Industrial
Psychology 244
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Chapter 1: The Foundation and Challenges of Human Resource Management
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For any organisation, making the right decision about its employees is vital to its
success. Making these decisions is no easy task due to diversity, size, and the everchanging environment of an organisation’s workforce.
According to the 2017 Africa Competitiveness Report, South Africa received an
overall rating of 47 out of 138 (moving up from 56th of 144 counties in 2015).
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People Practices in South Africa
This can be regarded as a good rating because South Africa remains highly ranked
compared to other countries in sub-Saharan Africa. Despite this, South Africa still
has much to do in the people component of the HR area.
The Global Competitiveness Report
Competitiveness is a set of institutions, policies and factors that determine the level
of productivity of a country. The level of productivity, in turn, sets the level of
prosperity that can be reached by an economy.
The productivity level also determines the rates of return obtained by investments in
the economy, which in turn are the fundamental drivers of its growth rates. In other
words, a more competitive economy is one that is likely to grow faster over time.
The Global Competitiveness Index is evaluated on 12 different pillars of
competitiveness.
Basic Requirements
Efficiency Enhancers
Innovation and
Sophistication
Institutions
Higher education and
training
Business sophistication
Infrastructure
Goods market efficiency
Innovation
Macroeconomic
environment
Health and primary
education
Labor market efficiency
Financial Market
development
Technological readiness
Market size
Key for Factor-Driven
Economies
Key for EfficiencyDriven Economies
Key for InnovationDriven Economies
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Human Resources: Past and Present
Modern human resource management is radically different from personnel
management of decades ago. In the last 80 years of the 20th century, a combination
of 3 HR management approaches has emerged.
The Scientific Management Approach
The technique of scientific management was the first radical change of the early
1900’s. Before this approach, all employees were considered equally productive and,
if their productivity did not measure up, their employment would be terminated.
Frederick Taylor (the father of scientific management), Frank and Lillian Gilbreth and
Henry Gantt believed that managers should take a scientific and objective approach
to determine fair performance standards. Workers who produced output above the
standard would receive additional incentive pay.
The movement’s treatment of the employee – someone motivated solely by money –
led to problems.
In this approach, the employee is seen as simply another factor of production.
Scientific management showed great concern for employee output but little concern
for employee satisfaction.
The concept of the ‘economic man’ held that an employee is motivated primarily by
economic gain and that an employee’s output can be maximized only through
financial incentives. With this in mind, Taylor created the ‘differential piece-rate
system’, whereby employees would receive a higher rate of pay per piece produced
after the daily output standard had been achieved.
The main focus of personnel departments in the early 20 th century was on the
implementation of scientific management techniques. Management at this time had a
paternalistic attitude towards employees of “We know what is best for you”. These
paternalistic practices were a reason for the decline in popularity of scientific
management in the 1920s and 1930s.
The Human Relations Approach
During the 1930s and 1940s, management’s attention shifted to human relations.
The Hawthorne studies had demonstrated that employee productivity was also
affected by certain social and psychological factors.
Elton Mayo and F.J Roethlisberger discovered in the studies that employees’
feelings, emotions and sentiments were strongly affected by work conditions, and
these feelings could have a significant impact on productivity.
Thus, it was asserted that treating employees with dignity would both enhance
employee satisfaction and enable the achievement of higher productivity.
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The shift to human relations was also influenced by the growing strength of unions
all over the world at the time. As a result of unionism in South Africa, the first
Industrial Conciliation Act was passed in 1924, which allowed workers to dispute and
negotiate over working conditions and personnel programs.
The human relations approach was instrumental in improving the working
environment of many employees, but it only achieved minimal success in increasing
employees’ output and enhancing job satisfaction.
The poor performance of this approach is attributable to the following:
→ The approach was based on an oversimplified concept of human behavior in
an organisational setting. The notion that ‘a happy employee is a hard worker’
is only valid for part of the workforce.
→ The approach failed to consider the concept of individual differences, and that
what motivates one employee may not motivate another.
→ The approach failed to recognize the need for both job structure and for
controls on employee behavior.
→ The approach failed to recognize that good human relations are but one of
many conditions necessary to sustain a high level of employee motivation.
The human relations approach fell out of favor with management during the 1950s
and 1960s and is considered outdated today.
The Human Resource Approach
The emerging trend in human resource management today is the human resource
approach, where organisations benefit in two significant ways: an increase in
organisational effectiveness and the satisfaction of each employee’s needs.
Rather than addressing organisational gals and employee needs as separate and
exclusive, the HR approach holds that they are mutual and compatible: ‘one need
not be achieved at the expense of the other’.
The term became popular in the 1970s as research in behavioral sciences showed
that managing people as resources, as opposed to factors of production, could result
in real benefits to the organisation and the employee.
The term ‘human resources’ is hard to define with clarity. A number of principles can
provide the basis for the human resource approach:
→ Employees are investments that will, if effectively managed and developed,
provide long-term rewards to the organisation in the form of greater
productivity.
→ Policies, programs and practices must be created that satisfy both the
economic and emotional needs of employees.
→ A working environment must be created in which employees are encouraged
to develop and use their skills to the maximum extent.
→ HR programs and practices must be implemented with the goal of balancing
the needs and meeting the goals of both the organisation and the employee.
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Strategic Human Resource Management
In a fast-paced global economy, change is the norm. Long-term planning for these
changes is risky, but essential. The process of making organisational decisions
about the future in this complex, rapidly-changing world is called strategic
management.
Strategic Human Resource Management (SHRM) is a focus on the integration of all
HR policies with one another and with the overall strategy and direction of the
organisation.
SHRM activities gained popularity in the 1980s, as they address a wide variety of
people issues across all functional areas of a business.
The Differences between Strategic HRM and Traditional HRM
Dimensions
Strategic HRM
Traditional HRM
Participates in formulating
overall organisational
Planning and Strategy
Is involved in operational
strategic plan and
Formation
planning only.
aligning HR functions with
company strategy.
Has high status and
Has medium status and
Authority
authority for top HR
authority.
officer.
Is concerned with all
Is concerned primarily
Scope
managers and
with hourly, operational
employees.
and clerical employees.
Is involved in making
Makes operational
Decision-Making
strategic decisions.
decisions only.
Is fully integrated with
Has moderate to little
Integration
other organisational
integration with other
functions.
organisational functions.
Coordinates all HRM
Does not coordinate all
Coordination
activities.
HR functions.
Today, every type of manager in a business that is responsible for people is
considered an HR manager. To be successful in this regard, the HR manager will
need a complementary set of competencies.
→ Business mastery
• The HR manager will need to know the business and strategies of the
organisation thoroughly.
→ HR mastery
• The HR manager will have to keep informed about changes relating to
any issues regarding people and employees.
→ Change mastery
• The HR manager will have to be able to manage change processes so
that HR activities are effectively merged with the business needs of the
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→ Personal credibility
• The HR manager must establish personal credibility, which they can do
by standing up for their beliefs and being fair-minded in dealing with
others.
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Human Resource Functions
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Activities included in the HR department will vary from organisation to organisation,
because the human resources function differs in each organisation. However, there
are different management functions that can be assigned to the HR department,
either exclusively or in conjunction with other departments.
Among the activities that are most likely to be assigned exclusively to the HR
department are:
→ Compensation and benefits issues
→ Affirmative action and employment equity
→ Job analysis programs
→ Pre-employment testing
→ Attitude surveys
In addition to these exclusive activities, the HR department is likely to carry out some
activities jointly with other departments in the organisation. Some of these activities
will be discussed briefly.
Job Analysis and Design
For employees to perform satisfactorily, their skills, abilities and motives to perform
the job must match the job’s requirements. A mismatch may lead to poor
performance, absenteeism, turnover and other problems.
The process of job analysis determines the skills and abilities required to perform a
specific job. There are various techniques of job analysis.
Recruitment, Selection, Orientation and Internal Staffing
To a great degree, the effectiveness of an organisation depends on the effectiveness
of its employees. Without a high-quality labor force, an organisation is destined to
have mediocre performance. For this reason, the external recruitment of human
resources is a critical HR function.
Recruiting and selecting a qualified labor force involves a variety of different HR
activities.
Performance Appraisal, Training and Development, and Career Management
The growth of an organisation is closely related to the development of its human
resources. When employees fail to grow and develop in their work, a stagnant
organisation will most probably result.
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A strong employee development program does not guarantee organisational
success, but such a program is generally found in successful, expanding
organisations.
