Summary of the 10th edition of Human Resource Management: Gaining a Competitive Advantage by Noe

How can a company obtain a competitive advantage? - Chapter 1

What is competitiveness and human resource management?

Competitiveness refers back to the ability of companies to retain and gain market share in the desired industry. It is also related to effectiveness, which is determined by how the company satisfies stakeholders. Important "stakeholders" include "stockholders", who want something back for their investment. For example, customers who want a good quality product for the price, employees who want to be paid for the work they do.

Companies that do not meet the interests of stakeholders are less likely to have a competitive advantage over other companies in the industry.

Human resource management refers back to politics, practice, and systems that influence employee behavior, attitude, and performance. HRM means: determining and analyzing the work, determining the human resource resources (HRM planning), inspiring potential employees (recruiting), choosing employees (selecting), teaching employees how to do the work best and preparing for the future (training and development), rewarding employees (compensation), evaluating employee performance (performance management) and creating a positive work environment (employee relationship).

What are the roles and responsibilities of HR departments?

A study has shown that the amount made available by companies for HRM is on average 2.936 US dollars per employee. High impact HR teams have one person per 64 employees. These teams spend more than the average available for HRM: 4.434 USD. These high impact HR teams have furthermore a higher percentage of HR specialists than compliance-based and basic HR organizations.

There are three HR product lines:

1. Administrative service and transactions: compensation, renting and staffing.
   This emphasizes: means effectiveness and quality service.

2. Business partner service: developing effective HR systems and helping implement business plans, talent management.
   This emphasizes: knowing the business and exerting influence: solving problems, developing effective systems to ensure the necessary competences.

3. Strategic partner: contribute to the business strategy based on considerations of human capital, business capabilities, readiness and development of HR practices as strategic distinguishing factors.
   This emphasizes: knowledge of HR and the business environment, the market and business strategies.

HR managers have 2 major challenges:

1. Shifting their focus from current activities to strategies for the future.

2. Preparing non-HR managers to develop and implement HR practices.

What are strategic roles of HRM functions?

Shared service model is a way of organising HR functions (where centres of expertise or excellence, service centres and business partners are important). Centres of expertise or excellence are HR specialists in staff training. Service centers are a central place for administrative and transactional tasks such as enrolling for training courses or changing benefits that employees and managers can have online. Business partners are HR staff members who work with a business unit manager on strategic issues such as creating new compensation plans or developing programs to prepare high-level managers.

Self-service goes refers to giving employees online access to apps that provide information about HR issues. Examples of these HR issues are training, benefits, compensation and contracts. With a change to self-service, HR can focus more on consulting with managers on key personnel issues and need less time for day-to-day transactional tasks.

Outsourcing refers to the practice of providing another company with service (a vendor, third party or consultant). The most common "outsourced activities" relate to benefits administration (flexible publishing accounts, health plan status), relocation and payroll. The main reasons for companies to outsource specific services are cost savings, increased ability to recruit and manage talent, improving HR service quality and protecting the company from potential litigation by standardizing processes such as selection and recruitment.

Evidence-based HR refers to the demonstration that human resource practices have a positive impact on a company floor and key stakeholders. These key stakeholders might be employees, customers, the community and shareholders.

HR or work analytics refers to the practice or use of quantitative methods and scientific methods to analyse 'big data'. Big data combines information from human resource databases, business financial statements, employee surveys and other data sources to make evidence-based human resource decisions and demonstrate that HR practices affect the organization's bottom line, including profits and costs.

SuccesFactors use data from 3 systems. These three systems are the following:

1. Customer relationship management

2. Learning and performance management

3. Employees record

The role of a HR senior will likely include the following tasks:

• Developing and supporting the company culture

• Employee recruitment, retention and engagement

• Success planning

• Developing the entire HR strategy of the specific company

The role of a HR junior will likely include the following tasks:

• All transactions focused on paperwork

• Benefits and payroll administration

• Answering employee questions

• Data management

The Society for Human Resource Management (SHRM) has drawn up a list of nine competencies that an HR professional should meet:

1. Human resource technical expertise and practices. This is the ability to apply the principles of human resource management to contribute to the success of the company.
   Examples of how to behave: stay up-to-date on relevant laws, legal statements and regulations: develops and uses best practices.

2. Relationship management. This is the ability to manage interaction with and between others with specific goals such as providing service and organizational success.
   Examples of how to behave: provides customer service to stakeholders in the organization, ensures alignment within HR in delivering service and information to the organization.

3. Consultation. This means providing guidance to stakeholders such as employees and leaders who seek expert advice on different circumstances and situations.
   Examples of how to behave: acts like an expert in the field of personnel and people management and develops advisory and coaching skills.

4. Organizational leadership and navigation. This is the ability to lead initiatives and processes within the organization and to buy from stakeholders.
   Examples of how to behave: promotes collaboration, shows behaviour that is consistent with and conforms to the organizational culture.

5. Communication. This is the ability to effectively and freely exchange information with and between different stakeholders at all levels of the organization to produce meaningful results.
   Examples of how to behave: provides constructive feedback effectively, helps managers communicate not only on HR issues.

6. World and cultural effectiveness. This consists of managing human resources between and across borders. Examples of how to behave: working effectively with different cultures and population groups.

7. Ethical practices. This includes the integration of core values, integrity, and responsible for all organizational and business practices.
   Examples of how to behave: maintains confidentiality, acts with personal, professional and behavioral integrity.

8. Critical evaluation. This is the ability to interpret information to determine the return on investment and the impact of the organization in making recommendations and business decisions.
   Examples of how to behave: collects critical information, makes good decisions based on evaluation of available information.

9. Business insight. This is the ability to understand business function and statistics within the organization and business.
   Examples of how to behave: displays an ability to understand business operations and functions within the organization, understands organizational statistics and their relationship to business success.

Which competitive challenges affect human resource management?

There are thee challenges where an increased importance of human resource management is crucial:

1. The sustainability challenge.

2. The challenge on a global level (global challenge).

3. The challenge of technology.

Competing through sustainability means:

• a return on shareholders.

• high-quality products, services and work experience for employees.

• add value to intangible assets and human capital.

• social and environmental responsibility.

• adapt to changing characteristics and expectations of the workforce.

• legal and ethical issues.

• effectively use new working arrangements.

Sustainability is defined as the ability of a company to achieve their needs without sacrificing the ability of future generations to serve their interests.

Examples of stakeholders are shareholders, the community, customers, employees and all other parties who are interested if a company is or becomes successful.

Competing through globalization means:

• Expanding into foreign markets

• Preparing employees to go to work abroad

Competing through technology means:

• Change employees and managers work roles

• Create high performance work systems by integrating technology and social systems

• Developing E-commerce and E-HRM

• The use of social networking systems

• Develop HR dashboards and use HR analytically in problem solving

Companies might have problems with attracting and retaining talented employees. Most companies increase wages, pay for benefits and provide training to provide a solution for these problems. New technologies eliminate administrative and transactional HR activities. About 80% of all jobs are in the service sector. Jobs in the service sector are in healthcare, local municipalities, professional business service and retail. The number of jobs are decreasing in the agriculture sector. Examples are farmers, fishing, forestry. This decrease in jobs is the result of for example technical developments, foreign competition, cost reduction and more efficient work processes. There is a shortage of employees with skills in science, technology, technology and mathematics (STEM skills).

Currently, more companies are interested in using intangible assets and human capital as a way to gain a competitive advantage. A business value consists of assets which are important to provide goods and services:

• Financial assets. Examples are cash and securities.

• Psychological assets. Examples are property and equipment.

• Intangible assets.

There are three examples of intangible assets.

1. Human capital: tacit knowledge, education and work related knowledge.

2. Social capital: corporate culture, management philosophy, coaching/mental relations

3. Intellectual capital: patents, copyrights, trade secrets.

The Magic Selling Program stands for:

• Meet and make contact and / or a connection

• Ask questions and listen

• Give options and advice

• Inspire to buy

• Celebrate the purchase

This program is designed to allow sales people to make more personal connections with shoppers.

Knowledge workers are employees who contribute to the company by what they know about customers or have specialized knowledge. They do not contribute not by manual labour. Knowledge workers share specialised knowledge that managers do not have such as specific information about customers. Knowledge workers are very much in demand due to the fact that companies need their skills and the jobs they need are growing.

Empowering means that employees have every responsibility to make decisions on all aspects of product development or customer service.

A learning organization includes a culture of lifelong learning, allowing all employees to continuously acquire and share knowledge.

Change refers to the approval of a new idea or behaviour by a company.

Employee engagement refers to the extent to which employees are fully involved in their work and the strength of their commitment to their work and the company.

Talent management refers to a company's systematically planned strategic effort to use bundles of human resource management practices, including the acquisition and assessment of employees, learning and development, performance management and compensation for attracting, retaining, developing and motivating highly skilled employees and managers.

Alternative work arrangements include the following:

• Independent contractors

• On-call, temporary and contract company employees

Total quality management (TQM) is a business effort to continuously improve the way people, machines and systems perform their work. This results in the following core values:

• Methods and processes have been developed to meet the needs of internal and external customers.

• Every employee is trained in quality.

• Quality is designed in a product or service. Therefore, errors can be prevented rather than detected and corrected.

• The company works with vendors, suppliers and customers to improve quality and keep costs down.

• Managers measure progress with data-based feedback.

Malcolm Balbridge National Quality Award is an award to promote quality awareness, recognize quality of companies and publish successful quality strategies.

ISO 9000:2000 is a quality standard which is used worldwide. It consists of eight quality management principles. These principles are the following:

1. Customer focus

2. Leadership

3. Human engagement

4. A process approach

5. A system approach to management

6. Continuous improvement

7. Using facts to make decisions

8. Establish equal relationships with suppliers of the firm

ISO develops standards which are related to management. These standards also include a wide variation in other areas such as education, music and protecting children.

The Six Sigma process is defined as the process of measuring, analyzing, improving and then controlling processes once they are brought within the narrow six sigma quality tolerance or standards.

Lean thinking is a way to do more with less effort, time, equipment, space but still offer customers what they need and want.

Company performance of existing employees is often referred to internal workers. Employees identify and recruit new employees from the external workforce through recruitment and selection. The external labour market includes people actively seeking employment and actively searching for a job.

Important changes in demography and diversity in the field of work are:

• The age in the workfield is rising.

• The field of work is more diverse in terms of race, gender and generation.

• Immigration will continue to influence the size and diversity of the working population.

Different generations have different names for these generations. The generations are find below:

• 1925-45: Traditionalist, silent generation

• 1946-64: Baby boomers

• 1965-80: Generation X

• 1981-95: millenials, generation Y, Echo Boomers

• 1996: generation Z, digital natives

To successfully manage with a diverse field of work, a manager must develop a new set of skills. Examples of these new skills are:

• Effective communication with employees that have many different cultural backgrounds.

• Coaching and developing employees of different ages, educational backgrounds, ethnic, psychological and religious backgrounds.

• Provide performance feedback that is based on objective outcomes. These managers should make sure that there are no values and stereotypes that work against women, minorities and people with disabilities. They should look at their personal abilities and talents rather than judging too early.

• Develop a work environment that makes it comfortable for employees from different backgrounds to be creative and innovative.

• Recognising and responding to generational problems.

Ethics is defined as the fundamental principles of right and wrong that employees and companies deal with.

Ethically successful companies can be characterized by four principles:

1. Employees take responsibility for company actions.

2. The company emphasizes fair treatment of employees, customers, vendors and clients.

3. Employees value and use a sense of purpose or vision in their work.

4. The company emphasizes mutual benefits in customers, sellers, clients and common relationships.

Sarbanes-Oxley Act of 2002 sets strict rules for business conduct and imposes severe fines for non-compliance.

Human resource managers must meet three basic standards to be ethically responsible. These three standards are the following:

1. The HRM practices must result in the best outcome for a large group of people.

2. It must respect basic human rights in the area of privacy.

3. Managers must treat employees and customers fairly and equally.

Offshoring is defined as exporting jobs from developed countries to countries where labour and other costs are lower. Examples of these countries are India, Mexico and Brazil.

Reshoring is defined as jobs moving from other countries to the United States of America. Reshoring occurs more often than offshoring. There might be several reasons for this occurrence. Some of these reasons are:

• Political stability

• Customer preference

• Local health and safety standards

• Image: building a factory in a poor country might result in negative publicity.

Social networking means visiting websites and social media channels such as Facebook, Twitter, LinkedIn and blogs that facilitate interaction between people usually with shared interests.

Human Resource Information System (HRIS) is a computer system used to collect, store, retrieve and disseminate information which relate to a company's human resources.

Cloud computing refers to a computer system that provides an information technology (IT) infrastructure via a network in a self-service, customizable, and on demand model.

A HR dashboard is used in firms for managers and employees to have access to the company intranet or human resource information system.

High performance work systems maximize the gap between the enterprise social system (employees) and its technical system.

Virtual teams are defined as teams separated by time, geographical distance, culture and / or organizational boundaries. These teams almost always rely solely on technology (i.e. email, internet, Skype) to interact and successfully complete assignments.

What are competition challenges due to HRM practices?

There might be different challenges for firms. There might be global challenges and challenges in the area of sustainability.

Examples of global challenges are the following:

• HRM strategy is matched to business strategy

• Knowledge is divided

• Work is divided into teams

• Selection systems are work-related and legal

Examples of sustainable challenge are the following:

• Creating a continuous learning environment

• Discipline systems are progressive

The HRM practices that help companies deal with competitive challenges in 4 dimensions:

1. Managing the human resource environment

2. Acquiring and preparing human resources

3. Assessment and development of human resources

4. Compensating human resources

What is the definition of strategic human resource management? - Chapter 2

Human resource managers need to:

• Have input into the strategic plan.

• Have specific knowledge of the strategic goals of the organization.

• Know which employee skills, behavior and attitude are needed to promote the strategic plan.

• Develop programs to ensure that employees have these skills, behaviors and attitudes.

What is the definition of a business model?

A business model is a story of how a company creates value for its customers and, more importantly, how they want to do this to gain profit.

There are a few basic accounting concepts:

• Fixed costs (the product must be able to cover the fixed costs)

• Variable costs

• Contribution margin (this is the difference between what a firm asks for a product and the variable costs)

• Gross profit margin (the number of products sold times the contribution margin)

What is the definition of strategic management?

Strategic management is a process. It is an approach to address the competitive challenges an organization faces. It is a process for analyzing the competitive environment and situation of companies, developing the strategic goals of the company and drawing up an action plan and allocation of resources. This plan and the allocation of resources increase the possibilities of achieving those goals.

Strategic management involves:

• Business organizations that participate in generic strategies that often fit into some strategic type.

• The process of developing strategies for achieving business goals in its environment.

Strategic human resource management (SHRM) can be seen as the pattern of planned human resource implementations and activities intended to enable an organization to achieve its goals.

The strategic management process has two independent phases. These two phases are the following:

1. Strategic formulation. This consists of the strategic planning of groups, determining a strategic direction in defining the mission and vision of the company, external opportunities and threats and internal strengths and weaknesses.

2. Strategic implementation. This means that the organization follows the chosen strategy. Strategic implementation consists of structuring the organization, allocating resources and ensuring that the company has well-trained employees.

There are four levels of integration between the HRM function and the strategic management function. These four levels are:

1. Administrative linkage. This is the lowest level. The HRM function is focused on daily activities at this level. The HRM manager has no time or opportunity to take a strategic view on HR issues. The strategic planning exists without any input from the HRM department. This results in a complete separation between the HRM department and the strategic management process and both strategic formulation and strategic implementation.

2. One-way linkage. The business strategic business planning function develops the strategic plan and thereafter informs the HRM function about the plan. Although one-way traffic recognizes the importance of human resources in implementing the strategic plan, the company cannot take human resource issues into account when formulating this strategic plan. This level of integration often leads to a strategic plan that companies cannot successfully implement.

3. Two-way linkage. This allows human resources to be taken into account during the process of strategy formulation. The integration consists of three steps:

   1. The strategic planning teams inform the HRM function about the different strategies the company is considering

   2. Present the results of this analysis to the strategic planning team

   3. The plan is handed over to the HRM manager who develops and implements the program.

4. Integrative linkage. Integrative linkage is dynamic and multifaceted. It is based on ongoing interaction rather than consecutive interaction. The HRM function is involved in both strategic formulation and strategic implementation.

What is meaning of strategic formulation?

There are five components of the strategic management process relevant for the strategic formulation:

1. Mission. The mission is an explanation of the reason of existence of the organization: this usually specifies the customer service, the satisfied needs and/or values received by the customer and the technology used.

2. Goals. These are the things a company hopes to achieve in the medium and long term.

3. External analysis. This analysis consists of examining the operational environment of the organization to identify the strategic opportunities and threats.

4. Internal analysis. This analysis identifies the strengths and weaknesses of an organization. The external and internal analysis can be combined into the so-called SWOT analysis.

5. Strategic choice. This choice is the organization strategy: it describes the ways in which the organization tries to fulfill its mission and achieve its long-term goals.

What is strategic implementation?

There are five key variables which determine success in strategic implementation. These key variables are the following:

1. Organizational structure

2. Task design

3. The selection, training and development of people

4. Remuneration systems

5. Types of information and information systems

HRM is responsible for the task of designing, selecting, training and developing people and the reward system. HRM has a direct influence on structure and information and decision-making process. The strategy must be implemented successfully first. The tasks must be written out and grouped into jobs in a way that it is effective and efficient. Next, the HRM function must ensure that employees have the right knowledge, skills, and ability to meet their part of implementing the strategy.

What is a HRM practice?

HRM practices consists of the following:

• Job analysis and design

• Recruitment and selection

• Training and development

• Performance management

• Pay structure, incentives and benefits

• Work-employee relationships

What is job analysis and design?

Job analysis is defined as the process of obtaining detailed information about a job. Job design is defined as the specific tasks that contain a specific job.

What is employee recruitment and selection?

Recruitment is defined as the process by which the organization seeks candidates for potential employment. Selection refers to the process by which a firm tries to identify applicants with the necessary knowledge, skills, ability and other characteristics that help the company achieve its goals.

What is the meaning of training employees and their development?

Training refers to a planned effort to facilitate the learning of work-related knowledge, skills and behaviour by employees. Development includes the acquisition of knowledge, skills and behaviour that improve the ability of employees to meet the challenges of a variety of existing jobs or jobs that do not yet exist.

What is performance management?

Performance management is used to ensure that the activities and results of employees match the objectives of the organization.

What are payment structures, incentives and benefits?

