goals (alignment).

Chapter B: Strategic Human Resource Management

Strategy is a way to survive and prosper, it is a process used to compete and face the competitive challenges and achieve company goals. Strategy: the pattern or plan that integrates an organisations major goals, policies and action sequences into a cohesive whole. First the company starts with a generic strategy like costs saving, product differentiation or focus, specialising. Than a strategy around the environment is developed. For example a strategy around (reactions towards) competitors, (satisfying) stakeholders, (how to reach certain) customers groups, what technology, which employees and lowering costs and increasing benefits.

Companies have several resources to compete:

• Physical resources (plant, equipment, location, technology)
• Organisational resources (structure, planning, controlling, co-ordinating)
• Human resources (experience, skills, and intelligence)

When these resources are allocated in a certain way they can gain a competitive advantage.

Employees are a big part of these resources (they take a role in organisational resources as well as in human resources), so HRM has an important function which must be integrally involved in the company’s strategy. To be effective, HRM managers need to:

• Have an input in the strategic plan regarding people and alternative strategies.
• Have specific knowledge of the business and strategic goals
• Know what kinds of employees are needed in what way.
• The manager can develop programs to ensure that employees have those skills, behaviour and attitudes.

HRM managers should be trained to identify the competitive issues and think strategically.

B.1      Business model

A business model tells us how a company can create value for its customers and how this process makes an organisation a profit. The accounting principles are:

1. Fixed costs are costs that do not change if the output changes

2. Variable costs change if the output changes

3. Margin is the difference between the price of the product and the variable costs of the product. This is also known as contribution margin.

4. Gross Margin is the number of sold items * contribution margin

B.2      Strategic management

Strategic human resource management (SHRM): a pattern of planned human resource deployments and activities intended to enable an organisation to achieve its goals. This means hiring the right people to integrate into strategic processes and make them a success. The strategic management process has two phases. The first phase is strategy formulation: defining the company’s mission and goals and SWOT analysis. This leads to a certain strategic choice.

The second phase is strategy implementation: generating alternatives and match with the company’s ability. It is the process of devising structures and allocating resources to enact the strategy a company has chosen. During this (not sequential!) process constantly decision making and information are needed.

To choose a strategy, certain questions should be asked. These questions are: Where to compete (what market), how to compete (cost, quality, reliability, delivery) and with what to compete (referring to employees/resources). The last one is very important and this is part of the HRM section. Strategy formulation is done by the top of the organisation and because this involves people-related business issues, the HRM function needs to be involved. There are four levels of integration between the HRM function and the strategic management function:

• Administrative linkage. The HRM is focused on day-to-day activities and engages in administrative work. There is no involvement in the business strategy, neither in formulation nor in implementation.

• hampions

• One-way linkage. The strategic plan is developed by the planning department and staff. HRM is informed of the strategic plan and HRM doesn’t take part of formulating the strategic plan but has to implement it. This often leads to unsuccessful implementation.

• Two-way linkage. HRM issues are considered during formulating the strategic plan by first informing HRM about the various possible strategies. Then HRM analyses the HRM implications of the various strategies. When the strategic decision is made, the HRM department has to implement it. The strategic planning and the HRM are interdependent.

• Integrative linkage. This is based on continual rather than sequential interaction. The HRM functions are build into the strategy formulation and implementation. The HRM manager gives information about the human resource capabilities and this is assimilated in the strategy formulation. Once the strategy is chosen the HRM implements the strategy with employees who have the right skills to do so.

Thus, in strategic HRM, the HRM function is involved in both strategy formulations and in implementation processes.

B.3            Strategy Formulation

The strategic management consists of five components figure 2.5:

1. the mission = a statement of the organisations reason for being, the company’s vision and values. It usually specifies the customer groups, services and technology used.
2. the organisational goals = what an organisation hopes to achieve in the medium to long term of the future. The highest goal is to make profit and to maximise stockholders wealth. It’s an operationalization of the mission.
3. External analyses = examining the organisations operating environment to identify strategic opportunities and threats. Opportunities are for example new products or new technology, threats can be employees who haven’t got the right skills, or being behind on innovations.
4. Internal analyses = the process of examining an organisations strengths and weaknesses. The strengths can be the resources (capital, technology, human resources) but they can also be weaknesses if not fully used.
5. The strategic choice = the organisations strategy; the ways an organisation will attempt to fulfil its mission and achieve its goals. The internal and external analysis’s form the SWOT (strength, weaknesses, opportunities and threats) analysis. With the SWOT analysis there can be generated some strategic alternatives. From these alternatives there will be made a strategic choice.

Organisations also want to have the best personnel available so they compete for employees as well as for customers. It is the job of HRM to bring in the best employee, make a good wage rate and keep track of government regulations concerning employees. In the end the employees are the ones responsible for implementing the strategy.

Employees have to be viewed as strategic assets; a committed workforce can deliver the highest level of customer service. They can also come up with ideas to work efficiently and more effective when they are committed to their jobs (because they are thinking for the companies’ best interest). Mechanisms or structures for integrating the HRM function into the strategy formulation may help the strategic planning team to make the most effective strategic choice.

B.4 Strategy Implementation

After the strategy is formulated the next step is to implement it. HRM must take an active role in implementing. The basic premise behind strategy implementation is that an organisation has a variety of structural forms and organisational processes to choose from when implementing a given strategy.

These choices make an economic difference. There are five important components in the strategy implementation process. They determine success in strategy implementation, and thus determine performance. HRM has primary responsibility for three of these five implementations and they can directly affect the two remaining variables.

• Organisational structure.
• Types of information.
• reward systems                                                                    (HRM responsibility)
• the selection, training and development of people               (HRM responsibility)
• task design                                                                           (HRM responsibility)

To achieve successful implementation, first the tasks have to be divided and grouped in an efficient way. Then HRM has to ensure the company has employees with the right skills, ability and knowledge. Doing this effectively will create vertical alignment in which the HR processes will contribute to the organisational strategy. People in the organisation will make this linkage possible, like some sort of middleware. They ensure this by recruitment, training, placement and career management. In addition, the HRM has to develop reward and performance systems, and control the performances of employees through job analysis and job design.

B.4.1 Implementation mechanisms

HRM practices can be divided in six menus:

1) Job analysis and design.

The numbers of tasks that are needed to produce products/services are formed into jobs. Job analysis is the process of getting detailed information about jobs. Job design addresses what tasks should be grouped into a particular job. New technology and the strategy have an influence on how the jobs are done or grouped. Jobs can have narrow tasks (few skills required) which are used to increase efficiency. Or broad complex tasks (many skills required) which is used to increase innovation.

2) Employee recruitment and selection.

Recruitment is the process of seeking applicants for potential employment. Selection is the process by which an organization attempts to identify applicants with the necessary skills, knowledge, abilities and other characteristics that will help it achieve its goals. The strategy of a company has an influence on what type of employee’s to hire.

3) Employee training and development.

Training refers to a planned effort to facilitate the learning of job-related knowledge, skills and behaviour by employees. Development involves acquiring the right knowledge that improves employees’ ability to meet the changes in job requirements (existing and not yet existing jobs) and changes in client demands.

Changes in strategies often require changes in the type, levels and mixes of skills. An organisation keeps changing so the employees need to be trained to keep up with the developments.

4) Performance management.

Performance management is used to ensure those employees’ activities and outcomes meet the organisations objectives. The quantity but also the quality of work has to be checked. To perform the best way it is necessary to exactly know how work should be performed.

5) Pay structure, incentives and benefits.

The pay system has an important role in implementing strategies. A high pay level can attract the best employees but increases the labour costs. Payment can also be tied to performance to stimulate workers to achieve the highest performance.

6) Labour and employee relations.

Companies can choose to treat employees as an asset that requires investment of resources or as an expense to be minimised. Employees participation in decision making, employee rights and the companies responsibility towards employees are part of the organisations choices to be made. These choices have an impact on the success of the company. High quality and high production are related to the organisations labour force. 

B.4.2 Strategic Types

A company can be defined by the strategy chosen. A strategy says something about the way a company seeks to compete in its industry, how they want to create value. There are two generic strategies (proposed by Porter): reducing cost and product differentiation (thus increasing return). This leads to two basic strategies:

1. The overall cost leadership focuses on the lowest cost productions. This is achieved by constructing efficient large scale facilities, experience curve, controlling overhead costs and other costs like advertising costs. It is difficult for other companies to enter this industry because this company can produce at low costs and offer his products at a low price.

2. The differentiation strategy tries to make the product slightly different than other products. It can do so by creating a certain brand name, image, unique features or unique customer services. Differentiation protects against price sensitivity, because the product is slightly different, the price can be higher than similar products.

All these strategies need different kind of employees. Role behaviours are behaviours required of an individual in his or her role as a job holder in a social work environment.

Companies engaged in cost strategies tend to specifically define skills they require and invest in training because of the focus on efficient production. They also rely on performance management, with high pay differentials between superiors and subordinates. They seek efficiency through worker participation listen to employees’ ideas on efficient producing.

Cost strategy companies are usually characterised with control orientated HRM, high centralisation, low participation, low training, low wages, low benefit and highly contingent pay.