Compensation and Health
The issue of compensation has long posed problems for the HR manager. A range
of questions needs to be asked on how compensation should be awarded to
employees.
Two increasingly important parts of compensation is employee benefits and health
and safety. These two aspects have become necessary parts of compensation for an
employee, and businesses today are more and more concerned about giving these
benefits out correctly and fairly.
Labor Relations
Labor unions exert a powerful influence on employers and help shape the HR
policies and programs for union employees.
The South African labor relations system is basically built around the Labor Relations
Act No. 66 of 1995, and the Employment Equity Act No. 55 of 1998.
The employee who fails to perform to expectations not only can be costly for
management but also creates stress, tensions and frustration within the workgroup.
For these reasons, managers must recognize the causes of unsatisfactory
performance and be able to bring about a permanent improvement in job behavior.
Human Resource Information Systems (HRIS), Technology and Research
In organisations today, a large portion of all the activities mentioned can be
accomplished with the assistance of an HRIS, often via the Web or intranet, and
increasingly over a personal scale.
Many HR problems are costly and can have a negative impact on an organisation’s
productivity rate. The HRIS can also assist by providing crucial HR metrics about
these matters and can help the organisation identify solutions.
HR Department Roles
The primary task of the HR department is to ensure that the organisation’s human
resources are used and managed as effectively as possible within the ever-changing
environment. HR administrators help design and implement policies and programs
that enhance human abilities and improve the organisation’s overall effectiveness.
HR’s Effect on Success
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through their employees.
The question
that is often asked, however, is how
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important the HR function is in that achievement, given other critical factors of
business.
Employers who have successfully integrated the HR function into the top level of
management and strategic planning, and all other critical areas and issues of the
business, can expect greater employee productivity and thus greater overall
success.
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To acquire and retain employees, HR administrators perform five critical roles:
→ Create and implement policy
→ Maintain communication
→ Offer advice
→ Provide services
→ Control personnel programs and procedures
HR Policies
HR policies are guides to a management’s thinking, and they help management
achieve the organisation’s HR objectives. Policies also help define acceptable and
unacceptable behavior and establish the organisation’s position on an issue.
HR committees generally include members from both line and staff departments. A
line function is one that is directly related to the achievement of an organisation’s
goals. Staff generally refers to a department that provides specialized services for
the entire organisation.
To be maximally effective, HR policies should be in writing, communicated to all
employees and readily available.
As the workforce and the business environment change and technology moves on,
the needs of the employees and the organisation develop; the organisation’s policies
must also keep pace with these changes.
Critical Policy Issues
Most of the issues facing HR management are included in four broad areas:
employee influence, personnel flow, compensation and reward systems, and work
systems. Each of these areas must be addressed regardless of the industry, size of
the organisation or the types of employees involved.
By developing critical HR policies with these four areas in mind, decision-makers can
create HR programs in a unified and systematic manner.
→ Employee Influence
With the increasing popularity of employee participation initiatives, more
organisations are developing policies that define the scope and breadth of employee
influence in managing the organisation.
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These policies specify the degree of authority and responsibility that are delegated to
employees, and the way in which those relationships may most effectively be
institutionalized.
→ Personnel Flow
Attention must be paid to the task of ensuring that personnel flow meets the
organisation’s long-term requirements of human resources. Decisions regarding
employees must be made keeping in mind the profits, growth and critical
organisational goals.
→ Compensation and Reward Systems
The objectives of reward systems include the attention, motivation and retention of
employees at all organisational levels.
Accomplishing these objectives forces management to consider a number of critical
policy issues. Finding solutions to these policy issues will define critical aspects of
the employee-employer relationships.
→ Work Systems
Work systems are concerned with the design of work. Policy decisions will include
many aspects that shape the extent to which the quality of work life is an important
organisational goal.
Communication
All organisations depend on communication – it is the glue that binds various
elements, coordinates activities and allows people to work together and produce
results. It is so important because organisations are larger than ever, and are spread
throughout countries, the world, and even virtually.
Often, it is the HR department that plays a pivotal role in the design and
maintenance of good communication flows through the company. HR communication
efforts can occur in two main ways:
→ Downward communication methods occur from management to employees.
• Orientations sessions, bulletin boards, newsletters, employee
handbooks.
→ Upward communication methods occur from employees to management.
• Suggestion programs, complaint procedures, email, attitude surveys,
open-door meetings.
Advice and Services
Management has become increasingly complex since the 1980s with the demand for
more socially responsible activities in organisational behavior. To cope with complex
issues, managers often turn to experts for advice and counsel.
Advice from HR staff may be accepted or rejected. The rejection of staff advice will
be inversely proportional to the confidence a manager has in staff experts. All staff
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A problem occurs when line managers rely too heavily on HR specialists for advice
and leave them to deal with all people issues. This is counterproductive, as everyday
people problems should be solved by the organisation’s supervisors.
Supervisors should be first to identify unmet needs or problems of their employees,
and with the assistance of HR specialists, find a solution.
Control Functions
The HR department performs important control functions for the management of
human resources. HR administrators are responsible for monitoring personnel goals
and guidelines to ensure their achievement. Common control activities include:
→ Collection and analysis of hiring, selection, placement and promotion data to
ensure that EE laws and policies are being observed.
→ Analysis of performance appraisal records to determine whether appraisals
are being conducted in an unbiased manner.
→ Analysis of statistics on absenteeism, grievances and accidents to determine
where problems are most critical and what may be done to reduce them.
HR employees generally have the authority to carry out control functions. HR
administrators should also be tactful when putting pressure on managers to conform
to guidelines, in order to reduce stress and tension between the relationship.
Policies and Procedures
HR has to ensure that all these aspects are dealt with fairly, consistently and within
the prescribed legislative requirements.
Proper policies and procedures have to be developed, communicated, implemented
and enforced to ensure adherence, compliance and fairness. Policies and
procedures should be well-known and easily accessible to all employees. Regular
updates and additions should be performed to keep up with the changing workforce
and environment.
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Structure of the HR Department
The HR department normally contains clerical (support), professional and
managerial jobs.
→ Clerical employees include clerks, data capturers, receptionists and lowerlevel administrative assistants.
→ Professional employees are specialists in fields such as counselling, benefits,
employee development, employee testing and labor relations.
→ Managerial employees oversee the clerical and professional employees and
coordinate the organisation’s personnel activities.
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The HR department in medium to large-sized organisations contains individual
workgroups organized by functions. Many of the managers of each function will be
responsible for various aspects of the work of the HR department.
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Responsibilities for HR Functions
The responsibility for performing the HR function does not reside only in the HR
department; all managers at all levels of the organisation share in that responsibility.
In most organisations, the HR staff design HR policies and the operating managers
implement them. On occasion, these roles overlap, but the primary responsibility for
implementation of HR policies and procedures rests with those who are responsible
for the day-to-day supervision of subordinates.
All things being equal, there are always certain factors that tend to strengthen or
weaken the standing of HRM.
Strengthening Factors
Political/visionary skills of HR
practitioners
Perceived competence of HR staff
Top management support
Involvement in strategy-making
Weakening Factors
Inept HR practitioners
HR function providing only a servicing.
Role
Lack of top management support
HR managers not involved in strategy
process
Ongoing need for staff development and
training
Training undertaken by line units
Large-scale reorganization in training
Stable organisation with little demand
for change
Expansions of business requiring
emphasis on recruitment and training
Crisis in employee relations, especially
where trade unions are involved
Business critically reliant on people as
opposed to technology
Static business conditions
No challenge from workforce
Role of people less important than that
of technical considerations
Current Issues and Challenges
It is generally accepted that the quality of an organisation’s human resources
represents a critical factor.
One HR challenge is how to attract, retain, motivate and develop individuals with the
required talent. If that isn’t enough of a challenge, consider the impact a turbulent
business environment presents, the difficulty of managing a diverse workforce, and
the everchanging legal climate and government regulations.
→ Employee Productivity
One of the biggest challenges facing South Africa since its re-entry into the
international community is its labor productivity. South Africa has one of the lowest
productivity rates in the world, which complicates the issue considerable.
South Africa still has a long way to go to catch up with the rest of the world, but it is
heartening to see that many organisations are becoming more conscious to stay
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→ Quality Improvement
South African employees recognize the importance of quality in the workplace. The
quality focus today is less of an us-VS-them mentality and more of a new philosophy:
excellence should be the norm, not the exception.