The payment structure has two important roles in implementing strategies:

1. A high level of remuneration and/or benefits compared to those of competitors can ensure that the company attracts and retains high-quality employees. It can however have a negative impact on the total costs of labor of the company.

2. By linking pay to performance, the company can evoke specific activities and performance levels for employees.

What are labor and employee relationships?

Companies may choose to treat employees as an asset for which investment in resources or as an expense should be minimized. They must make choices about how many employees can participate in decision making, what rights employees have, and what responsibility the company has towards employees.

What is the definition of a strategic type?

The book focuses on two generic strategies:

1. Costs. A firm can create value by reducing costs.

2. Differentiation. A firm can create value by differentiating a product or service in such a way that the company is able to charge a premium price compared to its (direct) competitors.

According to Porter, this leads to two basic strategies:

1. Overall cost leadership. This type of strategy focuses on becoming the cheapest producer in a specific industry. This strategy delivers above average returns within this industry and tends to deny other companies access to the industry since the company is able to lower its prices below its competitive costs.

2. Differentiation strategy. This type of strategy tries to create the impression that the product or service of the firm is different from that of other industries and firms.

What are HRM requirements and strategic types?

Role behaviors are defined as the behaviors that are required of an individual in his or her role as an employee in a social work environment. Companies move to cost strategies due to the focus on efficient production, define the skills they require and invest in training employees in these skills. Employees in companies with a differentiation strategy need to be very creative and able to work well together. They only need to have a moderate concern for quantity, a long-term focus and a tolerance for ambiguity and to be risk-takers.

What are management strategies?

An internal growth strategy is applied by companies that channel their resources towards building on existing strengths. An external growth strategy is a strategy that is used to try to expand the resources of a company or to strengthen its market position by acquiring or creating new companies.

Divestment or downsizing strategy consists of cuts, divestments or liquidation.

Concentration strategies require that the company retains the current skills that exist in the organization. This requires that training programs provide a means of keeping those skills sharp among people in the organization and that compensation programs focus on retraining people with those skills.

Internal growth strategies presents unique personnel problems.

Downsizing is defined as the planned elimination of large numbers of staff intended to increase the effectiveness of the organization.

What is strategy evaluation and control?

It is important that companies constantly assess the effectiveness of the strategy and the implementation process.

What does the role of human resources in providing strategic competitive advantage look like?

We must recognize that human resources can provide a strategic competitive advantage in two other ways: through emerging strategies and improving strategies.

What are emerging strategies?

Improved strategies are the result of a rational decision-making process led by top managers when developing a strategic plan.

Emergent strategies consist of the strategies that evolve from the base of the organization and can be seen as what organizations actually do, as opposed to what they intend to do.

What is the legal environment with regard to equal employment opportunities and security in the US? - Chapter 3

The Constitution (in the U.S.) establishes three important administrative bodies:

1. Legislature: this consists of the House of Representatives and the Senate. These bodies develop laws that regulate many HRM activities.

2. Executive: this consists of the president of America and the many regulatory bodies overseen by the president. The president can submit bills which will become laws if passed. The president has the power to veto any law passed by Congress ensuring that few laws are passed without the president's approval - allowing the president to influence the way laws are written. The regulatory agencies are responsible for the enforcement of laws under the authority of the president.

3. Judiciary: this consists of the federal legal system which is composed of three levels: the American District Court and the semi-judicial bodies, the American Court of Appeal and the Supreme Court (decisions made at the High Court are binding).

Equal employment opportunity (EEO) refers to the government's attempt to ensure that all individuals have an equal opportunity to work, regardless of race, color, religion, gender, age, disability or national origin.

What are constitutional amendments?

The 13th amendment of the constitution abolished slavery in America. The 14th amendment has to do with the fact that discrimination due to race, age, gender and more is no longer allowed.

What is the occupational rehabilitation act of 1973 (The Vocational Rehabilitation Act of 1973)?

This act covers executive agencies and contractors and subcontractors who receive more than $2500 annually from the federal government. It requires them to take positive action for people with disabilities. The congress designed this law to encourage employers to actively recruit qualified people with disabilities and to make reasonable accommodations to enable them to become active members of the labor market.

What is the Vietnam Era Veteran's Readjustment Act of 1974?

This act is designed to help and provide employment to veterans affected by the Vietnam War.

What is the Pregnancy Discrimination Act?

This act is designed to protect pregnant women. An employer cannot refuse to employ a pregnant woman because of her pregnancy, pregnancy-related illness, or the prejudices of colleagues, clients or clients.

What is the Civil Rights Act of 1991?

A major difference in this act is the addition of compensatory and punitive damages in cases of discrimination. Punitive damages are intended to discourage employers from discriminating by ensuring payments are made to the claimant in addition to the actual damage suffered.

What is the Americans with Disabilities Act (ADA) of 1990?

This Act protects persons with disabilities from discrimination in the workplace.

What are executive orders?

Executive orders are defined as guidelines issued and amended unilaterally by the president.

What is the Executive Order 11246?

President Johnson issued the Executive Order. This order prohibits discrimination based on race, color, religion, gender and national origin.

What is the 11478 Executive Order?

President Nixon issued this order, which requires the federal government to base employment policies on merit and suitability, and specifies that race, color, gender, religion and national origin should not be considered.

What is the Equal Employment Opportunity Commission (EEOC)?

The EEOC is responsible for enforcing most EEO laws. The EEOC has three responsibilities:

1. Investigating and resolving complaints about discrimination

2. Collecting information

3. Drawing up guidelines

What do investigations and solutions of forces about discrimination look like?

The congress passed the law stating that an "illegal act" occurs when a discriminatory compensation decision is made, an employee is subjected to the decision whether an employee is affected by the application, including every time compensation is paid.

In what way do you collect information?

Every organization with more than hundred employees must complete a report indicating the number of women and minorities working in nine different job groups. The EEOC computer analyses these reports to identify patterns of discrimination.

How do you draw up guidelines?

The uniform guidelines on employee selection procedures provide guidance on how an organization should develop and manage selection systems in order not to violate Title VII.

What is the Office of Federal Contract Compliance Programs (OFCCP)?

The OFCCP is the agency responsible for enforcing the execution decisions that relate to companies doing business with the federal government.

These plans have 3 basic components. These components are:

1. Utilization analysis. This analysis compares the composition of the race, gender and ethics of the employer's personnel with those of the available labor supply.

2. Goals and timetables. The employer must develop specific goals and timetables for achieving balance in the workforce with respect to these characteristics.

3. Action steps. Employers with federal contracts should develop a list of steps for action that they will take to achieve their goals to reduce under-utilization.

What types of discrimination exists?

Legal scientists have identified three theories of discrimination. These three types are the following and will be explained in the next section:

1. Unequal treatment

2. Unequal impact

3. Reasonable accommodation

What is the definition of disparate treatment?

Disparate treatment exists when people in similar situations are treated differently and the different treatment is based on a person's race, skin color, religion, gender, national origin, age or disability status.

Bona fide occupational qualification (BFOQ) is a professional qualification based on gender, religion etc. which an employer claims which is a necessary qualification for the job. For example, if someone needs to be hired to hand out towels in a woman's changing room, being a woman is a BFOQ.

What is meant by disparate impact?

It occurs when a faculty-neutral employment practice disproportionately excludes a protected group from employment opportunities.

The fourth-fifths rule states that a test has unequal consequences if the recruitment percentages for the minority group are less than four-fifths (or 80%) of the recruitment percentages for the majority group.

The standard deviation rule uses actual probability distributions to determine the negative impact.

What are pattern and practice?

Example: why hire male employees and not female employees?

What is meant by reasonable accommodation?

Reasonable accommodation presents a relatively new theory of discrimination. Reasonable accommodation differs from these two theories in that reasonable accommodation imposes a special obligation on an employer to do something affirmative to accommodate someone's disability or religion instead of simply requiring an employer to refrain from any action.

What are current issues relating to diversity and equal employment opportunities?

What is the definition of sexual harassment?

Sexual harassment refers to undesirable sexual advances. It can take place in two basic ways. "Quid pro quo" harassment occurs when any benefit (or punishment) is made on the basis of the employee's submission (or non-submission) of sexual advances. Example: if a male manager tells a female secretary that if she has sex with him he is giving her promotion. A more subtle and possibly more pervasive form of sexual harassment is 'hostile work environment'. Example: naked pictures of an employee, using sexual words or using sexual jokes.

What is the meaning of employee safety?

The Occupational Safety and Health Act (OSHA) is the most comprehensive legislation on employee safety.

General duty clause is OSHA's most important provision that states that every employer has a general duty to provide every employee with a workplace without recognized hazards that cause or are likely to cause death or serious physical harm.

What is OSHA Inspection?

An OSHA inspection takes place at random times without an employer knowing. An OSHA inspection has four main components:

1. The compliance officer checks the employer's records of deaths, injuries and illness.

2. The officer is usually accompanied by a representative of the employer.

3. Employee interviewing is also done during the inspection.

4. The officer discusses the outcomes with the employee, and identifies observed violations.

Safety awareness programs go beyond compliance with OSHA and try to make symbolic and substantive changes to the emphasis the organization places on safety.

A safety awareness program has three primary components. These components are:

1. Identifying and communicating hazards

2. Strengthen safe working methods

3. Promoting security internationally

Job hazard analysis technique is a breakdown of each task into basic elements, each of which are assessed on the potential for damage or injury.

Technic of operations review (TOR) is an analysis method that helps managers determine which specific elements of a job have led to a past accident.

What is the analysis and design of work? - Chapter 4

What is the definition of workflow analysis and organizational structure?

A work-flow design is defined as the process of analyzing the tasks required for the production of a product or service prior to assigning the tasks to a particular job category or person.

An organization structure is defined as the relatively stable and formal network of vertical and horizontal interconnections between jobs that form the organization.

An 'output' is a product of a department or service. The work processes are the activities that members of a work unit undertake to produce a given output.

When producing a product, there can exist waste. When experts first visit a company, they look at different types of waste. Examples of these types of waste are the following:

• Movements that do not create value.

• The overload of specific people or machines.

• Inconsistent production that creates excessive inventory.

Lean production tries to leverage technology, along with a small number of flexible, well-trained and skilled employees to produce customized products at lower cost.

"Batch work methods" are large groups of low-skilled workers make long runs of identical mass products that are stored in inventory for later sale.

A company's inputs can be divided into three parts needed to perform the tasks.

1. Raw materials. Raw materials consist of the materials that are converted into the product of the business area.

2. Equipment. Equipment refers to the technology and machinery needed to convert the raw materials into the product produced.

3. Human skills. Human skills consists of the employees available to the company.

Two of the most critical dimensions of the organizational structure are the following:

• Centralization. Centralization refers to the extent to which the decision-making authority is at the top of the organizational chart, as opposed to its distribution over lower levels (in which case the authority is decentralized).

• Departmentalization. Departmentalization refers to the extent to which business areas are grouped on the basis of functional similarity or similarity in workflow.

Functional structure uses a functional department plan with relatively high levels of centralization. Functional structures are best suited in stable, predictable environments, where the demand for resources can be well anticipated and coordination requirements between jobs can be refined and standardized over consistent repetitions of activity.

Divisional structure combines a divisionalization scheme with relatively low levels of centralization. Units in these structures act almost as separate, self-sufficient, semi-autonomous organizations. Often divisional structures are more flexible and innovative. Divisional structures are best suited in unstable, unpredictable environments, where it is difficult to anticipate resource demand, and coordination requirements between jobs are not consistent over time.

Most organizations choose a mix between a functional structure and a divisional structure.

Job analysis refers to the process of getting detailed information about jobs.

Almost every human resource management program requires some form of information derived from job analysis. Examples are:

• Selection. The selection of staff means that the most qualified candidates for employment will be identified.

• Performance appraisal. Performance appraisal is about obtaining information about how well each employee is performing to reward those who are effective, improve the performance of those who are not effective, or give a written justification why the "poor performer" should be disciplined.

• Training and development. Training can be very useful in an organization for i.e. employees. Some training programs may be more comprehensive than others, but they all require that the trainer has identified the tasks being performed in the job to ensure that the training prepares individuals to effectively perform their work.

• Job appraisal

• Career planning. Career planning involves matching a person's skills and ambitions to opportunities that are or may become available in the organization.

• Job redesign. Job redesign is often used by firms if a firm would like to reorganize the job to make it more efficient and more effective. To reorganize a job, there must be detailed information about the existing job. Moreover, redesigning a task will in fact be similar to analyzing a job that does not yet exist.

• Personnel planning. Human resource planning can be used in for example personnel planning. Managers are able to analyze the needs of the employees of an organization in a dynamic environment. It is furthermore able to develop activities that enable a company to adapt to change.

Some other subjects are important to mention. Job evaluation is the process of the evaluation of a specific job. This evaluation involves assessing the relative dollar value of each task for the organization to set up internal reward structures.

Job analysis is important for the HR department. The analysis of a specific job is important for line managers as well since:

• Managers need detailed information about all jobs in their field of work to understand the work process.

• Managers need to understand the job requirements to make intelligent recruitment decisions.

• A manager is responsible for ensuring that each individual performs properly.

• It is also the manager's responsibility to ensure that the work is done safely, knowing where potential hazards can manifest themselves and creating a climate in which people feel free to interrupt the production process when dangerous conditions exist.

There exists two types of information which are most useful in performing a job analysis:

1. Job description. Job description is defined as a list of tasks, duties and responsibilities that a function entails (TDRs). TDRs are observable actions.

2. Job specification. Job specification is a list of knowledge, skills and other characteristics that a person must have in order to perform the task. KSAOs are characteristics of people who are not directly perceptible: they are only perceptible when individuals carry out the TDRs of the work.

Position Analysis Questionnaire (PAQ) is a standardized questionnaire questionnaire with 194 items. These items represent work behavior, working conditions and task characteristics that can be generalized in a wide range of tasks. These 194 items are divided into six sections. These sections are:

1. Information input. How and where does an employee get information to perform his or her work properly?

2. Mental processes. The reasoning, decision making, planning and information processing activities involved in the execution of the task.

3. Work output. These are the physical activities, tools and devices used by the employee to perform the task.

4. Relationship with other persons. The relationship with other people needed to perform the task.

5. Work content. This is the physical and social context in which the work is performed.

6. Other characteristics. These other characteristics include the activities, conditions and characteristics other than described above that are relevant to the work to be done.

The analyst then assesses the item on six scales: degree of use, amount of time, importance of the work, possibility of occurrence, applicability and special code.

This technique provides information about the work performed in a format that allows comparisons to be made between different tasks, regardless of whether these tasks are similar or unequal.

The Dictionary of Occupational Titles (DOT) was created in the 1930s and served as a tool to help the new public employment system link the demand for skills and the supply of skills in the US workforce. Although this system has served the country well for over 60 years, it became clear to U.S. Department of Labor officials that jobs in the new economy were so qualitatively different from jobs in the old economy that the DOT no longer served it. For all these reasons, the Department of Labour left the DOT in 1998 and developed a completely new system for classifying jobs called the Vocational Information Network, or O*NET. Rather than relying on fixed job titles and limited job descriptions, O*NET uses a common language that is generalised in different jobs to describe the opportunities, work styles, work activities and work context required for different professions that are more broadly defined.

What is the definition of job design?

Job design is defined as the process of defining how work will be performed and what tasks are required for a particular task.

Job redesign is defined as changing the tasks or the way work is performed in an existing task.

There are different forms of job design:

• Mechanistic approach. The focus of the mechanistic approach is to identify the simplest way to structure work that maximizes efficiency.

• Motivating approach. This approach focuses on the job characteristics that affect psychological meaning and motivation potential, and considers attitudinal variables as the main outcomes of job design. According to the Job Characteristics Model, a job can be described in five characteristics. These characteristics are:

  • Skill variety

  • Task identity

  • Autonomy

  • Feedback

  • Task significance.

• Biological approach. The biological approach of work design comes primarily from the sciences of biomechanics, occupational physiology and occupational medicine and is commonly referred to as ergonomics. Ergonomics is concerned with investigating the interface between individual physiological characteristics and the physical working environment. The aim of this approach is to minimize the physical load of the worker by structuring the physical working environment around the functioning of the human body.

• Perceptual motor approach. This approach focuses on human mental abilities and limitations. There are also standardized frameworks for assessing the nature of teams. The three most critical dimensions needed to describe teams include skills differentiation, distinctiveness, temporal stability (the extent to which team members are expected to work together for a long time).

How do staff planning and recruitment work? - Chapter 5

Human resource planning consists of: prediction, goal setting and strategic planning, program implementation and evaluation.

What is the definition of forecasting?

In personnel forecasting, the HR manager tries to identify the supply of and demand for different types of personnel. The primary goal is to predict areas within the organization where future shortages or surpluses on the labor market will occur. Forecasts can be made by using statistical methods (recording historical trends) and judgmental methods.

In what way will the demand for labor be determined?

If the "job categories" or skills have been identified, the planner should search for information that helps to predict when more or fewer people are needed with these skills or in this job category in the future.

A leading indicator is an objective measure that accurately predicts future labor demand.

In what way will the supply for labor be determined?

A detailed analysis of how many people are currently in different job categories within the company is required to determine the internal labor supply. This analysis is then adjusted to take into account changes in the near future caused by retirements, promotions, transfers, voluntary turnover and terminations. Transitional matrices show the proportion of employees in different job categories at different times.

In what way can a labor surplus or labor shortage be determined?

An organization can anticipate when there is a work surplus and when there is a shortage. When this is determined, the organization can determine what they are going to do about these potential problems.

What is the meaning of goal setting and strategic planning?

The purpose of setting specific quantitative goals is to draw attention to the problem and provide a measure for determining the relative success of all programs aimed at solving a pending labor shortage or surplus.

There are a few examples for reducing a surplus:

• Contraction

• Wage reduction

• Transfers

• Division of labor

• Early retirement

There are a few examples to avoid labor shortages:

• Overtime

• Temporary workers

• Retraining

• Turnover reductions

• Technological innovation

What is the definition of downsizing?

Downsizing is defined as the planned elimination of large numbers of employees who are designed to improve the effectiveness of the organization. According to prior research, there are three reasons why organizations choose to downsize. These three reasons are the following:

1. Many companies are looking for a way to reduce costs. Since labor costs are a large part of the total costs of a firm, reducing these labor costs is a quick way to reduce the total costs.

2. The introduction of new technologies (such as robots) results in the fact that less staff members are needed.

3. Many companies changed locations where they did business due to several economic reasons.

There seem to be a number of reasons why most downsizing efforts do not meet expectations for improving business performance. Some of these reasons are:

• While initial cost savings are a short-term plus, the long-term effects of mismanaged effort reduction can be negative.

