Book Management (9th edition): Part 2

(BQ) Part 2 book Management has contents: Managing human resources, managing diversity, dynamics of behavior in organizations, motivating employees, managing communication, managing quality and performance, managing the value chain, information technology, and e business, leading teams,...and other contents.

chapter 11 pt4

After studying this chapter, you should be able to:

1. Explain the strategic role of human resource management.

2. Describe federal legislation and societal trends that infl uence human resource management.

3. Explain what the changing social contract between organizations and employees means for workers and human resource managers.

4. Show how organizations determine their future staffi ng needs through human resource planning.

5. Describe the tools managers use to recruit and select employees.

6. Describe how organizations develop an effective workforce through training and performance appraisal.

7. Explain how organizations maintain a workforce through the administration of wages and salaries, benefi ts, and terminations.

Getting the Right People on the Bus

The Strategic Role of HRM Is to Drive

Organizational Performance

The Strategic Approach

Building Human Capital to Drive

Performance

Globalization

The Impact of Federal Legislation on HRM

New Manager Self-Test: What Is Your HR

Work Orientation?

The Changing Nature of Careers

The Changing Social Contract

Innovations in HRM

Finding the Right People

Human Resource Planning

G ETTING THE R IGHT P EOPLE ON THE B US1

As a new manager, how much emphasis will you give

to getting the right people on your team? How much

emphasis on people is needed? Find out by answering

the following questions based on your expectations and

beliefs for handling the people part of your management

job Please answer whether each item is Mostly True or

Mostly False for you

Mostly True

Mostly False

1 I will readily fi re someone who

isn’t working out for the interests

of the organization.

2 Selecting the right people for

a winning business team is as

important to me as it is to a

win-ning sports team.

3 I expect to spend 40 percent to

60 percent of my management

time on issues such as recruiting,

developing, and placing people.

4 I will paint a realistic picture of

negative job aspects that will help

scare off the wrong people for the

job.

5 My priority as a manager is fi rst

to hire the right people, second to

put people in the right positions,

and third to then decide strategy

and vision.

6 With the right people on my team,

problems of motivation and

super-vision will largely go away.

7 I expect that hiring the right

people is a lengthy and arduous

process.

8 I view fi ring someone as helping

them fi nd the place where they

belong to fi nd fulfi llment.

SCORING AND INTERPRETATION: Most new ers are shocked at the large amount of time, effort, and skill required to recruit, place, and retain the right people

manag-In recent years, the importance of “getting the right people on the bus” has been described in popular busi-

ness books such as Good to Great and Execution The right

people can make an organization great; the wrong people can be catastrophic

Give yourself one point for each item you marked as Mostly True If you scored four or less you may be in for a shock as a new manager People issues will take up most

of your time, and if you don’t handle people correctly, your effectiveness will suffer You should learn how to get the right people on the bus, and how to get the wrong people off the bus The faster you learn these lessons, the better new manager you will be A score of fi ve or more suggests you have the right understanding and expecta-tions for becoming a manager and dealing with people on the bus

Hiring and keeping quality employees is one of the most urgent concerns for today’s

organizations.2 Employees give a company its primary source of competitive

advan-tage, so talent management is a top priority for smart managers The term human

resource management (HRM) refers to the design and application of formal systems

in an organization to ensure the effective and effi cient use of human talent to

accom-plish organizational goals.3 This system includes activities undertaken to attract,

develop, and maintain an effective workforce Managers have to fi nd the right

peo-ple, place them in positions where they can be most effective, and develop them so

they contribute to company success

Over the past decade, human resource management has shed its old “personnel” image and gained recognition as a vital player in corporate strategy.4 Increasingly, large corporations are outsourcing routine HR administrative activities, freeing HRM staff from time-consuming paperwork and enabling them to take on more strategic responsibilities Human resources tops Gartner Inc.’s list of most commonly out-sourced business activities.5

All managers need to be skilled in the basics of human resource management Flatter organizations often require that managers throughout the organization play

an active role in recruiting and selecting the right employees, developing effective training programs, or creating appropriate performance appraisal systems HRM professionals act to guide and assist line managers in managing human resources to achieve the organization’s strategic goals

T HE S TRATEGIC R OLE OF HRM I S TO D RIVE

How a company manages talent may be the single most important factor in tained competitive success Today’s best human resources departments not only support strategic objectives but also actively pursue an ongoing, integrated plan for furthering the organization’s performance.6 Research has found that effective human resource management has a positive impact on strategic performance, including higher employee productivity and stronger fi nancial results.7

sus-The Strategic Approach

The strategic approach to human resource management recognizes three key ments First, all managers are involved in human resource management Second, employees are viewed as assets Employees, not buildings and machinery, give a company its competitive edge Third, human resource management is a matching process, integrating the organization’s strategy and goals with the correct approach to managing human capital.8 In companies that take a strategic approach, HR managers are key players on the executive team and play a pivotal role in driving performance

ele-At retailer Target, for example, the formal mission of the human resources ment is to “drive company performance by building a fast, fun, and friendly team committed to excellence.” To fulfi ll the mission, HR managers are directly involved

depart-in builddepart-ing a culture that distdepart-inguishes Target from other retailers, fi nddepart-ing the right people to fi t the culture, then creating training programs, compensation, and other mechanisms to develop and retain quality employees.9 Some current strategic issues

of particular concern to managers include the following:

▪ Right people to become more competitive on a global basis

▪ Right people for improving quality, innovation, and customer service

▪ Right people to retain during mergers and acquisitions

▪ Right people to apply new information technology for e-businessAll of these strategic decisions determine a company’s need for skills and employees

Go to the experiential exercise on pages 332–333 that pertains to your potential for strategic human resource management.

This chapter examines the three primary goals of HRM as illustrated in Exhibit 11.1 HRM activities and goals do not take place inside a vacuum but within

the context of issues and factors affecting the entire organization, such as

global-ization, changing technology, a growing need for rapid innovation, quick shifts in

markets and the external environment, societal trends, government regulations, and

changes in the organization’s culture, structure, strategy, and goals

The three broad HRM activities outlined in Exhibit 11.1 are to fi nd the right

peo-ple, manage talent so people achieve their potential, and maintain the workforce over

the long term.10 Achieving these goals requires skills in planning, recruiting, training,

performance appraisal, wage and salary administration, benefi t programs, and even

termination

Building Human Capital

to Drive Performance

Today, more than ever, strategic decisions

are related to human resource

consider-ations In many companies, especially

those that rely more on employee

infor-mation, creativity, knowledge, and

ser-vice rather than on production machinery,

success depends on the ability to manage

human capital.11 Human capital refers to the

economic value of the combined

knowl-edge, experience, skills, and capabilities of

employees.12 To build human capital, HRM

develops strategies for fi nding the best

tal-ent, enhancing their skills and knowledge

with training programs and opportunities

for personal and professional development,

and providing compensation and benefi ts

that support the sharing of knowledge and

appropriately reward people for their

con-tributions to the organization

E X H I B I T 1 1 1 Strategic Human Resource Management

Lowe’s 215,000 employees help customers with remodeling, building, and gardening ideas at its 1,575 stores They cut lumber, blinds, pipe, and chains; thread pipes; assemble items; provide computer project design and landscape garden design; match paint colors; teach how-to clinics; and offer many other services Managers know that providing superior customer service depends on

human capital, so they invest in fi nding the best people and helping them develop and

apply their combined knowledge, skills, experience, and talent.

The importance of human capital for business results is illustrated in Exhibit 11.2 The framework was developed by Accenture and used by software and services company SAP SAP needed a way to evaluate and revise its human capital processes

to shift to a new strategy requiring stronger customer focus and greater individual employee accountability The idea is to show how investments in human capital contribute to stronger organizational performance and better fi nancial results The framework begins at the bottom (level 4) by assessing internal processes such

as workforce planning, career development, learning management, and so forth Managers use these activities to increase human capital capabilities (level 3), such

as employee engagement or workforce adaptability Enhanced capabilities, in turn, drive higher performance in key areas such as innovation or customer satisfaction (level 2) Finally, improvements in key performance areas lead to improved busi-ness results.13

As a new manager, recognize that human capital is the organization’s most valuable asset If you are involved in hiring decisions, look for the best people you can fi nd, and then treat them like gold, with opportunities to learn, grow, and develop new skills and earn appropriate compensation and benefi ts.

SOURCE: Susan Cantrell, James M Benton, Terry Laudal, and Robert J Thomas, “Measuring the Value of Human Capital Investments: The SAP Case,” Strategy & Leadership

34, no 2 (2006): 43–52 Copyright 2006 by Emerald Group Publishing Limited Reproduced with permission of Emerald Group Publishing Limited in the format Textbook

E X H I B I T 1 1 2 The Role and Value of Human Capital Investments

Human Capital Capabilities

Leadership

Capability

Workforce Performance

Employee Engagement

Workforce Adaptability

Ability to Change

Talent Management

Human Capital Efficiency Level 3

Business Results

Level 1

Revenue Growth

ROIC or ROE (FS only)

Total Return to Shareholders

Future Value

Employee Relations

Performance Appraisal

Human Capital Strategy

Succession Planning

Learning Management

Recruiting

Knowledge Management

Workforce Planning

Human Capital Infrastructure

Workforce Design

Level 4

Human Capital Processes

Key Performance Drivers

Level 2

Productivity Quality Innovation Customers

Globalization

An issue of signifi cant concern for today’s organizations is competing on a global

basis, and the success of a company’s global business strategies is closely tied to the

effectiveness of the organization’s global HR strategies. 14 A subfi eld known as

inter-national human resource management (IHRM) specifi cally addresses the added

complexity that results from coordinating and managing diverse people on a global

scale.15 Research in IHRM has revealed that, as the world becomes increasingly

inter-connected, some HR practices and trends are converging However, IHRM managers

need a high degree of cultural sensitivity and the ability to tailor and communicate

policies and practices for different cultures.16 What works in one country may not

translate well to another Exhibit 11.3 lists some interesting trends related to selection,

compensation, performance appraisal, and training in different countries

T HE I MPAC T OF F EDERAL L EGISLATION ON HRM

A number of federal laws have been passed to ensure equal employment opportunity

(EEO) Some of the most signifi cant legislation and executive orders are summarized

in Exhibit 11.4 The point of the laws is to stop discriminatory practices that are unfair

to specifi c groups and to defi ne enforcement agencies for these laws EEO

legisla-tion attempts to balance the pay given to men and women; provide employment

opportunities without regard to race, religion, national origin, and gender; ensure

fair treatment for employees of all ages; and avoid discrimination against disabled

individuals

The Equal Employment Opportunity Commission (EEOC) created by the Civil

Rights Act of 1964 initiates investigations in response to complaints concerning

dis-crimination The EEOC is the major agency involved with employment

discrimina-tion Discrimination occurs when some applicants are hired or promoted based on

criteria that are not job relevant; for example, refusing to hire a black applicant for

a job he is qualifi ed to fi ll or paying a woman a lower wage than a man for the

same work are discriminatory acts When discrimination is found, remedies include

providing back pay and taking affi rmative action Affi rmative action requires that

an employer take positive steps to guarantee equal employment opportunities for

people within protected groups An affi rmative action plan is a formal document

that can be reviewed by employees and enforcement agencies The goal of

organiza-tional affi rmative action is to reduce or eliminate internal inequities among affected

employee groups

oth-ers Less emphasis is placed on job-related skills and experience.

• Employment tests are considered a crucial part of the selection process in Korea, whereas in Taiwan, the job interview is considered the most important criterion for selection.

• China and Taiwan have surprisingly high use of pay incentives and are moving toward more incentives based on individual rather than group performance.

evaluat-ing their goal achievement, plannevaluat-ing their development, and improvevaluat-ing their performance to be the most important reasons for performance appraisals.

• HR managers in Korea incorporate team-building into nearly all training and development practices.

SOURCE: Mary Ann Von Glinow, Ellen A Drost, and Mary B.Teagarden,“Converging on IHRM Best Practices: Lessons Learned from a Globally Distributed Consortium on

E X H I B I T 1 1 3 Some Trends in International Human Resource Management

t i ies for people within protected d d

g

gr

gro ro

g ups p

Failure to comply with equal employment opportunity legislation can result

in substantial fi nes and penalties for employers Suits for discriminatory practices

can cover a broad range of employee complaints One issue of growing concern is sexual harassment, which is also a violation of Title VII of the Civil Rights Act The

EEOC guidelines specify that behavior such as unwelcome advances, requests for sexual favors, and other verbal and physical conduct of a sexual nature becomes sexual harassment when submission to the conduct is tied to continued employ-ment or advancement or when the behavior creates an intimidating, hostile, or offensive work environment.17 Sexual harassment will be discussed in more detail

As a new manager, you may need to keep detailed records that document compliance with federal laws and regulations Complete the New Manager Self-Test on page 313

to see if you have a natural orientation toward systematic record-keeping.