Improved quality means survival. Only organisations with the best quality will thrive,
and not because of quality alone. Quality means conforming to customer
requirements, preventing errors and accidents, and striving towards an error-free
output.
A quality orientation signals an important change in company culture and involves
more than a technical function or department. It is an operating system that extends
throughout the organisation.
→ Downsizing, Delayering and Decruiting
Laying off employees and cutting payrolls is a trend throughout the world.
Organisations will continue to let people go because, unlike earlier downsizing
periods in which employers simply wanted to cut costs until business picked up,
today an operation that does not create value is permanently squeezed out.
The methods being used are Total Quality management and process Re-engineering
efforts. The goal is clear and unambiguous: continuous improvement is needed to
prepare for global competition.
→ The Changing Workforce
The demographics of South Africa’s employees are creating a new, diverse,
changing workforce. How does such a diverse population view work, management
and the future?
According to recently conducted studies, it is clear that, in many organisations, the
trust gap between employees and employers is widening. This is understandable as
many government departments and organisations have undergone drastic
restructuring.
Another constant challenge for organisations is wide and growing workforce diversity
(South Africa’s diverse population is discussed thoroughly in Chapter 3). While
overall trends are discouraging, there are still many organisations in South Africa
where job loyalty is strong.
→ Global Economy
The changing global economy is placing new and increasing demands on human
resources in South African companies.
As foreign investors determine where to go for new international projects, employees
are constantly measured up against those of other nations. South African
organisations must match foreign competition if they are to take advantage of the
opportunities presented by new markets around the world.
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→ The Impact of the Government
The HR profession has, since 1994, felt the great impact of government policies and
programs through numerous pieces of legislation enacted by government pertaining
to many social issues. These include the following:
• Labor relations framework in SA
• Mine health and safety
• Occupational health and safety
• Basic conditions of employment
• EE and BEE
• Skills development
• King Code reports on corporate governance
All of these issues have had a big impact on the management of employees within
organisations.
→ Quality of Working Life
Quality of Working Life (QWL) refers to the extent to which employees’ work meets
their personal needs. One’s QWL improves as one’s work meets more and more
personal needs, such as security, responsibility and self-esteem.
An increasing number of organisations are providing a good QWL for employees, as
it may also have an impact on employee loyalty. Another facet of QWL is having fun
at what you are doing. In a work environment this can occur at various levels: stafforientated, supervisor-orientated, social-orientated and strategy-orientated
workplace fun. Practical examples of adding fun to the workplace include:
• Bulletin board
• Theme days
• Fun committee
• Baby picture/wedding picture contest
• Calling cards
• Birthday celebrations
• Celebrations of achievement
• Recognition of personal achievements
• Encouraging humor
Creating a work environment that minimizes the likelihood of an accident or injury
has long been a goal of QWL programs. In the modern workplace, a number of
safety and health issues have proved difficult to resolve in both manufacturing and
service industries.
1. First, a number of employees have established employee wellness programs
to help employees be healthier and happier, and to lower employer-provided
healthcare costs.
2. Secondly, there is evidence that some work environments pose risks for a
variety of illnesses. Unlike injury, illness is often difficult to detect and often
remain undetected until it is too late to help.
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→ Technology and Training
An organisation’s technology – the methods and techniques used to produce goods
and services – profoundly affects the skills and abilities that an organisation’s
employees must have.
Technology in the past has done little to affect how people worked together, but that
has changed now. New technologies have emerged to address the issue of working
together and to support lateral communication.
As new technologies have been introduced by businesses, the need for skills and
training has increased dramatically in order to perform many of the jobs in today’s
organisations. The incorporation of technology also brought about challenges in
terms of policies and conduct at the workplace.
Challenges Facing HR Managers in the 21st Century
Traditional approaches that were conceived n cultures emphasizing command and
control are giving way to new approaches characterized by greater employee
commitment, cooperation and communication coupled with changed expectations
and the incorporation of new technology.
Organisations with rigid structures will be swept away. HR, therefore, will need to
create and facilitate new processes that help the organisation identify the following:
→ Future talent needs
→ The desired make-up of the organisation’s human capital
→ Internal talent to be grown and leveraged
→ Competencies and skills that will have to be acquired from external sources
→ The organisation’s demographic profile will need to be engaged and
energized
HR Career Opportunities
Career opportunities in HR management demand diligent preparation. HR
professionals consider academic preparation a necessity. Future HR professionals
are almost certainly expected to hold a university degree or diploma.
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While technical knowledge and critical communication and interpersonal skills can be
acquired through academic preparation, other competencies are best developed
outside of the classroom and rather in working experience. Experience in a specific
industry is also valuable.
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It is important that HR practitioners and management realize that their conduct is
regulated by a variety of legislation, reports, ethical aspects and prescription of
professional bodies.
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Legislation and Other Matters Governing HR and HR Practices
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Compliance is of the utmost importance and it is also important to understand the
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organisation within which we function.
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Professionalization of Human Resource Management
A profession is characterized by the existence of a common body of knowledge and
a procedure for certifying members of the profession. These characteristics apply to
the HR profession. The South African Board for People Practices (SABPP) was
established on 15th October 1982.
Registering at the board has major advantages for both the HR practitioner and for
their organisation. The SABPP is involved in research, certification and many other
activities.
→ Ethics and HR Management
With the professionalization of HR management in SA, the need for a uniform code
of ethics has also risen. Ethics can be described as the discipline dealing with what
is good and bad, or right and wrong, or with moral duty and obligation. There are
many kinds of ethical codes and most professions have their own.
→ SIOPSA
The mission of the Society for Industrial and Organisational Psychology in South
Africa (SIOPSA) is to: “help develop a fair and humane work environment, enabling
people to reach their full potential and experience a high quality of work life in South
Africa. To this end, the society strives to create conditions in which Industrial and
Organisational Psychologists will be able to deliver efficient and effective services to
the benefits of all in South Africa.”
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Chapter 2: Human Resources and Technology
One of the most significant issues in modern organisations is the use of technology
to streamline activities, cut costs, improve connectivity and efficiency, and increase
business effectiveness. The ever-changing workforce and business environment are
also involved in this new use of technology.
HR and the Internet
The internet is a global collection of independently operating, but interconnected,
computers that provide a variety of information and communication facilities.
The information most useful for HR managers on the Internet can be classified in 2
broad categories:
→ Conversational Resources
• These allow users to have conversations with individuals anywhere in
the world (social media is a recent, popular conversational resource).
→ Reference Resources
• The World Wide Web uses hypertext mark-up language to transfer text,
sound, graphics or video.
• Gopher Sites are usually maintained by government agencies or
educational institutions.
An Intranet is an organisational network that serves as an information hub for the
entire organisation. Access to an intranet is limited to those with login details and a
password. Intranets usually have self-service capabilities where employees can
access information on HR issues.
An Extranet is an internet-linked network that allows employees access to
information provided by external entities.
An HR Portal is usually hosted on a company’s intranet. It provides employees with a
single access point or ‘gateway’ to all HR-related information.
Human Resource Information Systems (HRIS)
The Human Resource Information System (HRIS) is a system used to acquire, store,
manipulate, analyse, retrieve, and distribute information regarding an organisation’s
human resources. It maintains employee, organisational and HR data sufficient to
support most, if not all of the HR functions, depending on the various modules
installed.
The Nature of an HRIS
The HRIS is part of the organisation’s larger management information system (MIS).
The scope of an HRIS is determined by the need for HR data. All HR functions can
be and usually are included in the scope of an HRIS.
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The HRIS is based on an open systems model involving 3 main activities: inputs,
transformation, and outputs. The system usually has a form of control to monitor its
functioning. This control is achieved through feedback.
Benefits of an HRIS
The benefits of an HRIS in an organisation include:
→ Improves the quality of information
→ Reduces the administrative burden
→ Improves the speed and accessibility of information
→ Improves the flexibility of information
→ Increases competitiveness
→ Produces a greater number and variety of accurate, real-time, HR-related
reports
→ Improves the service to employees and employee satisfaction
→ Produces HR metrics
→ Re-engineers HR processes and functions
→ Shifts the focus of HR from transaction processing to strategic HRM
Components of an HRIS
For an HRIS to function, there are 4 components that have to be present. For the
HRIS to function properly, all these components must be integrated.
→ Hardware
• This equipment performs the input, storage, manipulation, and output
of information.
→ Software
• This is the set of programs used to operate the computer.
→ Data
• Data is necessary to solve HR problems.