Companies with a differentiation strategy need to be creative and risk takers. Employees are expected to work together and co-operate to develop new ideas. The jobs are broadly defined with general job descriptions. There is a result based performance management and performance evaluations. Differentiation strategy companies are usually characterised by committed HRM systems: low centralisation, high participation, high training, high wages, high benefits (the opposite of the cost strategy).

B.4.3         Directional strategies

There are 5 types of directional strategies for organisations:

1. External growth
2. Concentration strategy
3. Internal growth
4. Mergers and acquisitions
5. Downsizing

Companies that attempt to integrate vertically or horizontally or to diversify have an external growth strategy: an emphasis on acquiring vendors and suppliers or buying businesses that allow a company to expand into new markets. Mergers and acquisitions are a part of external growth, increasingly there is both consolidation within industries and mergers across industries. HRM plays a big part in implementing of a merger or acquisition; it has to provide training in conflict resolution. There are more global mega mergers in spite of the fact that these, one of the major reasons that mergers do not always live up to expectations is people issues. Firm cultures need to be examined before embarking on a merger or acquisition, because every firm has its own culture. HRM has to integrate and standardises the business practises which isn’t easy if you don’t take into account the business culture (like wages). Before a merger or a acquisition the visions and missions of the companies involved have to be similar. Then you have to make clear to the employees that a major change is going to take place so they are well prepared and know what to expect, then the integration part of the merger or acquisition can begin. Not only the employees need to be reorganised, but also the top of the organisation (for whom significant roles has to be given) needs challenging opportunities. 

Companies that use strategies emphasising market share or operating costs are considered concentration strategies. With this strategy the company tries to focus on what it does best. It focuses on increasing market share, reducing costs or creating and maintaining a market niche for products and services. This requires training programs and compensation programs to get and keep the best employees.

Companies that focus on new market development, product development, innovation or joint ventures are using the internal growth strategy: Compensations are high and used as an incentive for employees to achieve the growth goals. The training programs fit the organisations strategy.

For instance, innovation needs technical training, joint venture requires extensive training in conflict resolution, and expansion needs market knowledge training.

A divestment or downsizing strategy is made up of retrenchment, divestitures or liquidation. Downsizing: the planned elimination of large numbers of personnel, designed to enhance organisational effectiveness. It gets rid of employees with outdated skills or cut whole business units that are in declining markets. Downsizing provides the opportunity to make way for fresh ideas and create a new culture. However, research reveals that downsizing is far from universally successful for achieving the goals of increased productivity and increased profitability. Some companies had to downsize later again, which isn’t effective.

HRM has the challenge to avoid downsizing, first it must carefully examine which employees are valuable and which are not. This is difficult because the best employees can easily find a job elsewhere. There is also the ‘’grenade’’ approach, which is a humane approach. It means working with early retirement programs. This type of reduction does not distinguish between good and poor employees but eliminates an entire group of employees. Often, the cost-cutting goals are not achieved this way, because you need to hire and retrain new employees to replace the lost talent.

After the downsizing HRM has to maintain open communication with remaining employees to build their trust and commitment. The employees need to be informed about the strategy pursued, the costs and the duration of the downsizing. 

B.5 Controlling the competitive advantage

A final component to the strategic management process is that of the strategy evaluation and control. After implementing the strategy, it is important to monitor the effectiveness of the strategy to identify problems. HR can provide a strategic competitive advantage in two ways:

1) through emergent strategies and 2) through enhancing competitiveness.

1) Strategic management can be divided in intended and emergent strategy. Intended strategies are the result of the rational decision-making process used by top managers as they develop a strategic plan. Most strategies used are intended strategies. Emergent strategies consists of the strategies that evolve from the beginning of the company and is what the company does al the time. It is a pattern in a stream of decisions or actions. This kind of strategies are developed in time and a result of experience or discovered by employees who come up with ideas for new markets or products. The HRM function is mainly to support intended strategy. Most emergent strategies are identified by those lower in the organisation hierarchy (ideas for new products, strategies, markets). HRM facilitates communications, so that the emergent strategy makes its way up to the management.

2) HRM has to develop a human capital pool that gives the company the unique ability to adapt to an ever changing environment. Recently new organisations have developed themselves as a learning organisation in which people can continually expand their capacity to achieve the results they desire. This requires the company to be in a constant state of learning through monitoring the environment, assimilating information, making decisions and flexibly restructuring to compete in that environment.

Chapter C: The Analysis and Design of Work

One of the tasks of HRM is job determination: how work should be done. This is a part of strategy formulation. How a job is done and assigned in an organisational structure is influenced by the way a company competes. In turn, the fit between the company’s structure and environment can have an impact on the firm’s competitive success. There is not one best way to design jobs and structure organisations: a fit needs to be created between environment, competitive strategy, philosophy, organization design and jobs.

If a company wants to compete via low-cost strategy it needs to maximise efficiency. Efficiency is maximised by breaking jobs down so that low wages workers can easily do them. It is also enhanced by eliminating any redundancy of support services, so that jobs are structured into functional clusters where everyone in the cluster is performing similar work. People working together in this way learn a great deal about the function and can increase efficiency via continuous evolutionary improvements.

If the company want to compete via innovation, it needs to maximise flexibility. Flexibility is maximised by aggregating work into larger, holistic pieces that are executed by teams of higher wage, higher skilled workers. Flexibility is also enhanced by giving the units their own support systems and decision making authority in local markets. People working together in these cross-functional clusters generate a greater number of creative and novel ideas that can be leveraged into more discontinuous, revolutionary improvements.

Job analysis focuses on analysing existing jobs to gather information for other HRM practices such as selection, training and compensation. So it has a passive, information-gathering orientation.

Job design focuses on redesigning existing jobs to make them more efficient or more motivating to jobholders. So it has a proactive orientation toward changing the job.

C.1 Work-Flow Analysis

Work flow design is the process of analysing all the tasks necessary for the production of a product or service, prior to allocating and assigning these tasks to a particular job category or person. Only after we thoroughly understand work-flow design can we make informed decisions regarding how to initially bundle various tasks into discrete jobs that van be executed by a single person.

Work-flow analysis includes analyzing work inputs, work processes and work outputs. Figure 4.1

• Analysis of Inputs: Inputs can be broken down into raw materials (what materials, data and information are needed?), equipment (what special equipment, facilities and systems are needed?) and human resources (what knowledge, skills and abilities are needed by those performing the tasks?). You can also work in teams, but to be effective, it is essential that the level of task interdependence matches the level of outcome interdependence.
• Analysis of work processes: Work processes are the activities that members of a work unit do to produce a certain output. What tasks are required in the production of the output? How many employees do we need?
• Analysis of Outputs: What product, service or information is provided? How is the output measured? (Specifying standards for quality and quantity)

C.2 Organizational structure

To redesign jobs, you also need to understand how one job relates to others (above, below and at the same level). Organization structure refers to the relatively stable and formal network of vertical and horizontal interconnections among jobs that constitute the organization.

The two most critical dimensions of organization structure are centralization and departmentalization. Centralization is the degree to which decision-making authority resides at the top op the organization. Departmentalization is the degree to which work units are grouped based on functional similarity of similarity of work flow.

A common type of organization structure is the functional structure. This structure has a functional departmentalization with relatively high levels of centralization. Figure 4.2. Functional structures are most appropriate in stable, predictable environments and for organizations that compete on costs.

Another common type is the divisional structure. This one has a divisional departmentalization with relatively low levels of centralization. One can organize around products, around geographic regions or around clients. Figure 4.3,4.4,4.5.

Units act like semi-autonomous organizations and tend to be more flexible and innovative.

But it’s not very efficient because every unit has its own specialists (redundancy) and it has a lower level of oversight than a functional structure. Divisional structures are most appropriate in unstable, unpredictable environments where it is difficult to anticipate demands for resources and where coordination requirements between jobs are not consistent over time. And for organizations that compete on differentiation or innovation.

Jobs in functional structures need to be narrow and highly specialized and people work alone. They have little decision-making authority or responsibility. People tend to think of fairness in terms of rules and procedures. Jobs in divisional structures need to me more holistic, with people working in teams that have greater decision-making authority. People tend to think of fairness in terms of outcomes and how they are treated interpersonally.

C.3 Job Analysis

Job analysis is the process of getting detailed information about jobs: what gets done, how gets it done and what skills are required to get the job done. Job analysis is very important to HR managers, because almost every HRM program requires some information that is gleaned from job analysis.

1. Work redesign: An organization may want to redesign work to make it more efficient and effective. It needs detailed information about the existing jobs.

2. Human Resource Planning: to analyse an organization’s human resource needs in a dynamic environment and develop activities that enable a firm to adapt to change.

3. Selection: To identify the most qualified applicants for employment, it is first necessary to determine the tasks that will be performed by the individual hired and the skills that are needed. That information is gained through job analysis.

4. Training: almost every employee hired by an organisation will require training. The trainer has to have identified the tasks performed in the job to ensure that the training will prepare individuals to perform their jobs effectively.

5. Performance appraisal: This is about looking how well the employee is performing in order to reward them. Through job analysis the organisation can identify the behaviours and results that distinguish effective performance from ineffective performance.