Equal Opportunity/Discrimination Laws

Civil Rights Act 1991 Provides for possible compensatory and punitive damages plus

traditional back pay for cases of intentional discrimination brought under title VII of the 1964 Civil Rights Act Shifts the burden of proof to the employer.

Americans with Disabilities Act 1990 Prohibits discrimination against qualifi ed individuals by employers on

the basis of disability and demands that “reasonable tions” be provided for the disabled to allow performance of duties Vocational Rehabilitation Act 1973 Prohibits discrimination based on physical or mental disability and

accommoda-requires that employees be informed about affi rmative action plans Age Discrimination in Employment

Act (ADEA)

1967 (amended

1978, 1986)

Prohibits age discrimination and restricts mandatory retirement.

Civil Rights Act, Title VII 1964 Prohibits discrimination in employment on the basis of race,

reli-gion, color, sex, or national origin.

Compensation/Benefi ts Laws

Health Insurance Portability

Accountability Act (HIPPA)

1996 Allows employees to switch health insurance plans when changing

jobs and get the new coverage regardless of preexisting health ditions; prohibits group plans from dropping a sick employee Family and Medical Leave Act 1993 Requires employers to provide up to 12 weeks unpaid leave for

con-childbirth, adoption, or family emergencies.

equal work.

Health/Safety Laws

Consolidated Omnibus Budget

Reconcilia-tion Act (COBRA)

1985 Requires continued health insurance coverage (paid by employee)

What Is Your HR Work Orientation?

As new manager, what is your orientation

con-cerning day-to-day work issues? To fi nd out, think

about your preferences for the questions below

Circle a or b for each item depending on which

one is accurate for you There are no right or

wrong answers

1 The work elements I prefer are

_ a Administrative _ b Conceptualizing

2 The work elements I prefer are

_ a Creative _ b Organizing

3 My mode of living is

_ a Conventional _ b Original

4 Which is more important to you?

_ a How something looks (form) _ b How well it works (function)

5 I like to work with

_ a A practical person _ b An idea person

6 I am more

_ a Idealistic _ b Realistic

7 For weekend activities, I prefer to

_ a Plan in advance _ b Be free to do what I want

8 A daily work routine for me is

_ a Painful _ b Comfortable

SCORING AND INTERPRETATION: The HR department typically is responsible for monitor-ing compliance with federal laws, and it provides detailed and specifi c employee procedures and records for an organization Every new manager

is involved in HR activities for his or her direct reports, which involves systematic record keeping, awareness of applicable laws, and follow through For your HR work orientation, score one point for each “a” answer circled for questions 1, 3, 5,

7 and one point for each “b” answer circled for questions 2, 4, 6, 8

New managers with a high score (seven or eight) for HR work orientation tend to be practical, organized, good at record keeping, and meet com-mitments on time New managers with a low score (one or two) on HR work orientation tend to be more free-spirited, creative, and conceptual These managers tend to think out-of-the-box and may dislike the organization, routine, and legal record keeping required for effi cient HR management If your score is midrange (three to six), you may do well with HR work if you put your mind to it, but

HR may not be your area of greatest strength

T HE C HANGING N ATURE OF C AREERS

Another current issue is the changing nature of careers and a shift in the relationship between employers and employees

The Changing Social Contract

In the old social contract between organization and employee, the employee could contribute ability, education, loyalty, and commitment and expect in return that the company would provide wages and benefi ts, work, advancement, and training throughout the employee’s working life But volatile changes in the environment have disrupted this contract Consider the following list found on a bulletin board at

a company undergoing major restructuring:

▪ We can’t promise you how long we’ll be in business

▪ We can’t promise you that we won’t be acquired

▪ We can’t promise that there’ll be room for promotion

▪ We can’t promise that your job will exist when you reach retirement age

▪ We can’t promise that the money will be available for your pension

▪ We can’t expect your undying loyalty, and we aren’t even sure we want it.18

Downsizing, outsourcing, rightsizing, and restructuring have led to the tion of many positions in organizations Employees who are left may feel little stabil-ity The above list refl ects a primarily negative view of the new employer-employee relationship, but there are positive aspects as well Many people, particularly younger employees, like the expectation of responsibility and mobility embedded in the new social contract Everyone is expected to be a self-motivated worker who is continu-ously acquiring new skills and demonstrating value to the organization

elimina-Exhibit 11.5 lists some elements of the new social contract The new contract is based on the concept of employability rather than lifetime employment Individuals are responsible for developing their own skills and abilities, understanding their employ-er’s business needs, and demonstrating their value to the organization The employer,

in turn, invests in creative training and development opportunities so that people will

be more employable when the company no longer needs their services This means offering challenging work assignments, opportunities to participate in decision mak-ing, and access to information and resources In addition, an important challenge for HRM is revising performance evaluation, compensation, and reward practices to be compatible with the new social contract Smart organizations contribute to employees’ long-term success by offering extensive professional training and development oppor-tunities, career information and assessment, and career coaching.19

E X H I B I T 1 1 5

The Changing Social

Contract

Employee • Employability; personal responsibility

• Partner in business improvement

• Learning; skill development

• Job security

• A cog in the machine

• Knowing Employer • Creative development opportunities

• Lateral career moves; incentive compensation

• Challenging assignments

• Information and resources; making authority

decision-• Standard training programs

• Traditional compensation package

• Routine jobs

• Limited information

SOURCES: Based on Louisa Wah,“The New Workplace Paradox,”Management Review ( January 1998): 7; and Douglas T Hall and Jonathan E Moss,“The New Protean Career Contract: Helping Organizations and Employees Adapt,”Organizational Dynamics

The new social contract can benefi t both employees and organizations However,

some companies take the new approach as an excuse to treat people as economic factors

to be used when needed and then let go This attitude hurts morale, employee

commit-ment, and organizational performance Studies in both the United States and China, for

example, have found lower employee and fi rm performance and decreased commitment

in companies where the interaction between employer and employee is treated as a

con-tractlike economic exchange rather than a genuine human and social relationship.20

As a new manager, appreciate the opportunities that are offered by the new social

contract Allow people to make genuine contributions of their talents to the

organiza-tion, and provide them with challenging work and opportunities to learn new skills

they can transfer to other jobs in the future.

Innovations in HRM

The rapid change and uncertainty in today’s business environment bring signifi cant

new challenges for human resource management Some important issues are

becom-ing an employer of choice, addressbecom-ing the needs of temporary employees and

part-time workers, acknowledging growing employee demands for work/life balance,

and humanely managing downsizing

Becoming an Employer of Choice The old social contract may be broken for

good, but today’s best companies recognize the importance of treating people right

and thinking for the long term rather than looking for quick fi xes based on an

eco-nomic exchange relationship with employees An employer of choice is a company that

is highly attractive to potential employees because of human resources practices that

focus not just on tangible benefi ts such as pay and profi t sharing, but also on

intangi-bles (such as work/life balance, a trust-based work climate, and a healthy corporate

culture), and that embraces a long-term view to solving immediate problems.21 To

engage people and spur high commitment and performance, an employer of choice

chooses a carefully balanced set of HR strategies, policies, and practices that are

tai-lored to the organization’s own unique goals and needs

Using Temporary and Part-Time Employees

Con-tingent workers are becoming a larger part of the

work-force in both the United States and Europe Contingent

workers are people who work for an organization, but

not on a permanent or full-time basis These include

temporary placements, contracted professionals, leased

employees, or part-time workers.22 The temporary

staff-ing industry doubled between 2002 and 2007 and is

projected to grow into a $200 billion industry by 2010.23

People in temporary jobs do everything from data entry,

to project management, to becoming the interim CEO

Although in the past, most temporary workers were in

clerical and manufacturing positions, in recent years

demand has grown for professionals, such as

accoun-tants and fi nancial analysts, interim managers,

informa-tion technology specialists, product managers, and even

lawyers and health-care workers A related trend is the

use of virtual teams Some are made up entirely of people

who are hired on a project-by-project basis Many

com-panies depend on part-time or temporary employees to

in bank failures with contingent professionals, mostly retirees who

bring the needed expertise Gary Holloway, shown here, was recruited back after two years of retirement and now considers his offi ce “on the road” as he travels to failing banks in his temporary job An FDIC group swoops in like a SWAT team, sorts through a bank’s troubled loans, sells assets, and reopens the bank under new ownership

Holloway brings to this task his experience with the FDIC during the 1980s savings and loan crisis, which resulted in 534 closings.

c

con tingent workers P Peo ple l

w h

w who

w wo rk k f for an organ i iza ti tion, but not on a permanent or full- -

t i ime basis, including temporary y y placements, contracted profes- s

si io ionals, or leased employees.

Promoting Work/Life Balance Initiatives that enable employees to lead

a balanced life are a critical part of many organizations’ retention strategies One approach is to let people work part of the time from home or another remote location

Telecommuting means using computers and telecommunications equipment to do

work without going to an offi ce The most recent report from the Bureau of Labor Statistics shows that 30.7 million people in the United States worked from home at least one day a week in 2004 This includes more than 100,000 employees of the fed-eral government, according to the Offi ce of Personnel Management.25 Other forms of

fl exible scheduling are also important in today’s workplace, and 55 percent of HRM

professionals surveyed say they are willing to negotiate fl exible work arrangements with interviewees and new employees.26

In addition, many companies have implemented broad work/life balance tiatives, partly in response to the shift in expectations among young employees.27

ini-Generation Y workers are a fast-growing segment of the workforce Typically, Gen Y employees work smart and work hard on the job, but they refuse to let work be their whole life Unlike their parents, who placed a high priority on career, Gen Y workers expect the job to accommodate their personal lives.28

Rightsizing the Organization In some cases, organizations have more people than they need and have to let some employees go Rightsizing refers to intentionally reducing the company’s workforce to the point where the number of employees is deemed

to be right for the company’s current situation Also

called downsizing, planned reductions in the size of

the workforce are a reality for many of today’s

com-panies As the term rightsizing implies, the goal is to

make the company stronger and more competitive by aligning the size of the workforce with the company’s current needs However, some researchers have found that massive cuts often fail to achieve the intended benefi ts and in some cases signifi cantly harm the orga-nization.29 Unless HRM departments effectively and humanely manage the rightsizing process, layoffs can lead to decreased morale and performance Managers can smooth the process by regularly communicating with employees and providing them with as much information as possible, providing assistance to work-ers who will lose their jobs, and using training and development to help address the emotional needs of remaining employees and enable them to cope with new or additional responsibilities.30

F INDING THE R IGHT P EOPLE

Now let’s turn to the three broad goals of HRM: fi nding, developing, and maintaining

an effective workforce The fi rst step in fi nding the right people is human resource planning, in which managers or HRM professionals predict the need for new employ-ees based on the types of vacancies that exist, as illustrated in Exhibit 11.6 The second step is to use recruiting procedures to communicate with potential applicants The third step is to select from the applicants those persons believed to be the best poten-tial contributors to the organization Finally, the new employee is welcomed into the organization

Underlying the organization’s effort to attract employees is a matching model With the matching model, the organization and the individual attempt to match

When the Maytag operations closed in Newton, Iowa, Derek Winkel decided that was where he should locate

his new company, Central Iowa Energy Winkel knew he could attract

an effective workforce for the biodiesel production company because

there would be plenty of skilled and available labor in the area Almost

all of his employees are former Maytaggers.

mat ching model An

em-ployee selection approach in

w

which the organization and

t h he applicant attempt to match h

e

ea ach other’s needs, interests,

a

an nd values.

the needs, interests, and values that they offer each other.31 For example, a small

software developer might require long hours from creative, technically skilled

employees In return, it can offer freedom from bureaucracy, tolerance of

idiosyn-crasies, and potentially high pay A large manufacturer can offer employment

secu-rity and stability, but it might have more rules and regulations and require greater

skills for “getting approval from the higher-ups.” The individual who would thrive

working for the software developer might feel stymied and unhappy working for

a large manufacturer Both the company and the employee are interested in fi nding

a good match

Human Resource Planning

Human resource planning is the forecasting of human resource needs and the

pro-jected matching of individuals with expected vacancies Human resource planning

begins with several questions:

▪ What new technologies are emerging, and how will these affect the work system?