→ Clear Procedures and Trained Users
• Clear procedures must be in place for the operating system to do its
job correctly and accurately, and there needs to be trained users to be
able to operate these systems.
Types of HRISs
Depending on the organisation’s size and philosophy, there are several types of
HRISs that can provide different information. There are 4 major types of HRISs:
→ Decision Support System
• Systems that support management to make a variety of decisions,
including “what if?” questions and looking at the skills currently
available in the organisation.
→ Management Information System
• Systems that provide important information and data for use in HR
metrics and to produce specific reports (e.g. EE reports).
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Systems that automate routine transactions such as payroll and clock
systems while reducing the cost of these transactions.
→ Enterprise Resources Planning System
• Systems that integrate all the functions in the organisation.
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Reasons for the Slow Introduction of Technology in HR Departments
There are a number of reasons why HR departments are slow to adapt to computerbased HR systems and incorporate technology:
→ Lack of support by top management
→ Satisfaction with the status quo
→ Defensiveness about revealing HR operations
→ HR managers’ lack of HRIS skills and knowledge
→ Poor or incomplete needs analysis
→ Lack of proper communication
Skills Requirements for an HR professional in HRIS Work
In addition to knowledge about the latest trends and developments in HR
management, HR professionals working in an HRIS function also need other skills
and capabilities. These include:
→ A systems view of HR and its relation to its environment
→ Systems concepts as they apply within the HR context
→ Management skills in designing and justifying an HRIS
→ Knowledge of the technical language that programmers use
→ Analytical skills that will enable them to identify the specific HRIS needs for
the system and end-users
→ Good communication skills
→ Computer skills for understanding the interface between computer technology
and HR functions
→ An understanding of the future of the HRIS field
Modules of an HRIS
It is important for the HRIS in an organisation to be flexible. To achieve this goal,
most HRISs are built on a modular basis. Modules are each designed for specific
departmental or functional applications in a fully developed HRIS.
Some HRIS vendors offer a wide variety of modules, whereas others focus on only a
few.
Applications of the HRIS Database Modules
Information obtained from the HRIS database must be up to date, complete, flexible
and easily accessible. There are 13 most common HRIS modules:
→ Applicant Tracking Module
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This module keeps track of information about vacancies and candidates for those
jobs. It tracks applicants and their CVs and helps match candidates on file to the
prerequisites for the vacancies. This module is extremely useful when recruiting
candidates for vacant positions.
→ Training and Development Module
With this module, an individual’s training and development needs are compared with
available training and development options within an organisation. Both employees’
and managers’ evaluations of training needs can be entered.
→ Position Control Module
This module enables an organisation to track positions for monitoring, budgeting,
planning and control purposes. Each position is usually assigned a code and position
characteristics. Position status can then be monitored.
→ Wage, Benefits and Salary Administration Module
Within the compensations area, the HRIS module handles several major
applications, including administering salary plans, bonus and commission plans, and
benefits management.
The foundation of an organisation’s compensation program is the salary plan. This
plan contains information about salary grades, a job classification system, and salary
ranges.
→ Human Resource Planning Module
The Human Resource Planning (HRP) module may provide information to help
estimate future labour supply and demand by analysing many types of employee
movements.
→ Skills Inventory Module
The skills inventory module has many uses in the HR department as it an help ask
questions regarding skills necessities. The module collects, stores and maintains
records of individual qualifications and experience. This skills inventory is a vital tool
in HR planning and training.
→ Talent Management Module
A talent management module is required to ensure long-range stability in an
organisation’s management positions. This module focuses on collecting and
maintaining data that underlies succession charts.
→ Labour Relations Module
This module assists organisations to document labour relations-related matters and
keep records of disciplinary matters. It can also document grievances and
dismissals, and ensure compliance with correct procedures, policies and legislation.
→ Time and Attendance Module
This module can help to keep records of employee attendance, and the times at
which they commence duty and leave the premises. This module is very important
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→ Onboarding/Orientation Module
this module can help ensure that new employees have all the information they need
and get exposure to the necessary matters. This module can provide the required
information and keep track of what has already been communicated.
→ Performance Management
Keeping record of employee performance is crucial. This module can keep record of
scores, evidence, personal development plans, training requirements, achievements,
and challenges experienced.
→ HR Metrics/ Analytics and Reports
The type of data stored in HRIS makes it possible to create various reports. This
makes reporting for HR and line managers more efficient and time-saving. The
system can also help to identify patterns or problem areas.
→ Basic Employee Module
This module is the cornerstone of basic information that is found in the system. The
basic information collected in this module is collected and edited once for all other
modules.
Most Common Reasons for HRIS Failure
There are 5 most common reasons why HRISs fail in organisations:
→ Leadership
→ Planning
→ Change management
→ Communication
→ Training
Selecting, Implementing, Maintaining and Evaluating an HRIS
Before an HRIS can be implemented, a number of aspects have to be considered.
There are 12 steps to be followed when selecting and implementing an HRIS:
1. Do a needs assessment
2. Compile a list of items essential for the HRIS (rank according to importance)
3. Identify potential solutions and vendors, screen and arrange for demonstration
and a needs assessment
4. Decide whether the system will be bought from a vendor or self-developed
5. Review proposals and cost frameworks for all vendors and for internal
development
6. Identify all the hardware, software and data needed
7. Prepare a presentation for the decision-makers in the organisation
8. Implement the vendor/self-development system
9. Train HR department and end-users of the HRIS
10. Obtain feedback from end-users
11. Evaluate the systems
12. Update/change the system
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Securing the Integrity of HR Data
Perhaps the biggest risk of technology is to the integrity of the information in the HR
files. The issue of keeping records unaltered and safe from tampering is complicated
by the issue of the type of technology that is being used.
There are 2 main approaches to maintaining record integrity:
→ Controlling Access – This process records who, when and why employees
access data.
→ Security Technology – This approach occurs through which a computer user
is limited either in the information they can access or the type of access they
have.
Technology in HR
Technology is developing rapidly, and employees’ needs are changing. There is
pressure on HR to embrace technology to ensure that the organisation does not fall
behind and that the available technology is used to the organisation’s advantage.
Technological advances include:
→ HR dashboards
→ Cloud computing
→ Recruitment
→ Social media
→ Training, development and learning
→ Performance management
→ Succession planning
→ Orientation and onboarding
→ Talent management
→ Apps for mobile devices
→ Gamification
→ Assistive devices
→ Bring your own device to work (BYOD)
→ Augmented reality
Predictions for the Future Workplace
There are a number of aspects that currently influence the workplace, but there are
also a number of challenges that must be kept in mind for the future. These future
challenges include:
→ Multiple generations in the workplace
→ Employee engagement in the future
→ Recruitment on different platforms
→ Being very connected
→ Accelerated leadership
→ Social learning
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Chapter 3: Managing Diversity and Regulatory Challenges
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Globalisation and the challenging demographics of the South African workforce are
creating enormous challenges. The growing interdependence of people and cultures
is accelerating, and technological advances have transformed the world into a ‘global
village’.
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It is important to consider South Africa in these rapid changes in how the diversity
came about and the legal environment that affects the way in which employers
interact with this new workforce.
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South Africa’s Diverse Population
For South African businesses to succeed, they must recognise the emergence of the
diversified workforce and find the means to harness its energies, talents and
differences. The major groups that provide diversity in the South African workforce
include:
→ Population Groups
The South African population is made up of four population groups:
• Black Africans (80.7%)
• Coloured people (8.1%)
• White people (8.1%)
• Indian or Asian people (2.5%)
This distribution above is not reflected in the workforce. White people still dominate
in top management and senior positions, consisting of 68.9% of South African
workplaces.
Representation of designated groups is showing a reasonable amount of change in
terms of professionally qualified employees. It is important for this trend to filter
through to top management and senior management levels.
→ Women
More and more women are entering the workforce, as can be seen by the 2%
increase in female employment in the formal sector from 2015 to 2016. Despite this,
the proportion of working-age women who are employed remains much lower than
that of their male counterparts.
There are almost four times more males in top management positions. Women
remain vulnerable because a large proportion of females are employed in low and
unskilled positions. Instead, women are predominately employed in administration
positions.
It is evident that the promotion of gender equity in South Africa contributes to more
women entering the workplace and occupying senior positions. Women still,
however, face problems in the workplace. These include balancing work and family
life and stereotyping.