6. Career planning: career planning entails matching an individuals skills and aspirations with opportunities that the organisations has.

7. Job evaluation: The process of job evaluation involves assessing the relative dollar value of each job to the organisation to set up internally equitable pay structures. Pay structures should be equitable, because otherwise employees will be dissatisfied and may quit.

To do all these things mentioned above it is necessary to get information about different jobs and get detailed information about the employees. Job analysis is clearly important to the HRM department to make hiring decisions. But it’s also important to line managers for many reasons. First, managers must have detailed information about all the jovs in their work group to understand the work-flow processes. Second, managers need to understand the job requirements to make intelligent hiring decisions. Third, a manager is responsible for ensuring that each individual is performing satisfactorily. Finally, it is also the managers’ responsibility to ensure that the work is being done safely, knowing where potential hazards might manifest and creating a climate where people feel free to interrupt the production process if dangerous conditions exist.

In job analysis two types of information are most useful; these are job descriptions and job specifications.

Job description = a list of the tasks, duties and responsibilities (TDR) that a job entails. These are observable actions.

Job specification = a list of the knowledge, skills, abilities and other characteristics (KSAO) that an individual must have to perform a job. Knowledge refers to the factual or procedural information that is necessary to successfully perform a task. A skill is an individual’s level of proficiency at performing a particular task. Ability refers to the individuals’ capability. Other characteristics might be personality traits (for example: achievement motivation). KSAO’s are not directly observable actions. You can only observe them when an employee is carrying out the TDR’s of the job.

C.3.1   Sources of information

Job analysis entails obtaining information from people familiar with the job. This could be the person who does the job (=subject-matter expert), but also others familiar with the job (like job incumbents and supervisors). It is important to check the source because information is as good as the source; the source has to be representative for every employee. Research has shown that job incumbents may provide the most accurate estimates of the actual time spent performing job tasks. Supervisors may be a more accurate source of information about the importance of job duties.

There seems to be no relationship between the actual performance level of the person who is analysed and the job analysis ratings.

But different employees (male/female etc) do give another analysis about the same job. This also has to do with the experience level of the incumbent.  

C.3.2   Methods

There a various methods to analyse a job; there is no one best way. The two discussed are the position analysis questionnaire and the Occupational Information Network.

1) Position analyses questionnaire (PAQ).

This method is very broad and emphasises inputs, processes, relationships and outputs. It is consistent with the work flow analysis approach. The PAQ is a standardised job analysis questionnaire containing 194 items which represent work behaviour, work conditions and job characteristics that can be generalised across a wide variety of jobs.

They are organised into six sections:

• Information input; where and how a worker gets information needed to perform the job.

• Mental processes; the reasoning, decision making, planning and information processing activities that are involved in performing the job.
• Work output; the physical activities, tools and devices used by the worker to perform the job.
• Relationships with other persons; the relationships with other people required to perform the job.
• Job context: The physical and social contexts where the work is performed.
• Other characteristics; the activities, conditions and characteristics other than those previously described that are relevant to the job.

The job analyst is asked to determine whether each item applies to the job being analysed. The items are then rated on six scales: extent of use, amount of time, importance to the job, possibility of occurrence, applicability and special code. Then a computer calculates the results which give some guidance regarding the types of abilities that are necessary to perform the job. This technique provides information about the work performed that allows for comparison across jobs, whether those jobs are similar or dissimilar.

The disadvantage about the PAQ is to fill out the test; it’s rather difficult so some employees have to be excluded. A second problem is that its general, standardised format leads to rather abstract characterisations of the jobs. So it does not lend itself well to describing the specific, concrete task activities that comprise the actual job and it is not ideal for developing job descriptions or redesigning jobs.

2) Occupational Information Network (O*NET)

The Department of Labor developed a system for classifying jobs referred to as the O*NET. Instead of relying on fixed job titles and narrow task descriptions, it uses a common language that generalizes across jobs to describe the abilities, work styles, work activities and work context required for various occupations that are more broadly defined.

Jobs do change all the time. Little adjustments are constantly made to match changing conditions in the environment or personal preferences with the job. Most inaccuracy in job analysis results from job descriptions that are outdated.

For this reason -in addition to statically defining the job- the job analysis process must also detect changes in the nature of jobs. These changes in the nature of work and the expanded use of project based organizational structures; require the type of broader understanding that comes from analysis of work flows. Because the work can change very rapidly and it is impossible to rewrite job descriptions every week, more flexibility is needed in the writing of job descriptions and specifications.

C.4      Job Design

If a work unit does not yet exist, or the size of a work group is decreased, or work is not being performed in the most efficient manner, then the way that work is done needs to be changed. This requires redesigning the existing jobs. Job design is the process of defining the way work will be performed and the tasks that will be required in a given job. Job redesign is the process of changing the tasks or the way work is performed in an existing job.

To effectively design jobs, the manager has to understand the job as it exists (job analysis) and its place in the larger work unit’s work-flow process (work-flow analysis). The manager has to understand the organization as a whole, because otherwise he might redesign a job in a way that is good for that one job, but out of line with the work flow, structure or strategy of the organization.

After understanding the detailed way the task exists, the manager has many alternative ways to design a job. The manager needs to understand the trade-offs of emphasising one approach over another, so let’s discuss the four basis design approaches.

1) Mechanistic approach

This one has roots in classical industrial engineering. The focus of this approach is identifying the simplest way to structure work that maximises efficiency. This most often entails reducing the complexity of the work to provide more HR efficiency (making the work so simple that anyone can be trained quickly and easily to perform it). This approach focuses on designing jobs around the concepts of task specialisation, skill simplification and repetition. An example of this approach is scientific management. According to this approach, productivity could be maximised by taking a scientific approach which meant seeking the best way to produce and perform a job. So time and motion studies were done to identify this best way to do a job. Once the best way to perform the work is identified, workers should be selected based on their ability to do the job, and they should be trained and motivated to work at their highest capacity. In this way the company is less dependent on individual workers, because they are easily replaceable.

2) The motivational approach

This approach was a reaction on mechanistic approach and has it roots in psychology. It’s positively related to the mental ability of workers.

 It focuses on the job characteristics that affect psychological meaning and motivational potential and it views attitudinal variables (for example: satisfaction, motivation) as the most important outcomes of job design. The main focus is to increase the motivational potential of the job.

The prescriptions of the motivational approach focus on increasing the complexity of jobs through job enlargement, job enrichment and the construction of jobs around socio-technical systems.

A model of how job design affects employees is the Job Characteristics Model. According to this model, jobs can be described in 5 characteristics:

• Skill variety: the extent to which the jobs requires a variety of skills.
• Task identity: the degree to which a job requires completing a whole piece of work from beginning to end.
• Task significance: how important the job is to other people.
• Autonomy: the degree to which the job allows an individual to make decisions about the way the work will be carried out.
• Feedback: the extent to which a person receives clear information about performance effectiveness from the work itself.

These five job characteristics determine the motivating potential of a job (by affecting the three critical physiological states ‘experienced meaningfulness’, ‘responsibility’ and ‘knowledge of results’). The higher the core job characteristics, the higher the level of internal work motivation that individuals will have. This is expected to result in higher quantity and quality of work as well as a higher level of job satisfaction.

3) The biological approach

This approach comes primarily from ergonomics. Ergonomics is the interface between individuals’ physiological characteristics and the physical work environment. The goal of this approach is to minimise physical demand on the worker by structuring the psychical work environment around the way the human body works. It therefore focuses on outcomes such as physical fatigue, aches and pains and health complaints. The biological approach has been applied in redesigning equipment used in jobs that are physically demanding and/or to adjust for example the height of keyboards. Making the job worker-friendly also leads to increased efficiency. There are also regulations about the jobs ergonomics to make the job worker friendly.

4) The perceptual motor approach

This approach focuses on human mental capabilities and limitations. The goal is to design jobs in a way that ensures they do not exceed people’s mental capabilities and limitations.

It tries to improve reliability, safety and user reactions by designing jobs to reduce their information-processing requirements. In designing jobs, one looks at the least capable worker and then constructs job requirements that an individual of that ability level could meet. Demanding jobs can lead to dissatisfaction. Similar to the mechanistic approach, this approach decreases the jobs cognitive demands.

Studies have examined positive and negative outcomes of the various approaches to job design.

• Motivational approach: Positive outcomes: high satisfaction, high motivation, greater involvement, higher performance, lower absenteeism. Negative outcomes: increased training time, lower utilization levels, greater likelihood of error, greater chance of mental overload.
• Mechanistic approach: Positive outcomes: decreased training time, higher utilization levels, lower likelihood of error, less chance of mental overload. Negative outcomes: lower job satisfaction, lower motivation, higher absenteeism.
• Biological approach: Positive outcomes: lower psychical requirements, fewer medical incidents/complaints, lower absenteeism, higher job satisfaction. Negative outcomes: higher costs because of changes in equipment or job environment.
• Perceptual motor approach: Positive outcomes: lower training time, higher utilization levels, lower likelihood of error and accidents, less chance of mental overload. Negative outcomes: lower satisfaction and lower motivation.