▪ What is the volume of the business likely to be in the next fi ve to ten years?

▪ What is the turnover rate, and how much, if any, is avoidable?

The responses to these questions are used to formulate specifi c questions

pertain-ing to HR activities, such as the followpertain-ing:

▪ What types of engineers will we need, and how many?

▪ How many administrative personnel will we need to support the additional

engineers?

▪ Can we use temporary, part-time, or virtual workers to handle some tasks?32

By anticipating future human resource needs, the organization can prepare itself

to meet competitive challenges more effectively than organizations that react to

prob-lems only as they arise One of the most successful applications of human resource

planning occurred at the Tennessee Valley Authority

E X H I B I T 1 1 6 Attracting an Effective Workforce

h

hum an resource planning

T The

T fo rec asting g of hu man re

TVA created an eight-step plan that assesses future HR needs and formulates actions to meet those needs The fi rst step is laying the groundwork for later implementation of the pro- gram by creating planning and oversight teams within each business unit Step two involves assessing processes and functions that can be benchmarked Step three involves projecting the skills and employee numbers (demand data) that will be necessary to reach goals within each business unit Once these numbers are in place, step four involves projecting the current employee numbers (supply data) over the planning horizon without new hires and taking into consideration the normal attrition of staff through death, retirement, resignation, and so forth Comparison of the difference between supply and demand (step fi ve) gives the future gap, or surplus situation This knowledge enables HR to develop strategies and operational plans (step six) Step seven involves communicating the action plan to employees The fi nal step is to periodically evaluate and update the plan as the organization’s needs change When TVA faces a demand for additional employees, this process enables the company to recruit workers with the skills needed to help meet organizational goals 33

Recruiting

Recruiting is defi ned as “activities or practices that defi ne the characteristics of

appli-cants to whom selection procedures are ultimately applied.”34 Today, recruiting is

sometimes referred to as talent acquisition to refl ect the importance of the human

fac-tor in the organization’s success.35 Even when unemployment rates are high, panies often have trouble fi nding people with the skills the organization needs A survey by Manpower Inc of 33,000 employers in 23 countries found that 40 percent reported having diffi culty fi nding and hiring the desired talent.36

com-Although we frequently think of campus recruiting as a typical recruiting

activ-ity, many organizations use internal recruiting, or promote-from-within policies, to fi ll

their high-level positions.37 Internal recruiting has two major advantages: It is less costly than an external search, and it generates higher employee commitment, devel-opment, and satisfaction because it offers opportunities for career advancement to

employees rather than outsiders Frequently, however, external recruiting—recruiting

newcomers from outside the organization—is advantageous Applicants are vided by a variety of outside sources including advertising, state employment ser-

pro-vices, online recruiting serpro-vices, private employment agencies (headhunters), job fairs,

and employee referrals

Assessing Organizational Needs Basic building blocks of human resource agement include job analysis, job descriptions, and job specifi cations Job analysis

man-is a systematic process of gathering and interpreting information about the essential duties, tasks, and responsibilities of a job, as well as about the context within which the job is performed.38 To perform job analysis, managers or specialists ask about work activities and work fl ow, the degree of supervision given and received in the job, knowledge and skills needed, performance standards, working conditions, and so forth The manager then prepares a written job description, which is a clear and con-cise summary of the specifi c tasks, duties, and responsibilities, and job specifi cation, which outlines the knowledge, skills, education, physical abilities, and other charac-teristics needed to adequately perform the job

Job analysis helps organizations recruit the right kind of people and match them

to appropriate jobs For example, to enhance internal recruiting, Sara Lee Corporation identifi ed six functional areas and 24 signifi cant skills that it wants its fi nance execu-tives to develop, as illustrated in Exhibit 11.7 Managers are tracked on their develop-ment and moved into other positions to help them acquire the needed skills.39

Realistic Job Previews Job analysis also enhances recruiting effectiveness by enabling the creation of realistic job previews A realistic job preview (RJP) gives applicants all pertinent and realistic information—positive and negative—about the

i n nterpret ing in in for mat ion about ab out t t

t h he essential duties, tasks, and d

job and the organization.40 RJPs contribute to greater employee satisfaction and lower

turnover because they facilitate matching individuals, jobs, and organizations

Indi-viduals have a better basis on which to determine their suitability to the organization

and “self-select” into or out of positions based on full information

Legal Considerations Organizations must ensure that their recruiting practices

conform to the law As discussed earlier in this chapter, equal employment

opportu-nity (EEO) laws stipulate that recruiting and hiring decisions cannot discriminate on

the basis of race, national origin, religion, or gender The Americans with Disabilities

Act underscored the need for well-written job descriptions and specifi cations that

accurately refl ect the mental and physical dimensions of jobs, so that people with

dis-abilities will not be discriminated against Affi rmative action refers to the use of goals,

timetables, or other methods in recruiting to promote the hiring, development, and

retention of protected groups Most large companies try to comply with affi rmative

action and EEO guidelines Prudential Insurance Company’s policy is presented in

Exhibit 11.8 Prudential actively recruits employees and takes affi rmative action steps

to recruit individuals from all walks of life

An Equal Opportunity Employer

Prudential recruits, hires, trains, promotes, and compensates individuals without regard to race,

color, religion or creed, age, sex, marital status, national origin, ancestry, liability for service in the

armed forces of the United States, status as a special disabled veteran or veteran of the Vietnam

era, or physical or mental handicap.

This is offi cial company policy because: • we believe it is right

• it makes good business sense

• it is the law

We are also committed to an ongoing program of affi rmative action in which members of

under-represented groups are actively sought out and employed for opportunities in all parts and at all

levels of the company In employing people from all walks of life, Prudential gains access to the full

experience of our diverse society.

E X H I B I T 1 1 8

Prudential’s Corporate Recruiting Policy

E-cruiting Today, much recruiting is done via the Internet.41 E-cruiting, or recruiting

job applicants online, dramatically extends the organization’s recruiting reach, ing access to a wider pool of applicants and saving time and money Besides posting job openings on company Web sites, many organizations use commercial recruiting sites where job seekers can post their résumés and companies can search for qualifi ed applicants In addition, in industries where competition for highly skilled employees

offer-is stiff, new online services emerge to help managers search for “passive candidates,” people who aren’t looking for jobs but might be the best fi t for a company’s opening Red 5 Studios Inc took a highly creative approach to recruit passive candidates in the hot market for videogame producers

Several members of the team behind the popular online game “World of Warcraft” decided

to start their own company, and Red 5 Studios was born But the start-up quickly ran into a problem—how to attract good employees in an industry where competition for talent is stiff The team decided to make a list of their “dream hires” and then set about recruiting them They learned everything they could about each dream developer to personalize the pitch— searching on Google, playing the developer’s games, tracking down the prospects’ blogs and posts in industry forums, and so forth.

When the research was complete, Red 5 sent each prospect a package of boxes, nested like a Russian doll In the fi nal box was an iPod Shuffl e engraved with the prospect’s name and containing a recorded recruiting message from CEO Mark Kern The recruiting strategy worked Four months later, three of the passive candidates had joined Red 5 Studios, with another considering making the move 42

Innovations in Recruiting As the previous ple shows, managers sometimes have to fi nd innovative approaches to recruit the right people Organizations look for ways to enhance their recruiting success One highly effective method is getting referrals from current employ-ees Many organizations offer cash awards to employees who submits names of people who subsequently accept employment because referral by current employees is one of the cheapest and most reliable methods of exter-nal recruiting.43 Companies also are increasingly search-ing among the membership of relevant trade groups, such

exam-as at trade shows, meetings, and on the exam-associations’ Web sites “All the good candidates seem to belong to a particu-lar association and the ones who aren’t as skilled usually don’t,” explains one recruiter.44

Some organizations also turn to nontraditional sources

to fi nd dedicated employees, particularly in a tight labor market For example, when Walker Harris couldn’t fi nd workers for his ice company on the west side of Chicago, Harris Ice, he began hiring former prison inmates, many

of whom have turned out to be reliable, loyal employees.45

In Louisville, Kentucky, where the traditional labor force

is shrinking, companies such as UPS, Allied Van Lines, and General Electric are fi nding a source of hard-work-ing employees among Asian, African, and Eastern Euro-pean immigrants fl eeing persecution.46 Since 1998, Bank

of America has hired and trained more than 3,000 former welfare recipients in positions that offer the potential for promotions and long-term careers Numerous companies recruit older workers, who typically have lower turnover rates, especially for part-time jobs The Home Depot offers

“snowbird specials”—winter work in Florida and summers

Red 5 Studios Inc.

This ad from Black Enterprise

maga-zine enhances external recruiting by giving potential applicants a

realistic job preview The applicant must possess critical skills such

as speaking a foreign language, have a four-year college degree

plus three years of professional work experience, be willing to live

anywhere on assignment, be between the ages of 23 and 36, and

be able to pass “a rigorous physical fi tness test.” If you possess

these requirements, you can even apply online at http://www

in Maine Border’s Bookstores entices retired teachers with book discounts and

read-ing and discussion groups.47 Recruiting on a global basis is on the rise as well Public

schools are recruiting teachers from overseas High-tech companies are looking for

qualifi ed workers in foreign countries because they cannot fi nd people with the right

skills in the United States.48

Refer back to the opening questionnaire to test your own preparation as a new

manager for recruiting and selecting the right people for your team Do you have

what it takes?

Selecting

The next step for managers is to select desired employees from the pool of recruited

applicants In the selection process, employers assess applicants’ characteristics in an

attempt to determine the “fi t” between the job and applicant characteristics Several

selection devices are used for assessing applicant qualifi cations The most frequently

used are the application form, interview, employment test, and assessment center

Studies indicate that the greater the skill requirements and work demands of an open

position, the greater the number and variety of selection tools the organization will

use.49 Human resource professionals may use a combination of devices to get an idea

of a candidate’s potential performance

Application Form The application form is used to collect information about the

applicant’s education, previous job experience, and other background characteristics

Research in the life insurance industry shows that biographical information

invento-ries can validly predict future job success.50

One pitfall to be avoided is the inclusion of questions that are irrelevant to job

suc-cess In line with affi rmative action, the application form should not ask questions

that will create an adverse impact on protected groups unless the questions are clearly

related to the job.51 For example, employers should not ask whether the applicant rents

or owns his or her own home because (1) an applicant’s response might adversely affect

his or her chances at the job, (2) minorities and women may be less likely to own a home,

and (3) home ownership is probably unrelated to job performance By contrast, the CPA

exam is relevant to job performance in a CPA fi rm; thus, it is appropriate to ask whether

an applicant for employment has passed the CPA exam, even if only one-half of all

female or minority applicants have done so versus nine-tenths of male applicants

Interview The interview serves as a two-way communication channel that allows

both the organization and the applicant to collect information that otherwise might

be diffi cult to obtain This selection technique is used in almost every job category in

nearly every organization It is another area where the organization can get into legal

trouble if the interviewer asks questions that violate EEO guidelines Exhibit 11.9 lists

some examples of appropriate and inappropriate interview questions

However, the interview is not generally a good predictor of job performance One

estimate is that conventional interviews have a 2 correlation with predicting a

suc-cessful hire.52 People can improve their chances of having a successful interview by

understanding some common pet peeves that trigger a negative response from

inter-viewers, as outlined in the Manager’s Shoptalk on page 323

Today’s managers are trying different approaches to overcome the limitations of

the interview Some put candidates through a series of interviews, each one conducted

by a different person and each one probing a different aspect of the candidate Others

use panel interviews, in which the candidate meets with several interviewers who take

turns asking questions.53 Some organizations also supplement traditional interviewing

information with computer-based interviews This type of interview typically requires a

candidate to answer a series of multiple-choice questions tailored to the specifi c job

an n applicant’s education, previ-

-ous job experience, and other background characteristics.

The answers are compared to an ideal profi le or to a profi le developed on the basis of other candidates Companies such as Pinkerton Security, Coopers & Lybrand, and Pic n’ Pay Shoe Stores have found computer-based interviews to be valuable for search-ing out information regarding the applicant’s honesty, work attitude, drug history, candor, dependability, and self-motivation.54

As a new manager, get the right people in the right jobs by assessing your team’s or department’s needs, offering realistic job previews, using a variety of recruiting and selecting methods, and striving to match the needs and interests of the individual to those of the organization.