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→ The Age of the Workforce
South Africa has a relatively young population, with almost 60% of people being
under 30 years old. Along with this, South Africa’s extremely high unemployment
rate means that unemployment is highest for people of younger ages.
The differing age of the South African workforce means that the needs and
expectations of generations will differ. HR has to be aware of these differences in
order to ensure maximum levels of participation, productivity and commitment from
the various generations.
→ People with Disabilities
The Constitution of South Africa and the Integrated National Disability Strategy state
that disability rights are integral to human rights in South Africa. People living with
disabilities account for 1.2% of the South African workforce.
There are three main types of special needs from disabilities:
• Physical disabilities
• Learning disabilities
• Personal problems
Many individuals experience anxiety around employees living with disabilities.
Managers must therefore ensure that they can set the tone for proper treatment of
employees living with disabilities. This includes overcoming common
misconceptions, such as:
• They do not have the right skills.
• They are too costly to employ.
• Co-workers will be uncomfortable with colleagues with disabilities and their
productivity will be negatively affected.
• Getting information on how to hire people with disabilities is time-consuming
and complicated.
Although organisations have policies in place to deal with employees living with
disabilities, there is still a gap between policy and practice. HR should ensure that its
human resource activities are more inclusive and encourage the organisation to
become involved with people with disabilities.
→ Sexual/Affectional Orientation
The South African Constitution outlaws discrimination on the basis of sexual
orientation. Despite this, LGTB+ employees still experience high levels of prejudice,
discrimination and harassment in the workplace.
Organisations should put policies in place that prohibits prejudice based on sexual
orientation and therefore promote diverse workplaces where the rights of all
employees are respected and equal opportunities for advancement are offered
irrespective of sexual/affectional orientation.
→ HIV & Aids
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SS has taken a leading role in dealing with this issue in the workplace by publishing
the ‘Code of Good Practice: Key Aspects of HIV/AIDS in 2000 and its Technical
Assistance Guidelines (TAG)’ in 2003. These were revised in 2010.
The primary objective of the Code and the TAG is to provide policy guidelines to
assist employers, employees and organisations to develop and implement
comprehensive, gender-sensitive HIV and AIDS workplace policies and programs.
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→ Religion
According to the Constitution, everyone has the right to freedom of conscience,
religion, thought, belief and opinion. Almost 80% of South Africa’s population follows
the Christian faith, and other major religions groups include the Hindus, Muslims,
Jews, and African traditional belief followers.
No employer is entitled to discriminate against an employee or applicant for
employment purely on the grounds of the employee’s religion.
Managing Diversity
An organisation must be clear about its motivation in managing diversity.
→ Managing diversity refers to the development and implementation of
organisational policies and practices intended to embrace employee
differences and promote inclusion with the aim of leveraging each employee’s
unique contribution to the organisation.
Complying with employment equity legislation is not enough. The organisation must
recognise the business necessity of having a diverse workforce and tapping the
potential of that workforce.
Managing diversity is a long-term process that demands top management
identification and commitment to set mechanisms in motion to access the potential of
all employees. There are many potential advantages of managing diversity:
→ Attracting, retaining and using the best talent.
→ Maximising employee potential and tapping into a range of skills that the
organisation did not have before.
→ Enhancing communication, understanding and trust between groups and
individuals.
→ Promoting greater productivity as a result of greater flexibility.
→ Enhancing global competitiveness.
What is Diversity?
Diversity is any collective mixture characterised by differences, similarities and
related tensions and complexities.
In the HR field and in South African organisations, the term diversity has three major
focus areas:
→ Legal imperatives in the form of employment equity and affirmative action.
• This focus area represents a very narrow view of diversity and the
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→ The unique work-related challenges experienced by minority groups.
• This focus area reflects the reality that some individuals or groups are
prone to discrimination and finding ways to prevent this from happening.
→ The broad range of common traits and differences that impact on relations
between individuals and groups.
• This is the broadest focus area and is most likely applied in organisations
with comprehensive diversity management programs.
• These organisations appreciate the far-reaching nature of diversity, rather
than focusing only on the primary dimensions of diversity.
There are three main dimensions of diversity:
→ Primary dimensions (internal dimensions) are those human differences that
are inborn and exert a major impact on us. All of us view the world through the
filter of these dimensions.
→ Secondary dimensions (external dimensions) are more mutable and can be
changed, discarded or modified throughout our lives.
→ Organisational dimensions contain those issues that relate to structure and
general managerial mechanics.
Stereotypes and Prejudices
A stereotype is a fixed, distorted generalisation about the members of a group.
Stereotyping stems from the primary dimensions of diversity and assigns incomplete,
exaggerated and distorted qualities to members of this group.
A stereotype usually comes from outside sources, not individual experiences. A
stereotype requires that the exaggerated beliefs about a group be sustained by
selective perception and/or selective forgetting of facts and experiences that are
consistent with the stereotype.
Stereotyping negates people’s individuality and limits their potential. To a great
extent, people perform according to the expectations placed on them. If the
stereotype is that the person is not competent, then they may not perform
competently.
Clinging to negative stereotypes about people who are different from us results in
prejudice. Prejudice involves processing one’s stereotypes in such a way as to
reinforce one’s own sense of superiority to the members of that group.
Assimilation
Assimilation refers to the assumption that a dominant group’s performance and style
are superior to those of persons who were not in the dominant group. This
assumption devalues diversity in the organisation and reinforces the value of
homogeneity.
Assimilation is likely to be met with resistance. Some organisations believe that the
homogenous ideal made them succeed because of their tough, no-compromise,
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For organisations that value diversity, assimilation is not the ideal. The basis for
assimilation is bias. Pressuring diverse employees to conform diminishes them as
individuals and could cause them to lose touch with their own cultural background.
Pushing assimilation does not benefit individuals or the dominant workforce. It
reinforces the bias that spawns this approach and perpetuates stereotyping and
prejudice in the workplace. Organisations who cannot adapt to this new reality will
not survive.
Valuing Diversity
The first step in getting an organisation to value diversity is to acknowledge the
fundamental difference between valuing diversity, employment equity and affirmative
action.
→ Employment equity is a legal approach to workplace discrimination.
→ Affirmative action is a response to the under-use of protected groups in
various job categories, in which a business attempts to attract and advance
people from such groups because of their failure to do so in the past as a
result of discrimination.
→ Valuing diversity moves past both of these concepts and results in
management designed to reap the benefits that a diverse workforce offers.
Employment equity and affirmative action are government-initiated, legally driven
efforts to change – from a quantitative standpoint – the make-up of an organisation’s
workforce. Valuing diversity is an organisation-specific, necessity-driven effort to
change – from a qualitative standpoint – how the organisation uses its workforce.
Diversity Programs
Organisational diversity programs have been in existence for only a few years in
South Africa and vary substantially in their context, cost and effectiveness. The
awareness and valuing of diversity training programs have met with varied success
in South Africa.
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The possible reasons for their lack of success include:
→ No follow-up activities after the initial training.
→ Few or no incentives for managers to increase the diversity of their
workgroups.
→ Top management’s view of diversity as an HR issue, not as a key to the
organisation’s long-term success.
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Attitudes towards diversity programs vary with regard to who is being asked. HR
professionals are generally positive about diversity and recognise it’s necessity in the
workplace, whereas line managers are generally more sceptical and believe that
diversity makes their jobs more difficult.
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Diversity Education and Awareness Training
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Diversity education begins the process of cultural change within an organisation that
attitudes. It should be
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aimed at providing concepts, principles and frameworks that will facilitate quality
decisions in the midst of differences, similarities and related tensions and
complexities.
The first group to be educated should be top management. Education in managing
diversity as a resource is ongoing and will be unique to each organisation’s needs.
Awareness training seeks to motivate employees to recognise the worth and dignity
of everyone in the workplace and to treat them with respect. It also seeks to diminish
the negative impact of individual prejudices by getting each person to accept
responsibility for the problem.
Diversity training takes many forms:
→ Values clarification
→ Perceptual differences
→ Problem-solving case studies
→ Exploring cultural assumptions
→ Personalising the experience
Problems with Diversity Training
Things often go wrong in the process of managing diversity. Examples of mistakes
made by diversity trainers include:
→ Trainers’ own psychological values are used as training templates.
→ The working definition of diversity is too narrow.
→ Political correctness is frequently the prevailing atmosphere.
→ Individual styles of participants are not respected.
→ Only one group is expected to change.
→ Important issues may be ignored.