• Many downsizing campaigns release people who appear to be irreplaceable.

• Why downsizing efforts often fail is that the employees who survive the purges often become narrow-minded, self-centered and risk averse.

The key to successful downsizing is to avoid undeniable overall reductions and instead make surgical strategic savings that not only reduce costs, but also improve the company's competitive position.

What are early retirement and staff buyout programmes and why do they exist?

More and more employees continue to work longer after the age of 55. There are many reasons why employees continue to work after they reached this age. Some reasons for this are:

• The improved health of older people in general, combined with the reduced physical work in many jobs, has made working longer a viable option.

• This option is attractive to many workers because they fear that social security will be cut back and many people have poor employer-sponsored pensions that may not be able to cover their expenses.

• age discrimination legislation and the prohibition of mandatory retirement age categories has limited the possibility for organizations to deal unilaterally with aging staff.

• Many employers are increasingly concerned about the loss of the wealth of experience that older workers bring to their companies.

Working longer after this age can however also create problems. Two examples of these problems are:

1. Older workers sometimes cost more than younger workers since these older people have higher seniority, there might be higher medical costs and higher pension contributions.

2. Older workers tend to occupy the best paid jobs which might sometimes result in not hiring young workers or these older workers might block the progress of young workers.

In what way is it possible to employ temporary workers?

Over the last years, many companies are hiring temporary workers more and more. Managers choose to hire temporary workers since they like to keep flexibility and be able to change quickly when customer demand changes into products and service.

Besides flexibility, hiring temporary employees offer a number of other advantages:

• The use of temporary employees in the company results in less administrative tasks and financial burdens associated with being the record holder.

• Small businesses that cannot afford their own testing programs often get employees who have been tested by a temporary employment agency.

• Many employment agencies train workers before they are sent to employers which results in lower training costs and transition for both the temporary worker and the company will be easier.

• Because the temporary worker has little experience in the host company, the person brings an objective perspective on the problems and procedures of the organization that are sometimes valuable.

There might also be a disadvantage. A disadvantage can be that temporary employees are less loyal to a company relating to employees who work for a specific company for a longer period.

What are the definitions of outsourcing, offshoring and immigration?

Outsourcing is a logical choice when a company simply does not have certain expertise and is not willing to invest time and effort in its development. Outsourcing means that services are accomplished by a third party.

Offshoring is a special case of outsourcing where the jobs that move leave one country and go to another.

The USA implemented a new law to attract educated immigrants to the USA. These immigrants can be educated in the area of mathematics, science, engineering and technology. There exists now a 'green card'. This green card means that non Americans can live and work in America on a permanent basis.

How is it possible to change wages and hours?

There exists a furlough. A furlough is a retrenchment in hours is aimed at salaried employees rather than of hourly employees.

What does program implementation and evaluation look like?

A critical aspect is that you need to be sure that someone is responsible for achieving the goal and they have the necessary authority and means to achieve it.

What is the meaning of planning positive action?

Workforce Utilization Review is a comparison of the proportion of employees in protected subgroups with the proportion that each subgroup represents in the relevant labor market.

Organizations should realize that positive action plans need to be complemented by communication programs that clearly indicate the needs and benefits these programs bring to the organization and society.

How does the recruitment process of staff look like?

Human Resource Recruitment is defined as any practice or activity carried out by the organization with the main objective of identifying and attracting potential employees. In this way, it creates a buffer between planning and actual selection of new employees.

All companies must make decisions in three areas of recruitment:

1. Personnel policy. These policies affect the type of jobs the company has to offer.

2. Recruitment sources. These sources are used to recruit applicants that affect the types of people applying.

3. The characteristics and behavior of the recruiter.

What is the definition of a human resources policy?

Personnel policy is a generic term that is used to refer to organizational decisions that affect the nature of the vacancies for which people are recruited.

What is meaning of internal versus external recruitment: job security?

Promoting the policy from within the company makes it clear to applicants that there are opportunities for progress within the company. This means internal recruitment. These opportunities arise not only from the first vacancy, but also from the vacancy that arises when a person in the company fills the vacancy. Employment-at-will policies state that either party in the employment relationship can terminate this relationship at any time, regardless of the cause. Due process policies formally formulates the steps an employee can take to appeal against a termination decision.

What is meant by extrinsic and intrinsic rewards?

Companies can adopt a "lead-the-market" approach to pay staff. They can use this approach since paying is an important task characteristic for virtually all applicants. This lead the market approach is a policy of paying wages that are higher than the current market. If companies adopt this approach, they might have a clear advantage in recruiting staff. A higher salary can also compensate for the less desirable functions of a job. An example is that a firm might pay a higher wage for people who work during the night or during the weekend.

What is meant by image ads?

Sometimes organizations only advertise to promote that they are a good organization to work for. Image ads are especially important for companies in highly competitive labor markets that think they have a bad image.

What are recruitment sources?

Recruitment sources are defined as the sources from which a company recruits potential employees and are a crucial aspect of its overall recruitment strategy.

How do internal versus external sources compare?

Trust in internal sources offers a company several advantages. Some examples of these advantages are the following:

1. It generates a sample of applicants who are well known to the company.

2. These applicants are relatively well informed about the company's vacancies which minimizes the possibility of inflated job expectations.

3. It is generally cheaper and faster to fill vacancies internally.

4. Within a company, outsiders are often outperformed, especially when it comes to filling jobs at the top of the hierarchy.

However, there are also several reasons why organizations may decide to recruit externally. Some examples are:

1. For entry-level positions and perhaps even for some specialized positions at the higher level, there should be no internal recruits from which to draw.

2. Attracting outsiders can expose the organization to new ideas or new ways of doing business.

3. Recruiting from external sources is a good way to strengthen your own business while weakening your competitors.

What is the definition of direct applicants and referrals?

Direct applicants are people who apply for a vacancy without a request from the organization. Referrals are people who are asked to apply by someone within the organization. These two sources of recruits share a number of characteristics making them excellent sources to exhaust: many direct applicants are to some extent already "sold" to the organization. This is also called self-selection. Liftout is used when it is not about a single person, but about an entire team.

How can firms use advertisements in newspapers and magazines?

Advertisements to recruit staff are ubiquitous. Although they usually generate less desirable recruits than direct applications or referrals. These advertisements in newspapers and magazines are expensive. Some form of advertising is however needed. People who read an advertisement need enough information to know what the job is all about to be able to properly assess whether they meet the requirements.

What is the meaning of electronic recruitment?

There are many ways to use the internet and many organizations use this medium. One of the easiest ways to learn more about e-cruiting is to simply use the organization's own web page to recruit applications. For example, a company can put surveys online in which people can see how well they match an organization.

What are public and private employment agencies?

The Social Security Act (1935) requires anyone receiving unemployment benefits to be registered with a local state employment office. Employers can register their vacancy at their local state office, and the office will try to find someone suitable using its automated inventory of local unemployed people. A special type of temporary employment agency is the so-called executive search firm (ESF). These are often called headhunters because, unlike the other sources we have investigated, they work almost exclusively with people currently employed.

How can firms recruit people from colleges and universities?

Most colleges and universities offer services to find a job after graduation. Interviews on campus is the most important source of recruits for beginning professional and management vacancies. The best way for companies to get the best students is through internship programs. This way, the company quickly gains insight into the students and the student gets to know the company.

How are recruiters able to evaluate the quality of a resource?

Yield ratios can be used to evaluate the quality of a resource. Yield ratios express the percentage of applicants who successfully move from one stage of the recruitment and selection process to the next.

What is the definition of a recruiter?

Recruiters' characteristics and behaviors have less influence on applicants' work choices than we would expect.

A recruiter has a functional area. Most organizations should choose whether their recruiters are specialists in human resources or experts in specific jobs.

There are two recruiter characteristics that stand out when the responses of applicants to recruiters are examined.

1. Warmth. This characteristic reflects the extent to which the recruiter seems to care about the applicant and is enthusiastic about its potential to contribute to the company.

2. Informativeness. In most times, people react more positively to recruiters who are warm and informative.

Recruiters realism. This is perhaps the most well researched aspect of recruiting deals with the level of realism that the recruiter includes in his message. An organization's decisions on human resources policies that directly affect the characteristics of a job are probably more important than the recruiter's characteristics and behavior when influencing the job choice.

Organizations can take steps to increase the impact of recruiters on recruitment. Recruiters can provide timely feedback. Recruitment can be done in teams rather than alone.

What is meant by selection and placement? - Chapter 6

What are selection method standards?

Personal selection determines who should not work or should work in an organization. Different generic standards must be met in each selection process. The focus is on five terms:

1. Reliability

2. Validity

3. Generalizability

4. Usability

5. Legality

What is the definition of reliability?

Reliability can be defined as the degree to which a unit of measurement is free of random errors.

In what way can reliability and measurements be estimated?

Most measurements in personnel selection are about complex characteristics such as intelligence, integrity and leadership qualities.

The correlation coefficient is a measure of the extent to which two sets of numbers are related. The correlation coefficient expresses the strength of the relationship in numerical form. A positive relationship equals +1.0 and a negative relationship equals -1.0. If there is no relation then it is 0.0. When assessing the reliability of a measure, we may be interested in knowing how the scores on the measure at one time at another moment relate to scores on the same measure for example. If the characteristics measured (such as intelligence) are probably stable and the time course is short, it should be relatively strong. If the characteristics measured are weak, the measure would be inconsistent and therefore unreliable. This is called test-retest reliability.

What is the definition of validity?

Validity can be defined as the extent to which the performance of the measure is related to performance at work. A measurement must be reliable to obtain validity.

What is criterion related validation?

One way to determine the validity of a selection method is to show that there is an empirical relationship between scores on the selection measure and scores for job performance. If there is a substantial correlation between test scores and scores for work performance, criterion related validity would have been established. Predictive validation tries to establish an empirical relationship between test scores before being hired and the final execution of the task. Competitive validation assesses the validity of a test by administering it to people who are already at work and then correlating test scores with existing measurements of each person's performance.

Despite the extra effort and time required for predictive validation, it is superior to competitive validation for several reasons.

1. Applicants are (because they are looking for work) usually more motivated to perform well in the tests than current employees (who already have a job).

2. Current employees have learned many things that job seekers have not yet learned.

3. Current workers tend to be homogeneous that is, similar to each other on many characteristics.

What does the content of validation look like?

If the sample size is small, an alternative test validation strategy such as content validation can be used. Content validation is performed by demonstrating that the questions or problems raised by the test are a representative example of the types of situations or problems that occur at work. A test with valid content exposes the applicant to situations likely to occur during work, and then tests whether the applicant has sufficient knowledge, skills or the ability to cope with such situations. The ability to use content validation in small example settings generally makes it more applicable than criterion related validation:

1. An assumption behind content validation that the person to be hired must have the knowledge, skills or abilities at the time it is hired.

2. It is crucial to minimize the number of conclusions drawn by judges because subjective judgment plays such an important role in the validation of content.

What is the definition of generalizability?

Generalizability is defined as the extent to which the validity of a selection method established in one context extends to another context. There are two primary 'contexts' about which we may like to generalize: different situations and different examples of people. Just as reliability is necessary but not sufficient for validity, validity is necessary, but not sufficient for generalizability.

Validity generalization is an alternative to validate selection methods for companies that cannot use criterion-related or content validation. Validation generalization is a three step process:

1. The company provides evidence of earlier criterion related validity studies conducted in other situations that show that a specific test (such as an emotional stability test) is a valid predictor for a specific task (such as a nurse in a large hospital).

2. The company provides evidence from a function analysis to document that the function it is trying to perform (nurse in a small hospital) is comparable in all important investigations into the job performed elsewhere (nurse in a large hospital).

3. If the company can demonstrate that it uses a test that is equal to or comparable to that in the validated institution, then one can "generalize" the validity of the first context (large hospital) to the new context (small hospital).

What is meant by usability?

Utility is the extent to which the information provided by selection methods improves the bottom-line effectiveness of the organization.

What is meant by legality?

All selection methods must comply with existing laws and existing legal precedents. An example is the company Abercrombie that discriminates on the basis of race.

What is a federal law?

Three primary federal laws form the basis for the majority of cases submitted by applicants. These are:

1. Civil Right Act 1991.

2. Age Discrimination in the Employment Act 1967.

3. American with Disabilities Act 1991.

The Civil Right Act 1991 differs from the 1964 law in three important areas.

1. It defines the explicit obligation of employers to determine the business necessity of any neutral appearing selection method that has a negative impact on the group, as specified by the law.

2. The 1991 act allows the complainant to have a jury decide whether he or she can recover punitive damages for emotional harm caused by discrimination.

3. The 1991 law explicitly prohibits the granting of preferential treatment to minority groups.

Instead of applying race standards, employers can partially achieve both goals to maximize predicted future performance and diversity in different ways. These ways are:

1. Aggressive recruitment of members of protected groups allows an employer to generate a larger pool of protected group members, and by being very selective within this larger group, the scores of admitted applicants will better match those of all other groups.

2. Different selection methods have different levels of adverse effects and multistage selection batteries using different methods at different stages may also help.

3. A common approach that does not seem to work is to abandon the types of conformity-driven, evidence-based assessments of staff use, in favour of softer, 'illusion' initiatives that express the generic value of diversity but do not document goals.

The Age Discrimination in the Employment Act 1967 does not protect younger employees and, like the latest civil rights law, allows for jury characteristics and punitive damages. This act bans almost all "mandatory retirement" programs.

American with Disabilities Act 1991 protects individuals with physical and mental disabilities and requires employers to make "reasonable accommodations" to disabled individuals whose disabilities prevent them from performing essential functions as currently designed.

What is an executive order?

Executive Order 11246 runs parallel to the protection provided by the Civil Right Act of 1964, but goes beyond the 1964 act in two important ways.

1. Not only do the implementing decrees prohibit discrimination, they also oblige employers to take positive action to hire qualified minority applicants.

2. Execution orders also allow the government to suspend all business with a contractor while an investigation is being conducted, putting great pressure on employers to comply with these orders.

What types of selection methods exists?

What is the definition of an interview?

A selection interview is defined as "a dialogue initiated by one or more persons to gather information and evaluate an applicant's qualifications". It is an expensive way since one person has to interview another, and they have to be taken to the same location. Recent research has pointed out a number of concrete steps that can be used to increase the usefulness of the staff selection interview:

1. HR staff should keep the interview structured, standardized and focused on achieving a small number of goals.

2. Interviewers should ask questions about specific situations that are likely to occur during work and use them to determine what the person is likely to do in those situations. Such situations with situational interviews have been shown to have a relatively high predictive value.

Situational assessment items come in two types.

• Some items are "experience-based" and require the applicant to reveal an actual experience he or she had in the past when facing the situation.

• Other items are "forward-looking" and ask what the person is likely to do when facing a particular hypothetical situation in the future. Experience items often perform better than forward-looking items.

What are references, application blanks and background checks?

Almost all employers also use a method to get background information about applicants for an interview. This information can be obtained from the people who know the candidate through reference checks. The evidence on the reliability and validity of reference checks suggests that these are at best weak predictors of future success at work.

The main reason for this low validity is that the evaluations given in most reference letters are so positive that it is difficult to distinguish applicants. This has two reasons:

1. The applicant can usually choose who writes the letter and can therefore only choose the writers who think best about her.

2. Because letter writers can never be sure who will read the letters, they can rightly fear that providing harmful information about someone may haunt them.

Another problem is that applicants do not always tell the truth when it comes to mentioning their references.

Although the use of background checks is becoming more common in the United States, they are rarely used in Europe. There are several reasons for this differences between the United States and Europe. These reasons are:

1. In terms of values and culture, the applicant's right to privacy exceeds the organization's right to know in Europe.

2. Compared to the United States, in Europe there are far fewer cases of violence at work and the rates of theft and fraud are also much lower.

3. Although greater respect for individual privacy seems to put the employer at a disadvantage, on the other hand, the legal concept of negligent adoption in Europe is also largely unheard of.

What is meant by a physical skill test?

Physical skills testing can be relevant not only for predicting performance, but also for predicting occupational injuries and disabilities. There are seven types of tests in this area:

1. Muscle tension

2. Muscle strength

3. Muscle endurance

4. Cardiovascular endurance

5. Flexibility

6. Balance

7. Coordination evaluations

What is meant by a cognitive ability?

Cognitive skill test distinguishes individuals based on their mental rather than physical abilities. Cognitive proficiency has many different facets, although we will only focus on three dominant ones:

1. Verbal understanding refers to a person's ability to understand and use written and spoken language.

2. Quantitative ability refers to the speed and accuracy with which one can solve all kinds of arithmetical problems.

3. Reasoning refers to a person's ability to find solutions to a wide variety of problems. This is a broader concept.

What are personality inventories?

While skill tests try to categorize individuals in relation to what they can do, personality measures tend to categorize individuals according to how they are. Research suggests that there are five main dimensions of personality, known as "the big five":

1. Extraversion. Examples are social and cosy.

2. Assertive. Examples are emotionally stable, unconverted and safe.

3. Acceptance. Examples are courteous, trusting, good-natured, tolerant and expressive.

4. Conscientiousness. Examples are reliable, organized and persistent.

5. Openness to experience. Examples are curious and imaginative.

Emotional intelligence has traditionally been understood as having five aspects:

1. Self-awareness. This is knowledge of one's strengths and weaknesses.

2. Self-regulation. This is the ability to control disturbing emotions.

3. Self-motivation. This is how to motivate oneself and persevere in the fact of obstacles.

4. Empathy. This is the ability to perceive and read emotions in others.

5. Social skills. This is the ability to control the emotions of other people.

The lower validity in connection with self-reporting of personality can be traced back to three factors.

1. People sometimes have no insight into how their own personalities are, so their scores are inaccurate or unreliable.

2. People's personalities sometimes differ in different contexts.

3. With some characteristics such as competence, the validity coefficients are higher when using a curvilinear prediction rather than just a straight linear prediction.

What are work examples?

Work-samples try to stimulate the orbit in a prehistoric context to observe how the applicant performs in the stimulated orbit. There are 3 disadvantages to work-samples:

1. Because of their nature, the tests are function-specific. This means that the generalizability is low.

2. These tests are relatively expense to development. This is partly because a new test must be developed for each task because of their non-standard formats.

3. In any case, with regard to work test stitch tests developed as competitions, these events tend to attract more male applicants than female applicants.

The term assessment center is used to describe a wide range of specific selection programs that use multiple selection methods to assess candidates for jobs on their management potential.