Employment Test Employment tests may include intelligence tests, aptitude and

ability tests, and personality inventories Many companies today are particularly interested in personality inventories that measure such characteristics as openness

to learning, initiative, responsibility, creativity, and emotional stability Companies that put a premium on innovativeness and problem solving are also challenging

applicants with brain teasers, having them ponder questions such as how many golf

balls will fi t inside a school bus The answers aren’t as important as how the cant goes about solving the problem See how you do answering the brain teasers in Exhibit 11.10 on page 324

appli-Assessment Center First developed by psychologists at AT&T, assessment ters are used to select individuals with high potential for managerial careers by such organizations as IBM, General Electric, and JCPenney.55 Assessment centers

National origin • The applicant’s name

• If applicant has ever worked under a different name

• The origin of applicant’s name

• Applicant’s ancestry/ethnicity

Disabilities • Whether applicant has any disabilities

that might inhibit performance of job

• If applicant has any physical or mental defects

• If applicant has ever fi led workers’

compensation claim

• When applicant graduated from high school

• What religious holidays applicant observes Criminal record • If applicant has ever been convicted of

a crime

• If applicant has ever been arrested

children

• Childcare arrangements Education and experience • Where applicant went to school

• Prior work experience

• When applicant graduated

• Hobbies Citizenship • If applicant has a legal right to work in

the United States

• If applicant is a citizen of another country

SOURCES: Based on “Appropriate and Inappropriate Interview Questions,”in George Bohlander, Scott Snell, and Arthur Sherman, Managing Human Resources, 12th ed

(Cincinnati, OH: South-Western, 2001): 207; and “Guidelines to Lawful and Unlawful Preemployment Inquiries,”Appendix E, in Robert L Mathis and John H Jackson,

Human Resource Management, 2nd ed (Cincinnati, OH: South-Western, 2002), 189–190.

E X H I B I T 1 1 9 Employment Applications and Interviews: What Can You Ask?

high managerial potential based d d

o n their performance on a serie s

o f simulated managerial tasks.

present a series of managerial situations to groups of applicants over a two- or

three-day period, for example One technique is the in-basket simulation, which requires

the applicant to play the role of a manager who must decide how to respond to

ten memos in his or her in-basket within a two-hour period Panels of two or three

trained judges observe the applicant’s decisions and assess the extent to which they

refl ect interpersonal, communication, and problem-solving skills At a Michigan

auto parts plant that makes a joint-venture engine from Daimler-Chrysler,

Mitsubi-shi, and Hyundai, applicants for plant manager go through four-hour

“day-in-the-life” simulations in which they have to juggle memos, phone calls, and employee

or job problems.56

Some organizations now use this technique for hiring front-line workers as well

Mercury Communications in England uses an assessment center to select customer

assistants Applicants participate in simulated exercises with customers and in

vari-ous other exercises designed to assess their listening skills, customer sensitivity, and

ability to cope under pressure.57

Have you ever had a job interview where everything

seems to be going well but then takes a drastic turn

for the worse? Understanding common blunders that

tick off interviewers can make you more successful as

both a job candidate and an interviewer Here’s one

expert’s list of the top seven:

1 Not communicating enough People who won’t

talk drive interviewers crazy These folks offer

short answers to open-ended questions and

don’t follow up when the interviewer prods for

more information.

2 Not making eye contact Candidates who look

around everywhere except at the interviewer

provoke distrust One expert advises extremely

shy people to look at the interviewer’s “third

eye,” just above and between the person’s two

eyes, to avoid this blunder.

3 Talking too much Answering questions fully is

important, but a candidate who babbles on and

on puts most interviewers off.

4 Using street slang or unprofessional language

Street-speak doesn’t fi t most corporate domains

In addition, saying like, uh, or um every other

word quickly loses an interviewer’s attention.

5 Stretching the truth People want to present

themselves in the best light, but many

candi-dates go too far, embellishing their skills, hiding

past job failures, or outright lying about

edu-cational qualifi cations Interviewers can often

sense this, which destroys trust.

6 Making a fashion statement In most cases,

peo-ple should wear traditional professional dress

for an interview.

7 Failing to effectively close Interviewers like a

candidate who closes the interview by stating their interest or asking about the next step in the process, rather than just letting the interview fade away.

There are even more outlandish blunders that occasionally occur Here are some of the unusual things that have happened during job interviews, based on surveys of vice presidents and human resource directors at major U.S corporations:

▪ The applicant announced she hadn’t had lunch and proceeded to eat a hamburger and french fries in the interviewer’s offi ce.

▪ When asked if he had any questions about the job, the candidate answered, “Can I get an advance on my paycheck?”

▪ The applicant chewed bubble gum and stantly blew bubbles.

con-▪ The job candidate said the main thing he was looking for in a job was a quiet place where no one would bother him.

▪ The job applicant challenged the interviewer to arm wrestle.

SOURCES: Indira Dharchaudhuri, “Interviewers Pet Peeves,”

Hindustan Times, February 24, 2004; and Martha H Peak,

“What Color Is Your Bumbershoot?” Management Review

Online Checks One of the newest ways of gauging whether a candidate is right for the company is by see-ing what the person has to say about him or herself on social networking sites such as Facebook and MySpace Recent college graduates looking for jobs have found doors closed to them because of risqué or teasing photos

or vivid comments about drinking, drug use, or sexual exploits Recruiters from more than two dozen compa-nies told career counselors at New York University, for example, that if an applicant’s online presentation raises red fl ags, the person isn’t likely to even get an interview.58 Companies today are not only interested in a candidate’s educational and work qualifi cations, but also in personal characteristics and values that fi t with the organization’s culture One recruiter said the open admission of exces-sive drinking and so forth makes managers question the applicant’s maturity and judgment

Following selection, the next goal of HRM is to develop employees into an effective workforce Key development activities include training and performance appraisal

Training and Development

Training and development represent a planned effort by an organization to facilitate

employees’ learning of job-related skills and behaviors.59 Organizations spent some

$58.5 billion on training in 2007, with more than $16 billion of that spent on outside learning products and services Exhibit 11.11 shows some frequently used types and methods of training in today’s organizations One of the fastest growing methods is the use of podcasting, which jumped from 5 percent in 2006 to 15 percent in 2007.60

E X H I B I T 1 1 1 0

Try Your Hand at Some Interview Brain Teasers

How would you answer the following questions in a job interview?

1 How would you weigh a jet plane without using scales?

2 Why are manhole covers round?

3 How many golf balls can fi t inside a standard school bus?

4 How much should you charge to wash all the windows in Seattle?

5 You’re shrunk and trapped in a blender that will turn on in 60 seconds What do you do?

Answers: There might be many solutions to these questions Here are some that interviewers sider good answers:

con-1 Fly it onto an aircraft carrier or other ship big enough to hold it Paint a mark on the hull of the ship showing the water level Then remove the jet The ship will rise in the water Now load the ship with items of known weight (100 lb bales of cotton, for instance) until it sinks to exactly the line you painted on the hull The total weight of the items will equal the weight of the jet.

2 A square cover might fall into its hole If you hold a square manhole cover vertically and turn it

a little, it will fall easily into the hole In contrast, a round cover with a slight recess in the center can never fall in, no matter how it is held.

3 About 500,000, assuming the bus is 50 balls high, 50 balls wide, and 200 balls long.

4 Assuming 10,000 city blocks, 600 windows per block, fi ve minutes per window, and a rate of

$20 per hour, about $10 million.

5 Use the measurement marks on the side of the container to climb out.

SOURCES: These questions are used at companies such as Microsoft, Google, and eBay Reported in Michael Kaplan, “Job

Interview Brainteasers,” Business 2.0 (September 2007): 35–37; and William Poundstone, “Impossible Questions,” Across the Board (September–October 2003): 44–48.

Employment tests range from

personality profi les to profi ciency testing in specifi c skills required

for a position For a 911 operator position, an applicant should

expect to take tests like data entry for speed and accuracy, 911

address checking, 911 grid map reading and direction accuracy,

911 memorization, customer service assessment, and a personal

characteristics profi le Here, Rick Bias, 911 Communications Director

for Morgan County, Missouri, oversees operations in the Public Service

Answer Point Area.

On-the-Job Training The most common method of training is on-the-job

train-ing In on-the-job training (OJT), an experienced employee is asked to take a new

employee “under his or her wing” and show the newcomer how to perform job

duties OJT has many advantages, such as few out-of-pocket costs for training

facili-ties, materials, or instructor fees and easy transfer of learning back to the job When

implemented well, OJT is considered the fastest and most effective means of

facili-tating learning in the workplace.61 One type of on-the-job training involves moving

people to various types of jobs within the organization, where they work with

expe-rienced employees to learn different tasks This cross-training may place an employee

in a new position for as short a time as a few hours or for as long as a year, enabling

the employee to develop new skills and giving the organization greater fl exibility

Corporate Universities Another popular approach to training and development

is the corporate university A corporate university is an in-house training and

educa-tion facility that offers broad-based learning opportunities for employees—and

fre-quently for customers, suppliers, and strategic partners as well—throughout their

careers.62 One well-known corporate university is Hamburger University,

McDon-ald’s worldwide training center, which has been in existence for more than 40 years

Numerous other companies, including IBM, FedEx, General Electric, Intel,

Harley-Da-vidson, and Capital One, pump millions of dollars into corporate universities to

con-tinually build human capital.63 Employees at Caterpillar attend courses at Caterpillar

E X H I B I T 1 1 1 1 Methods and Goals of Training

SOURCES: Methods data from Tammy Galvin, “2003 Industry Report,” Training (October 2003): 21 (Reprinted with permission from the October

2003 issue of Training magazine, Copyright 2003, Bill Communications, Minneapolis, Minn All rights reserved Not for resale.); and “2007 Industry

Report,” Training (November–December 2007): 18.

University, which combines e-training, classroom sessions, and hands-on training activities The U.S Department of Defense runs Defense Acquisition University to pro-vide ongoing training to 129,000 military and civilian workers in acquisitions, tech-nology, and logistics.64

Promotion from Within Another way to further employee development is through promotion from within, which helps com-panies retain and develop valuable peo-ple Promotions provide more challenging assignments, prescribe new responsibilities, and help employees grow by expanding and developing their abilities The Peebles Hydro Hotel in Scotland is passionate about promoting from within as a way to retain good people and give them opportunities for growth A maid has been promoted to head housekeeper, a wine waitress to restau-rant head, and a student worker to deputy manager The hotel also provides constant training in all areas These techniques, combined with a commitment to job fl exibility, have helped the hotel retain high-quality workers at a time when others in the tourism and hospitality industry are suffering from a shortage of skilled labor Staff members with 10, 15, or even 20 years of service aren’t uncommon at Hydro.65

Mentoring and Coaching For many management and professional jobs, tional on-the-job training is supplemented or replaced by mentoring and coaching With mentoring, an experienced employee guides and supports a newcomer or less-experienced employee Mentors typically offer counsel regarding how to network and advance in the company in addition to guiding the employee in developing his

tradi-or her skills and abilities Coaching is a method of directing, instructing, and ing a person with the goal to develop specifi c management skills Coaching usually applies to higher-level managers who want to develop their personal competencies For instance, a coach might observe a senior executive in action and provide feed-back about how the executive can improve her interaction skills Managers can also discuss diffi cult situations as they arise, with the coach helping them work through various alternative scenarios for dealing with the situation.66

train-Performance Appraisal

Performance appraisal comprises the steps of observing and assessing employee

per-formance, recording the assessment, and providing feedback to the employee ing performance appraisal, skillful managers give feedback and praise concerning the acceptable elements of the employee’s performance They also describe performance areas that need improvement Employees can use this information to change their job performance Unfortunately, only three in ten employees in a recent survey believe their companies’ performance review system actually helps to improve performance, indicating a need for improved methods of appraisal and feedback.67

Dur-Generally, HRM professionals concentrate on two things to make performance appraisal a positive force in their organizations: (1) the accurate assessment of perfor-mance through the development and application of assessment systems such as rating scales, and (2) training managers to effectively use the performance appraisal interview,

so managers can provide feedback that will reinforce good performance and motivate

training a person with the

per formance appraisal The

process of observing and

e

ev valuating an employee’s

performance, recording the

a

as ssessment, and providing

f e eedback to the employee.