It seems that there continues to be ignorance about the diverse needs of employees
and how it impacts on the workplace.
Effective Diversity Training
It can be said that diversity training is morally right and that it fosters understanding
and acceptance between co-workers. Diversity training can have a positive impact
when:
→ The focus is on substantive changes, both individual and organisational.
→ Motivation is linked to bottom-line organisational goals and priorities.
→ Accountability is a priority.
→ Training is well integrated into organisational functions and planning and has
the strong support of leadership.
→ Training is viewed as a long-term process that requires a strong commitment
from everyone.
→ Utilising a wide range of approaches, training is tailored to the needs of the
organisation.
→ Trainees return to a supportive organisational environment and apply what Cleo Appies
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However, diversity training can also have a negative impact if the following principles
are implemented:
→ The focus is on cosmetic changes.
→ The primary motivation is to minimise the risk of costly lawsuits.
→ There is little or no accountability after follow-up.
→ Stand-alone training is offered, along with passive support by top
management.
→ Training is viewed as an event, done as quickly and inexpensively as
possible.
→ Trainers utilise ‘off-the-shelf’ approaches and treat everyone in the same way.
→ Trainees do not take training with them.
Language Sensitivity
Language sensitivity and guidelines for appropriate language help managers value a
diverse workforce. Some rules would seem to be so obvious as to not need
repeating, but unfortunately, they do.
→ Do not tell jokes directed at a group of people who are stereotyped.
→ Use metaphors and analogies from diverse sources and diverse disciplines.
→ Avoid terms that devalue people or that spotlight differences.
→ Be aware of, and sensitive to, the preferences of members of diverse groups
regarding titles or terminology.
The Multicultural Organisation
Multicultural organisations value the diversity that they have created within their
workforce and encourage members of different groups to learn from one another.
They also adopt some of the norms and values of minority groups. These practices
help to create an environment in which differing viewpoints are value and given
consideration.
A further characteristic of the multicultural organisation is its unique organisational
culture. This new culture is better suited to deal with an increasingly multicultural and
rapidly changing marketplace. According to Richard Allen and Kendyl Montgomery
(2001), organisations can become multicultural through a model of planned change
consisting of three phases.
1. Unfreezing
Top management needs to ‘unfreeze’ the current culture by changing the system in
which it operates. Top management must then create a vision for the future and
communicate it to the rest of the organisation.
2. Moving
Once the initial steps have been taken to unfreeze the culture, management must
move through a number of steps to achieve a complete culture change. Each of the
practices targeting under-represented groups must be a part of a planned approach
to organisational change.
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The existing staff must also receive effective diversity training. Members will begin to
understand the importance and potential payoffs of diversity and help to give the
process momentum.
3. Refreezing
It is important that the changes made in the ‘moving’ step are institutionalised. This
can be accomplished by aligning the organisational policies, procedures and reward
systems to the new culture. Without this critical step, the organisation will run the risk
of going back to its old ways.
Once these steps have been completed successfully, the company will be in a much
better position to reap the benefits of a truly multicultural organisation.
Response to Diversity Government Legislation
South African society is diverse and complex. After more than two decades of
democracy, large-scale inequality still exists, and deep social divisions remain.
The government attempted to address inequality and discrimination by enshrining
particular rights and responsibilities in legislation. These initiatives aimed to ensure
that all individuals have an equal chance of being selected for employment and that
they are treated equally once they are hired.
HR professionals are the key individuals within organisations who must develop and
enforce policies and procedures to effect this change. True transformation can only
begin when the diversity of the workforce is valued and effectively managed.
The Constitution of the Republic of South Africa (No. 108 of 1996)
The Constitution of the Republic of South Africa, signed by then President Nelson
Mandela on 18 December 1996, was implemented during February 1997. The Bill of
Rights, included in the constitution, outlines the fundamental rights afforded to all
South Africans.
The first right mentioned is the right to equality. It states that all must be equal before
the law and all must be entitled to equal protection of the law. It is clear that the
government is serious about removing any unfair discrimination and laying out the
foundations for a democratic and open society. Other rights include:
→ The right to freedom of conscience, religion, thought, belief and opinion.
→ The right to freedom of expression.
→ The right to assemble, to picket and demonstrate with others peacefully and
unarmed, and to present petitions.
→ The right to freedom of association.
→ The right to engage freely in economic activity and to pursue a livelihood
anywhere in the national territory.
→ The right to fair labour practice.
→ The right to use the language and to participate in the cultural life of their own
choice.
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Employment Equity Act (No. 55 of 1998, as Amended)
The employment equity act aims to achieve equity in the workplace by promoting
equal opportunities and fair treatment in employment through the elimination of
unfair discrimination and implementing affirmative action measures to redress the
disadvantages in employment experienced by designated groups to ensure that their
equitable representation in all occupational categories and levels in the workplace.
Affirmative action can be defined as action intended to overcome the effects of past
or present discriminatory policies and practices, or other barriers to equal
opportunity.
Only the following employer groups are subject to the affirmative action provisions
outlined in Chapter III of the Act:
→ Employers who employ more than 50 employees.
→ Employers who employ fewer than 50 employees but whose total annual
turnover equals or exceeds the applicable turnover of a small business.
→ An employer appointed by a collective agreement.
→ Municipalities.
→ Organs of the state except for:
• The National Defence Force
• The National Intelligence Agency
• The South African Secret Service
For the employer to be successful with the implementation of the Act, an
employment equity plan must be drawn up. There are 10 steps that must be
performed for an employment equity plan:
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This process can take place through a variety of methods. Managers should be
informed of their obligations of the Act and be offered training in diversity
management and related skills.
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2. Making Employees Aware
Once a suitable person is appointed, they should embark on a process to make all
employees aware of the following:
→ The content and application of the act.
→ Employment equity and anti-discrimination issues.
→ The proposed process to be followed.
→ The advantages to employees of participation in the process.
→ The need for the involvement of all stakeholders to promote positive
outcomes.
n.
1. Assigning EE Plan Responsibility
The first step in the process is to assign responsibility for the development,
implementation and monitoring of the plan to someone in the organisation. This
person must be given the resources and power to perform their necessary duties
and their performance must be monitored.
29
3. Stakeholder Involvement
This program cannot be carried out by the appointed manager along, but should also
involve stakeholders, as it affects everyone. A consultative forum or similar body
should be established for regular meetings between parties.
4. Assess Employment Policies, Practices and Procedures
This step involves assessing the employment policies, practices and procedures
within the company to identify any barriers that may exist, or factors that positively
promote employment equity in the workplace.
It will also be necessary to determine the extent of under-representation of
employees from the designated groups in different levels of the organisation. There
are various issues that can be reviewed:
→ Disciplinary practices
→ Working conditions
→ Employment benefits arrangements
→ Utilisation and job assignments
→ Corporate culture
→ Remuneration structures and practices
5. Set Objectives and Formulate Measures
Affirmative action measures need to be taken to address the employment policies,
practices and working conditions that were identified as having an adverse effect on
designated groups in the workforce.
For each specific practice, measures need to be formulated and developed.
Guidance for this process includes:
→ Appointment of members from designated groups
→ Increasing the pool of available candidates
→ Training and development of people from designated groups
→ Promotion of people form designated groups
→ Retention of people from designated groups
→ Reasonable accommodation for people from designated groups
6. Duration
The duration of the plan should be between 1 and 5 years. The time frame should
set out more than just the duration, but also include milestones and target dates for
reaching goals.
7. Allocation of Resources
To make the developed plan a reality, resources need to be allocated to appropriate
processes and practices of the plan.
8. Communication
This step involves full communication o the plan to all stakeholders.
9. Monitoring and Reviewing
This step entails monitoring and reviewing the employment equity plan. EmployersCleo Appies
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→ Keep records of the plan
→ Implement mechanisms to monitor and evaluate the implementation of the
plan
→ Evaluate progress at structured and regular intervals
→ Report on progress to the consultative forum and all stakeholders
→ Where progress is unsatisfactory, or flaws emerge in the plan, review and
revise the plan through the consultation process
→ Provide internal procedures to resolve any dispute about the interpretation or
implementation of the plan
10. Reporting to the Department of Labour
The final step entails the process of reporting the plan and its results to the
Department of Labour. Four procedures are important in this step:
→ All employers who report must complete and submit the EE report form.
→ All employers who report must complete and submit an Income Differential
Statement form.
→ Designated employers must submit their reports annually on the first working
day of October.