The motivational and mechanistic approaches are negatively related to each other, suggesting that designing jobs to maximise efficiency very likely results in a lower motivational component to those jobs.

It is important to recognise the trade off between the motivational value of jobs and the efficiency with which the jobs are performed. Jobs high on the motivational approach had higher job evaluation scores representing higher skill requirements and that these jobs had higher pay levels. Jobs high on the mechanistic and perceptual motor dimensions had lower skill requirements and correspondingly lower wage rates. Finally, jobs high on the biological dimension had lower psychical requirements, training and compensation.

Conclusion in designing jobs: it is important to understand the trade off inherent in focusing on one particular approach to job design. Managers who seek to design jobs in a way that maximises all the outcomes for jobholders and the organisation need to be aware of these different approaches, understand the costs and benefits associated with each, and balance them appropriately to give the organisation a competitive advantage.

Chapter D: HR Planning and Recruitment

Two of the major ways that societal events affect employers are through consumer markets (which affect the demand for goods and services) and through labour markets (which affect the supply of people to produce goods and services).

There are three keys to effectively utilising labour markets to one’s competitive advantage.

• Companies must have a clear idea about their current HR configuration: the strengths and weaknesses of their current employees.
• Organisations need to know where they are going in the future and what kind of changes this will have for their HRM.
• If there are differences between the current HRM and the future HRM, these must be corrected. If there are too many employees, downsizing could be a good intervention and in case of too less employees, an effective recruitment campaign is a good solution.

D.1      HR process of planning. Figure 5.1

1. Forecasting demand
2. Forecasting supply
3. Forecasting of labor shortage of surplus
4. Goal setting and strategic management
5. Program implementing and evaluation

D.1.1   Forecasting

Forecasting is the attempt to determine the supply of and demand for various types of human resources to predict areas within the organisation where there will be future labour shortages or surpluses. Both the labour demand and the labour supply need to be forecasted. This can be done with statistical methods or judgmental methods. The statistical method is good for capturing historic trends and can be very precise. Statistical planning models are useful when there is a long stable historical that can be used to reliably detect relationships among variables. But many important things occur that have no historical precedent. In these cases, one must rely on the pooled subjective judgements of experts to make inferences about the future. HRM planning often uses a balanced approach that includes both statistical and judgmental components.

Typically, demand forecasts are developed around specific jobs categories or skill areas relevant to the organisation’s current and future state. Once the job categories or skills are identified, the planner needs to seek information that will help predict whether the need for people with those skills or in that job category will increase or decrease in the future. Companies use leading indicators, which is an objective measure that accurately predicts future labour demands. The leading indicator differs per company.

Once a company has projected labour demand, it needs to get an indicator of the firms’ labour supply. Determining the internal labour supply calls for a detailed analysis of how many people are currently in various job categories within the company. This analysis is then modified to reflect changes in the near future caused by retirements, promotions, transfer, voluntary turnover and terminations.

One type of statistical method than can be used for this is transitional matrices. The Transitional matrix = a matrix that shows the proportion of employees in different job categories at different times. It shows how people move from one state or job category to another. The matrices can be read from left to right or form bottom to top to detect changes or relations. They can also be used for charting historical trends and to plan for the future. For example, when there might be a surplus in labour, the hiring process can be stopped during that period. If we think we could have a shortage in labour the training process can be speeded up, the amount of voluntary turnover can be decreased or the external recruitment of individuals can be expanded.

When the forecasts for the labour demand and supply are known, the planner can compare the figures to ascertain whether there will be a labour shortage or surplus for each job category. When this is determined, the company can determine what to do about these potential problems.

D.1.2   Goal setting & Strategic planning

The second step in human resource planning is goal setting and strategic planning. The purpose of setting specific quantitative goals is to focus attention on the problem and provide a benchmark for determining the relative success of a program. The goals should come directly from analysis of labour supply and demand and should include a specific figure of what should happen and a timetable for when results should be achieved. An example of a goal is: reduce the number of employees by 50% in 3 years.

Once these goals are established the firm needs to choose from many different strategies available for redressing labour shortages or surpluses. Some options in case of expected surplus are: downsizing, pay reductions, hiring freeze, early retirement and retraining.

Some options in case of expected shortage are: overtime, temporary employees, outsourcing and technological innovation. These options differ widely in expense, speed, effectiveness etc. The most used options are hiring or firing people to keep the actual labour level with the asked labour level.

Downsizing

There are three reasons for downsizing (as said before, this is the planned elimination of large numbers of personnel, designed to enhance the organisational effectiveness):

• Companies are trying to reduce costs.
• Closing outdated plants or introducing technological changes. These events reduce the need for labour.
• Change of the location of business. This is done for economic reasons: cheaper to produce elsewhere or jobs moving out.

It is not so sure if downsizing really enhances the organisations effectiveness. The results have not always lived up to expectations: Most firms show even worse financial performance in the following years.

Although the initial costs savings are of short term plus, the long term effects of an improperly managed downsizing effort can be negative.

There are a number of reasons why downsizing isn’t effective.

Three of them are:

• Downsizing leads to a loss of talent and in many cases it disrupts the social network needed to promote creativity and flexibility.
• Many downsizing campaigns let go of people who turn out to be irreplaceable assets. So people have to hired back to fill in that position, but they can be not as competent as the previous employee. An solution to that problem can be maintaining a list of people that are fired because of downsizing, but hire them in times needed.
• Employees who survive often become narrow-minded, self-absorbed and risk-averse. Motivation level drops off because any hope of future promotion dies out. Many employees are start looking for another job just in case they get fired too. There is also negative publicity when a company makes use of downsizing, which can hurt the company’s image. This could be solved to explain the reason for the downsizing clearly and to make sure that the layoff procedure is fair.

Many of these downsizing problems can be reduced through better planning.

Early retirement programs

Another means of reducing a labour surplus is to offer an early retirement program. Because of the improved health of older people, the decreased physical labour and legislation in favour of older employees, today the workforce is aging. Although an older workforce has some advantages for employers in terms of experience and stability, it also poses problems. Older workers are more costly than younger workers, and they keep the job position occupied for younger dynamic employees. Next to the early retirement program, the phased retirement programs are a possibility. Phased retirement programs allow the organisation to tap into the experience of older workers while reducing the number of hours they work (and hence reducing costs). This option is often helpful psychologically for workers.

Temporary workers

A means to eliminate a labour shortage could be hiring temporary workers. Temporary employment gives the firm flexibility needed to operate efficiently and frees the company of the administrative work around the employer. Another advantage is that the company gets employees who are tested by the employment agency so they get good workers and save money because they don’t have to test and train the employees themselves. Because the temporary worker has little experience in the host company he or she brings an objective perspective to the organisation. The temporary worker can also have experience because if working elsewhere, which can benefit the company.

The disadvantages of temporary workers can be the tension between them and the workers of the company. This can be overcome to hire the temporary worker at the right time, for example not directly after a downsizing because the employees may relate the new one with the fired ones. All the employees -new and old- should be treated the same.

Outsourcing and offshoring

A temporary employee can be brought in to manage a single job the company. But a firm might also be interested in getting a much broader set of services performed by an outside organization: outsourcing. This is another means to eliminate a labour shortage.

Outsourcing is a logical choice when the firm simply does not have certain expertise and is not willing to invest the time and energy to develop it. It is driven by economies of scale.

Outsourcing in the area of manufacturing often involves designing projects in the United States and then shipping manufacturing responsibilities overseas. In the service industries outsourcing means shipping data entry jobs overseas.

Technological advancements in computer networking and transmitting have speeded up the outsourcing process a have also helped it spread beyond manufacturing areas and low skilled jobs. Third world countries are creating a supply for labour for unskilled and low skilled work. Many companies rely on outsourcing and are concerned whether this type of outsourcing (which is positive at the short term) will make the competitiveness of firms negative in the long term. Although these firms may be reducing manufacturing costs, eventually they will find it more and more difficult to design products that can make advantage of innovations in technology. Outsourcing if left unchecked starts a downward spiral that prompt more and more outsourcing, until the firm itself produces nothing of value. In the mean time more workers get displaced. In the end, firms that do the manufacturing soon develop their own design teams and then become direct competitors with the substantial competitive advantage.

Offshoring is a special case of outsourcing where the jobs that move actually leave one country and go to another. Firms that offshore certain aspects of work can gain a great competitive advantage over their rivals. If the offshoring process is effectively managed. The best jobs to outsource are those that are repetitive, predictable and easily trained. When choosing an outsourcing vendor, it is usually the bigger and older the better. Firms should not offshore any work that is proprietary or require tight security. It is generally a good idea to start small and then monitor the work very closely, especially at the beginning.

Altering pay and hours

Companies facing a shortage of labour may be reluctant to hire new employees. Under some conditions, these firms can try to get more hours out of the existing labour force. Despite having to pay workers 150% for overtime production, employers see this as a preferable to hiring and training new employees, especially if they are afraid that current demand for products or services may not extend to the future. Also for a short time at least the workers enjoy the extra payments. However over extended periods employees experience stress and frustration from being overworked in this manner.