“We don’t do training,” says Equifax senior vice president and chief learning offi cer Lynn Slavenski “We do change.” Slavenski oversaw the establish-

ment of Equifax University for the consumer credit reporting company What distinguishes

corporate universities from most old-style training programs is that the courses—from

classes teaching a specifi c technical skill to corporate-run MBA programs—are intentionally

designed to foster the changes needed to achieve the organization’s strategy.

employee development Current thinking is that performance appraisal should be

ongoing, not something that is done once a year as part of a consideration of raises

Assessing Performance Accurately To obtain an accurate performance rating,

managers acknowledge that jobs are multidimensional and performance thus may

be multidimensional as well For example, a sports broadcaster might perform well

on the job-knowledge dimension; that is, she or he might be able to report facts and

fi gures about the players and describe which rule applies when there is a

question-able play on the fi eld But the same broadcaster might not perform as well on another

dimension, such as communication The person might be unable to express the

infor-mation in a colorful way that interests the audience or might interrupt the other

broadcasters For performance to be rated accurately, the appraisal system should

require the rater to assess each relevant performance dimension A multidimensional

form increases the usefulness of the performance appraisal and facilitates employee

growth and development

A recent trend in performance appraisal is called 360-degree feedback, a

pro-cess that uses multiple raters, including self-rating, as a way to increase awareness

of strengths and weaknesses and guide employee development Members of the

appraisal group may include supervisors, coworkers, and customers, as well as the

individual, thus providing appraisal of the employee from a variety of perspectives.68

One study found that 26 percent of companies used some type of multirater

perfor-mance appraisal.69

Another alternative performance-evaluation method is the performance review

ranking system.70 This method is increasingly coming under fi re because it essentially

evaluates employees by pitting them against one another As most commonly used,

a manager evaluates his or her direct reports relative to one another and categorizes

each on a scale, such as A = outstanding performance (20 percent), B = high-middle

performance (70 percent), or C = in need of improvement (10 percent) Some

com-panies routinely fi re those managers falling in the bottom 10 percent of the ranking

Proponents say the technique provides an effective way to assess performance and

offer guidance for employee development But critics of these systems, sometimes

called rank and yank, argue that they are based on subjective judgments, produce

skewed results, and discriminate against employees who are “different” from the

mainstream One study found that forced rankings that include fi ring the bottom 5 or

10 percent can lead to a dramatic improvement in organizational performance in the

short term, but the benefi ts dissipate over several years as people become focused on

competing with one another rather than improving the business.71 Many companies

are building more fl exibility into the performance review ranking system, and some

are abandoning it altogether.72

Despite these concerns, the appropriate use of performance ranking has been

use-ful for many companies, especially as a short-term way to improve performance

Consider how a variation of the system helps U.S restaurant chain Applebee’s retain

quality workers in the high-turnover restaurant business

Most people working in fast-food and casual dining restaurants don’t stay long Turnover

of hourly employees is a perpetual problem, averaging more than 200 percent a year in the

casual dining sector for the past 30 years Applebee’s managers wanted to reduce their

turn-over rate, but they also wanted to focus their retention efforts on the best people.

A key aspect of the new retention strategy is the Applebee’s Performance Management

system Twice a year, each hourly employee is rated on characteristics such as reliability,

guest service, attitude, and teamwork Managers then look at how each employee ranks with

respect to all others in the restaurant, separating employees into the top 20 percent, the

middle 60 percent, and the bottom 20 percent Store managers are rewarded for retaining

the top and middle performers.

The system is not the basis for fi ring low-ranking employees, but they usually

leave soon enough anyway Its value lies in helping managers focus their retention

Applebee’s International Inc.

process that uses multiple

ra aters, including self-rating, to a

ap ppraise employee performanc e

a

an nd

a gu g ide developm p ent.

efforts on the more valuable employees It’s paying off The turnover rate has dropped

50 percent since Applebee’s began using the ranking system.73

Performance Evaluation Errors Although we would like to believe that every manager assesses employees’ performance in a careful and bias-free man-ner, researchers have identifi ed several rating problems.74 One of the most dan-gerous is stereotyping, which occurs when a rater places an employee into a class

or category based on one or a few traits or characteristics—for example, typing an older worker as slower and more diffi cult to train Another rating error

stereo-is the halo effect, in which a manager gives an employee the same rating on all dimensions even if his or her performance is good on some dimensions and poor

on others

One approach to overcome performance evaluation errors is to use a behavior-based rating technique, such as the behaviorally anchored rating scale The behaviorally

anchored rating scale (BARS) is developed from critical incidents pertaining to job

per-formance Each job performance scale is anchored with specifi c behavioral statements that describe varying degrees of performance By relating employee performance to specifi c incidents, raters can more accurately evaluate an employee’s performance.75

Exhibit 11.12 illustrates the BARS method for evaluating a production line visor The production supervisor’s job can be broken down into several dimensions, such as equipment maintenance, employee training, or work scheduling A behavior-ally anchored rating scale should be developed for each dimension The dimension

super-in Exhibit 11.12 is work schedulsuper-ing Good performance is represented by a 4 or 5 on the scale and unacceptable performance as a 1 or 2 If a production supervisor’s job has eight dimensions, the total performance evaluation will be the sum of the scores for each of eight scales

As a new manager evaluating subordinates, remember that jobs are multidimensional and people need to be evaluated separately on each relevant dimension so they can

be rewarded appropriately and improve their performance where needed Be aware

of your own prejudices so you can avoid stereotyping people during evaluations.

s

ste reotyping Placing an em-

-ployee into a class or category

er rror that occurs when an

em-ployee receives the same rating g g

o n all dimensions regardless

o f his or her performance on

te e echnique that relates an

em-ployee’s performance to specifi fi c

j

jo ob

j -related incidents.

SOURCES: Based on J P Campbell, M D Dunnette, R D Arvey, and L V Hellervik, “The Development and Evaluation of Behaviorally Based Rating Scales,”

E X H I B I T 1 1 1 2 Example of a Behaviorally Anchored Rating Scale

Now we turn to the topic of how managers and HRM professionals maintain a

workforce that has been recruited and developed Maintenance of the current

work-force involves compensation, wage and salary systems, benefi ts, and occasional

terminations

Compensation

The term compensation refers to: (1) all monetary payments and (2) all goods or

com-modities used in lieu of money to reward employees.76 An organization’s

compensa-tion structure includes wages and/or salaries and benefi ts such as health insurance,

paid vacations, or employee fi tness centers Developing an effective compensation

system is an important part of human resource management because it helps to

attract and retain talented workers In addition, a company’s compensation system

has an impact on strategic performance.77 Human resource managers design the pay

and benefi ts systems to fi t company strategy and to provide compensation equity

Wage and Salary Systems Ideally, management’s strategy for the organization

should be a critical determinant of the features and operations of the pay system.78

For example, managers may have the goal of maintaining or improving profi tability

or market share by stimulating employee performance Thus, they should design

and use a merit pay system rather than a system based on other criteria such as

seniority

The most common approach to employee compensation is job-based pay, which

means linking compensation to the specifi c tasks an employee performs However,

these systems present several problems For one thing, job-based pay may fail to

reward the type of learning behavior needed for the organization to adapt and

sur-vive in today’s environment In addition, these systems reinforce an emphasis on

organizational hierarchy and centralized decision making and control, which are

inconsistent with the growing emphasis on employee participation and increased

responsibility.79

Skill-based pay systems are becoming increasingly popular in both large and small

companies, including Sherwin-Williams, Au Bon Pain, and Quaker Oats

Employ-ees with higher skill levels receive higher pay than those with lower skill levels At

Quaker Oats pet food plant in Topeka, Kansas, for example, employees might start

at something like $8.75 per hour but reach a top hourly rate of $14.50 when they

master a series of skills.80 Also called competency-based pay, skill-based pay systems

encourage employees to develop their skills and competencies, thus making them

more valuable to the organization as well as more employable if they leave their

current jobs

Compensation Equity Whether the organization uses job-based pay or

skill-based pay, good managers strive to maintain a sense of fairness and equity within

the pay structure and thereby fortify employee morale Job evaluation refers to the

process of determining the value or worth of jobs within an organization through an

examination of job content Job evaluation techniques enable managers to compare

similar and dissimilar jobs and to determine internally equitable pay rates—that is,

pay rates that employees believe are fair compared with those for other jobs in the

organization

Organizations also want to make sure their pay rates are fair compared to other

companies HRM managers may obtain wage and salary surveys that show what

other organizations pay incumbents in jobs that match a sample of “key” jobs selected

by the organization These surveys are available from a number of sources, including

the U.S Bureau of Labor Statistics National Compensation Survey

job evaluation The process

of determining the value of job bs s

wag e and salary surveys

S urveys that show what other organizations pay incumbents i

in n n jobs that match a sample

of “key” jobs selected by the organization.

Pay-for-Performance Many of today’s organizations develop compensation

plans based on a pay-for-performance standard to raise productivity and cut labor costs

in a competitive global environment Pay-for-performance, also called incentive

pay, means tying at least part of compensation to employee effort and performance,

whether it be through merit-based pay, bonuses, team incentives, or various sharing or profi t-sharing plans Data show that, while growth in base wages is slow-ing in many industries, the use of pay-for-performance has steadily increased since the early 1990s, with approximately 70 percent of companies now offering some form

gain-of incentive pay.81 With pay-for-performance, incentives are aligned with the iors needed to help the organization achieve its strategic goals Employees have an incentive to make the company more effi cient and profi table because if goals are not met, no bonuses are paid

behav-Benefi ts

The best human resource managers know that a compensation package requires more than money Although wage/salary is an important component, it is only a part Equally important are the benefi ts offered by the organization Benefi ts make

up more than 40 percent of labor costs in the United States.82

Some benefi ts are required by law, such as Social Security, unemployment compensation, and workers’ compensation Other types of benefi ts, such as health insurance, vacations, and such things as on-site daycare or fi tness centers are not required by law but are provided by organizations to maintain an effective workforce

One reason benefi ts make up such a large portion of the compensation package

is that health-care costs continue to increase Many organizations are requiring that employees absorb a greater share of the cost of medical benefi ts, such as through higher co-payments and deductibles

Computerization cuts the time and expense of administering benefits grams tremendously At many companies, employees access their benefits pack-age through an intranet, creating a “self-service” benefits administration.83 This access also enables employees to change their benefits selections easily Today’s organizations realize that the “one-size-fits-all” benefits package is no longer

pro-appropriate, so they frequently offer cafeteria-plan benefits packages that allow

employees to select the benefits of greatest value to them.84 Other companies use surveys to determine which combination of fixed benefits is most desirable The benefits packages provided by large companies attempt to meet the needs

of all employees

Termination

Despite the best efforts of line managers and HRM professionals, the organization will lose employees Some will retire, others will depart voluntarily for other jobs, and still others will be forced out through mergers and cutbacks or for poor performance

Even as a new manager, play a role in how people are compensated Consider skill-based pay systems and incentive pay to encourage high performers Don’t be dismayed if some people have to be let go If people have to be laid off or fi red, do it humanely Go to the ethical dilemma on pages 333–334 that pertains to termination

of employees for poor performance.