→ To assist the employer with the process, the Code of Good Practice on the
Preparation, Implementation and Monitoring of the EE Plan has been issued.
Labour Relations Act (No. 66 of 1995)
The Labour Relations Act (LRA) does not explicitly regulate unfair discrimination.
However, it is clear that all involved in labour relations should review and adapt their
HRM policies in order to prevent unfair discriminatory labour practices that may lead
to unrest and expensive litigation.
Aspects regulated by the LRA that are relevant in addressing unfair discrimination in
the workplace include:
→ The right to freedom of association
→ Workplace forums
→ Dispute resolution
→ HIV and AIDS
→ Sexual harassment
The Basic Conditions of Employment Act (No. 75 of 1997, as Amended)
The Basic Conditions of Employment Act (BCEA) has an effect on the individual
employment relationship, which is otherwise largely regulated by the common law.
The BCEA contains certain minimum, standards below which an individual employer
and employee may not drop.
Aspects covered in the BCEA include:
→ Working time and leave
→ Remuneration
→ Deductions
→ Notice of termination
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→ Prohibition of the employment of children
→ Forced labour
Broad-Based Black Economic Empowerment (BBBEE)
BBBEE is a form of economic empowerment aimed at transforming South Africa
economically by increasing the number of black people who participate actively in
the country’s economy at all levels.
Organisations are often required to have a minimum BBBEE score to be able to do
business with other particular organisations. Compliance expectations can have a
substantial impact on the long-term survival and ability of the organisation to flourish,
although compliance is deemed to be beneficial to many stakeholders.
Sexual Harassment
Sexual harassment has developed into one of the most controversial, complex and
perhaps widespread HR problems in the world. Although the occurrence of sexual
harassment in the workplace varies widely among countries, its prevalence in the
workplace is undeniable.
Employees often acknowledge their experiences of sexual harassment, but they are
seldom willing to report it. Employees refrain from reporting harassment because of
the following reasons:
→ Fear of retaliation
→ Fear of losing one’s job
→ The need for a future job reference
→ The possibility of being considered a troublemaker
→ The assumption that nothing would change if the harassment was reported
→ Concern about being accused of inviting the harassment
→ A reluctance to draw public attention to private lives
→ The prospect of emotional stress
Defining Sexual Harassment
Sexual harassment refers to any unwanted conduct of a sexual nature that is
intended to affect or interfere with a person’s work performance or meant to create
an intimidating, hostile or offensive work environment.
Sexual harassment can span from subtle and unwelcome attention, sexual and
suggestive remarks, to extreme blackmail and outright violent behaviour such as
attempted or actual rape.
The complaining individual must show that they did not want, invite, solicit or
encourage the sexual conduct in order to show that sexual harassment actually
occurred. There are two forms of harassment:
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→ ‘This for that’ or ’Quid Pro Quo’ Sexual Harassment
Quid Pro Quo sexual harassment is a form of harassment that occurs when a
harasser (workplace superior) makes unwelcome sexual advances towards
someone in exchange for workplace benefits. This represents a breach of trust
and/or abuse of power.
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→ ‘Can’t Take It Anymore’ or ‘Hostile Environment’ Harassment
Hostile Environment sexual harassment is a form of harassment that occurs when
unwelcome sexual conduct with job performance or creates an intimidating, hostile
or offensive work environment.
Employees in such work environments have less favourable working conditions than
their colleagues, and they may feel fearful, demeaned or belittled. In this case, a
supervisor, co-worker or even a customer can be the perpetrator.
Measuring and Researching Sexual Harassment
Because of the sensitivity of this subject, it is sometimes difficult to get an accurate
reading of the extent of sexual harassment in an organisation. Certain techniques
provide HR administrators with estimates about the nature, extent and location of
sexual harassment. These include:
→ Grievance data
→ Oral complaints to management and HR officials
→ Exit interviews
→ Survey data (well-designed and anonymous)
Forms of Sexual Harassment
There are 3 major forms of sexual harassment.
→ Physical
• Brushing up against a person
• Touching a person’s hair
• Forced fondling
→ Verbal
• Sexual stories or jokes
• Whistling at someone
• Repeatedly asking a person out
→ Non-verbal
• Staring at someone
• Sending email messages of a sexual nature
• Sexually suggestive calendars or posters
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HR’s Responsibility
There are three potential challenges that the HR manager faces in this area:
Identifying/Recognising the Most Dangerous Personality Types within the Company
Darlene Orlov and Michael Roumell (1999) identified ten potentially dangerous
personality types within companies:
→ The dirty jokester/office clown
• This person has a sense of humour and often shares funny jokes and
stories which can sometimes take a sexual turn.
→ The close encounter of the third, fourth and fifth kind
• This person always gets uncomfortably close with co-workers when
speaking to them.
→ The ‘touchy-feeler’
• This is the type of person who touches others.
→ The office gossip
• Every workplace has a rumour mill. There are usually a handful of people
who keep it going and can sometimes stray fact from fiction.
→ The sexual braggart
• This person often goes around the workplace discussing their sexual
conquests, and as a result, offends people.
→ The sexual enquirer
• This person goes around asking co-workers about their sex lives.
→ The cusser
• This is a person who constantly uses four-letter words – many with sexual
connotations.
→ The after-work socialiser
• This person persistently targets one or two co-workers with an invitation for
after-work cocktails.
→ The date baiter
• This individual constantly asks co-workers out on dates.
→ The poster, pin-up or picture purveyor
• This person has pictures, posters or other visual or written materials of a
sexual nature on the walls of their office.
Identifying possible dangerous behaviour can be an important first step in the
prevention of sexual harassment, but this only involves a limited number of
employees.
Drawing up a Good Sexual Harassment Prevention Policy
This is not an easy task. There are various aspects that can provide some guidance
to developing an effective prevention policy:
→ A zero-tolerance statement
→ Definition of sexual harassment
→ Examples of prohibited conduct
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→ Complaint procedure
→ Investigating procedure
Once the policy has been drawn up, it is critical that every employee is made aware
of the policy and has complete and easy access to it.
Providing Effective Sexual Harassment Training
Implementing a sexual harassment training program for all employees is vital as this
will enable the workforce to develop the same knowledge and understanding of the
issue. The key objective of this training is to eliminate sexual harassment from the
workplace altogether.
According to Orlov and Roumell, there are a few primary topics that need to be
addressed in a sexual harassment training program:
→ Outline the legal definitions of sexual harassment
→ Stress the concept of ‘unwelcome’ sexual advances
→ Clarify the organisation’s existing sexual harassment prevention policy
→ Reinforce the organisation’s commitment to and support for maintaining a
workplace free of sexual harassment
→ Emphasis each employee’s personal responsibilities
→ Explain retaliation issues
→ Use role-playing exercises to heighten the awareness and understanding of
what is and what is not appropriate conduct
→ Offer detailed guidance on how to avoid and handle being the target of sexual
harassment
→ Carefully instruct employees on the proper procedures for reporting sexual
misconduct
→ Clarify all sexual harassment complaint investigation procedures
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Chapter 4: Strategic HR Planning and Research
Human Resource Planning (HRP) is the process of anticipating and providing for the
movement of people into, within and out of an organisation with the aim of finding the
best fit between employees and jobs.
Strategic Human Resource Planning (SHRP) is the process by which organisational
goals, as put forth in mission statements and organisational plans, are translated into
HR objectives to ensure that the organisation is neither overstaffed nor understaffed,
and the employees with the appropriate talents, skills and desire are available to
carry out their tasks/ duties in the right jobs at the same time.
Types of HR Planning
When doing HRP, companies can consider a number of options.
→ Firstly, the company can choose whether to be proactive or reactive in their
approach.
→ Secondly, the organisation can decide regarding the breadth of the planning.
This refers to having a narrow or broad focus on HR planning areas.
→ The third choice involves the formality of the plan (formal or informal).
→ The last option involves the degree of fit that the HR plan has with the
strategic plan of the organisation. This refers to the HR plan being loosely fit
or fully integrated with the company’s strategic plan.
Craft identified three possible types of linkages:
→ Input Linkages
Here, HR information is made available either before or during the strategic planning
process. This can take place through a specialised HR unit doing scanning or
through a specialised committee of HR personnel.
→ Decision Inclusion Linkages
Here, HR personnel are either directly or indirectly involved in the organisation’s
strategic planning process.
→ Review and Reaction Linkages
Here, HR personnel can respond to a proposed or final strategic plan. The plan may
be reviewed as an HR flexibility and desirability viewpoint. Personnel may even have
a sign-off authority.