In case of a labour surplus, it is possible to avoid a layoff if the organisation can get their employees to take pay cuts, or to take a reduction of working hours of all the workers.

D.1.3   Program Implementation & Evaluation

The programs developed in the strategic-choice-stage of the process are put into practices in the program implementation stage.

A critical aspect of program implementation is to make sure that some individual is held accountable for achieving the stated goals and has the necessary authority and resources to accomplish this goal. It is also important to have regular progress reports on the implementation to be sure that all programs are in place by specified times and that the early returns from these programs are in line with the projections.

The final step in the planning process is to evaluate the results. This involves checking whether the company has successfully avoided labour shortages or surpluses and to see which specific parts of the planning process contributed to success or failure.

HRM planning is an important function that should be applied to an organisations entire labour force. It is also important to plan for various subgroups (e.g. women, minorities) within the labour force. You can use a workforce utilisation review to determine whether there is any subgroup whose proportion in the relevant labour market is substantially different from the proportion in the job category. A workforce utilisation review is a comparison of the proportion of workers in protected subgroups with the proportion that each subgroup represents in the relevant labour market. Under utilisation could come about because of problems in selection or from problems in internal movement, and this could be seen via the transitional matrices.

This kind of review is critical for many reasons:

• Many companies take voluntary affirmative action programs to make sure under utilisation does not occur and to promote diversity.
• Companies might also engage in utilisation reviews because they are legally required to do so.
• Affirmative programs can be mandated by the courts as part of the settlement of discrimination complaints.

To adopt affirmative action planning the company needs to assess current utilisation patterns and then forecast how these are likely to change in the near future. If these analysis suggests an under utilisation problem, goals and timetables need to be set to change the problem. Certain strategic choices need to be made in the pursuit of these goals that might affect recruitment or selection practices, and then the success of these strategies has to be evaluated against the goals established. (These steps are identical to the steps of the generic planning process.)

D.2      Recruitment

Human Resource Recruitment: this is the practice or activity carried on by the organisation with the primary purpose of identifying and attracting potential employees. It creates a buffer between planning and actual selection of new employees. Figure 5.4

Recruitment activities are designed to affect:

• the number of people who apply for vacancies.
• the type of people who apply for them.
• the likelihood that those applying for vacancies will accept positions if offered.

The goal of an organisation recruitment program is to ensure that the organisation has a number of reasonable qualified applicants to choose from when there is a job opening (and not just to generate a large number of applicants, which might be unqualified). Recruiting and selecting employees is a complex process, trying to do both at the same time usually fails. Because of strategic differences among companies, the importance assigned to recruitment may differ. All companies have to make decisions in three areas of recruiting:

1. Personnel policies, which affect the kinds of jobs the company has to offer.
2. Recruitment sources used to solicit applicants, which affect the kinds of people who apply.
3. The characteristics and behaviour of the recruiter.

These in turn influence both the nature of the vacancies and the nature of the people applying for them. These two things (vacancy characteristics and applicant characteristics) lead to the job choice.

1) Personnel policies

This refers to organisational decisions that affect the nature of the vacancies for which people are recruited. When it comes to predicting job choice, the characteristics of the vacancy is more important than recruiters or recruiting sources. One organisational policy that affects the opportunity for promotion is the degree to which the company promotes from within; that is, it recruits for upper level vacancy internally rather than externally. Relying on internal sources offers the company several advantages.

• It generates a sample of applicants who are well known to the company.
• The applicants know the content of the vacancy so they don’t have wrong expectations.
• It is generally cheaper and faster to fill vacancies internally.
• There is greater job satisfaction of current employees by increasing their changes of promotion.
• It reduces the need for external hiring and the costs of generating and processing so many applications.

The reasons to recruit externally are:

• The entry level positions and perhaps even for some upper level positions there are no internal employees to fill the vacancy.
• Outsiders may bring new ideas and new views to the company.

Companies that take a lead-the-market approach to pay have a distinct advantage in recruiting. These companies pay more than average salary and other benefits to attract applicants. More than average payment can also make up for a jobs less desirable features (working at night for example).

Employment at will policies state that either an employer or an employee can terminate the employment relationship at any time regardless of cause. Companies that do not have employment at will provisions typically have extensive due process policies.

Due process policies are policies by which a company formally lays out the steps an employee can take to appeal a termination decision.

Job security is an important feature to many job applicants. Employee at will suggests low job security; due process suggests high job security.

Image advertising is advertising to promote the company just as a good place to work in general. It is particularly important for companies in highly competitive markets. The challenge and responsibility associated with a job is an attractive characteristic for many people. The advertisements can also be used to attract people of a certain group. Whether the goal is to influence the perception of the public in general or specific segments of the labour market, the beliefs about the organisations are formed by the advertisement. Thus it is critical for organisations to systematically asses their reputation in the labour market and redress any shortcomings they detect relative to their desired image.

2) Recruitment Sources

The sources from which potential employees are recruited are a critical aspect of its overall recruitment strategy. The size and nature of the people reacting on the vacancies depends on how and to whom the organization communicates its vacancies.

Possible sources for recruitment are:

• Internal sources (faster, cheaper, more certainty)
• External sources (new ideas & approaches)
• Direct applicants & referrals (self-selection, low cost)
• Newspaper advertising (Large volume, low quality recruits)
• Public employment agencies (blue-collar jobs, motivation, attitudes)
• Private employment agencies (head hunters, white-collar jobs, expensive)
• Colleges & Universities
• Electronic recruiting - the Internet

Direct applicants are people who apply for a job vacancy without prompting from the organisation.

Referrals are people who are prompting to apply for a job by someone within the organisation.

Direct applicants and referrals often have done some research about the company and concluded that there is enough fit between themselves and the vacancy, this is called self-selection and saves the company time. Referrals come from current employees they are family or acquaintances; these are called community relations.

Generally, you can’t fill all your vacancies with direct applicants and referrals, so some advertising is needed. The main questions in advertising are what to say and to whom to say it. The company thus has to decide which medium to use.

Another technological innovation in recruiting is videoconferencing. This eliminates travelling and allows for a more personal meeting between employer and applicant.

People searching for a job can be registered by the public employment agencies (=arbeidsbureau). They can also be registered by a private employment agency, this one charges the company money to deliver the employers (=uitzendbureau).

To be registered by the public employment agency, you have to be unemployed, which is not a requirement if you want to register by a private one.

Most colleges and universities have placement services that seek to help their graduates obtain employment. On-campus interviewing is the most important source of recruits for entry-level professional and managerial vacancies.).

Because there a few rules about the quality of a given source for a given vacancy it is generally a good idea for employers to monitor the quality of all their recruitment sources. This could be done by developing yield ratios for each source. These ratios’ express the percentage of applicants who successfully move from one stage of the recruitment and selection process to another.

Data on cost per hire are also useful in establishing the efficiency of a source.

3) Recruiters

Recruiter’s characteristics and behaviours seem to have less impact on applicant’s job choices than we might expect. Most organisations must choose whether their recruiters are specialists in HRM or experts at particular jobs.

Two traits stand out when applicants’ reactions to recruiters are examined:

• Warmth: reflects the degree to which the recruiter seems to care about the applicant and is enthusiastic about her potential to contribute to the company.
• Informativeness.

In general applicants respond more positively to recruiters who are perceived as warm and informative.

Recruiters’ realism is an important aspect of recruiting deals. The recruiter has to be as realistic as possible without giving negative information about the company.

Research suggests that recruiters do not have much influence on job choice, but of course they have some impact. Recruiters’ impact can be enhanced by:

• Providing timely feedback; applicants react very negatively to delays in feedback, because the firm seems uninterested then.
• Recruiters need to avoid behaviours that might convey the wrong organizational impression.
• Recruiting can be done in teams rather than by an individual. Applicants tend to view line personnel as more credible that personnel specialists, but specialist have knowledge, so both should be included in a team.

Chapter E: Selection and Placement

Any organisation that intends to compete through people must take much care with how it chooses organisational members, especially managers. In general, female and male leaders differ in style. But the key is not to decide which gender to hire, but to measure each individual’s abilities, skills and experience. Personnel selection decisions made by the organisation are instrumental to its ability to survive, adapt and grow. The competitive aspects of selection decisions become especially critical when organisations are confronted with tight labour markets and when competitors tap the same market for personnel. The goal by personnel selection is to minimise the errors in selection and placement, and to improve the companies’ competitive position.

E.1      Selections standards

Personnel selection is the process by which companies decide who to hire. Several standards should be met in the selection process. The five important standards are: reliability, validity, generalizability, utility and legality.

E.1.1   Reliability

Much of the work in personnel selections involves measuring characteristics of people to determine who will be accepted for the job. The characteristics of the person have to fit the characteristic of the job, and are the base for selecting people. These characteristics can be mathematical ability, verbal reasoning capacity, strength, integrity, or other characteristics. The measures have to be reliable. Reliability is the consistency of a performance measure: the degree to which a performance measure is free from random error. So the score a person receives based on a measure has to be consistent over time and contexts.