What is an honesty test and drug test?

Many companies used to use polygraph tests or lie detectors to evaluate applicants, but this changed with the Polygraph Act in 1988. As a result, the paper and pencil fairness testing industry was born.

How does staff training work? - Chapter 7

What is training?

Training can have the following effects:

• It might increase employee knowledge of foreign competitors and cultures which is crucial for success in foreign markets.

• Training ensures that employees have the basic skills with new technology, such as robots.

• It helps employees to understand how to work effectively in teams to make a good contribution to increase a product or service quality.

• It ensures that the company values innovation, creativity and learning

• It ensuring job security by offering workers new ways to contribute to the company when their jobs change, their interests change or their skills become outdated.

• It prepares workers to work more effectively with each other especially with minorities and women.

What is the role of training in continuous learning and competitive advantage?

Formal training and development, informal training and knowledge management are the key features of a continuous learning philosophy that focuses on performance and supports the business strategy.

Continuous learning refers to a learning system that requires employees to understand the entire work system and is expected to acquire new skills, apply them to the job and share what they have learned with other employees.

Training refers to a company's planned effort to facilitate employees' learning of work-related competencies, knowledge, skills and behavior.

Formal training refers to training and development programs, courses and events developed and organized by the company.

Informal learning refers to learning initiated by the learner, which means action and action, is motivated by an intention to develop and does not occur in a formal learning environment.

Both formal training and informal learning contribute to the development of intangible assets, but especially to human capital. Human capital consists of knowledge, advanced skills, understanding the system and creativity as well as the motivation to deliver high quality products and services.

Explicit knowledge refers to knowledge that is well documented, can easily be articulated and can easily be transferred from person to person. Examples are a checklist, formulas, definitions, processes.

Tacit knowledge refers to personal knowledge based on individual experiences that make it difficult to codify.

Knowledge management refers to the process of improving business performance by designing and implementing tools, processes, system structures and cultures to improve the creation, sharing and use of knowledge.

What is meant by designing effective formal training activities?

The training design process refers to a systematic approach to developing training programs. We mention two examples of a training design process:

1. The Instructional System Design (ISD)

2. The ADDIE model (analysis, design, development, implementation and evaluation)

This training process consists of six steps. These steps are the following:

1. Need assessment. This is used to determine whether a training is necessary or not.

2. Ensuring employees readiness for training. This ensures that employees are ready for training and that they have the motivation and basic skills.

3. Creating a learning environment. This indicates whether the training session has the factors necessary to learn to act or not.

4. Ensuring transfer or training. This ensures that employees apply the content of the training to their work.

5. Selecting training methods. This includes choosing a training method.

6. Evaluating training programs. This evaluates the training if the desired learning outcomes are accomplished.

What is meant by need assessment?

Need assessment usually includes organizational analysis, personal analysis and task analysis.

• Organizational analysis involves determining the business suitability of training, given the company's business strategy, the resources available for training and support by managers and colleagues for training activities.

• Person analysis includes determining whether performance shortages are due to a lack of knowledge, skills or competence of a motivational or work design problem, identifying who needs training and determining the willingness of employees to train.

• Task analysis involves identifying the important tasks and knowledge, skills and behaviors that should be emphasized in the training for employees to perform their tasks.

What is meant by an organizational analysis?

There are three factors to consider before training is chosen as the solution for each pressure point: the business strategy and the available training resources.

• The support of managers and colleagues for training activities. The key factors for success are:

  • a positive attitude of managers towards participation in training activities;

  • the willingness of managers and colleagues to tell employees how they can more effectively use the knowledge, skills or behaviours they have acquired during on-the-job training;

  • and the availability of opportunities for workers to use training content in their work.

• Business strategy. Training helps companies to achieve a business strategy.

• Training sources. It is necessary to determine whether the company has the budget, time and expertise for training.

What is meant by a personal analysis?

A personal analysis helps a manager to understand when a training is appropriate and which employees need training.

There are a number of questions you should ask to determine whether a training is a good solution to a performance problem. It is important to assess if:

• The performance problem is important and has the potential to cost the company a significant amount of money from lost productivity or customers.

• Employees do not know how to perform effectively. Maybe they have received little or no previous training or the training was not effective.

• Employees cannot demonstrate the right knowledge or behavior.

• Performance expectations are clear and there are no obstacles to performance, such as defective tools or equipment.

• There are positive consequences for good performance, while poor performance is not rewarded.

• Employees receive timely, relevant, accurate, constructive and specific feedback on their performance.

• Other solutions, such as redesigning a job or transferring employees to other jobs, are too expensive or unrealistic.

What is meant by a task analysis?

A task analysis identifies the circumstances in which tasks are performed. Some conditions include:

• identification of equipment and the environment in which the employee works

• time constraints (deadlines)

• safety considerations

• performance standards.

A job is defined as a specific job for which specific tasks must be completed. A task is defined as a statement of the work of an employee in a specific task.

There are four steps in a task analysis:

1. Identifying the task to be analysed

2. Drawing up a list of tasks carried out at work

3. Validating or confirming the tasks

4. Identifying the knowledge, skills, capabilities and other factors needed to successfully perform each task.

What is meant by readiness for training?

Readiness for training refers to characteristics of employees who provide employees with the desire, energy and focus needed to learn from training. The desire, energy and focus is called motivation to learn.

How do you create a learning environment?

There exists some factors that influence the motivation to learn. Examples of these factors are:

• Self- effectiveness

• Benefits of consequences of training

• Awareness of training needs

• Work environment

• Basic skills and purposefulness.

What is meant by care for transfer of training?

Transfer of training refers to on-the-job use of knowledge, skills and behaviors learned during training.

What is the definition of manager support?

Manager support refers to the extent to which trainees managers emphasize the importance of attending training programs and emphasize the application of training content to work. Managers can also facilitate transfer by using action plans. An action plan is a written document that outlines the steps employees and the manager should take to ensure that the training is transferred to the job. The action plan includes a goal to determine what training content will be used and how it will be used, strategies to achieve the goal, including necessary resources, strategies to get feedback and expected results.

What is the definition of group or teambuilding?

Group or team building methods are used to improve the effectiveness of the group or team. During these methods, trainees share ideas and experiences with each other, build a group identity, learn about the dynamics of contact with each other and learn to deal with each other's strengths and weaknesses. This technique improves the skills for effective teamwork. Experiential learning is often part of team building methods, where conceptual knowledge and theory is acquired. One participates in behavioral simulation, analyses the activity and links theory and activity to real-life work situations.

In adventure learning, learning is focused on developing teamwork and leadership skills. This is done by using structured activities that take place outside of work and can be very physical, but not necessarily. The activity must be linked to skills that the employees should develop and it is necessary after the activity to have a discussion about how it went and how this can be translated to the workplace. Participants often say that the training gives them a better idea of themselves and how they interact with others.

Cross-training and coordination training are team training, coordinating the input of individuals working towards a common goal. Cross-training ensures that team members understand each other's skills and that they start practicing each other's skills, so that they can possibly take over tasks from each other. In coordination training, the team is trained in sharing information and making decisions together. In team leader training, the team manager is trained to lead the team.

Action learning gives teams a real business problem. Together they have to solve this problem, commit to an action plan and are responsible for the implementation of the action plan.

Six Sigma training is defined as an action training program that provides employees with measuring and statistical tools that can reduce errors and costs. The employees can be certified as green belts, champions, black belts and eventually master black belts. Six sigma is a quality standard that aims for 3.4 errors per one million processes.

How can you choose a training method?

When choosing a training method, it must first be determined which outcome must be achieved through the training. If you look for a suitable method here, you should pay attention to how it facilitates learning and using the training content, which costs are related to the development and use of the method and how effective it is.

How do you evaluate a training program?

Training programs should be evaluated to determine their effectiveness. This can be done by looking at the training outcomes. These results can be categorized as follows:

• Cognitive

• Based on skills

• Effective

• Results

• Return On Investments (ROI)

To see which measurement is best used, we need to look at the purpose of the training. There are various reasons to evaluate training programs. Examples of these reasons are:

• Identify the strengths and weaknesses of training

• Determining whether the content, organization and administration of the training contributes to learning and using the content of the training in the job.

• See which employees benefit most from the training

• Compare the costs and benefits of the training investment with the situation where no investment in training is made.

• Determine the benefits and costs of the program

• Collecting data by asking participants if they were satisfied with the program and why they actually participated.

• Compare the costs and benefits of different training programs so that the best training program can be chosen.

Evaluation design differs based on:

• who is involved (only trainees or also a control group that does not receive training)

• when are outcomes measured (after the training, or also before)

• the costs

• the time needed to do the evaluation and the strength of the design in excluding alternative explanations for the results.

There are several factors to take into account when choosing an evaluation design:

• The size of the training program

• The purpose of the training

• The implications acting if a program does not work

• The standards of the company concerns the evaluation

• The costs of designing and applying the evaluation

• The speed with which one wants to receive results about the effectiveness of the program

A cost-benefit analysis (ROI) is the process of determining the economic benefits of a training program. One should perform such an analysis for a number of reasons:

• To get an overview of the total expenses for the training, including the direct and indirect costs

• To compare the costs of different programs

• To evaluate the proportion of money spent on training development, administration and evaluation.

• To assess the proportion of costs spent on development, administration and evaluation and to make comparisons between the money made available for training of one group and another.

• In order to keep costs under control

The first step in the analysis is to determine the costs. A method to compare the costs of different training programs is the resource requirements model. This model compares the equipment, facilities, personnel and material costs through the different stages of the training. To then determine the benefits, the original reasons for introducing training should be considered.

Finally, the next steps should be taken to calculate the return on investment analysis:

• Identify the results

• Give these results a value

• Determine the changes in performance after the training and look at any other influences.

• Determine the annual yield that is only affected by the training. You do this by comparing the yield before the training with that after the training.

• Determine the costs of the training (direct, indirect, development, overhead, reward trainees)

• Calculate the total savings by deducting the training costs from the annual revenues.

• Calculate ROI by dividing revenues by costs. The ROI gives an estimate of each dollar (or euro) earned by each dollar (euro) invested in training.

What are special training issues?

What is cross-cultural preparation?

As companies increasingly operate outside their own country, many employees also work outside their own country. An expatriate is an employee who has been sent abroad by his company to work there. There is also an increasing use of host-country nationals, talented employees from the country of origin, who understand cultural values and customs better than an expatriate.

Cross-cultural preparation is the process of training employees (and their families) who have been commissioned abroad. To be successful abroad, expatriates need to:

• Being competent in their areas of expertise

• Being able to express oneself in the other country

• Flexible, tolerant and sensitive to cultural differences are

• Be motivated to succeed in their assignment, find a challenge to work in another country and like to get to know new cultures.

• Be supported by their family

Foreign assignments consist of three phases:

1. The pre-departure phase. Before employees and their families leave abroad, they need language training and a good orientation on the culture of the new country. The novelty of the culture, the degree of interaction with residents of the new country and the novelty of the job that is accepted play a role in determining which method should be used for cross-cultural training.

2. The on-site phase. In the on-site phase, the expatriate and his family are often linked to a local employee, who helps them understand the new work environment and society.

3. The repatriation phase. Repatriation is preparing the expatriates for their return to their home country. This is important because the chance of a reentry shock is high. Expatriates often decide to leave the company they work for when they return, because the assignments they get have less responsibility, challenge and status than those abroad.

Virtual expatriates also have the assignment to manage an operation abroad, only they remain living in the home country. They travel a lot and use multimedia techniques, such as videoconferencing, to maintain contact. This way is cheaper, but can take more time to set up projects, employees are often seen as outsiders and being away from home can cause difficulties in the work-life balance.

How does managing diversity work?

Managing diversity means creating an environment in which all employees can contribute to the goals of the organization and in which they can also grow personally. This means that everyone has equal access to a job and is treated fairly. Learning employees to work with colleagues from different backgrounds may require a culture change.

The following characteristics are associated with the long term success of diversity programs:

• The top management publicly supports diversity, provides the program with resources and intervenes personally.

• The program is structured

• Capitalizing on a diverse workforce is a company goal

• Capitalizing on a diverse workforce is seen as a prerequisite for profit.

• The program is evaluated through the use of metrics such as sales, staff retention and promotion.

• The manager is fully involved

• The program is seen as a change of culture and not as a one-off project.

• Managers and demographic groups are not blamed for problems

• The skills and behavior needed to work well together are taught.

• Managers are rewarded for progress towards diversity goals

• Managers gather feedback from employees and respond to it.

• There is an open and safe culture to which all employees want to belong.

Diversity training ensures that employees change their attitude towards diversity and/or acquire the skills needed to work in a diverse work environment. The key components of effectively managing diversity programs are as follows:

• Support from top management

• Use diversity in recruiting and selecting new employees

• Discover and develop talent

• Support of employees

• Ensure fair, equal treatment

• Keep managers accountable

• Improve relationships with external stakeholders

What is the definition of socialization?

Organizational socialization is the process of transforming new employees into effective members of the company. Employees have to learn different things:

• History: the new employees need to know everything about the traditions, myths, habits and background of the members.

• Goals: the new employees must know the rules, values and principles that guide the organization.

• Language: they need to know the specific jargon of the organization.

• Political: they need to know how to get information according to the formal and the informal path. They need to be well informed about the relationships in the organization and the power structures in the company.

• People: they must develop successful and satisfying working relationships with other employees.

• Performance: new employees need to know what they still need to learn.

Socialization takes place in three phases, which all have to go through in order to function well within a company:

1. Anticipatory socialization: the process that helps people to develop expectations about the company, the job, the working conditions and the relationships between people.

2. Encounter: this phase starts when the employee starts his job. However realistic the picture gained during the previous phase may be, there will be shock and surprise.

3. Settling in: at this stage, employees begin to feel comfortable in their jobs and social relationships. They begin to solve problems regarding their work and regarding work-life balance and become interested in assessing their work and career opportunities within the company.

Characteristics of a successful orientation program:

• Employees are encouraged to ask questions

• Orientation is the responsibility of the manager of the new employee

• The program provides information on both the technical and the social part of the job

• New employees should not be embarrassed.

• Both informal and formal interactions take place between employees and managers

• New employees are assisted in reallocating themselves. For example, when looking for a new home.

• Employees learn about the products, services and customers of the organization.

Many companies use technology to make orientation more interactive and save travel costs.

What is meant by performance management? - Chapter 8

What is the definition of performance management?

The performance review process tells top performers that they are valued by the company. A good assessment process ensures that all employees performing similar tasks are evaluated to the same standards. We believe that performance appraisal is only part of the broader performance management process. We define performance management as the process by which managers ensure that the activities and outputs of employees match the goals of the organization. The performance management system has three parts:

1. Defining performance

2. Measuring performance (performance assessment)

3. Returning performance information (performance feedback).

What does the performance management process look like?

Many employees and managers do not like the annual performance review. The effective performance management process consists of six steps:

1. Define performance results for business department

2. Develop employee goals, behaviors and actions to achieve a particular outcome

3. Provide support and ongoing performance discussions

4. Evaluate performance

5. Identify improvements needed

6. Deliver consequences for performance results

What are performance management purposes?

The purpose of performance management systems consists of three types:

1. Strategic

2. Administrative

3. Developmental

What is meant by the strategic goal?

One of the main ways in which strategies are implemented is by defining the results, the behavior and to some extent the personnel characteristics needed to execute those strategies and then developing measurements and feedback systems that reflect the extent to which employees have the characteristics, participate in the behavior and produce the results.

What is meant by the administrative purpose?

Organizations use performance management information in many administrative decisions:

• payroll

• promotions

• retention termination

• dismissals

• recognition of individual performance.

Despite the importance of these decisions, however, many managers, who are the source of information, see the performance review process only as a necessary evil that they have to endure to meet their job requirements.

What is the development goal?

A third goal of performance management is employee development. Managers often do not feel comfortable confronting employees with their poor performance.

Giving high ratings to all employees enables a manager to minimize such conflicts, but then the development goal of the performance management system is not fully achieved.

What are the performance criteria?

Although people differ about the criteria that should be used to evaluate performance management systems, we believe there are five that stand out:

1. Strategic matching

2. Validity

3. Reliability

4. Acceptability

5. Specificity

What is the definition of strategic matching?

Strategic matching is defined as the extent to which a performance management system delivers work performance that is in line with the strategy, objectives and culture of the organization.

Many companies such as Brinker International, Federal Express and Coca-Cola have implemented measures for critical success factors (CSFs) or Key Performance Indicators (KPIs) in their performance management systems. CFSs are factors in a company's business strategy that give it a competitive edge.

To effectively use non-financial performance measures, managers need to:

• Develop a model of how non-financial performance measures align with the company's strategic goals.

• Use existing databases and identify the data that exist on key performance measures.

• Use statistical and qualitative methods to test the relationship between performance measures and financial results.

• Review the model to ensure that non-financial performance measures are appropriate and determine whether new measures should be added.

• Trade to conclusions that the model shows.

• Check whether the measures taken and investments made have produced the desired result.

What is the definition of validity?

Validity is defined as the extent to which a performance measure assesses all relevant - and only relevant - aspects of performance. A performance measure is only valid if it is not defective or contaminated. A performance measurement is insufficient if not all aspects of performance are measured. An infected measure evaluates irrelevant aspects of performance or aspects not related to the work.

What is the definition of reliability?

Reliability refers to the consistency of a performance measure. An important type of reliability is inter-rater reliability: the consistency between the persons who evaluate the performance of the employee. A performance measure has inter-rater reliability of two persons if they give the same assessments of the work performance of a person.

Internal consistency reliability is achieved when all items reviewed are internally consistent. In addition, the measure must be reliable over time (test-retest reliability).

What is the definition of acceptability?

Acceptance refers to whether people who use a performance measure accept it.

There are three categories of perceived honesty:

1. Procedural

2. Interpersonal

3. Outcome balance

What is the definition of specificity?

Specificity is the extent to which a performance measurement tells employees what is expected of them and how they can meet these expectations.

What is the approach to measure performance?

In this section we examine different ways of evaluating performance:

• The comparative approach

• The attribute approach

• The behavioral approach

• The result approach

• The quality approach

We also evaluate these approaches based on the criteria of strategic matching, validity, reliability, acceptability and specificity. All approaches have their own strengths and weaknesses. Therefore, most companies use a combination of these approaches.

What does the comparative approach look like?

The comparative approach to performance measurement requires the assessor to compare a person's performance with that of others. At least three techniques fall under the comparative approach: ranking, forced distribution and paired comparison.