The value of termination for maintaining an effective workforce is fold First, employees who are poor performers can be dismissed Productive

p art t o f f c ompens ati ti on on t to to em- em

ployee effort and performance.

employees often resent disruptive, low-performing employees who are allowed

to stay with the company and receive pay and benefits comparable to theirs

Second, employers can use exit interviews as a valuable HR tool, regardless of

whether the employee leaves voluntarily or is forced out An exit interview is

an interview conducted with departing employees to determine why they are

leaving Sixty-eight percent of companies surveyed by the Society for Human

Resource Management say they either routinely or occasionally conduct

for-mal exit interviews.85 The value of the exit interview is to provide an

inexpen-sive way to learn about pockets of dissatisfaction within the organization and

hence find ways to reduce future turnover.86 The oil services giant Schlumberger

includes an exit interview as part of a full-scale investigation of every

depar-ture, with the results posted online so managers all around the company can get

insight into problems.87 However, in many cases, employees who leave

volun-tarily are reluctant to air uncomfortable complaints or discuss their real reasons

for leaving Companies such as T-Mobile, Campbell Soup, and Conair found

that having people complete an online exit questionnaire yields more open and

honest information When people have negative things to say about managers

or the company, the online format is a chance to speak their mind without

hav-ing to do it in a face-to-face meethav-ing.88

For companies experiencing downsizing through mergers or because of global

competition or a shifting economy, often a large number of managers and workers

are terminated at the same time In these cases, enlightened companies try to fi nd a

smooth transition for departing employees By showing genuine concern in

help-ing laid-off employees, a company communicates the value of human resources and

helps maintain a positive corporate culture

▪ This chapter described several important points about human resource

manage-ment in organizations All managers are responsible for human resources, and

most organizations have a human resource department that works with line

managers to ensure a productive workforce

▪ Human resource management plays a key strategic role in driving organizational

performance, through building human capital and enabling the company to be

more competitive on a global basis

▪ The HR department must also implement procedures to refl ect federal and state

legislation and respond to changes in working relationships and career

direc-tions The old social contract of the employee being loyal to the company and the

company taking care of the employee until retirement no longer holds

Employ-ees are responsible for managing their own careers

▪ Current issues of concern to HRM are becoming an employer of choice,

address-ing the needs of temporary and part-time employees, implementaddress-ing work/life

balance initiatives, and humanely managing downsizing

▪ The fi rst goal of HRM is to attract an effective workforce through human resource

planning, recruiting, and employee selection The second is to develop an

effec-tive workforce Newcomers are introduced to the organization and to their jobs

through orientation and training programs Moreover, employees are evaluated

through performance appraisal programs The third goal is to maintain an

effec-tive workforce through wage and salary systems, benefi ts packages, and

termina-tion procedures In many organizatermina-tions, informatermina-tion technology is being used to

more effectively meet all three of these important HR goals

ch11 MANAGEMENT IN PRACTICE: EXPERIENTIAL EXERCISE

Do You Want to Be an HR Manager?

The following questions are based on a Human

Resources Capability Model developed by the

Austra-lian Public Service (APS) for HR managers who work

in government agencies People who work with HR

managers complete a 72-item questionnaire

assess-ing a range of expectations for the HR manager The

results are given to the manager, who then works to

improve low scores The following questions give a

glimpse of the expectations for APS HR managers

Please think about how strongly you are attracted to

the requirement below

1 —Not attracted at all

2 —Not very attracted

3 —Moderately attracted

4 —Very attracted

5 —Extremely attracted

Bringing HR to the Business

1 Has a detailed knowledge of current HR approaches, tools, and technology

1 2 3 4 5

2 Understands the human behavior triggers that affect or improve organizational performance

1 2 3 4 5

Connecting HR with the Business

3 Maintains knowledge of the business through quent interaction with people in the workplace

1 2 3 4 5

1 Assume it is the year 2020 In your company, central

planning has given way to frontline decision making,

and bureaucracy has given way to teamwork Shop

fl oor workers use handheld computers and robots A

labor shortage currently affects many job openings,

and the few applicants you do attract lack skills to

work in teams, make their own production decisions,

or use sophisticated technology As vice president

of human resource management since 2008, what

should you have done to prepare for this situation?

2 If you were asked to advise a private company

about its equal employment opportunity

responsi-bilities, what two points would you emphasize as

most important?

3 What does it mean to say that HRM plays a strategic

role in driving organizational performance?

Con-sider recruiting, training, performance appraisal, and

compensation strategies as part of your answer

4 Which selection criteria (personal interview,

employ-ment test, assessemploy-ment center) do you think would

be most valuable for predicting effective job

perfor-mance for a college professor? For an assembly-line

worker in a manufacturing plant? Discuss

5 How do you think the growing use of

telecommut-ers, temporary and part-time worktelecommut-ers, and virtual

teams affect human resource management? How

can managers improve recruiting and retention of these employees?

6 Is it wise for managers to consider a candidate’s MySpace or Facebook postings grounds for rejec-tion before even interviewing a promising candi-date? Is it fair? Discuss

7 If you are in charge of training and development, which training option or options—such as on-the-job training, cross-training, classroom, podcasting, mentoring—would you be likely to choose for your company’s production line manager? A customer service representative? An entry-level accountant?

8 If you were to draw up a telecommuting contract with an employee, what would it look like? Include considerations such as job description, compensa-tion and benefi ts, performance measures, training, and grounds for dismissal

9 How would you go about deciding whether to use

a job-based, skills-based, or pay-for-performance compensation plan for employees in a textile man-ufacturing plant? For waitstaff in a restaurant? For salespeople in an insurance company?

10 What purpose do exit interviews serve for taining an effective workforce?

4 Presents strong business cases for HR initiatives

1 2 3 4 5

Partnering with the Business

5 Establishes and maintains good relationships

across the organization

1 2 3 4 5

6 Guides the top executive and line managers in

actively managing people issues

1 2 3 4 5

Achieving High-Quality Business Results

7 Applies business acumen to HR decisions

1 2 3 4 5

8 Continuously monitors HR initiatives to maintain

consistency with business outcomes

1 2 3 4 5

Bringing Ideas to the Business

9 Continually looks for ways to enhance or create

new HR methods to achieve business outcomes

1 2 3 4 5

10 Critically evaluates and explores alternatives to the way things are done

1 2 3 4 5

Scoring and Interpretation

Correct answers are not the point of the ing questions The subscales (Bringing HR to the Business, Partnering with Business, etc.) represent elements of the HR Capability Model that APS HR managers are expected to master Any questions for which you receive a 4 or 5 would be strong areas for you If you averaged 4 or higher for most of the fi ve capabilities above, you may want to consider a career

preced-in HR If you aspire to become an HR manager it would be good to study the entire model at the fol-

lowing Web site: http://www.apsc.gov.au/publications01/ hrmodel.htm.

SOURCE: Based on “Human Resources Capability Model,” Australian

Public Service Commission, Australian Government, http://www.apsc

.gov.au/publications01/hrmodel.htm.

A Conflict of Responsibilities

As director of human resources, Tess Danville was

asked to negotiate a severance deal with Terry

Winston, the Midwest regional sales manager for

Cyn-Com Systems Winston’s problems with drugs

and alcohol had become severe enough to

precipi-tate his dismissal His customers were devoted to

him, but top management was reluctant to continue

gambling on his reliability Lives depended on

his work as the salesperson and installer of

Cyn-Com’s respiratory diagnostic technology Winston

had been warned twice to clean up his act, but had

never succeeded Only his unique blend of

techni-cal knowledge and high-powered sales ability had

saved him before

Now the vice president of sales asked Danville

to offer Winston the option of resigning rather than

being fi red if he would sign a noncompete agreement

and agree to go into rehabilitation Cyn-Com would

also extend a guarantee of confi dentiality on the

abuse issue and a good work reference as thanks for

the millions of dollars of business that Winston had brought to CynCom Winston agreed to take the deal After his departure, a series of near disasters was uncovered as a result of Winston’s mismanagement Some of his maneuvers to cover up his mistakes bor-dered on fraud

Today, Danville received a message to call the human resource director at a cardiopulmonary technology company to give a personal reference

on Terry Winston From the area code, Danville could see that he was not in violation of the non-compete agreement She had also heard that Winston had completed a 30-day treatment program as promised Danville knew she was expected to honor the confidentiality agreement, but she also knew that if his shady dealings had been discovered before his departure, he would have been fired without any agreement Now she was being asked to give Winston a reference for another medical sales position

Commonwealth Worldwide Chauffeured

Transportation

Dawson Rutter started a limousine company so he’d

have a nice place to work—but not have to work

very hard Rutter was content to keep the company

small and play golf several times a week Six years

later, though, after being offered what he considered

a paltry fi gure from a larger company that wanted to

acquire Commonwealth, Rutter realized he needed

to do more to build value in the business He

envi-sioned transforming his local driver’s service into

a company with international reach and a level of

customer service that would set new benchmarks in

the industry

From his previous experience driving taxis and

limos for other companies, Rutter knew what his

priority would be in building his business: “Other

companies are metal-centric—mostly about the cars,”

he says “We are fl esh-centric We are about people.”

To provide the best customer experience meant

Com-monwealth had to provide a level and consistency of

service above and beyond what was offered by other

companies At the time, Commonwealth had few

professional or management employees, with Rutter

handling most duties, including sales and marketing

He started his transformation by recruiting a

top-notch sales manager, who steadily began building the

client base Commonwealth expanded into New York

City and snagged accounts from some of the

choic-est hotels Some guchoic-ests liked the service so well they

retained Commonwealth for their own companies

But more customers led to more challenges It was

one thing to provide boutique service with a small, locally focused company serving 40 or so customers, but providing it to 4,000 clients around the world was

a different matter

In the limo business, 90 percent of staff bers have direct contact with clients, but Rutter knew his primary focus had to be the drivers Find-ing workers wasn’t a problem; with the slowing economy there were plenty of people needing jobs But driver jobs typically attract poorly educated, unskilled, and itinerant workers How could Rutter build a squadron of organized, professional, fastidious employees dedicated to the business and committed to a mission of exceptional customer service?

3 Suggest at least one idea for training, one for formance evaluation, and one for compensation that might be used to develop and maintain a com-mitted corps of limo drivers

per-SOURCES: Based on Leigh Buchanan, “What’s Wrong with This

Picture? Nothing!” Inc Magazine (June 2007): 98–105.

What Would You Do?

1 Honor the agreement, trusting Winston’s

reha-bilitation is complete on all levels and that he is

now ready for a responsible position Give a good

recommendation

2 Contact the vice president of sales and ask him

to release you from the agreement or to give the

reference himself After all, he made the agreement You don’t want to lie

3 Without mentioning specifi cs, give Winston such

an unenthusiastic reference that you hope the other human resources director can read between the lines and believe that Winston will be a poor choice

ch11 ON THE JOB VIDEO C ASE

The Maine Media Workshops:

Human Resource Management

Since 1973, the Maine Media Workshops have seen

some of the most talented fi lmmakers,

photogra-phers, and writers pass through its doors The

pro-gram started as a summer camp of sorts for amateurs

and professionals alike wanting to hone their skills

while enjoying a week along the beautiful coast of

Rockport, Maine Over the years, students have

had the opportunity to work with and learn from

Hollywood’s heavy-hitters: Vilmos Zsigmond,

winning cinematographer on Close Encounters of the

Third Kind, The Black Dahlia, and The Deer Hunter;

Alan Myerson, Emmy-winning director of everything

from The Love Boat to The Larry Saunders Show to

Bos-ton Public to Lizzie McGuire; and even Gene Wilder

The names are impressive, but what has always set

the workshops apart is the intensity and quality of

the program The family-style lobster dinner at the

end is an added bonus!

Selection has always been a big job at the Maine

Media Workshops From January through November,

the organization needs instructors to teach weeklong

classes in the 500 or so courses they offer For any

small company, doing that kind of staffi ng blitz year

after year would be challenging For the staff at the

Maine Media Workshops, there’s an added degree of

HR diffi culty With the exception of the skeleton crew

of full-timers, the organization is entirely served by

week-to-week temporary workers In the time it takes

most new hires to get their employee handbook and

complete their W2 forms, the instructors at the Maine

Media Workshops are already moving on

“Just because somebody is good at making

images doesn’t make him or her a good teacher,”

explained Elizabeth Greenburg, director of

educa-tion “What makes a good teacher is someone who

is generous enough and open enough to share her

life, her experience, her career and her knowledge

24/7 with students.” The Maine Media Workshops

have a very specifi c culture and that is part of what

attracts students The instructors become mentors

and coaches who are expected to dine with students, participate in social events, and be available to stu-dents to discuss an assignment or just to “pick their brains.”

Selecting a perfect balance of professional rience, leadership, and generosity isn’t something you can do in an interview The best way a potential employer can do a background check (vetting) and assess someone’s performance is through personal recommendations That, of course, requires a lot of scouting and many contacts With no time or budget for on-the-job training, the HR department likes to reach out to people who, like Greenburg, were once students so the potential new hire truly understands what it takes to perform to the Maine Media Work-shops’ standard In addition to personal referrals, the program directors are always looking for places to connect new people with the school Festivals such

expe-as Sundance are perfect places to recruit like-minded talent

Compensation is surprisingly not an issue for the big guys and everyday professionals alike Although the Maine Media Workshops pay a fair wage, the real compensation doesn’t come in a check “No one comes here for the money,” said Mimi Edmunds, fi lm program manager “They come here because they love it.”

Discussion Questions

1 Why might the instructors at the Maine Media Workshops be vetted very carefully if they are teaching only for one week?

2 The Maine Media Workshops recently expanded its Web site to serve the needs of an increasingly global audience for the school Would e-cruiting be

an appropriate recruiting tool for the Maine Media Workshops? Why or why not?