Most measuring done in personnel deals with complex characteristics like intelligence, integrity and leadership ability. Reliability refers to the measuring instrument (which might create errors) rather than to the characteristic itself. Actually, no measuring is ever flawless. One way to estimate reliability is to compute a correlation coefficient. The correlation coefficient is a measure of the degree to which two sets of numbers are related. It expresses the strength of the relationship in numerical form. A perfect positive relationship equals 1.0 and a negative relationship equals –1.0 when there is no relationship it equals 0.0.

Regardless of what will be measured you want the highest reliability, so two measures of the same should correlate high (test-retest reliability). What correlation efficient is high enough depends on the kind of decision that has to be made.

E.1.2   Validity

Validity: this is the extent to which a performance measure assesses all the relevant and only the relevant aspects of a job performance. A measure must be reliable if it is to have any validity. But on the other hand, the characteristic that is reliably measured may have no relation with the job, so it is not valid. In other words, reliability is necessary but an insufficient condition for validity.

One way of establishing the validity of a selection method is by measuring the criterion related validity. This is a method of establishing the validity of a personnel selection method by showing a substantial correlation between test scores and job performance scores.

A validity coefficient is used then. The key distinction between a validity coefficient and a correlation coefficient is that the correlation reflects a reliability estimate when we are attempting to asses the same characteristics twice, but the correlation coefficient reflects a validity coefficient when we are attempting to relate one characteristic to perform on some task.

Criterion related validity comes in two varieties. Figure 6.3:

• Predictive validation: seeks to establish an empirical relationship between applicants test scores and their eventual performance on the job. This requires one to administer tests to job applicants and then wait for some time and test again, to see how those applicants actually perform. If the test had validity, to two scores (before and after) should correlate.
• Concurrent validation: in this study a test is administered to all the people currently in a job and then incumbents’ scores are correlated with existing measures of their performance on the job. If the test had validity, to two scores should correlate.

Predictive validation takes more time than concurrent validation but it is superior because job applicants are more motivated to perform well on the test, and current employees have learned more things and tend to be homogenous.

When sample sizes are small, an alternative is content validation. This is a strategy performed by demonstrating that the items, questions or problems posed by a test are a representative sample of the kinds of situations or problems that occur on the job.

A test that is content valid exposes the job applicant to situations that are similar as the job and than test whether the applicant has sufficient knowledge and skills to handle that situation.

The ability to use the content validity in small sample settings makes it generally more applicable than criterion related validity. But content validation has also two limitations:

• One assumption is that the person who is to be hired must have the knowledge, skills, or abilities at the same time she is hired. So it is not useably when the person is expected to learn the job in a training program after the selection.
• Because subjective judgement plays a large role in content validation it is critical to minimise the amount of inference involved on the part of judges. So, content validation would be inappropriate for assessing more abstract characteristics such as intelligence, leadership and integrity etc.

E.1.3   Generalizability

Generalizability: this is the degree to which the validity of a selection method established in one context extends to other contexts. The three primary contexts over which to generalise are: different situations and different people. Just as reliability is necessary but not sufficient for validity, validity is necessary but not sufficient for generalizability.

Tests tend to show similar levels of correlation even across jobs that are only somewhat similar. The more complex a job, the higher the validity of a lot of tests. In general, one finds very similar levels of correlations across different groups of people. Because the evidence suggests that test validity often extends across situations and subgroups, validity generalisation is an alternative for validating selection methods for companies that cannot employ criterion related or content validity.

Validity generalisation process has three steps:

• The company provides evidence from previous criterion related validity studies conducted in other situations that shows that a specific test is a valid predictor for a specific job.
• The company provides evidence from job analysis to document that the job it is trying to fill is similar to the job validated elsewhere.
• If the company can show that it is uses a test that is the same as or similar to that used in the validated setting, then one can generalise the validity from the first context to the new context.

E.1.3   Utility

Utility: this is the degree to which the information provided by selection methods enhances the effectiveness of selecting personnel in real organisations. In general, the more reliable, valid, and generalizable the selection method is, the more utility it will have. The utility of any test generally increases as the selection ratio (= number of selected people / total number of tested people) gets lower, so long as the additional costs of recruiting and testing are not excessive. Many other factors relate to the utility of a test, like the cost of the test, the value of a product or service produced by a job (the more valuable the product, the more value there is in selecting the best personnel), etc.

E.1.4 Legality

All selection methods should conform to existing laws and existing legal precedents. The government can make organisation follow the rules and individuals have the right to stand up if they feel they are treated unfairly. This is called Executive orders.

E.2 Selection methods

There are selection methods used in various organisations.

Interview

A selection interview has been defined as a dialogue initiated by one or more persons to gather information and evaluate the qualifications of an applicant for employment. The selection interview is the most widespread selection method employed in organisations. Without proper care, it can be unreliable, low in validity and biased against a number of different groups. Legality is low because of subjectivity. Moreover, interviews are relatively costly (and therefore low in utility) because they require one or more persons to interviews another person, which involves travelling.

To increase the utility of person selection interviews there are a number of concrete steps.

• HR staff should keep the interviews structured, standardised and focused on accomplishing a small number of goals.
• The interviewer should take structured notes.
• Ask questions dealing with specific situations that are likely to arise on the job and use these to determine what a person is likely to do in a situation. This is what we call a situational interview. The items of this interview have been shown to have quite high predictive validity. Situational judgement items come in two varieties:

Experienced based (require the applicant to reveal an actual experience in a confronting situation) and Future oriented (ask what the person is likely to do when confronting in a similar situation in the future).

• Use more trained interviewers, so subjective errors are not possible. It is important that interviewers avoid subjective errors that can result when one human being is asked to rate another. You can best use multiple interviewers. To limit the subjective errors the interviewers are trained: they are thought to be ‘witnesses’ of a fact, and not ‘judges’.

References and Biographical Data

Nearly all employers also use some method for getting background information on applicants before an interview. This information can be solicited from the people who know the candidate through references checks. Most references are all positive so it is hard to differentiate applicants. The biggest concern with the use of biographical data (as also with the interview) is that applicants may be motivated to misrepresent themselves. This problem can be solved to ask many references and check as many as possible.

Physical Ability Test

Although automation and other advances in technology have eliminated or modified many physically demanding tasks, many jobs still require certain physical abilities. In these cases, tests of physical abilities may be relevant, not only to predicting performance, but also to predicting injuries.

There are seven classes of tests in this area: Muscular tension, muscular power, muscular endurance, cardiovascular endurance, flexibility, balance, and co-ordination. The criterion-related validities are quite strong. These tests (the strength test in particular) are likely to have an adverse impact on some applicants, most female applicants. So, to do these kinds of tests, two questions have to be asked:

• Is the physical ability essential to the job and is it mentioned in the job description?
• Is there a probability that failure to perform the job would result in some risk for safety or health of the employers?

Cognitive ability test

Cognitive ability test: this is a test that includes the dimensions verbal comprehension, quantitative ability and reasoning ability. Verbal comprehension refers to a person’s capacity to understand and use written and spoken language.

Quantitative ability concerns the speed and accuracy with which one can solve problems of all kinds. Reasoning ability refers to a person capacity to invent solutions to many diverse problems.

Given the changing nature of the economy, the adaptability of workers has become a critical concern of many employers. People who are high in adaptability have been found to be skilled at handling emergencies, managing stress, solving problems, learning new technologies and dealing with culturally diverse populations.

Personality Inventories

While ability tests attempt to categorise individuals relative to what they can do, personality measures tend to categorise individuals by what they are like. There are five common aspects of personality, also called The Big Five:

• Extraversion
• Adjustment
• Agreeableness
• Openness to experience
• Conscientiousness    (this one is considered one of the most important factors,

because this is the only dimension of personality that     shows     predictive validity across all situations)

The validity for almost all of these five factors in terms of predicting job performance also seems to be higher when the scores are not obtained from the applicant but instead taken from other people, because people sometimes lack the insight of what their own personalities are or they fake their responses.

Emotional intelligence is required through the next five steps:

1. Self-awareness, know your strengths and weaknesses
2. Self-regulation, keeping your emotions in control
3. Self-motivation, motivate yourself
4. Empathy, feel other peoples emotions
5. Social skills, deal with other peoples emotions

Work sample tests and job performance tests

These tests attempt to simulate the job in miniaturised form. The key in this kind of test is the behaviour consistency between the requirements of the job and the requirements of the tests. The disadvantage is that the tests are job specific so generalizability is low and the tests are expensive because there has to be developed a new test for every new job.

In the area of the managerial selection, work sample tests are typically the cornerstones in assessment centres. These are processes in which multiple rates evaluate employees’ performance on a number of exercises.

Honesty Tests and Drug Tests

Many problems that confront the society also exist within the organisations and have led to two kinds of tests, the honesty test and the drug-use test. The most common one is a paper-and-pencil test, which asks the applicants directly about their past and experiences with drugs and theft. Of course people can fake their answers, but the effect of the faking bias is not large enough to detract from the test’s validity. The validity and reliability of drug tests are very high.

Test results should be reported back to the applicant, who should be allowed an avenue of appeal and perhaps retesting. Tests should be conducted in an environment that is as unintrusive as possible and results from those tests should be held in strict confidence. Finally, when testing current employees, the program should be part of a wider organisational program that provides rehabilitation counselling.