What is ranking?

Simple ranking requires managers to rank employees within their departments, from the highest to the worst performer (or the best to the worst).

Alternation ranking consists of a manager looking at a list of employees, determining who is the best employee and removing that person's name from the list.

What is meant by forced distribution?

The forced distribution method also uses a classification format, but employees are grouped. The most common is that employees are grouped into 3, 4 or 5 categories usually of odd size to group the employees into the best employees and the worst employees and groups in between.

What is meant by paired equation?

The paired comparison method requires managers to compare each employee with every other employee in the workgroup, giving an employee a score of 1 each time he or she is considered the best performing person. After all pairs have been compared, the manager calculates the number of times each employee has received the favorable decision and this becomes the employee's performance score.

What is the meant by the evaluation of the comparative approach?

The comparative approach to performance measurement is an effective tool in differentiating the performance of employees: it virtually completely eliminates clemency problems, central tendency and rigor. This is particularly valuable if the results of the measures are to be used when making administrative decisions such as salary increases and promotion.

What is meant by the attribute approach?

The attribute approach to performance management focuses on the extent to which individuals have certain characteristics that are considered desirable for the success of the company. The techniques used in the approach define a range of attributes - such as initiative, leadership and competitiveness - and evaluate individuals accordingly.

What are graphical rating scales?

Graphical rating scales are the most common form of attribute approach. In this form, various characteristics are evaluated by a five-point scale. Examples of these characteristics are knowledge, communication, teamwork and creativity. Graphical assessment scales can offer a number of different points (a discrete scale) or a continuum along which the assessor simply places a check mark (a continuous scale).

What is meant by a mixed standard scale?

Mixed standard scales have been developed to avoid the problems with graphical rating scales. To create a mixed standard scale, the relevant performance dimensions are defined. Thereafter, instructions that represent good, average and poor performance along each dimension are developed. The assessment scheme indicates when the performance of an employee is above (+), average (0) or below (-).

What does evaluating the attribute approach look like?

The attribute approach is currently the most popular performance method in an organization. This method is easy to develop and generalizable for different jobs, strategies and organizations. However, the techniques fail to meet various criteria for effective performance management. There is usually little correspondence between the techniques and the strategy of the company. Moreover, these methods usually have very vague performance standards that are open to different interpretations by different assessors. As a result, the validity and reliability of this method is low.

What is the definition of the behavioral approach?

The behavioral approach to performance management attempts to define the behavior that an employee must display to be effective in the job.

What are the assessment scales based on behavioral anchoring?

Behaviorally anchored assessment scales (BARS) are designed to specifically define performance dimensions by developing behavioral analyses related to different levels of performance. To develop a BARS, we first collect a large number of critical incidents that represent effective and ineffective performance at work. It is the job of the manager to consider the performance of an employee along each dimension and to determine where the employee's performance fits into the dimension using behavioral anchors as guidelines. Behavioral anchors have both advantages and disadvantages. They can increase inter-rater reliability by providing an accurate and complete definition of the performance dimension. A disadvantage is that they can influence information reminder, i.e. behavior that is close to the anchor, is more easily retrieved than other behavior.

What is the definition of a behavioral observation scale?

A behavioral observation scale (BOS) is a variation on a BARS. Just like a BARS, a BOS is developed on the basis of critical incidents. The BOS differs from the BARS in two ways:

1. Instead of throwing away a large number of behaviors that are examples of effective or ineffective performance, a BOS uses many of them to more specifically define all behaviors needed for effective performance.

2. Instead of assessing which behaviors best reflect an individual's performance, a BOS asks managers to assess the frequency with which the employee has exhibited each behavior during the assessment period.

What is meant by a competence model?

Competences are a collection of skills, knowledge, abilities and personal characteristics that enable employees to successfully carry out their work. A competency model identifies and provides descriptions of competencies that are common to a complete workforce, organization, work family or a specific task. Competence models can be used to help the best employees fill open positions and as the basis for development plans that allow the employee and manager to reach specific strengths and areas of development.

What does the evaluation of the behavioral approach look like?

Most techniques are based on a thorough job analysis resulting in the fact that the behavior that is identified and measured is valid. In general, the acceptability is often high as well since the users of the system develop the measures.

What is the definition of a results approach?

The results approach is aimed at managing the objective, measurable results of a job or workgroup. This approach assumes that subjectivity can be eliminated from the measurement process and that results are the closest indicator of one's contribution to the effectiveness of the organization.

What is meant by the use of objectives?

In a results-based system, top managers first determine the business strategies for the coming year. These goals are passed on to the next management layer and these managers define the goals they need to achieve in order for the company to achieve its goals. Results based systems have three corresponding components.

They require the setting of effective goals. The most effective goals are SMART goals. Different types of measurements can be used for goals or objectives, including timeliness, quality, quantity or financial statistics.

What is the Balanced Scorecard?

The balanced scorecard includes four perspectives on performance. These four perspectives are:

1. A financial perspective

2. A customer perspective

3. A internal and operational perspective

4. A learning and growth perspective

Each of above perspectives can be used to translate business strategy into objectives for the organization, management and employee. Effective balanced scorecards enable employees to understand the business strategy by looking at the scorecard and the strategy map only.

What are productivity measurements and evaluation systems (ProMES)?

The main goal of ProMES is to motivate employees and improve team or company level productivity. It is a tool to measure productivity information and give it back to employees. ProMES consists of 4 steps:

1. People in an organization identify the products or the set of activities or objectives that the organization expects to achieve.

2. The personnel defines the indicators of the products.

3. The personnel defines the conditions between the amount of the indicators and the level of evaluation associated with that amount.

4. A feedback system is being developed that provides employees and working groups with information on their specific performance level on each of the indicators.

What is the evaluation of the research approach?

The results approach minimizes subjectivity and is based on objective, quantifiable performance indicators. So, it is usually accepted for both managers and employees. Another advantage is that it links an individual result to the organization's strategies and goals. But, there are also disadvantages. Objective measurements can be both polluted and flawed. Another disadvantage is that individuals can only focus on aspects of their performance that are measured, neglecting those that are not. Another disadvantage is that you can provide feedback for result measurements, but the feedback does not explain how the employee should change his behavior to increase his performance.

What is meant by the quality approach?

Fundamental characteristics of the quality approach are customer focus, a preventive approach to errors and continuous improvement. Improving customer satisfaction is the main goal of the quality approach.

A performance management system that is designed with a strong quality orientation can be expected:

• Emphasize an assessment of both personal and system factors in the measurement system.

• Emphasize that managers and employees work together to solve performance problems.

• Include both internal and external customers in setting standards and measuring performance.

• Use multiple sources to evaluate personal and system factors.

Supporters of the quality approach argue that most performance management systems of U.S. companies are not compatible with the quality philosophy for a number of reasons:

• Most existing systems measure performance in terms of quantity, not quality.

• Employees are held responsible for good or bad results to which they contribute, but do not have full control.

• Companies do not share the financial benefits of success with employees based on how much they have contributed to them.

• Rewards are not linked to business results.

Kaizen refers to practices in which employees at all levels of the company have participated and which focus on continuous improvement of business processes. Kaizen means considering a continuous cycle of activities, including planning, doing, controlling and acting (PDCA).

These techniques provide employees with a goal to identify causes of problems and possible solutions:

• Process flow analysis identifies any action and decision needed to complete the work, such as waiting for a customer or putting together a television set.

• Cause and effect diagrams are events or causes that result in unwanted outcomes being identified.

• Pareto chart marks the main cause of a problem

• Control charts involves collecting data at multiple points in time

• Histograms display distributions of large sets of data

• Scattergrams shows the relationship between two variables, events or different loan of data

What does the evaluation of the quality approach look like?

The quality approach is primarily dependent on a combination of the attributes and result approaches of performance management.

How to choose a source for performance information?

Whatever performance management approach is used, it is necessary to decide who is the source of the performance measures.

• Managers. Managers are the most common source of performance information. It is usually safe to assume that supervisors have extensive knowledge of job requirements and that they have had ample opportunity to observe their employees.

• Colleagues. Colleagues are an excellent source of information in a job such as law enforcement, where the supervisor does not always observe the employee. Colleagues are often best placed to praise and recognize each other's performance on a daily basis. A disadvantage of using colleague ratings is the potential for friendship for bias ratings.

• Subordinates. Subordinates are a particularly valuable source of performance information when managers are evaluated. Upward feedback refers to reviews that include collecting subordinate evaluations of the behavior or skills of a managers.

• Self-assessment. Individuals have extensive opportunities to observe their own behavior and usually have access to information about their results at work. In the renewed process, self-evaluated employees can give examples of good performance and request training to improve their weaknesses.

• Customers. Many companies use customers in their evaluation system. The customer is often the only person present to observe the employee's performance and is thus the best source of performance information. The use of consumer evaluations of employee performance is appropriate in two situations.

  • The first is when the work of an employee requires direct service to the customer or connects the customer to other services within the company.

  • Secondly, customer evaluations are appropriate when the company is interested in gathering information to determine which products and services the customer wants. A recent popular trend in organizations is called 360-degree assessment. This technique consists of multiple reviewers providing input for the evaluation of a manager. So a 360-degree review is a performance review process for managers that includes evaluations of a wide range of individuals who interact with the manager. The process includes self-evaluations and evaluations of the manager's manager.

How is technology used in performance management?

Technology affects performance management systems in four ways:

1. Many companies are switching to web-based online paperless performance management systems.

2. Social media tools such as Facebook and Twitter are increasingly used to provide timely feedback. Social Performance Management refers to systems similar to Facebook, LinkedIn and Yammer that allow employees to quickly exchange information, talk to each other, provide coaching and receive recognition.

3. Companies are starting to use gamification in Performance Management. Gamification means that game-based strategies are applied to performance management to make it a fun, effective, transparent and inclusive process for employees and managers.

4. Companies rely on electronic tracking and control systems to ensure that employees work when and how they should be and to block access to certain websites. These systems include hand and fingerprint recognition systems, Global Positioning Systems (GPS) and software that employees can track using smartphones and notebook computers.

What are reducing errors, politics and increasing reliability and validity of assessments?

Research consistently shows that people have enormous limitations in processing information. Because we are so limited, we often use 'heuristics' or simplifying mechanisms to make judgments, be it about investments or people.

Assessment policy refers to assessors who deliberately distort a rating to achieve personal or business goals. There are a number of factors that promote appraisal policy: appraisal policy is most common when appraisers are accountable to the appraised employee, there are competitive appraisal goals and there is a direct link between appraisal interviews and highly desirable rewards.

There are three ways to reduce appraisal errors. These three ways are the following:

1. Rater error training. Rater error training tries to make managers aware of assessment errors and helps them develop strategies to minimize them.

2. Reference framework training. Reference framework training is also called rater-accuracy training. This type of training tries to emphasize the multidimensional nature of performance and let assessors understand and use the same idea of high, medium and low performance when making evaluations.

3. Calibration meetings. Calibration meetings provide a way to discuss employee performance with the aim of ensuring that similar standards are applied to their evaluations.

What is meant by performance feedback?

What is the role of the manager in an effective performance feedback process?

If employees are not informed about how their performance does not meet expectations, their performance will almost certainly not improve. To contribute to the effectiveness of a performance management system by providing effective feedback, managers should consider the following recommendations.

• Feedback should often be given, not once a year. There are two reasons for this.

  • Managers have a responsibility to immediately address performance gaps as soon as they become aware of them.

  • An important determinant of the effectiveness of a feedback session is the extent to which the evaluation does not surprise the subordinate.

• Create the right context for the discussion. Managers should look for a neutral location to give feedback.

• Ask the employee to assess their performance before the session.

• Recognize effective performance by praise.

• Focus on problem solving.

• Focus feedback on behavior or results, not on the person.

• Minimize Criticism

• Agree with specific goals and set a date to view progress.

What can managers do to control and diagnose performance issues and manage employee performance?

When diagnosing the causes of poor performance, it is important to consider whether poor performance is detrimental to the company. If it is disadvantageous, the next step is to perform a performance analysis to determine the cause of poor performance.

What are actions for managing employee performance?

Managers should consider the ability of employees, motivation or both to find ways to improve performance.

There are several reasons why employees are considered poor performers. Poor performance due to a lack of competence but no motivation (misdirected efforts) can be improved by skills development activities, such as training or temporary assignments. Managers with employees who have the ability but no motivation (oppressors) should consider actions that focus on interpersonal problems or incentives. Chronic poor performance by low-power, dead-word employees indicates that outplacement or shooting may be the best solution.

It is necessary to develop and implement a system that follows legal guidelines. Since performance measurements play a central role in such administrative decisions, such as promotions, pay increases and discipline, employees who sue an organization for these decisions ultimately attack the measurement system on which the decision was made. Two types of issues have dominated: discrimination and unfair dismissal.

Based on assessments of such court rulings, we offer the following characteristics of a civil liability system:

• The system must be developed by carrying out a valid task analysis that identifies the important aspects of work performance.

• The system should be based on behavior or results; evaluations of ambiguous characteristics should be avoided.

• Rateers should be trained in the use of the system rather than just giving the materials and be left to interpret how the assessment should be carried out.

• There should be some form of review by managers at the highest level of all performance reviews, and there should be a system for employees to appeal against what they consider to be an unfair evaluation.

• The organization should provide some form of performance or corrective guidance to help poor performers improve their performance before they are dismissed.

• Multiple evaluators should be used, especially if an employee's performance is unlikely to be seen by a single source of assessment, such as manager or client.

• Performance evaluations should be documented.

How does the development of employees look like? - Chapter 9

How does the development of employees look like?

Employee development makes an important contribution to a company's competitive advantage by helping employees understand their strengths, weaknesses and interests and showing them how new jobs and extended job responsibilities are available to them to meet their personal growth needs.

What is the relationship between development, training and career?

What is meant by development and training?

Development refers to formal education, work experiences, relationships and assessment of personality and skills that help employees prepare for the future. Training focuses on helping employees in their existing jobs.

What is the relation between development and career?

Today's careers are known as protean careers. A protean career is based on self-management with the goal of psychological success in one's work. Employees bear the greatest responsibility for managing their careers. The protean career has several implications for employee development. The goal of the new career is psychological success: the sense of pride and achievement that comes from achieving life goals that are not limited to performance at work.

Employees must develop new skills instead of relying on a static knowledge base.

What are development planning systems?

Developing Planning System is a system to retain and motivate employees by identifying and responding to their development needs. There are four steps in the developing planning system.

What is meant by self-assessment?

Self-assessment refers to the use of information by employees to determine their career interests, values, attitudes and behavioral trends. It often involves psychological tests such as the Myers-Briggs Type Indicator, the Strong-Campbell Interest Inventory and the Self-Directed Search. The Strong-Campbell helps employees identify their professional and job interests. The Self-Directed Search identifies employees' preferences for working in different types of environments.

What is the definition of reality control?

Reality check refers to the information employees receive about how the company evaluates their skills and knowledge and where they fit into the company's plans.

What is meant by goal setting?

Goals setting refers to the process of employees developing short and long term development goals. These goals usually relate to desired positions (such as becoming a sales manager within three years), level of skill application (use your budgeting skills to improve the unit's cash flow problems), work environment (move to company marketing within two years) or skill acquisition (learn how to use the company's personnel information system).

What are action plans?

An action plan is a written strategy that employees use to determine how they will achieve their short and long term career goals.

Are there some examples of career guidance and development systems?

Xerox Service University (XSU) offers employees the opportunity to develop their skills. Those who access the online website are presented with different schools, each offering a unique development path. The five XSU schools focus on the following aspects:

1. Creativity and innovation

2. Operational excellence

3. Leadership

4. People management

5. Business foundations.

What are the approaches used for employee development?

There are four approaches used to develop employees:

1. Formal education

2. Assessment

3. Work experience

4. Interpersonal relationships.

What is meant by formal education?

Formal education programs include off-site and on-site programs designed specifically for the company's employees, short courses offered by consultants or universities, executive MBA programs and university programs in which participants actually live at the university while attending classes. Tuition reimbursement refers to the practice of reimbursing staff costs for college and university courses and trainings.

What is meant by assessment?

Assessments include collecting information and giving feedback to employees about their behavior, communication style or skills. Assessments can be used for various reasons. Assessments are most commonly used to identify employees with managerial potential and to measure the strengths and weaknesses of current managers.

What are personality tests and inventories?

Tests are used to determine whether employees have the personality traits needed to be successful in specific management positions or jobs with international assignments. The personality test usually measures five important dimensions: extroversion, adaptation, acceptance, conscientiousness and openness to experience.

The Myers-Briggs Type Inventory (MBTI) refers to a rating based on Carl Jung's personality theory. This theory emphasizes that we have a fundamental personality type that shapes and influences how we understand the world, process information and socialize it.

What is an assessment center?

In an assessment center, multiple assessors evaluate the performance of their employees on a number of exercises.

In a leaderless group discussion, a team of five to seven employees is assigned a problem and must work together to solve it within a certain period of time. In the interview, employees answer questions about their work and personal experiences, skills, weaknesses and career plans.

An in-basket is a simulation of the administrative tasks of the manager's function. The participants read the documents and decide how they would react to them.

Role-play refers to the participant who takes on the part or role of manager or other employee.

What are performance reviews and 360-degree feedback systems?

A recent trend in performance reviews for management development is the use of upward feedback and 360-degree feedback. Upward feedback refers to assessment that consists of collecting subordinate evaluations of managers' behavior and skills. In 360-degree feedback systems, employee behaviors or skills are assessed not only by subordinates, but also by colleagues, customers, their bosses and themselves.

What is meant by work experience?

Most employees develop through work experience: relationships, problems, demands, tasks or other functions with which employees are confronted.

Stretch assignments refer to assignments where there exists a mismatch between the employee's skills and previous experiences and the skills required for success at work.

There are several ways in which work experience can be used for employee development. These include the following:

• Increasing the current task

• Job rotation

• Job transfers

• Promotions

• Downward movements

• Temporary assignments

Job augmentation refers to adding challenges or new opportunities to employees' current jobs. Some companies increase jobs by giving two managers the same responsibilities and function and enabling them to divide the work (two-in-a-box).

What is the definition of task rotation and sideways movements?

Job rotation gives employees a series of job assignments in different functional areas of the company or movement between jobs in a single functional area or department. Job rotation helps employees get an overall appreciation for the company's goals, increases their understanding of different company functions, develops a network of contacts and increases their skills.

What is meant by a transfer, promotion and downward movement?

In a transfer, an employee is assigned a job in another part of the company.