3 Complete a job analysis for one of the courses at the Maine Media Workshops Then create a job posting for that position Include a full job descrip-tion, qualifi cations, and a realistic preview of the job for the applicant

ch11 ENDNOTES

Based on ideas presented in Jim

1

Collins, Good to Great: Why Some

Companies Make the Leap and

Others Don’t (New York: Harper

Business, 2001).

Results of a McKinsey Consulting

2

survey, reported in Leigh Branham,

“Planning to Become an Employer

of Choice,” Journal of Organizational

Excellence (Summer 2005): 57–68.

Robert L Mathis and John H

3

Jackson, Human Resource

Manage-ment: Essential Perspectives, 2nd ed

(Cincinnati, OH: South-Western

467; Jonathan Tompkins, “Strategic

Human Resources Management in

Government: Unresolved Issues,”

Public Personnel Management

(Spring 2002): 95–110; Noel M

Tichy, Charles J Fombrun, and

Mary Anne Devanna, “Strategic

Hu-man Resource Management,” Sloan

Management Review 23 (Winter

1982): 47–61; Cynthia A Hall and Mark L Lengnick-Hall,

Lengnick-“Strategic Human Resources Management: A Review of the Lit- erature and a Proposed Typology,”

Academy of Management Review

13 (July 1988): 454–470; Eugene B

McGregor, Strategic Management of Human Knowledge, Skills, and Abili- ties, (San Francisco: Jossey-Bass,

tions,” Research in Personnel and Human Resources Management 16

(1998): 53–101; S Ramlall, suring Human Resource Manage- ment’s Effectiveness in Improving

“Mea-Performance,” Human Resource Planning 26 (2003): 51; Mark A

Huselid, Susan E Jackson, and Randall S Schuler, “Technical and Strategic Human Resource Man- agement Effectiveness as Deter- minants of Firm Performance,”

Academy of Management Journal 40,

no 1 (1997): 171–188; and John T Delaney and Mark A Huselid, “The Impact of Human Resource Man- agement Practices on Perceptions

Ray Burns (Mick Rossi) does prison time for a crime

he did not commit After his release, he focuses on

getting even with his enemies This fast-moving fi lm

peers deeply into London’s criminal world, which

includes some crooked London police, especially

Detective Brice (Vinnie Jones) The fi lm’s unusual

ending reviews all major parts of the plot

Recruitment

These scenes begin with a close-up of a photograph of

an ape that Riley (Patrick Bergin) carefully examines

They follow Detective Brice’s order to Riley to kill

the person who will not give them money He shoots

him in a pub The scenes end after Ray Burns accepts

Riley’s offer He walks away while saying, “All right

Let’s rock and roll, man All right Thanks, Riley.”

Riley says, “Thank you, Ray.” The fi lm cuts to Terry

(Trevor Nugent) talking to Nikki (Meridith Ostrom)

before Ray’s arrival

What to Watch for and Ask Yourself

▪ This chapter emphasized a strategic approach to human resource management Detective Brice out-lines a strategy in the opening of these scenes for the job he describes to Riley What are the key parts

of that strategy? What are the human resource implications of the strategy?

▪ Riley’s next step is to recruit Ray Burns Which recruitment guidelines and activities does he follow? Give examples from that portion of the

fi lm scenes

▪ Does Riley give Ray a “realistic job preview”? Use examples from the fi lm scenes to support your answer

ch11 BIZ FLIX VIDEO C ASE

Practices,” California Management

Re-view 41, no 3 (Spring 1999): 29–53.

Sunil J Ramlall, “Strategic HR

Man-9

agement Creates Value at Target,”

Journal of Organizational Excellence

based on George Bollander, Scott

Snell, and Arthur Sherman,

Man-aging Human Resources, 12th ed

(Cincinnati, OH: South-Western,

2001), pp 13–15; and Harry

Scar-brough, “Recipe for Success,” People

Management (January 23, 2003): 22–25.

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13

Terry Laudal, and Robert J Thomas,

”Measuring the Value of Human

Capital Investments: The SAP Case,”

Strategy & Leadership 34, no 2

(2006): 43–52.

Rich Wellins and Sheila Rioux, “The

14

Growing Pains of Globalizing HR,”

Training and Development (May

2000): 79–85.

Helen DeCieri, Julie Wolfram Cox,

15

and Marilyn S Fenwick, “Think

Global, Act Local: From Naive

Comparison to Critical

Participa-tion in the Teaching of Strategic

International Human Resource

Management,” Tamara: Journal of

Critical Postmodern Organization

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S Beecher, and N Napier, “Towards

an Integrative Model of Strategic

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Best Practices: Lessons Learned

from a Globally Distributed

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Human Resource Management 41,

no 1 (Spring 2002): 123–140.

Von Glinow, Drost, and Teagarden,

16

“Converging on IHRM Best

Prac-tices”; and Jennifer J Laabs,

“Must-Have Global HR Competencies,”

Mirvis, “The New Protean Career:

Psychological Success and the Path

with a Heart,” in D T Hall &

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Organizational Dynamics (Winter

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and Academic Literatures,” Human Resource Management 39, no 4

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an Emerging Economy,” Journal of Organizational Behavior 24 (2003):

511–535.

Based on Branham, “Planning to

21

Become an Employer of Choice.”

This discussion is based on Jaclyn

22

Fierman, “The Contingency

Workforce,” Fortune (January 24,

1994): 30–31; Kris Maher, “More People Pushed Into Part-Time

Work Force,” The Wall Street Journal, March 8, 2008; Marshall

Goldsmith, “The Contingent

Workforce,” BusinessWeek (May 23,

2007), http://www.businessweek.

com/careers/content/may2007/

ca20070523_580432.htm (accessed April 8, 2008); and John Tagliabue,

“Europe No Longer Shuns

Part-Time and Temporary Jobs,” The New York Times, May 11, 2006.

Goldsmith, “The Contingent

Solu-Stephen Barr, “Working from Home

a Work in Progress,” The Washington Post, June 19, 2007.

Gragg, “Are Telecommuting and

They’ve Arrived at Work With a New

Attitude,” USA Today, November

6, 2005, http://www.usatoday.com; Ellyn Spragins, “The Talent Pool,”

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and Brett C Luthans and Steven M Sommer, “The Impact of Downsiz-

ing on Workplace Attitudes,” Group and Organization Management 2,

no 1 (1999): 46–70.

Effective downsizing techniques are

30

discussed in detail in Bob Nelson,

“The Care of the Un-Downsized,”

Training and Development (April

1997): 40–43; Shari Caudron,

“Teaching Downsizing Survivors

How to Thrive,” Personnel Journal

(January 1996): 38; Joel Brockner,

“Managing the Effects of Layoffs

on Survivors,” California ment Review (Winter 1992): 9–28;

Manage-and Kim S Cameron, “Strategies for Successful Organizational Down-

sizing,” Human Resource ment 33, no 2 (Summer 1994):

“Role of Recruitment in Staffi ng

Utility Analysis,” Journal of Applied Psychology 70 (1985): 354–366.

Megan Santosus, “The Human

35

Capital Factor,” CFO-IT (Fall 2005):

26–27.

Reported in Robert E Ployhart,

36

“Staffi ng in the 21st Century:

New Challenges and Strategic

Opportunities,” Journal of

Manage-ment 32, no 6 (December 2006):

Finally Advances HR,” Workforce

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Work-force (August 1999): 77–84.

Simona Covel, “Start-Up Lures

42

Talent with Creative Pitch,” The Wall

Street Journal, June 4, 2007.

Kathryn Tyler, “Employees Can Help

to Stand Out, Join the Crowd,”

The Wall Street Journal, August 14,

Bats, and Not the Bantu,” The Wall

Street Journal, September 18, 2007.

Milt Freudenheim, “More Help

47

Wanted: Older Workers Please

Apply,” The New York Times, March

23, 2005, http://www.nytimes.com.

“Bank of America to Hire 850

48

Ex-Welfare Recipients,” Johnson

City Press, January 14, 2001; E

Blacharczyk, “Recruiters Challenged

by Economy, Shortages, Unskilled,”

HR News (February 1990): B1;

Victoria Rivkin, “Visa Relief,”

Work-ing Woman (January 2001): 15.

Wimbush, “Spotlight on Human

Personnel and Human Resource

Management (Boston: Kent, 1982);

and Civil Rights Act, Title VII,

Sec-tion 2000e et seq., U S Code 42

ing Leadership through Testing,”

Small Business Report (June 1987):

22–24; and W C Byham, ment Centers for Spotting Future

“Assess-Managers,” Harvard Business Review

(July–August 1970): 150–167.

Erin White, “Walking a Mile in

56

Another’s Shoes—Employers Champion Tests of Job Candidates

to Gauge Skills at ‘Real World’ Tasks”

(Theory and Practice column), The Wall Street Journal, January 16, 2006.

Mike Thatcher, “‘Front-line’ Staff

57

Selected by Assessment Center,”

Personnel Management (November

1993): 83.

Alan Finder, “For Some, Online

58

Persona Undermines a Resumé,”

The New York Times, June 11, 2006.

Bernard Keys and Joseph Wolfe,

(San Francisco: Jossey-Bass, 1994).

Jeanne C Meister, “The Brave New

62

World of Corporate Education,”

The Chronicle of Higher Education

(February 9, 2001): B10; and Meryl Davids Landau, “Corporate Univer-

sities Crack Open Their Doors,” The Journal of Business Strategy (May–

June 2000): 18–23.

Meister, “The Brave New World of

63

Corporate Education”; Edward E

Gordon, “Bridging the Gap,” ing (September 2003): 30; and John

Train-Byrne, “The Search for the Young

and Gifted,” BusinessWeek (October

4, 1999): 108–116.

Doug Bartholomew, “Taking the

64

E-Train,” Industry Week (June 2005):

34–37; Joel Schettler, “Defense Acquisition University: Weapons of

Mass Instruction,” Training

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Teamwork,” The New York Times,

May 7, 1999; and B Filipczak, “The Executive Coach: Helper or Healer?”

Introduction to Special Issue on

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(Summer–Fall 1993): 211–219; and Brian O’Reilly, “360 Feedback Can

Change Your Life,” Fortune (October

17, 1994): 93–100.

Kris Frieswick, “Truth &

Conse-69

quences,” CFO (June 2001): 56–63.

This discussion is based on Dick

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Grote, “Forced Ranking: Behind the

Scenes,” Across the Board (November–

December 2002): 40–45; Matthew Boyle, “Performance Reviews: Perilous

Curves Ahead,” Fortune (May 28,

2001): 187–188; Carol Hymowitz,

“Ranking Systems Gain Popularity

But Have Many Staffers Riled,” The Wall Street Journal, May 15, 2001; and

Frieswick, “Truth & Consequences.” Reported in McGregor, “The Strug-

and Rewards,” The Wall Street Journal, November 21, 2005; and

Lou Kaucic, “Finding Your Stars,”

Microsoft Executive Circle (Summer

Management: Rewarding Performance,

4th ed (Reston, VA: Reston, 1985).

L R Gomez-Mejia, “Structure and

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Process Diversifi cation, pensation Strategy, and Firm

Performance,” Strategic Management

Journal 13 (1992): 381–397; and E

Montemayor, “Congruence Between

Pay Policy and Competitive Strategy

in High-Performing Firms,” Journal

of Management 22, no 6 (1996):

889–908.

Renée F Broderick and George T

78

Milkovich, “Pay Planning,

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‘Fit’: A Prescriptive Model of Pay,”

paper presented at the 45th

An-nual Meeting of the Academy of

Management, San Diego, August

1985.

E F Lawler, III,

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and Pay Systems (San Francisco:

Jossey-Bass, 1990); and R J

Greene, “Person-Focused Pay:

Should It Replace Job-Based Pay?”

Compensation and Benefi ts ment 9, no 4 (1993): 46–55.

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Bureau of Labor Statistics, reported

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New Workforce,” BusinessWeek

(December 6, 1999): 39–44.

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82 , (Washington, DC: U S Chamber of

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Robert S Catapano-Friedman,

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‘90s,” Management Review

chapter 12 pt4

After studying this chapter, you should be able to:

1. Understand the pervasive demographic changes occurring in the domestic and global marketplace and how corporations are responding.

2. Understand how the defi nition of diversity has grown to recognize a broad spectrum of differences among employees, and appreciate the dividends of a diverse workforce.

3. Recognize the complex attitudes, opinions, and issues that employees bring to the workplace, including prejudice, discrimination, stereotypes, and ethnocentrism.