Chapter F: Training

The successes of a company depend on how well employees can learn new technologies and apply them to serving customers. An investment in training can gain the company a competitive advantage.

Training can:

• Increase employees’ knowledge of foreign competitors and cultures, which is critical for success in foreign markets.
• Help ensure that employees have the basic skills to work with new technologies, such as robots and computer assisted manufacturing processes.
• Help employees understand how to work effectively in teams to contribute to product and service quality.
• Ensure that the company’s culture emphasises innovation, creativity and learning.
• Ensure employment security by providing new ways for employees to contribute to the company when their jobs change, their interests change or their skills become obsolete.

• Prepare employees to accept and work more effectively with each other, particularly with minorities and women.

F.1 Training

In general, training means a planned effort to facilitate the learning of job related knowledge, skills and behaviour by employees. The goal for training is for employees to master the knowledge, skill and behaviours emphasised in training programs and to apply them to their day-to-day activities. Recently it has been acknowledged that to offer a competitive advantage, training has to be more than just a basic skill development. A firm should view training as a way to create intellectual capital. Intellectual capital includes basic skills (these are needed to perform a job), advanced skills (technical knowledge), an understanding of the customer or manufacturing system, and self-motivated creativity. It is important to develop the intangible assets.

Continuous learning is a system that requires employees to understand the entire work process and expects them to acquire new skills, apply them on the job and share what they have learned with other employees. Managers identify training needs and help to ensure that employees use training in their work. Figure 7.1

Formal training: training and development programs and courses that are developed and organized by the company. Informal training: learning that is learner initiated, involves action and doing, is motivated by an intent to develop and does not occur in a formal learning setting.

Explicit knowledge: knowledge that is well documented and easily transferred to other persons. Tacit knowledge: knowledge based on personal experience that is difficult to codify. Knowledge management: process of enhancing company performance by using tools, processes, system and cultures to improve the creation, sharing and use of knowledge.

F.2 The design

A key characteristic of training systems that contribute to competitiveness is that they are designed according to the instructional design process. This training design process is a systematic approach for developing training programs and it has six steps. Figue 7.1:

• Step 1: Needs assessment, to determine if training is needed.
• Step 2: Ensuring employees’ readiness for training.
• Step 3: Creating a learning environment.
• Step 4: Ensuring transfer of training
• Step 5: Selecting training methods.
• Step 6: Evaluating training programs.

Step 1: Needs assessment

The first step, needs assessment, refers to the process used to determine if training is necessary. There are some reasons that suggest that training is necessary, like new technology, internal or external customer requests for training, job design, legislation changes, and changes in customer demands or new products. Needs assessment shows who needs training and what kind of training (from a consultant of by using internal resources). Figure 7.2

Needs assessment involves:

1. Organisational analysis: This is a process for determining the business appropriateness of training. (What is the context?)

Managers need to consider three factors before choosing training as the solution:

• The companies’ strategic direction. The companies’ strategy and goal it chooses has a great impact on whether resources should be devoted to training and on what type and the amount of training. A few strategies are the concentration strategy, the internal growth strategy, the external growth strategy and the disinvestment strategy.
• The training resources available. It is necessary to identify whether the company has the budget, time and expertise for training. There are three ways: The company can use internal consultants to train all affected employees; The company can select and place unqualified employees elsewhere (no training); The company may decide to purchase training from a consultant, when there is lack of time or expertise. To identify consultants for training, a request for proposal is needed. This is document that outlines for potential vendors and consultants the type of service the company is seeking, references needed, number of employees who should be trained, project funding, the follow up process, expected completion date and the date when proposals must be received by the company. The next step is to choose one.
• Support of managers and peers for training activities. Support from managers is critical to tell trainees how they can effectively use knowledge, skills or behaviour learned in the training on the job and the opportunities they now have.

2. Person analysis: which is a process for determining whether employees need training, who needs it and if they are ready for training. (Who needs training?)

Person analysis helps the manager determine whether training is appropriate and which employees need the training.

A major indicator for training is the gap between the current performances and how it actually should be and job changes is another indicator.

The factors that influence employees’ performance and learning are:

• Person characteristics: an employees knowledge, skills, abilities and attitudes.
• Input: the instructions that tell the employees what, how and when to perform.
• Output: the job’s performance standards.
• Consequences: the incentives that employees receive for performing well.
• Feedback: the information employees receive while they are performing, about how well they meet the objectives.

3. Task analysis: This is the process of identifying the tasks knowledge, skills and behaviours that need to be emphasised in training. (In what do they need training?) Task analysis results in a description of work activities. A job is a specific position requiring the completion of specific tasks. A task is a statement of an employees’ work activity in a specific job.

There are four steps in task analysis:

• Select the job to be analysed.
• Develop a preliminary list of tasks performed on the job.
• Validate or confirm the preliminary list of tasks, by interviewing some subject matter experts. This information is used to determine which tasks will be focused on in the training. Tasks that are important, frequently performed and difficult should be trained.
• Identify the knowledge, skills or abilities necessary to successfully perform each task. One can do this by interviewing. Information concerning how difficult it is to learn the knowledge, skills or ability, is important for training purposes and usually obtained by a questionnaire.

Step 2: Ensuring employees’ readiness for training

Motivation to learn: the desire of the trainee to learn the content of a training program.

Managers play an important role in motivating employees. They can do this by ensuring employees’ understanding of the benefits of training (like career possibilities) and to ensure their self-efficacy. Self efficacy is the employees’ belief that they can successfully learn the content of a training program. To make the employees’ motivation to learn as high as possible; they need to ensure employees’ self-efficacy; understanding the benefits of training; being aware of training needs, career interest, and goals; understanding work environment characteristics; and ensuring employees’ basic skill levels. Table 7.4

The degree to which employees have basic skills can influence their motivation: they have to be able to understand the content of a training program. Basic skills consist of reading, writing, and cognitive ability. These are very important and have a great influence on performance in general.

F.3 (Step 3) Creating a learning environment

There are some conditions for learning. First, employees need to know why they should learn. They have to understand the objective of the training program to learn best.

Employees also need meaningful training content. The training has to link to their current job experiences and tasks to make it easy to learn. The training context is the physical, intellectual and emotional environment in which the training occurs.

When they have done the training program, the employee needs the opportunity to practice. It is important to consider how much should be practised: overlearning is a good thing: trainees should practice what they have learned several times.

Further, employees need feedback. Feedback is the information about how well people are meeting the training objectives. To be effective, feedback should focus on specific behaviours and be provided as soon as possible after the training.

According to the social learning theory, people learn by observing and imitating the actions of models. Employees learn by observing, experience, and interacting with others. For the model to be effective the desired skills or behaviours need to be clearly specified and the model should have characteristics similar to the target audience.

Employees need the training program to be properly co-ordinated and arranged, which is one of the aspects of training administration. Good co-ordination ensures that trainees are not distracted by events that could interfere with learning. The end of the program can be used to evaluate and make some adjustments when needed.

Employees also need to commit training content to memory. This facilitates the recall of training content after training.

F.4 (Step 4) Transfer of training

The transfer of training refers to on-the-job-use of knowledge, skills and behaviour. It is influenced by figure 7.4:

• Climate for transfer, which refers to the trainees perception about a wide variety of characteristics of the work environment ( = situational constraints and social support) that facilitate or inhibit the use of trained skills or behaviour.
• Manager support, which refers to the degree to which they emphasise the importance of attending the training programs, and stress the application of training content to the job. They can also attend the program themselves to give support.

Or they can write an action plan (document summarizing what the trainee and manager will do to ensure that training transfers to the job) to ensure the training transfers to the job. The action plan includes a goal, a strategy to achieve this goal, getting feedback and the expected outcomes.

• Peer support. Transfer of training can also be enhanced by creating a support network among the trainees which helps trainees to discuss progress in using learned capabilities on the job.
• Opportunity to use learned capabilities. This refers to the extend to which the trainee is provided with or actively seeks experience with newly learned knowledge, skills and behaviour from the training program. This is influenced by the work environment and trainee motivation.
• Technological support. This can be done by computer applications that can provide skills training, information access and expert advice. Such applications are called Electronic performance support systems (EPSS).
• Self management skills. Training programs should prepare employees to self manage their use of new skills and behaviours on the job. Trainees need  to create their own reward system and ask managers for feedback.

F.5 (Step 5) Selecting training methods

For training to be effective, the first four steps of the training process have to be done (needs assessment, readiness for training, positive learning environment and transfer of training).

New training technologies can reduce delivery costs and increase flexibility. Having a state of the art instructional technology should not be the guiding force in choosing a training method. The method should be based on training objectives. Instructional methods can be grouped in presentation methods, hands on method and group building method.

1) Presentation methods

Presentation methods: These are training methods in which trainees are passive recipients of information. These are ideal for presenting new facts, information, different philosophies or alternative problem solving solutions. This method has three distinctions:

• Classroom instruction, this involves having the trainer lecture a group. The more active participation, job-related examples and exercises that the instructor builds in, the more the trainees will learn.
• Audio-visual techniques. This includes overheads, slides and video to instruct employees.