Promotions are progress in positions with greater challenges, more responsibility and more authority than in the previous job. Promotion usually includes salary increases.

A downward movement occurs when an employee gets less responsibility and authority.

Research has identified the characteristics of the employee associated with a willingness to accept transfers. Some of these characteristics are:

• High career ambitions

• A belief that one's future with the company is promising

• The belief that accepting a transfer is necessary for success in the company

To ensure that employees accept transfers, promotions and downward movements as development opportunities, companies can offer:

• Information about the content, challenges and potential benefits of the new job and location.

• Involvement in the transfer decision by sending employees an example of the new location and giving them community information.

• Clear performance targets and early feedback on their work performance.

• A host at the new location to help them adapt to the new community and workplace.

• Information on how the vacancy affects their income, taxes, mortgage payments and other expenses.

• Compensation and assistance in selling and buying or renting a property.

• An orientation program for the new location and task.

• Information on how the new work experiences will support the employee's career plans.

• Help for dependent family members, including identifying schools and childcare and care for the elderly.

• Help for the spouse to identify and market skills and find work.

What are temporary assignments, projects, volunteer work and sabbaticals?

Temporary assignments refer to job-tryouts, such as employees who take a position to help them determine whether they are interested in a new job, employee exchanges, sabbaticals and voluntary assignments.

A sabbatical refers to a company leave for personal reflection, renewal and development of skills. Often, employees who take a sabbatical obtain full payment.

What are interpersonal relationships?

Employees can also develop skills and increase their knowledge about the company and its customers by interacting with a more experienced member of the organization.

Mentoring and coaching are two types of interpersonal relationships that are used to develop employees.

What is meant by mentoring?

A mentor is an experienced, productive senior employee who helps to develop a less experienced employee. Research suggests that employees with certain personality characteristics (such as emotional stability, the ability to adapt their behavior to the situation and high needs for power and performance) are most likely to seek a mentor and be an attractive protégé for a mentor.

Mentoring programs have many important goals, such as socializing new employees, developing managers and providing opportunities for women and minorities to exchange experiences and acquire the exposure and skills needed to switch to management positions.

How do you develop successful mentoring programs?

A major benefit of formalized mentoring programs is that they provide mentors for all employees, regardless of gender or race. A limitation of formal mentoring programs is that mentors are unable to provide counseling and coaching in a relationship that has been artificially created. A key to successful mentoring programs is that the mentor and the protege are well matched and can communicate with each other face-to-face, virtually or through social media.

What are the benefits of mentoring relationships?

Research suggests that mentors offer career and psychosocial support to their proteges. Career guidance includes for example:

• Coaching

• Protection

• Sponsorship and offering challenging assignments

• Exposure and visibility.

Psychosocial support includes serving as a friend and role model, providing positive esteem and acceptance and providing an outlet for the protégé to talk about fears.

What is meant by reverse monitoring?

Reverse monitoring refers to mentoring where younger employees supervise more senior employees. This can happen, for example, when a young employee helps an older employee aged 50 or over with the use of social media.

What is meant by coaching?

A coach is a colleague or manager who works with an employee to motivate him, to help him develop skills and to give reinforcement and feedback.

There are three roles a coach can play.

1. Part of the coaching can be one-to-one with an employee.

2. Another role is to help employees learn for themselves.

3. Coaching may involve providing resources such as mentors, courses or work experience that the employee may not be able to obtain without the help of the coach.

What are special issues in employee development?

What is meant by the glass ceiling?

A major development issue facing companies today is how women and minorities can move into senior management positions - how to melt the glass ceiling. Two thirds of companies do not have specific programs addressing the needs of women leaders.

What is inheritance planning?

Inheritance planning refers to the process of identifying and tracking high potential employees who are able to hold various positions in the company that arise from planned or unplanned vacancies due to sales, promotion or business growth.

Success planning is often discussed when considering business managers or top leaders, but it is an important consideration for any task.

Potentials with high potential are those that the Company believes are able to succeed in senior management positions such as general manager of a strategic business unit, functional director or chief executive officer (CEO).

Bank strength refers to having a pool of talented employees on call when needed.

How can employee dismissal and retention be managed? - Chapter 10

What is separation and retention of employees?

In addition to clinging to key officials, another characteristic of successful companies is their ability and willingness to dismiss employees engaged in counterproductive behavior. Every executive recognizes the need for satisfied and loyal customers. In addition to clinging to key executives, another characteristic of successful companies is their ability and willingness to dismiss employees engaged in counterproductive behavior. Involuntary dismissal is initiated by the organization, voluntary dismissal is initiated by employees.

How can voluntary redundancy be managed?

Poorest and best performing officials tend to leave more often. The progression of withdrawal is a theory that dissatisfied individuals perform a series of behaviors in succession to avoid their work situation. Causes of job dissatisfaction are personal attitude, tasks and roles, supervisors and colleagues and rewards and benefits. This can lead to the withdrawal from a job, which can manifest itself in behavioral changes, physical withdrawal from work and psychological withdrawal from work. Whistleblowing makes grievances public by going to the media or the government. Employees can leave their work physically and psychologically. In the latter case, employee involvement and organizational involvement quickly diminish. They can also respond to alleged unfair treatment by trying to return to the employer through theft or fraud.

Job satisfaction means that a person has a pleasant feeling that results from the perception that someone's job meets or provides for the fulfillment of someone's important task values. A frame of reference is a standard point that serves as a comparison for other points and thus gives meaning. Sources of dissatisfaction with work include unsafe working conditions, personal dispositions such as negative affectivity (reflecting piercing Indi double differences in satisfaction with all aspects of life), the nature of the tasks performed and the assigned role, supervisors and colleagues, reward and benefits and the lack of Priscila motivation, which is the extent to which people are encouraged to do their work because it helps other people. Most job satisfaction measures are based on employee self-reports and regular employee surveys.

How can involuntary dismissal be managed?

Involuntary dismissal is initiated by the organization. The basic principle is that in the absence of a specific contract, an employer or employee can terminate the employment relationship at any time. The principles of justice related to involuntary dismissal include, among other things:

• Fairness of the Outcome. Outcome Equality is the opinion that people take regarding the outcomes that are received in proportion to the outcomes that are received by other people with whom they identify.

• Procedural justice. Procedural justice is a concept of justice that focuses on the methods used to determine the outcomes. The six determinants of procedural justice are the following:

  • Consistency

  • Bias suppression

  • Information accuracy

  • Correct ability

  • Representativeness

  • Ethics

• Inter-active justice. Interactional justice is a concept of justice that refers to the interpersonal nature of how the outcomes were implemented. The four determinants of interpersonal justice are the following:

  • Explanation

  • Social sensitivity

  • Attention

  • Empathy

Alternative dispute resolution is a method for resolving disputes that are not dependent on the legal system. Often works through the four stages of open door policy, peer review, mediation and arbitration. Staff assistance programs are employer programs that attempt to reduce the problems found by employees who are drug addicts, alcoholics or psychologically disturbed. Outplacement counseling is counseling to help displaced workers make the transition from one job to another.

How are decisions made within the HR policy regarding budget? - Chapter 11

What is meant by the structure of payment?

The total compensation consists of two parts:

1. Cash compensation which is based on salary, earnings increases, bonuses, stock options and other monetary incentives.

2. Benefits. Examples of benefits are health insurance, paid holidays and an unemployment compensation.

Pay level decisions can be split into two areas:

1. Pay structure.

2. Individual pay.

Pay structure is the relative remuneration of different jobs (task structure) and how much they are paid (pay level). The remuneration level is defined here as the average remuneration (including wages, salaries and bonuses) of jobs in an organization. Job structure refers to the relative reward of jobs in an organization.

What is justice theory and honesty?

When discussing the consequences of remuneration decisions, it is useful to keep in mind that employees often compare their remuneration with that of other employees.

Justice theory suggests that people evaluate the honesty of their situations by comparing them with those of other people. According to this justice theory, a person (p) compares its own ratio of perceptions O (pay, benefits, working conditions) to perceived inputs I (effort, ability, experience) to the ratio of another equation (o).

If the ratio of p is smaller than the ratio of the other, this results in unequal inequality.

Some ways of restoring equity are counterproductive, including reducing one's own contribution (not working so hard), increasing one's outcome (such as through theft) or leaving the situation that generates inequality (leaving the organization or refusing to work or cooperate with employees who are seen as underpaid).

Two types of social pay comparison by employees are particularly relevant when making salary levels and making decisions about the work structure. These two are:

1. External equity pay comparisons focus on what employees in other organizations are paid for the same general task.

2. Comparisons of internal equity rewards focus on what employees are paid within the same organization, but in different jobs.

How can different salary levels be developed?

What is meant by market pressure?

Every organization faces two major market challenges in the competition to determine what its employees have to pay: competition in the product market and competition in the labor market.

What is competition in the product market?

Organizations must be able to sell their goods and services at a quantity and price that provides sufficient return on their investment. An organization that has higher labor costs than its competitors in the product market will have to charge higher average prices for products of comparable quality.

Product market competition imposes an upper limit on labor costs and compensation. This cap is more limited when labor costs account for a larger proportion of total costs and when demand for the product is affected by price changes (i.e. when demand is elastic).

What is competition in the labor market?

A second major challenge for market competition is competition in the labor market which reflects the number of available workers in relation to the number of available jobs. Shortages and surpluses affect remuneration levels.

An example is when car makers apply the same price as other car makers. Well-trained employees do not matter which company they work for. But if one increases the wages, the well-trained workers are drawn to the company with the highest wages and the company with the lower wages has a deficit.

In what way can employees in an organization be used as a resource?

Since organizations have to compete in the labor market, they should not only consider their employees as a cost, but as a tool in which the organization has invested and from which it expects valuable returns. Therefore, they should not only be assessed in terms of cost, but also in terms of the return they generate. This return can be expressed in the way in which they attract, retain and motivate a high quality workforce.

How can a firm decide what to pay?

While organizations face significant external labor and product market pressures in setting their compensation levels, there remains a degree of discretion. Under what circumstances do the benefits of a higher reward outweigh the higher costs?

According to the return on investment theory, a circumstance is that organizations have technologies or structures that depend on highly skilled employees. Another circumstance where higher wages may be justified is when an organization has problems observing and monitoring the performance of its employees.

What do market cost surveys look like?

To compete for talent, organizations use benchmarking, a procedure whereby an organization compares its own practices with those of the competition. In compensation management, benchmarking against product and labor market competitors is usually achieved by using one or more wage surveys, which provide information on the wage rates of competing organizations. Several factors influence decisions on combining surveys.

Comparisons of product markets that focus on labor costs are likely to weigh more heavily when:

• Labor costs account for a large proportion of total costs,

• the demand for products is elastic,

• the supply of labor is inelastic,

• the employee skills are specific to the product market.

By contrast, comparisons of the labor market may be more important when:

• attracting and retraining qualified workers is difficult

• the costs of recruiting replacement workers are high

How is it possible to achieve a specific course?

Once a market interest rate has been chosen, how is it included in the remuneration structure? Typically - especially for white-collar jobs - it is used to set the center of reward ranges for jobs or pay rates. Market research data is also often collected based on minimum and maximum wages. By using speed ranges, a company can recognize differences in performance, seniority, training, etc. of employees when setting individual rewards.

What is the difference between key jobs and non-key jobs?

Key jobs have a relatively stable content and - perhaps most importantly - are common in many organizations. Non-key jobs are to a large extent unique to organizations. By definition, they cannot therefore be directly valued or compared through the use of market research.

How is it possible to develop a job structure?

While external comparisons of the kind we have discussed are important, employees also evaluate their pay using internal comparisons. A job structure can be defined as the relative value of different jobs in the organization, based on such internal comparisons.

What is meant by work evaluation?

A job evaluation system consists of compensable factors and a weighting scheme based on the importance of each compensable factor to the organization. Simply put, compensable factors are the characteristics of jobs that an organization appreciates and chooses to pay for. These characteristics can be: job complexity, working conditions, education requirements, experience requirements and responsibility.

What is the point factor system?

After generating scores for each compensable factor for each task, job appraisal experts often apply a weighting scheme to take into account the different importance of the compensable factors to the organization.

Weights can be generated in two ways.

1. A priori weights can be assigned, which means that factors are weighed using expert judgments about the importance of each factor.

2. Weights can be empirically derived based on how important each factor seems to be in determining pay on the labor market.

What is meant by market research data?

The approach with the greatest emphasis on external comparisons is achieved by basing remuneration directly on market research that includes as many key tasks as possible.

There is no need to adapt a straight line to job evaluation and survey data (Figure 11.1). In some cases, a remuneration structure that provides higher monetary rewards for higher level jobs may be more in line with the organization's objectives or with the external market.

What is payment policy line?

A second method of determining the remuneration that combines information from external and internal comparisons is to use the payment policy rule to derive remuneration rates for both key and non-key job tasks. This approach differs from the first approach in that real market interest rates are no longer used for key jobs.

What are payment figures?

A third approach is to group jobs into a smaller number of pay brackets, pay ranges or salary figures. The advantage of this approach is that it reduces the administrative burden of setting separate rates for hundreds of different jobs. Note that the spread of series is greater at higher levels, realizing that performance differences are likely to have more impact on the organization at higher job levels.

In what way is it possible to monitor compensation costs?

Payment structure affects compensation costs in a number of ways. Most clearly, the wage level at which the structure is determined influences the costs. A commonly used index of the correspondence between actual and intended remuneration is the compa ratio, which is calculated as follows:

Degree Compa ratio = actual average reward for grade / pay center for grade.

What does globalization, geographical region and payment structures look like?

Compared to cities in China, India and Mexico, the labor market in American and German cities offers much lower levels of pay in general and also different payouts to skills, education and progress.

This is solved by paying an employee more to compensate with the high living costs in a particular country. However, the disadvantage of this approach is that it can be difficult to lower the salary if the costs at that location fall or if the employee moves to a cheaper region.

What is the importance of process: communication and participation?

Participation is important in the process. It is important to make a distinction between the participation of those affected by the policy and those who actually have to implement the policy. Managers are in the last group (and often also in the first group at the same time). As in other areas of human resource management, line managers are usually responsible for working with policy. Their intimate involvement in any change in existing reward practices is of course necessary.

Communication is important in the process as well. Managers play the most crucial communication role because of their daily interactions with their employees. Therefore, they should be willing to explain why the remuneration structure is designed as it is and assess whether employees' concerns about the structure should be addressed with changes in the structure.

What are opportunities?

Which problems might arise with job-related pay structures?

Wage-related reward structures have a number of potential limitations. Some of these limitations are:

1. They can stimulate age bureaucracy.

2. The hierarchical nature of the structure reinforces a top-down decision-making and information flow, as well as status differences, which do not lend themselves to taking advantage of the skills and knowledge of those closest to production.

3. The bureaucracy required to generate and update job descriptions and job evaluations can become an obstacle to change, as changes to job descriptions in wholesale can be enormously time-consuming and costly.

4. The work-based pay structure may reward undesirable behaviour, especially in a rapidly changing environment where the knowledge and skills needed yesterday, today and tomorrow may not be very useful.

5. The emphasis on job levels and status differences encourages promotional behaviour, but may discourage workers from moving sideways, as workers are reluctant to accept jobs that are not promotions or that seem to be steps.

What are the answers to problems concerning work-based reward structures?

What is meant by flattening and banding?

In response to the problems caused by job-based pay structures, some organizations have implemented delays or reduced job levels to achieve more flexibility in job assignments and increase earnings.

Broader groupings of jobs are also known as broad bands. For example, IBM has greatly reduced the bureaucratic nature of the system, from 5000 job titles and 24 salary grades to a simpler 1200 jobs and 10 bands.

A possible disadvantage of postponement and banding is a limited chance of promotion.

In what way can a person be paid for their skills, knowledge and competence?

A second related response to the job-based wage structure problems was to refrain from linking pay to jobs and to build structures based on individual characteristics such as skills or knowledge. Competence-based pay is similar, but usually refers to a plan that covers exempted workers (such as managers).

Skill-based pay systems seem to fit well with the wider breadth and skill that changing technology continues to bring. A major potential benefit of skills-based pay is the contribution to greater flexibility of employees, which in turn facilitates the decentralization of decision-making for those most familiar with it.

Can the American workforce compete?

We often hear that US labor costs are simply too high to allow US companies to compete effectively with companies in other countries. Sometimes it is wise to go to another country and produce there. There are a number of factors to consider.

How much does instability in labor costs vary from country to country? First of all, it is useful to note that relative labor costs are very unstable over time. However, compared to countries like Germany, labor costs in the US are now a bargain; this partly explains the decisions of German companies such as BMW, Mercedes-Benz and Volkswagen to find production sites in South Carolina, Alabama and Tennessee respectively, where labor costs are significantly lower than in Germany.

What are skill levels?

Besides the fact that labor costs are very unstable over time, the quality and productivity of national labor can vary dramatically. Lower labor costs may reflect the lower average skill level of the labor force; certain types of skilled labor may be less available in low-wage countries.

What is meant by productivity?

Thirdly, and most directly relevant, data on relative productivity and unit labor costs, mainly labor costs per hour, are divided by productivity per hour worked.

What are considerations other than labor costs?

Fourthly, any consideration of where to locate production cannot be based only on labor cost considerations. The speed of product development may be greater when production is physically close to the design group.

What is meant by executive pay?

The subject has received more attention than it deserves since there are few top managers and their compensation often represents a small proportion of an organization's total labor costs. On the other hand, top managers have a disproportionate ability to influence organizational performance, so decisions about their compensation are crucial.

What is government regulation of the compensation of employees?

How is it possible to achieve equal employment opportunities?

The Employment Equality Scheme (EEO) prohibits differences between men and women in employment outcomes, such as pay, unless justified by business needs.

At least two trends are directly relevant when discussing EEO.

1. Women have gone from 33% of all employees in 1960 to 46% in 2014.

2. Between 1960 and 2014, whites went from 90% to 80% of all employees.

Similar value (or equal pay) is a public policy that advocates solutions for undervaluing women's jobs. The idea is to obtain equal pay, not only for jobs of equal value, on the basis of Title VII of Citizens' Rights.

What is meant by a minimum wage, overtime and applicable wage legislation?

The Fair Labor Standard Act of 1938 (FLSA) established a minimum wage for jobs, which is new at $7.25 per hour. The FLSA also requires employees to pay one and a half times their hourly wages for each hour of overtime worked after 40 hours in a week.

Executive, professional, administrative, external sales and certain computer employee occupations are exempt from FSLA coverage. Non-excluded occupations are covered and include most hours of work.