4. Recognize the factors that affect women’s opportunities, including the glass ceiling, the opt-out trend, and the female advantage.

5. Explain the fi ve steps in developing cultural competence in the workplace.

6. Describe how diversity initiatives and training programs help create a climate that values diversity.

7. Understand how multicultural teams and employee network groups help organizations respond to the rapidly changing and complex workplace.

Do You Know Your Biases?

The Changing Workplace

Diversity in the United States

Diversity on a Global Scale

Managing Diversity

What Is Diversity?

Dividends of Workplace Diversity

Factors Shaping Personal Bias

Prejudice, Discrimination, and Stereotypes

Ethnocentrism

Factors Affecting Women’s Careers

Glass Ceiling

Opt-Out Trend

The Female Advantage

New Manager Self-Test: Are You Tuned

Into Gender Difference?

Cultural Competence

Diversity Initiatives and Programs

Changing Structures and Policies

Expanding Recruitment Efforts

Establishing Mentor Relationships

Accommodating Special Needs

Providing Diversity Skills Training

Increasing Awareness of Sexual Harassment

New Diversity Initiatives

Multicultural Teams

Employee Network Groups

D O Y OU K NOW Y OUR B IASES ?1

As a new manager, your day-to-day behavior will send

sig-nals about your biases and values Some personal biases

are active and well known to yourself and others Other

biases are more subtle, and the following questions may

provide some hints about where you are biased and don’t

know it Please answer whether each item is Mostly True

or Mostly False for you

Mostly True

Mostly False

1 I prefer to be in work teams with

people who think like me.

2 I have avoided talking about

cul-ture differences with people I met

from different cultures because I

didn’t want to say the wrong thing.

3 My mind has jumped to a

conclu-sion without fi rst hearing all sides

of a story.

4 The fi rst thing I notice about

peo-ple is the physical characteristics

that make them different from

the norm.

5 Before I hire someone, I have

a picture in mind of what they

should look like.

6 I typically ignore movies,

maga-zines, and TV programs that are

targeted toward groups and

val-ues that are different from mine.

7 When someone makes a bigoted

remark or joke, I don’t confront

them about it.

8 I prefer to not discuss sensitive

topics such as race, age, gender,

sexuality, or religion at work.

9 There are people I like but would

feel uncomfortable inviting to be

with my family or close friends.

SCORING AND INTERPRETATION: Give yourself one point for each item you marked as Mostly True The ideal score is zero, but few people reach the ideal Each ques-tion refl ects an element of “passive bias,” which can cause people different from you to feel ignored or disrespected

by you Passive bias may be more insidious than active discrimination because it excludes people from opportu-nities for expression and interaction If you scored 5 or more, you should take a careful look at how you think and act toward people different from yourself The sooner you learn to actively include diverse views and people, the better new manager you will be

Sweeping demographic changes in the U.S population have transformed today’s

society, creating a cultural mosaic of diverse people The nation’s minority

popula-tion, for example, is now 100.7 million, making about one in three U.S residents a

minority Roughly 32 million people speak Spanish at home, and nearly half of these

people say they don’t speak English very well, according to Census Bureau fi gures.2

These demographic shifts, among others, are prompting companies in the United

States and abroad to take notice because these trends open up new markets To

capi-talize on those opportunities, organizations have recognized that their workplaces

need to refl ect the diversity in the marketplace “Our country’s consumer base is so

varied,” says Shelley Willingham-Hinton, president of the National Organization for

Diversity in Sales and Marketing “I can’t think of how a company can succeed out having that kind of diversity with their employees.”3

with-Forward-thinking organizations agree and are taking steps to attract and retain a workforce that refl ects the cultural diversity of the population They take seriously the fact that there is a link between the diversity of the workforce and fi nancial suc-cess in the marketplace To be successful, these organizations are hiring workers who share the same cultural background as the customers they are trying to reach Avon, for example, turned around its inner-city markets by putting African-American and Hispanic managers in charge of marketing to these populations.4

Today’s organizations recognize that diversity is no longer just the right thing

to do; it is a business imperative and perhaps the single most important factor of the twenty-fi rst century for organization performance.5 Companies that ignore diver-sity will have a hard time competing in a multicultural global environment As Ted Childs, director of diversity at IBM, put it, “Diversity is the bridge between the work-place and the marketplace.”6 The global corporations listed in Exhibit 12.1 have been recognized as leaders in corporate diversity They have made diversity a top priority and have taken steps toward creating a corporate culture that values equality and refl ects today’s multicultural consumer base

In this chapter, we explore why demographic changes in the U.S and global marketplace have prompted corporations to place high value on creating a diverse workforce The chapter considers the advantages of a diverse workforce and the chal-lenges in managing one We look at the myriad complex issues that face managers and employees in a diverse workplace, including prejudice, stereotypes, discrimina-tion, and ethnocentrism Factors that specifi cally affect women—the glass ceiling, the opt-out trend, and the female advantage—are also considered After a review of the steps toward cultural competence, the chapter concludes by presenting an overview

of initiatives taken by corporations to create an environment that welcomes and ues a broad spectrum of diversity among its employees

When Brenda Thomson, the director of diversity and leadership education at the Las Vegas MGM Mirage, steps into one of the company’s hotel lobbies, she closes her eyes and listens “It’s amazing all the different languages I can hear just standing in the lob-bies of any of our hotels,” she says “Our guests come from all over the world, and it really makes us realize the importance of refl ecting that diversity in our workplace.”7

The diversity Thomson sees in the lobbies of the MGM Mirage hotels is a small refl tion of the cultural diversity seen in the larger domestic and global workplaces

Consolidated Edison Company of New York Starwood Resorts

Diversity in the United States

Today’s U.S corporations refl ect the country’s image as a melting pot, but with a

dif-ference In the past, the United States was a place where people of different national

origins, ethnicities, races, and religions came together and blended to resemble one

another Opportunities for advancement were limited to those workers who easily

fi t into the mainstream of the larger culture Some immigrants chose desperate

mea-sures to fi t in, such as abandoning their native languages, changing their last names,

and sacrifi cing their own unique cultures In essence, everyone in workplace

organi-zations was encouraged to share similar beliefs, values, and lifestyles despite

differ-ences in gender, race, and ethnicity.8

Now organizations recognize that everyone is not the same and that the differences

people bring to the workplace are valuable.9 Rather than expecting all employees to

adopt similar attitudes and values, managers are learning that these differences enable

their companies to compete globally and to tap into rich sources of new talent Although

diversity in North America has been a reality for some time, genuine efforts to accept

and manage diverse people began only in recent years Exhibit 12.2 lists some

interest-ing milestones in the history of corporate diversity

Diversity in corporate America has become a key topic, in part because of the vast

changes occurring in today’s workplace and consumer base The average worker

is older now, and many more women, people of color, and immigrants are seeking

job and advancement opportunities The following statistics illustrate some of the

changes reshaping the workplace

group of workers progresses through its life stages A baby boomer turns 60 every

seven seconds, continuously bumping up the average age of the workforce.10

In 1986, the median age of the U.S labor force was 35.4 years It increased to

40.8 years in 2006 and will increase to 42.1 years in 2016.11

occur with Asians and Hispanics In fact, the number of Hispanics in the

work-force will increase by 6 million between 2006 and 2016, with 27 million Hispanics

in the workforce by 2016.12 Exhibit 12.3 on page 345 shows the growth in

employ-ment among different racial and ethnic groups in the United States

together represent $1.5 trillion in annual purchasing power.13

popula-tion of the United States nearly doubled, and immigrants now number more than

37.5 million, meaning that almost one in eight people living in the United States

was born in another country, the highest percentage since the 1920s.14

So far, the ability of organizations to manage diversity has not kept pace with these

demographic trends, thus creating a number of signifi cant challenges for minority

workers and women Progress for women and minorities in both pay and leadership

roles has stalled or regressed at many U.S corporations, as refl ected in these

statis-tics: 75 percent of 357 global senior executives report their companies have one or no

minorities among their top executives, and 56 percent say they have one or no women

among their top executives.15 This inequality shapes perceptions about who can

assume leadership roles And the pay gap between white men and every other group

still exists.16 Corporations that truly value diversity will recognize pay inequality and

discrimination in the workplace and make progress toward eliminating them

As a new manager, you will be challenged to create a workplace that is inclusive

and bias-free You may have the courage to take an active stand against prejudice

and inappropriate, disrespectful behavior But will you inadvertently exclude people

who are different from the mainstream? Refer back to your score on the opening

questionnaire concerning passive bias.

fi rst woman to charter and head a bank, the Saint Luke Penny Savings Bank Today,

it survives as the Consolidated Bank & Trust Co., the oldest African American owned bank

in the United States.

1964 The University of Chicago Graduate School

of Business becomes the fi rst top business school to set up a scholarship program for African Americans.

1986 Pepsi runs the fi rst Spanish-language TV commercial on a major network.

1992 Levi Strauss & Co makes history by being the

fi rst Fortune 500 company to offer full

medi-cal benefi ts to domestic partners.

1999 When Carly Fiorina takes over as CEO of Hewlett–Packard, she becomes the fi rst woman

to head a Fortune 50 company Andrea Jung breaks ground for Asian American women when she is named to the CEO’s job at Avon.

2004 Wales-born American Howard Stringer is named Sony’s fi rst non-Japanese CEO Nancy McKinstry becomes the fi rst American to head Dutch publisher Wolters Kluwer.

1951 Secretary and single mother Bette Nesmith Graham invents and patents Liquid Paper She markets it herself after IBM refuses to buy it.

1970 Joseph L Searles is the fi rst African American member of the New York Stock Exchange

1987 Clifton R Wharton becomes the fi rst

African American to head a Fortune

100 company when he takes the helm of TIAA-CRE

1994 Rajat Kumar Gupta becomes the fi rst Indian-born head of a U.S transglobal corporation, McKinsey & Company.

2002 Stanley O’Neal is named CEO of Merrill Lynch, the fi rst African American to head a major investment bank.

2006 PepsiCo appoints India-born Indra K Nooyi

as its fi rst female CEO.

SOURCE: “Spotlight on Diversity,”special advertising section, MBA Jungle (March–April 2003): 58–61.

Diversity on a Global Scale

Implications of an increasingly diverse workforce are not limited to the United

States For example, the aging of the population is a global phenomenon In

addi-tion, for organizations operating globally, social and cultural differences may

create more diffi culties and confl icts than any other sources For instance, U.S

managers trying to transfer their diversity policies and practices to European

divi-sions haven’t considered the complex and social cultural systems in Europe Even

the meaning of diversity presents problems In many European languages, the

closest word implies separation rather than the inclusion sought by U.S diversity

programs.17

Foreign fi rms doing business in the United States face similar challenges

under-standing and dealing with diversity issues For example, Japanese leaders at Toyota

Motor Company seriously bungled the handling of a sexual harassment complaint

in the company’s North American division, leading to a lawsuit When Sayaka

Kobayashi sent a letter to Dennis Cuneo, senior vice president of Toyota North America,

say ing she had endured months of romantic and sexual advances from her boss,

Cuneo told her he would discuss the issue with the boss, Hideaki Otaka However,

Cuneo allegedly said that he didn’t want to offend the man (a cultural norm), so he

planned to say it was Kobayashi’s boyfriend who was upset about the overtures

This chapter’s Manager’s Shoptalk lists some interesting tips for foreign managers

working in the United States to help them understand and relate to Americans Do

you agree that these statements provide a good introduction to American culture for

a non-native?

National cultures are intangible, pervasive, and diffi cult to comprehend However,

it is imperative that managers in organizations learn to understand local cultures and

deal with them effectively.18 Many companies have taken this challenge seriously

and have experienced growth in the global marketplace For example, Honeywell

has a growing role in the global marketplace with 118,000 employees operating in

more than 100 countries Today, 54 percent of its employees work outside the United

States Honeywell made the global connection and incorporated diversity as part of

its global strategies and believes that diversity provides the energy to fuel its

high-performance culture and achieve sustainable competitive advantage.19 The director

of diversity at Kraft General Foods concurs “Being global means that our

custom-ers are divcustom-erse Our stockholdcustom-ers are divcustom-erse The population which is available to

us, our productivity, creativity, innovation, and people who supply us are diverse

There is no way we can run a business effectively without a deep understanding and

accommodating all of these elements.”20

E X H I B I T 1 2 3

Growth in Employment from 2006 to 2016 by Group

30%

Men Women

26.5 35.1

SOURCE: Bureau of Labor Statistics.