Mobile technologies; distance learning. This is used by geographically dispersed companies to provide information about new products, policies or procedures as well as skills training and expert lectures to field locations. People can learn whenever they want to, on their Ipod or Ipad.

An advantage of this type of learning is that it saves travel costs. An major disadvantage of distance learning is the potential for lack of interaction between trainer and audience. The trainer is not able to control the audience and cannot anticipate or follow their progress.

2) Hands-on methods

These are training methods that actively involve the trainee in the learning. They are ideal for developing specific skills, understanding how skills and behaviours can be transferred to the job, and dealing with interpersonal issues that arise on the job.

Some hands-on methods are:

• On the job training. This can be useful for training new employees or upgrading knowledge. This method assumes that employees learn the best from observing peers or managers and trying to imitate this behaviour.
• Self directed learning, this is a program in which employees take responsibility for all aspects of learning. They receive feedback about the learning performance.
• Apprenticeship, this is a work-study training method with both on-the-job and classroom training. The hours and weeks that must be devoted to completing specific skills are clearly defined. These can be sponsored by individual companies or by groups of companies co-operating with an union. An advantage is that employees can earn wages and learn at the same time.
• Simulation, this is a training method that represents a real life situation, allowing trainees to see the outcomes of their decisions in an artificial environment. A development of this is virtual reality. This is computer-based technology that provides trainees with a 3D learning experience. The environment responds to their behaviours and reactions.
• Business games and case studies. Case studies are situations that trainees study and discuss. Business games are games in which trainees must gather information, analyse it, and make decisions. These two methods are used primarily for management skill development. They stimulate learning because participants are actively involved. They have to work in teams and think strategically.
• Behaviour modelling. This is one of the most effective techniques for training interpersonal skills. Each training session focuses on one interpersonal skill and tries to rationale behind the key behaviours.
• Interactive video combines the advantages of video and computer based instructions. Trainees use the key board or touch the monitor to interact with the program. The video is used to teach technical procedures and interpersonal skills.
• E-learning. This refers to the instruction and delivery of training by computers through the Internet or company intranet. Effective e-learning is grounded on thorough needs assessment and complete learning objectives. This could be done by repurposing ( = the directly translating instructor-led training online). Learner control is the ability of trainees to actively learn through self-pacing exercises, links to other material and conversations with other trainees and experts. Effective online learning gives trainees meaningful content, relevant examples and the ability to apply content to work problems and issues. The best e-learning combines the advantages of Internet with the principles of a good learning environment. Trainees can also receive feedback through mail. Learning portals are websites or online learning centers that provide access to training courses, services and online learning communities from many sources.

Blended learning combines online learning, face-to-face instruction and other methods, because each method has some limitations.

3) Group building methods

These methods are designed to improve team or group effectiveness. The training techniques help trainees share ideas and experiences, build group identity, understand the dynamics of interpersonal relationships and get to know their own strengths and weaknesses and those of their co-workers. All the various techniques involve examination of feelings, perceptions, and beliefs about the functioning of the team, discussion and development of plans to apply what was learned in training to the team’s performance in the work setting. Group building methods often involve experiential learning.

• Adventure learning, this method develops teamwork and leadership skills using structured outdoor activities. It appears to be best suited for developing skills related to group effectiveness, such as self awareness, problem solving, conflict management and risk taking.
• Team training, this coordinates the performance of individuals who work together to achieve a common goal. Such training is an important issue when information must be shared and individuals affect the overall performance of the group.

This includes cross training (team members understand and practice each other’s skills), co-ordination training (which trains the team in how to share information and decisions) and team-leader training.

• Action learning, this involves working on a problem in a team, developing an action plan to solve this problem. The whole team is accountable for the outcome and carrying out the plan.
• Six Sigma training, this is an action training program that provides employees with defect-reducing tolls to cut costs. This programs involves principles of action learning.

Step 6: Evaluating training programs

Examining the training outcomes of a program is a way to evaluate the effectiveness of a training program based on cognitive, skill-based, affective and results outcomes. Training outcomes can be categorised table 7.8:

• Cognitive outcomes: the degree to which trainees are familiar with principles, facts, techniques or procedures.
• Skill based outcomes: the use and learning of behaviour and skills.
• Affective outcomes, these include attitudes, motivation and reaction to the program.
• Results, these are used to determine the training’s pay-off for the company.
• Return on investment. This is comparing the benefits to the costs of a training program. There are direct and indirect costs.

Which training outcomes measure is the best, depends on the training objective.

Once you have identified a learning method, the next step is to consider the extent to which the method facilitates learning and transfer of training, the costs related to the development and use, and its effectiveness. Table 7.9

There are a number of evaluation designs that can be applied to training programs:

1. Pretest/posttest with comparison group, this method compares a group of employees who receive training and a group who do not. The outcomes are collected and that is use as evidence to change.
2. Pretest/posttest this is similar to the above, but without the comparison group, so you cannot rule out the effects of other factors as explanations for change. This one is used when the manager does not want to exclude some employees.
3. Posttest only. Only training outcomes are collected.
4. Time series method. Training outcomes are collected periodically before and after training.

Evaluation designs without pretesting or comparison groups are appropriate if the manager is interested in identifying whether a specific level of performance has been achieved, and not in how much change has occurred.

Determining return on investment

Cost-benefit analysis: the process of determining the economic benefits of a training program using accounting methods. Training cost information is important for the following reasons:

• To understand total expenditures for training
• To compare the costs of alternative training programs
• To evaluate the proportion of money spent on training development, administration and evaluation, as well as to compare moneys spent on training for different groups of employees.
• To control costs.

F.6       Other issues

Because of the increasing global economy, employees are working in foreign countries. An expatriate is an employee sent by his company to do operations in a different country. To prepare and educate employees (and their families) to work abroad is called cross cultural preparation.

To succeed overseas, expatriates need to be:

• Competent in their areas of expertise.
• Able to communicate in the host country.
• Flexible, tolerant of ambiguity and sensitive to cultural differences.
• Motivated to succeed.
• Supported by their families.

Foreign assignments involve three phases:

1. Predeparture Phase: Before leaving, the employees need to get a language course and an orientation to the new country’s culture and customs. The family has to agree with the assignment abroad.
2. On-site Phase: On-side training involves continued orientation to the host country and its customs and cultures through formal programs or through a mentoring relationship.
3. Repatriation Phase. This involves the preparation of expatriates for return to the parent company and country from a foreign assignment. To make this return as easy as possible, the employee needs to remain having contact with their own country during the stay abroad, or else the return could be a shock. Sometimes they even leave the company, because the foreign assignment was much more challenging than the work they have to do when they are back.

F.7 Socialisation

Managing diversity is the process of creating an environment that allows all employees to contribute to organisational goals and experience personal growth. This includes equal access to jobs as well as fair and positive treatment of all employees, no matter what race, gender, family status, sexual or religious orientation. This requires the company to develop employees so that they are comfortable working with others no matter what their background is which may require changing the company culture.

To manage diversity through making sure that HRM practices meet standards of equal employment legislation (for example: hire more women) results in the cycle of disillusionment, because this does not change values and behaviours.

So, more has to be done. To successfully manage a diverse workforce, companies need to ensure that employees understand how their values and stereotypes influence their behaviour toward others and that employee’s gain an appreciation of cultural differences. This can be accomplished through diversity training programs. These are trainings designed to change employee attitude about diversity and / or develop skills needed to work with a diverse workforce. The Attitude awareness & change program is a program to increase employee’s awareness of stereotypes and beliefs, so that they will be able to avoid negative stereotypes.

Furthermore, the Behaviour based program is used to change organizational policies and individual attitudes to increase personal growth and productivity. One approach of these programs is to identify incidents that discourage employees from working up to their potential and improve this. Another approach is to teach managers and employees basic rules of behaviour in the workplace. A third approach is cultural immersion: sending employees into communities where they can interact with persons from different cultures.   

Managing diversity and inclusion: the process of creating an environment that allows all employees to contribute to organizational goals and experience personal growth.

Organisational socialisation is the process used to transform new employees into effective company members. Socialization involves three phases figure 7.7:

1) Anticipatory socialization. In this process, individuals develop expectations about the company and the job during recruitment and selection. So they need to be given an realistic job preview. Employee’s expectations are formed by interactions rather than by specific messages about the job. The expectations are also bases on prior work experience in similar jobs.

2) Encounter. This phase of socialization starts when the employee actually starts working.

3) Settling in. This phase starts when the employee is comfortable with job demands and the social relationships.

Employees need to complete all three socialization phases to fully contribute to the company. If they experience successful socialization, they will be more motivated, more committed and more satisfied.

Orientation programs play an important role in socialising employees. Orientation involves familiarising new employees with the company rules, policies and procedures. Although the content of the orientation program is important, the process of orientation should not be ignored. Effective orientation programs actively involve the new employee, so he or she can ask questions and interact. Managers also have to be actively included in this program to help the employee settle in.

Onboarding refers to the orientation process for new managers. They are given an introduction to the work they will be supervising and an understanding of the culture and operations of the entire company.

Year of summary

• 2014
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