What is the influence of employee benefits? - Chapter 12

What is the influence of wages?

There are three theories that explain the effect of wages:

1. Reinforcement theory. The reinforcement theory assumes that high performance in the future is likely if high performance was followed by a cash reward.

2. Expectancy theory. The expectancy theory is a theory that an employee's motivation is a function of resources, valence and expectations. According to this theory, motivation and performance will improve if it is linked to rewards. So the theory emphasizes the expected outcomes of an effort. The argument used against this theory is that incentives in the form of money may stimulate extrinsic motivation, but reduce intrinsic motivation.

3. Agency theory. The agency theory emphasizes the interests of the stakeholders of an organization. An important feature of today's organizations is that the management and ownership of the organization are now separated. Most stockholders do not have much to do with the organization of which they own a part. This creates agency costs. These arise from the fact that the interests of the principal and the agent are no longer on one line. The principal is a person who owns the company and is looking for ways to influence the agent. The agent in turn is a person who is expected to act in the interest of the principal. This is for example the manager. Agency costs can arise from two things.

   1. If the principal and the agent have different goals.

   2. If there is an information asymmetry. There might exist information asymmetry when the principal is not well informed about how far the agent is pursuing and achieving the goals.

Agency costs might arise resulting from agency problems. Three common examples of agency costs:

1. The principal and the agent have a different attitude towards risks. Shareholders can diversify their risks more easily than managers. This can lead to managers being more risk-averse than shareholders.

2. Management can spend money on unnecessary things, such as their own luxury or building empiricism.

3. They can be on a different line when it comes to making decisions. For example, a manager may have more interest in short-term success and an owner more interest in long-term success.

The principal must ensure that a contract is in place that aligns the interests of the principal and the agent. These contracts may be behavioural or outcome oriented.

Which contract a company should use depends partly on the following factors:

• Risk aversion: If an agent is risk averse, then a contract based on outcomes is less likely.

• Uncertainty of outcomes: Agents will be less willing to make their wages dependent on profit and therefore prefer a behavioral contract.

• Job routine: If a job has less routine, a contract based on outcomes is most appropriate, because monitoring is difficult.

• Measurability of results: If the results can be measured, wages can be based on them.

• Possibility to determine: a contract based on outcomes gives higher costs, because one also has to pay for the risk of the agent.

• Tradition.

Which compensation programs are used?

Different compensation programs attract different types of people. An organization does not have to prefer one compensation program over another since a combination of the programs is usually the best solution.

We know the following programs:

• Merit Pay

• Incentive pay

• Profit Sharing

• Ownership

• Gain Sharing

• Skill-Based

The programs differ in the following areas:

• Payment frequency

• Payment method

• The way performance is measured

And there are two quotas that determine which program fits in which situation:

1. The type of work

2. The style of management

We will also discuss the consequences of each method in the following areas:

1. Attracting employees

2. Motivation to perform

3. The culture of the organization

4. Costs

All explained above combined results in the following table:

In merit pay programs (annual) salary increases are linked to evaluation interviews in performance management. Many of these programs work with a merit increase grid. This is a grid that combines the performance of employees with the position of the employee in a pay range (compa ratio), in order to determine whether the size and frequency of his pay should be increased.

Deming criticizes the merit pay programs for the fact that it is unfair to judge employees on their performance, because these mainly depend on the system in which they work. Also, individual focus discourages teamwork. Another disadvantage of the program is the way it measures performance. If this is considered unfair by employees, then the whole program collapses. Honesty is judged on the distributive dimension (how much you get) and the procedural dimension (which process is used to determine how much you get).

The biggest criticism of merit pay is that it ultimately depends little on the performance that is delivered.

Individual incentives reward individual performance but are not part of the base salary. Performance is often measured on the basis of physical output rather than subjective assessments. However:

• Many jobs do not have physical output or the output is difficult to trace

• Employees focus only on the outcomes to be rewarded

• Ignore the team interest

• No longer take the time to acquire extra skills

• Quantity is often at the expense of quality

In profit sharing, the pay is based on a calculation of the company's performance and is not part of the base pay. It has two potential advantages:

1. It makes employees think more like owners.

2. Wage costs are automatically reduced in economically worse times.

It is difficult for many employees to discover the connection between what they do and what that has consequences for the organization, so that profit sharing does little for motivation and sometimes even has the opposite effect.

A company can realize employee ownership through stock options. This is the possibility for employees to buy shares of the organization for a fixed price. Employee stock ownership plan (ESOP) is a plan that provides employers with certain financial and tax benefits when employees are rewarded through shares. ESOPs can be risky for employees. The benefits of ownership are greater when this results in greater employee participation.

Gainsharing is a compensation program where the compensation of an employee is based on the performance of a group or a factory, which does not become part of the employee's base salary. It differs from profit sharing because the compensation is based on the performance of a group or a factory and not on the performance of the entire organization. This means that payments are made more often. It is a combination of the advantages of individual incentives and profit sharing. Group incentives and team awards are often used in smaller working groups.

The balanced score card can also be used to link employee performance to a specific reward. This method tries to weigh the different goals of performance reward.

How are firms able to reward their managers?

Rewarding managers is about the basis on which this group is paid. This payment is often linked to the financial performance of the company. The goal of the principals is to ensure that the agents act in a way that is best for the principals. This means a smaller emphasis in the remuneration on the base salary and greater dependence on the results achieved by the organization, by means of bonuses (short term) or specific incentives (long term). The balanced scorecard can also be a useful tool for paying managers. Finally, regulators and shareholders also put pressure on managers to relate their wages more clearly to performance.

Organizations can implement different wage structures. The following factors have a share in the choice of wage structures:

• Participation. Employees who participate in wage decision-making are more satisfied with their remuneration and the work itself. This is probably because they have a better understanding of the way in which wages are established. Employees must monitor themselves and each other to stimulate the productivity. This can be promoted by offering financial incentives and creating an environment that encourages trust and cooperation.

• Communication. When changes occur in the payroll system it is important to determine how this will be effectively communicated to employees to increase understanding and reduce concerns.

• The interwoven effects of pay and the process of setting it. Pay is important in itself but the importance of other factors should not be underestimated. Deciding how work is done and the way in which goals can be achieved gives at least as much (if not more) satisfaction to employees.

Ideally, a wage strategy should be consistent with the overall business strategy. Variable pay will work better in some organizations than in others.

The following dimensions are important in pairing the pay strategy with the business strategy.

• Risk sharing (variable pay)

• Time orientation (short versus long term)

• Wage structure

• Working conditions

• Degree of centralization of wage decisions

• Focus of the analysis of payment (skill, knowledge, job etc.)

What are the different types of employee benefits? - Chapter 13

What are the reasons for an increase in benefits?

When considering benefits as part of total compensation, the question arises: why do employers choose to push a significant part of the compensation dollar away from cash (wages and salaries) to benefits? Economic theory explain that people prefer a dollar in cash to a dollar in specific goods since the money can be used to buy the commodity or something else. To understand these factors, it is useful to examine the growth of benefits over time and the underlying reasons for this growth of benefits.

1. In the 1930s, different laws were passed as part of Franklin Roosevelt's New Deal. This New Deal was a legislative program aimed at protecting people from the devastating effects of the Great Depression.

2. Wage and price controls were introduced during World War II, combined with labor shortages, forcing workers to devise new ways to attract and retain workers.

3. The tax treatment of wages and salaries, which means that a dollar spent on benefits has the potential to generate more value for workers than the same dollar spent on benefits wages and salaries. The marginal tax rate is the percentage of additional income that goes to the tax.

4. Another factor that has influenced revenue growth is the cost advantage that groups typically realize over individuals.

5. The last factor that influenced the growth of benefits was the growth of organised labor from the 1930s to the 1950s. This growth was partly due to another piece of New Deal legislation, the National labor Relations Act, which greatly improves the ability of trade unions to organise employees and conclude contracts with employers.

What is meant by a benefits program?

Most benefits fall into one of the following categories:

• Social insurance

• Private group insurance

• Retirement

• Pay for days not worked

• Family-friendly policies

Why is social insurance essential?

Why is social security important?

One of the most important provisions of the Social Security Act of 1935 was the establishment of an old-age and unemployment insurance. An important feature of social security retirement benefits is that, for people of full retirement age, they are exempt from state tax in about half of the states and free from federal tax if no other income is received or if that other income falls below a certain level.

The earning test increases a person's incentive to retire and if she continues to work, the incentive to work part-time rather than full-time increases. An important change in January 2000 is that there is no profit test when the full retirement age is reached. Therefore, these employees no longer suffer loss of income.

The abolition of the tax contribution on wages for persons of full retirement age should lead to an increase in the number of older workers in the labor market for employers.

What is meant by unemployment insurance?

This program was established by the Social Security Act and has four main objectives. These four objectives are the following:

1. Compensate lost income during involuntary unemployment,

2. Helping the unemployed to find new jobs,

3. Encouraging employers to stabilize employment,

4. To maintain investments in workers' skills by generating income during short-term redundancies.

The unemployment insurance program is largely financed by federal and national taxes on employers.

Unemployed people are eligible for benefits if they are:

• have a prior link with the labor force,

• are available to work,

• are actively looking for work and

• were not dismissed for cause not voluntarily stopped, and not without work because of an industrial conflict.

What is the definition of a work allowance?

The compensation laws for employees cover work-related injuries and death. Before implementing these laws, employees suffering from work-related injuries or illnesses can only be compensated by claiming compensation.

Compensation for workers can be divided into four main categories:

• Disability income

• Medical care

• Death benefits

• Rehabilitation services

What is a private group insurance?

Group insurances are usually lower than individual rates because of economies of scale, the ability to pool risks and the greater bargaining power of a group.

What is a medical insurance?

Not surprisingly, public opinion surveys suggest that medical benefits are by far the most important benefit to the average person.

There exists three basic types of medical expenses which are typically covered:

1. Hospital expenses

2. Surgical expenses

3. Visits to doctors

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires employers to allow employees to extend their health insurance at group rates up to 36 months after a "qualifying event" such as termination, a reduction in hours leading to loss of health insurance, death and other events.

Why is it important to have a disability insurance?

There are two types of disability insurance: short-term disability insurance and long-term disability insurance. Most employees are only covered by both short-term and long-term disability insurance in larger workplaces. Short-term plans usually offer benefits for six months or less, after which long-term plans take over.

What is meant by a pension?

Employers have no legal obligation to offer private pension schemes, but many do.

What are the defined benefits?

A defined benefit plan guarantees a certain level of benefits to employees, usually based on a combination of years of service and age and on the employee's salary level.

Defined benefit schemes isolate employees from investment risks, which are borne by the company.

In the event of serious financial difficulties forcing the company to terminate or reduce employees' pension benefits, the Pension Benefit Guaranty Corporation (PBGC) provides some protection of the benefit. The PBGC was established in 1974 by the Law on Income Security of Employees (ERISA) and guarantees a basic benefit, not necessarily a full pension benefit, for employees who were eligible for pensions at the time of termination.

What is meant by a defined contribution?

Unlike a defined benefit plans, a defined contribution plan does not promise a specific benefit level for employees upon retirement. Instead, an individual account is set up for each employee with a guaranteed contribution. Defined contribution plans are particularly preferred in smaller companies. This might perhaps be due to the fact that small employers want to avoid long-term liabilities or perhaps because small companies tend to be younger, often established since the trend towards defined contribution plans.

Several factors influence the amount of income an employee will have available on retirement.

1. The earlier the age of investment, the longer the return can accumulate.

2. Different investments have different historical returns.

3. Another consideration is the need to counter investment risks through diversification, as equity and bond prices can be volatile in the short term.

The Pensions Protection Act (PPA) of 2006 requires defined contribution plans holding listed securities to enable employees:

1. to dispose of employer securities and

2. to dispose of at least three investment options other than employer securities.

What is a cash-balance plan?

One way to combine the benefit of defined benefit plans and defined contribution plans is to use a cash flow statement.

This type of pension plan consists of individual accounts, as in a 401 (k) plan. But unlike a 401 (k), all contributions come from the employer.

Defined benefit plans are the most generous for older employees with many years of service, and cash balance plans are the most generous for young employees who have years to earn interest.

What are financing, communication and settlement requirements?

ERISA does not require organizations to have pension schemes, but those that are established must meet certain requirements. Employees must receive a plan summary (SDP) within 90 days of entering a plan, describing the plan's funding, eligibility requirements, risks, etc. The SDP must be completed within 90 days of entering the plan. ERISA guarantees that when employees become members of a pension plan and work a certain minimum number of years, they are entitled to a penitentiary on retirement. These are called acquisition rights.

Are people paid for the time that they were not working?

At first sight, it seems that for example paid holidays or sick leave do not seem to make economic sense. Perhaps for the reason that a minimum number of days of leave (20 days) has been made legally compulsory in the European Community. In America, this does not exist and often employees only get 10 days for leave.

What is the goal of a family-friendly policy?

To alleviate employee conflicts between work and non-work, organizations can use family-friendly policies, such as family leave policies and childcare.

While the programs discussed here seem to target a certain group of workers, these programs often have 'spillover effects' on other workers, who they see as a symbol of overall corporate concern for human resources, and thus promote loyalty, even among employee groups that do not use the programs and may lead to better performance of the organization.

Since 1993, the Family and Medical Leave Act has required organizations with 50 or more employees within a 75 mile radius to provide up to 12 weeks of unpaid maternity or adoption leave.

Companies located in the United States are increasingly providing support to their employees in the form of child care.

How can firms manage benefits: objectives and strategies of employers?

While the regulatory environment includes some important limitations on benefit decisions, employers retain a high degree of discretion and must evaluate the payout of such decisions.

There is clearly considerable scope for progress in evaluating benefit decisions. Despite some of the obvious reasons for benefits - group discounts, regulation and minimizing offsetting taxes - organizations are not doing as well as they could to describe what they want their benefits package to achieve and evaluate how well they succeed.

What is meant by a survey and benchmarking?

As with cash compensation, an important element of benefits management is knowing what the competition is doing. Survey data on benefit packages are available from private consultants, the U.S. Chamber of Commerce and the Bureau of Labor Statistics (BLS). Another good source is the BLS, which provides information on benefit costs for specific categories, as well as breakdowns by industry, profession, union status and size of organization.

What is cost control?

When considering cost strategies, it is useful to consider several factors. These factors can be the following:

1. The greater the cost of a benefit category, the greater the likelihood of savings.

2. The growth trajectory of the benefit category is also important: even if the costs are currently acceptable, the growth rate may lead to serious costs in the future.

3. Cost control efforts can only work to the extent that the employer has considerable freedom to decide how much to spend in a benefit category.

One benefit - medical and other insurance - stands out as a target for cost control for two reasons.

1. Costs are high and cost growth has generally been high, even in the context of determined efforts to control cost increases.

2. Employers have many options to attack costs and improve quality, and the recent affordable care act makes these issues even more striking for employers.

In what way is it possible to control costs and improve quality in the healthcare sector?

Unlike workers in most Western European countries, who have nationalized health systems, the majority of Americans who have health insurance make it through their employers. One trend is aimed at reducing, rather than shifting, costs through activities such as pre-testing and second surgical advice. The use of alternative providers such as Health Maintenance organizations (HMOs) and Preferred Supplier organizations (PPOs) has also increased. HMO differs from more traditional providers by focusing on preventive care and outpatient treatment, where employees should only use HMO services and provide benefits on a prepaid basis. PPOs are essentially groups of healthcare providers who have contracts with employers, insurance companies, and are therefore able to provide healthcare at a reduced rate. They differ from HMOs because they do not provide benefits on a prepaid basis and employees are often not obliged to use the preferred suppliers.

What is an Employee Wellness Program?

These employee wellness programs (EWPs) focus on changing behavior both on and off work time which could ultimately lead to future health problems. These EWPs are preventive in nature: they try to control healthcare costs by reducing staff needs for services. EWPs are passive or active. Passive programs use little or no reach for individuals, nor do they provide ongoing support to motivate them to use the resources. Active welfare centres assume that behavioural change requires not only awareness and opportunity, but also support and reinforcement.

Research into these different types of wellness centres leads to different conclusions. Some of these conclusions are:

1. The costs of health education programs are significantly lower than those of fitness facility programs or the follow-up model.

2. All three models are effective in reducing the risk factors associated with cardiovascular disease.

What are healthcare costs and quality (ongoing challenges)?

Two important phenomena are often encountered in cost control efforts.

1. Piecemeal programs may not work well, as steps to control one aspect can lead to workers "migrating" to other programs offering cost-free medical treatment.

2. There is often a so-called Pareto group, which indicates that a small percentage of workers are responsible for generating most of the healthcare costs.

An important focus is on identifying best medical practices by measuring and monitoring the relative success of alternative treatment strategies using large-scale databases and research.

What are staff responses to control benefiting from cost increases?

Employers can change staff regulations to control benefit costs. They can do this because:

1. Benefit costs have been determined. Hourly costs can be reduced by allowing employees to work more hours.

2. A second possible effect of the Fair Labor Standards Act (FLSA) is that organizations will try to exempt their employees as possible. The growth in the number of employees may also reflect organizations' efforts to reduce hourly costs without having to pay overtime.

3. Another potential effect is the growth of part-time jobs and the use of agency workers, possibly in response to rising benefit costs.

4. Employers may classify employees as independent contractors rather than employees, thus eliminating the employer's obligation to provide legally required employee benefits.

What is the nature of the workforce?

While general considerations such as cost control and 'protection against the risks of old age, loss of health and loss of human life' are important, employers should also take into account the specific demographic composition and preferences of their current workforce when designing their benefit packages.

For example, if you employ older people, they will benefit more from medical insurance and pensions than young workers.

How can firms communicate properly with their employees and maximize the value of benefits?

What is the reason for employees to usually underestimate the value of their benefits?

If some employers were to offer significantly fewer benefits, the importance of benefits could become much greater.

What are flexible benefit plans?

Instead of a standard package of benefits for all employees, flexible benefit plans allow employees to choose the types and amounts of benefits they want.

What are the potential benefits of these flexible benefit plans?

1. Employees can gain greater awareness and appreciation of what employers offer them, particularly with plans that give employees a lump sum to allocate benefits.

2. There should be a better match between the benefits package and the employee's preferences, by allowing the employee's choice.

3. Employers can realize the total cost of their benefit programs.

What are flexible expense accounts?

A flexible spending account allows for pre-tax contributions to an employee account that can be used to pay for unhedged healthcare costs.

The federal tax law requires that funds in healthcare and care-dependent care are subscribed and spent in advance during the planning year.

What are general regulatory issues?

Although we have already discussed a number of regulatory issues, some extra attention is needed.

What is the affordable care act?

The Affordable Care Act, which was legally signed in 2010, has several provisions that will have a major impact on employers, as they will be implemented until 2018.

What are non-discrimination rules, qualified plans and tax treatment?

What are the benefits of a qualified plan? In the case of a qualified pension scheme, these tax benefits might include the following examples:

• an immediate tax deduction for employers for their contributions to pension funds,

• no tax liability for the employee at the time of the employer's deduction, and

• tax-free investment return on the pension funds.

How does gender, age and disability relate to the labor market?

Women live longer than men, so they should actually build up a longer pension. In the 1978 Manhart ruling, the Supreme Court ruled that it is illegal for employers to oblige women to contribute more to a defined benefit pension scheme than men: Title VII protects individuals, and not all women survive all men.

What is monitoring of future benefit obligations?

Financial Accounting Statement (FAS) 106, issued by the board of financial reporting standards, came into effect in 1993. This rule required that all post-retirement benefits no longer be funded on a pay-as-you-go basis.

What are collective agreements and employment relationships? - Chapter 14

Trade unions can help to achieve important work goals. However, due to global competition, high wages without employee productivity threaten the survival of a company. According to John Dunlop, the following matters are necessary for a successful system of industrial relations:

• An environmental context

• Participants including:

  • Employees

  • Unions

  • Managers

  • The government

• A web of rules and ideology

The main benefit of the Workers' Union to society is the institutionalization of industrial conflicts, which is therefore resolved in the least costly way. Unilateral management control endangers workers' rights. Extensive involvement of government and courts can result in costly, slow and imposed conflict resolution and thus the trade union system works best in democracies. The National labor Relationship Act actively supports collective bargaining by trade unions. NLRA enforcement rests with the National labor Relations Board. Employees join trade unions when they see a difference between perceived fair pay and benefits and actual pay and benefits. There are different negotiation structures. In the negotiation process, negotiators can adopt different strategies. The effectiveness of labor relations can be evaluated through strikes and wages and benefits, productivity and profits and performance of shares.

A system with trade unions works best in democracies. The main benefit of the Workers' Union to society is the institutionalization of industrial conflicts, which is therefore resolved in the least costly way. Unilateral management control puts workers' rights at risk. Extensive involvement of government and courts can result in costly, slow and imposed conflict resolution, so the trade union system works best in democracies. One of the most basic decisions of management is whether the trade union should be encouraged as its employees. First, an aggressive approach can be adopted to tackle unionization or to provide such good conditions that workers do not need to unionize. Trade unions try to give workers a formal and independent voice in determining the terms and conditions of their work. An important aim of trade unions is negotiation effectiveness, because it provides the strength and influence to make workers' voices heard and to bring about change in the workplace. Most trade unionists belong to a national or international union. Trade unions are responsible for training their members, while industrial trade unions are made up of members linked by their work in a particular sector.

What is the structure, governance and membership of the Union?

Typical provisions in collective agreements are:

• The drafting and management of the agreement, functions, rights and responsibilities

• Wage formation and administration

• Job or income security

• Factory operations

• Paid and unpaid leave

• Employee compensation plans and special groups.

Negotiations at the level of local trade unions are also very important. A 'check-off' provision is a provision in a trade union contract that requires an employer to deduct the trade union contribution from employees' pay slips. A closed shop is a union security system where a person must be a union member before being hired. However, this is illegal under NLRA. A shop in the Union is a union security that requires a person to join the union within a certain time after being hired. An Agency shop is that a trade union security requires an employee to pay membership fees, but not to join the union. Maintenance of membership: union rules that require members to remain members for a specified period. Right-to-work laws are state laws that prohibit compulsory union membership.

What is the contract negotiations?

There are different negotiation structures. In the negotiation process, negotiators can adopt different strategies. Examples of these different strategies are:

• Distributive negotiations are the part of the negotiation process that focuses on distributing a fixed economic pie.

• Integrative negotiations are the part of the process that seeks solutions that benefit both parties.

• Attitudinal structuring is the aspects of the process that refers to the relationship and level of trust between the negotiators.

• Intra-organizational negotiation is the part that focuses on the conflicting objectives of factions within labor and management.

Before starting negotiations, managers must accomplish some actions:

• set interdepartmental contract goals

• review old contracts

• prepare and analyze data

• anticipate union requirements

• determine the cost of possible contract provisions

• prepare for a strike

• determine strategy and logistics.

To reach an agreement, negotiators must do the following:

• separate people from the problem

• focus on interests and not positions

• generate a variety of possibilities before deciding what to do

• insist that results are based on an objective standard.

The willingness of the management to strike means that the company can remain profitable in the long term if it agrees to the demands of the union and whether the company can continue to operate in the short term despite a strike. The following factors are important:

• product demand

• perishability of products

• technology

• availability of replacement employees

• multiple production sites and staggered contracts

• integrated facilities

• lack of product alternatives

Mediation is a procedure for resolving collective bargaining, whereby a mediator without formal authority acts as a mediator and intermediary in the negotiations.

A fact-finder is someone who reports on the reasons for the labor management dispute and the views and arguments of both parties and provides a non-binding recommendation for resolving the dispute.

Arbitration is a procedure for resolving collective bargaining in which an arbitrator chooses a solution for the dispute.

How is it possible to manage human resources worldwide? - Chapter 15

What are current global changes?

Companies are trying to gain a competitive advantage that international expansion can offer in various ways. First, these countries are new markets with a large number of potential customers. Secondly, many companies are building production facilities in other countries to benefit from lower labor costs for relatively unskilled jobs in those countries. Thirdly, the rapid increase in telecommunications and information technology makes it possible to work faster, more efficiently and more effectively worldwide.

What is the European Union?

European countries have managed their economies individually for years. Most European countries agreed to participate in the European Economic Community (EEC), which began in 1992. The EEC was extended in 2009 and transformed into the European Union (EU).

What is the North American Free Trade Agreement?

The North American Free Trade Agreement (NAFTA) is an agreement between Canada, the United States and Mexico that has created a free market even larger than the European Economic Community.

What is the growth of Asia?

An additional global market of economic interest to many companies is in Asia. A consortium of Singaporean companies and public authorities, together with China, has developed a large industrial township in Suzhou in eastern China that will consist of turnkey factories for sale to foreign companies.

What is the General Agreement on Tariffs and Trade?

The General Agreement on Tariffs and Trade (GATT) is an international framework of rules and principles to reduce trade barriers between countries around the world. It currently consists of more than 100 Member States.

What are the factors that influence HRM in global markets?

Researchers in international management have identified a number of factors that might have influence on HRM in the global marketplace. This research focused on four factors. These factors are the following:

1. Culture

2. Education human capital

3. The political-legal system

4. The economic system

What is culture?

The most important factor influencing international HRM is by far the culture of the country in which a facility is located. Culture is important for HRM for two reasons.

1. Culture often determines the other three factors that influence HRM in global markets: education human capital, the political-legal system and the economic system. Culture also affects human capital, because if education is greatly appreciated by culture, members of the community try to increase their human capital. Besides, culture and economic systems are closely intertwined.

2. Another main reason is that culture is important to HRM since it often determines the effectiveness of different HRM practices.

What are the five cultural dimensions of Hofstede?

Hofstede identified five dimensions of culture. There five dimensions are the following:

1. Individual collectivism

2. Power dimension

3. Uncertainty avoidance

4. Masculinity femininity

5. Long-term versus short-term orientation

Individual collectivism describes the power of the relationship between an individual and other individuals in society - that is, the extent to which people act as individuals rather than as members of a group. In individualistic cultures, such as the United States, Great Britain and the Netherlands, people are expected to look at their own interests and those of their immediate families. In collectivist cultures, such as Colombia, Pakistan and Taiwan, people are expected to look after their own interests and the interests of the wider community, which is expected to protect people when they are in difficulty.

The second dimension, power distance, concerns in the way in which a culture deals with hierarchical power relations - especially the unequal distribution of power. Differences in power distance often result in miscommunication and conflicts between people from different cultures.

The third dimension, uncertainty avoidance, describes how cultures try to deal with the fact that the future is not perfectly predictable.

The masculinity femininity dimension describes the division of roles between the sexes in a society.

The fifth dimension includes long-term versus short-term orientation. Cultures with a long-term orientation focus on the future and hold values in the present that will not necessarily offer a direct advantage, such as economy and perseverance.

What are the implications of culture for HRM?

There are two implications of culture for HRM.

1. Culture differs greatly from issues such as how subordinates expect leaders to lead, how decisions are handled within the hierarchy and (most importantly) what motivates individuals.

2. Cultures can influence the suitability of HRM practices.

What is education human capital?

A company's potential to find and retain qualified personnel is an important consideration in any decision to expand into a foreign market. Human capital refers to the productive capabilities of individuals. Examples of these capabilities of individuals are knowledge, skills and experience that have economic value.

What is the political-legal system?

The rules imposed by a country's legal system can have a strong impact on HRM. The political-legal system often dictates the requirements for certain HRM practices, such as training, compensation, recruitment and dismissal.

How can employees be managed in a global context?

What types of international employees exist?

Before discussing the level of global participation, we should make a distinction between:

1. Mother countries

2. Host countries

3. Third countries

A motherland is defined as the country in which the headquarter of a company is located. A host country is defined as the country in which the organization of the parent country tries to locate a facility. A third country is defined as a country other than the host country or the mother country, and a company may or may not have a facility there.

Besides these different categories of countries, there are different categories of workers as well.

• Expatriate is the term generally used for employees sent by a company in one country to manage activities in another country.

• Parent-country nationals (PCNs) are employees born and living in the home country.

• Host-country nationals (HCNs) are those workers who are born and raised in the host, as opposed to the motherland.

• Third-country nationals (TCNs) are workers born in a country other than the country of origin and the host country but working in the host country.

What are levels of global participation?

The authors defined different types of markets which will be explained below.

• Domestic markets

• International markets

• Multinational markets

• Global markets

What are domestic markets?

Most companies start operating in a domestic market. As products become more popular, the owner can choose to build additional facilities in different parts of the country to reduce the cost of transporting the product over long distances.

What are international markets?

As more competitors enter the domestic market, companies are confronted with the possibility of losing market share; so they often look for other markets for their products.

What are multinational markets?

While international companies build one or a few facilities in another country, they become multinational when they build facilities in a number of different countries, trying to take advantage of lower production and distribution costs in different locations.

What are global markets?

Global organizations compete for state-of-the-art, top quality products and services at the lowest possible cost.

A transnational HRM system is characterized by three attributes. Transnational scope refers to the fact that HRM decisions must be made from a global rather than a national or regional perspective.

Transnational representation reflects the multinational composition of a company's managers. Transnational process refers to the extent to which the planning and decision-making processes of the company consist of representatives and ideas from different cultures.

How do you manage expatriates in global markets?

We discuss the key issues relevant to the management of expatriate managers. These issues relate to the following aspects:

• Selection

• Training

• Compensation

• Re-culture of expatriates

How does the selection of expatriate managers take place?

Expatriate managers must have technical competence in the field of operations; otherwise they will not be able to earn the respect of subordinates.

The manager's family must also be able to adapt to the new culture in the same way. These adaptive skills are divided into three dimensions.

1. The self-dimension,

2. The relationship dimension,

3. The observation dimension.

A study of international rights holders found that they considered the following five factors important in descending order of importance. These five factors are the following:

1. Family situation

2. Flexibility and adaptability

3. Work experience and motivation

4. Relational skills and;

5. Additional cultural openness

What does the step of training and development of expats look like?

Once an expatriate manager has been selected, it is necessary to prepare that manager for the upcoming assignment.

What do expatriates get as compensation?

One of the more difficult aspects of managing expatriates is determining the compensation package. Most use a balance approach to determine the total package level. Purchasing power includes all costs related to the expatriate assignment. Expenses include goods and services, housing, income tax, reserve and shipping and storage. Total wage packages have four components. First, there is the basic salary. Tax settlement rights are a second component. They are needed because of different tax systems in countries with high taxes. A third component, benefits, offers additional compensation problems. Most of the problems relate to the transportability of the benefits.

What is re-acculturation of expats?

A final issue that is important for managing expatriates is dealing with the re-acculturation process when managers re-enter their home country. Companies are making more and more efforts to re-accommodate expats.

There are two characteristics which help in this transition process:

1. Communication. Communication refers to the extent to which expatriate receives information and recognizes changes abroad.

2. Validation. Validation refers to the amount of recognition the expatriate receives upon returning home.

What does strategic HRM look like? - Chapter 16

How can the activities of HRM be divided into classes?

The activities of HRM can be divided into the following classes:

• Transformational. Examples are knowledge management, cultural changes, redefining strategic direction and the development of management. This amounts 5 - 15% of the tasks.

• Traditional. Examples are training, rewards, employee relations, performance management and recruitment. This amounts 15 - 30% of the tasks.

• Transactional. Examples are data tracking, employee services and benefit administration. This amounts 65 - 75% of the tasks.

Most companies therefore spend most of their time on transactional tasks. But in order to add value to the business, a company also needs to increase their activities in the transformational and traditional tasks. HR needs executives to be able to do this:

• Developing a strategy for the HRM function

• Determine the current effectiveness of the HRM function

• Redesign or outsource the HRM processes to improve efficiency and effectiveness

What is meant by the strategy of HRM?

HRM is increasingly seen as a client-oriented business unit within the organization that has to try to connect the wishes of the clients as best as possible with the products and technologies.

The basic process for drawing up a HRM strategy is as follows:

• Research the external environment to identify important trends/developments

• Define the strategic business issues

• Identify people issues that matter

• Develop an HR strategy based on the information collected

• Communicate this HR strategy

The HR strategy can be better aligned with the strategy of the specific company when department managers are involved in this process. These managers might ensure a better alignment between these strategies.

HR strategies can be developed in different ways. We can divide this into a number of categories:

• Outside-In perspective

  • Business Driven; Operating results - People issues - Strategy

• Inside-Out perspective

  • Business-Linked: Strategy - People Issues - Business Issues

  • People-Linked: Strategy - People Issues

  • HR-focused: HR strategy - Human issues

How can effectiveness be measured?

The advantage of measuring the effectiveness of HRM is that it gives a good sign to other managers. They can see that HRM cares about the organization as a whole and contributes to the (financial) success of the organization. It also allows us to determine whether the HRM function is achieving its goals.

There are two approaches that are usually used to evaluate the effectiveness of HRM practices. These approaches are:

1. The audit approach

2. The analytical approach

What is meant by the audit approach?

This audit approach takes into account customer satisfaction and other important measures that fit the organization. Some examples are the following:

• staffing

• equal opportunities

• compensation

• benefits

• training

• rewards

• succession planning

• security

• labor relations

• overall effectiveness

These examples mentioned above can be measured by a survey of employees or the highest executives in an organization.

What is meant by the analytical approach?

This analytical approach determines whether a project has the desired effect, what the costs and benefits of an HRM practice are or whether analytical data are used to improve effectiveness. It measures how much change a particular practice has brought about or what the monetary value of this is. A utility analysis can be applied to estimate the financial impact of employee behavior (such as absenteeism, turnover, performance and alcohol and drug abuse). This method is much more demanding than the previous one because it involves statistics and finances.

How is it possible to make improvements?

Improvements in the effectiveness of HRM can be achieved by improving the execution of the HRM activities themselves and by eliminating the administrative work as much as possible.

Some ways to improve effectiveness of HRM activities are the following:

• Restructuring

• Outsourcing

• Redesigning processes

• Use of new technologies

Restructuring. This means that the traditional HRM functions were structured around the basic functions of HRM, such as training and rewards. All these subfunctions had their own director who reports to the VP of HRM. But to ensure that the HRM function adds strategic value to the company's effectiveness, the senior HR person must be part of the top management. The HRM function then consists of the following components to increase efficiency:

• Expertise center: functional specialists who develop HR systems

• Field generalists: HRM employees connected to a business unit

• Service centres: where the administrative and support function of HR is carried out

Outsourcing. Outsourcing means that an external party will now take care of the outsourced process since this outsourced party can do a part of the process more effectively and/or cheaply. An outsourced party might be more effective because this party collects and uses the knowledge gained in different companies and can therefore develop and implement the best practices.

Redesigning processes. Reengineering refers to doing a complete review of a process, and then redesigning it so that the process offers greater efficiency and higher quality. To redesign processes, the following steps must be followed:

• Identifying the process that needs to be redesigned.

• Understanding the process

• Redesigning the process

• Implementing the new process. This is done first in a limited, controlled setting, before it is implemented throughout the organization.

New technologies. Several new technologies are already used in different ways in HRM. Some examples of these new technologies are:

• Administrative systems and processes make calculations for reviewing and documenting HR practices and decisions.

• Decision support systems help to solve problems.

• Expert systems have incorporated the rules of experts into their system.

• Through interactive voice technology an employee is able to call someone else over the computer.

The client-server architecture ensures that the clients, the computers in an organization, retrieve information from the central server where everything is stored. This connection of all computers is also called a network.

In a relational database, all information about different elements is stored in separate folders, which can then be linked together, such as name, identification number and location. Moreover, the information can be accessed from different locations.

Imaging is the process of scanning documents and storing them digitally so that they can be easily found again later and do not take up any physical space.

Expert systems mimic an expert and have three elements:

1. A knowledge base

2. A decision support component

3. A user interface: this system can improve quality and reduce costs.

Groupware is software that ensures that several users can use information at the same time and thus work together.

Technology has become an increasingly important task in organizations including in the HR function. In the following HRM activities is the use of technology important:

• Recruitment and selection. A recruiter is currently able to check and attract people online.

• Compensation and rewards. Goals are easily spread in the organization and evaluation is accomplished following various guidelines.

• Training and development. Digital methods can contribute to efficiency and effectiveness of training and ensure rapid processing of results.

HR professionals will need to have four basic competencies to participate in the strategic management process:

1. Business competence: have knowledge of the business in which the company is active and the economic and financial possibilities.

2. Professional/technical knowledge of different HR practices

3. Managing change processes

4. Integration competence: the competence to integrate the first three competences

A CHRO (chief human resource officer) is someone who is in charge of the HR function. This person must have the following competences and characteristics:

• Strategic advisor. This is important in formulating and implementing business strategy.

• Talent architect. This is important for a CHRO to build and identify human capital which is essential to the present and future of the organization.

• Counselor/ Confidante/ Coach

• Leader of the HR function

• Link with board of directors/ top management

• Workforce observer

• Representation of the organization