Planning Horizon
The objectives that companies set are usually expressed in terms of a time frame or
planning horizon: the length of time over which the objectives will be achieved and
the plan for accomplishing them will endure.
→ Short-range objectives are shorter than 1 year
→ Intermediate objectives are between 2 and 4 years
→ Long-range objectives are between 5 and 15 years
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Strategy-Linked HRP
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By linking strategic planning and human resources, the organisation can discover
critical issues, compare different groups, understand patterns and trends, hone in on
critical segments of the workforce, and customise its approach to managing different
segments of the workforce.
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SHRP Responsibility
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Compiles and analyses data from
managers on staffing needs
Implements the HR plan as approved by
top management
n.
Designs the HR planning data systems
io
Identifies the HR strategies
ut
HR Unit
Participates in the strategic planning
process for the entire organisation
r ib
The main responsibility for SHRP rests with HR managers at all levels within the
organisation. They cannot function in isolation though and must liaise with line
managers.
Managers
Identify supply and demand needs for
each division/ department
Review/ discuss HR planning
information with HR specialists
Integrate the HR plan with departmental
plans
Monitor the HR plan to identify changes
needed
Review employee succession plans
associated with HR plans
The Importance of SHRP
Linking HR planning with the organisational planning process will facilitate the
organisation’s ability to pursue a given number of strategic objectives and initiatives
successfully. SHRP is important because of 7 main reasons:
→ Creates a competitive advantage
→ Helps to achieve long-term goals
→ Improves profitability of the organisation
→ Offers a better understanding of the HR implications of organisational
strategies
→ Recruiting experienced talent well in advance of needs
→ Improved planning of assignments and other employee developmental
actions
→ Improved analysis and control of personnel-related costs
Strategic change refers to major transformations in the structure, size or functioning
of an organisation for the purpose of achieving strategic objectives. Change can be
either radical or incremental.
The two elements that are essential in SHRP are HR objectives and HR plans. Both
of these elements contribute to achieving effective strategic HR plans.
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Steps in The SHRP Process
There are seven phases/steps in the SHRP process.
1. Establish the mission, vision and values
This step refers to the establishment of the purpose of the organisation, where the
firm is headed in the future, and the main principles and belief systems in place. HR
is responsible for communicating and translating the mission, vision and values to
employees.
2. Conduct an external analysis
Changes in the organisation’s environment may have an impact on how business is
done. Environmental scanning gathers information about trends and anticipated
developments in the external and internal environment, and their relevance for HR
strategy.
3. Conduct an internal analysis
In investigating internal strengths and weaknesses, the firm can determine what
needs to change and what needs to stay. According to Snell, organisations need to
look at three aspects to find information about the organisation’s current situation:
→ Capabilities of employees
→ Composition of the workforce
→ Corporate culture
4. Forecasting demand
This analysis entails determining the organisation’s total manpower requirement. It is
important to recognise that forecasting involves approximations, not certainties.
5. Forecasting supply
This analysis entails evaluating the future supply of labour that the organisation will
need. The supply component consists of two parts: internal supply and external
supply. The aim, in the end, is to balance supply and demand to ensure that the
organisation’s goals are reached because HR plans are aligned to these goals.
Quantitative Methods of Forecasting HR Demand
Description
Advantages
Averages data about HR
•
• Simplicity
Moving
demand and from recent
• Data easily
Average
periods and makes future
obtained
demands
•
•
Forecasters can vary weights • May be used to
for HR demand assigned to
take factors into
Exponential
different past-time periods
account that the •
Smoothing
used to project future HR
moving average
demand
method
•
Number of people hired
• Easily explained
placed on one axis; time on
Trends
to managers
•
the other axis. A straight line
Projection
•
Easily
prepared
•
is plotted from past to future
by HR managers
predict 2019,
HR demand
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Method
Disadvantages
Seasonal or cyclic
patterns may be
ignored
Relies on past data
Mathematical
complexity
Choice of weights
may be arbitrary
Relies on past data
Rough estimates
Relies on past data
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•
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Regression
Mathematical
Linear
Programming
Assesses required staffing
level that matches desired
output levels, subject to
certain constraints
Actuarial
Models
Relate turnover to such
factors as age and seniority
Simulations
Use scenarios to test the
effect of various personnel
policies
Probability
Matrixes
Defines ‘states’ in the
organisation and identifies
time periods
First-Order
Markov
Model
Multiples the number of
people in each job category
by the probability of
movement between position
categories. The model
assumes that the current
position category is the chief
determinant of movement
•
•
Can include
many variables
Efficient use of
all available data
Assesses what
should be in the
future, and what
probably will not
Reflects the past
•
Useful for
considering
alternative HR
programs
•
•
•
•
•
•
•
•
•
•
Helps identify
career patterns
Helps perform
Mathematical
complexity
Requires large
sample sizes
Relies on past data
Managers are
sceptical of highly
sophisticated
methodology
Numerous
assumptions must
be made
May not be as
accurate as in
individual cases
•
Accuracy varies
•
Requires some
mathematical
sophistication
Accuracy varies
•
•
Adequate for
considering
alternative
•
effects of various
HR strategies
Not adequate for
long-term forecasts
Requires
mathematical
sophistication
•
Not very useful for
considering
Same as first-order model but
alternative effects
the probability of movement • More inclusive
Semi-Markov
of various HR
is determined by job position
than a first-order
Model
strategies
and the individual’s length of
Markov model
• Requires
stay in the job class
mathematical
sophistication
Qualitative Methods of Forecasting HR Demand and Supply
• Can involve key
decision-makers
A group of experts exchange
in the process
several rounds of estimates
• Highly subjective
• Can focus on
Delphiof HR demands and supply.
• Judgements may
what is expected
Technique
Each individual use feedback
not use objective
or desired in the
form other experts to ‘finedata efficiently
future
tune’ their own estimate
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•
•
Nominal
Group
Technique
A small group of experts
meets face-to-face to reach a
judgement concerning future
HR demand and supply
Same as Delphi
technique
Group
discussions
facilitate
exchange of
ideas and
generate
acceptance of
results by
participants
•
•
Same as Delphi
technique
Group pressure
may lead to less
accurate
assessments then
could be obtained
through other
means
6. Developing, formulating and implementing a strategy
The HR strategy should be formulated keeping the organisational strategy in mind.
This refers to the corporate strategy, the business strategy and the functional
strategy.
It is important for the objectives of the organisation and the initiatives of HR to be
connected (vertical alignment), and for HR practices to be aligned with each other
(horizontal alignment).
A critical component of implementing changes within the organisation that result from
the planning process is creating a climate of readiness for change. The ultimate goal
is to improve the quality of strategic organisational decisions by ensuring an
appropriate match between resources.
An important aspect here is that HR managers must participate in the development
of the organisation’s strategic plans.
7. Succession planning
Succession planning is the process of identifying a longer-term plan for the orderly
replacement of key employees. This is a logical next step in the SHRP process.
Succession planning has two purposes:
→ It facilitates transition when an employee leaves the firm
→ It identifies the development needs of high-potential employees who are due
to move into higher positions
Common Pitfalls in SHRP
SHRP is not always successful. Common pitfalls in the SHRP process include:
→ The Identity Crises
• Unless HR planners develop a strong sense of mission (direction), their
existence may be challenged.
→ Top Management Support
• For the process to be viable, it must have the full support of management.
This does not always happen easily.
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→ Size of Effort
• Building the process up gradually instead of starting with a complex
system gives the SHRP process better chances of success.
→ Coordination with Other Functions
• It is important that the process is coordinated with the other management
and HR functions.
→ Integration with Company Plans
• HR plans must be derived from organisational plans: plans made in
isolation will not serve any purpose.
→ Non-Involvement of Operating Managers
• SHRP requires a coordinated effort on the part of operating managers and
HR staff. If this does not happen, line management will not execute the
plans formulated in the SHRP process.
→ The Technique Trap
• Many new and sophisticated techniques for SHRP are useful, but there is
a tendency to adopt some of them just for the sake of it. Organisations
must use techniques to fit specific needs.
HR Research and Metrics
HR research refers to the collection and investigation of facts related to HR problems
in order to eliminate or reduce those problems. Specific uses of HR research include:
→ Measuring and evaluating present conditions
→ Predicting conditions, events and behavioural patterns
→ Evaluating current policies, programs and activities
→ Discovering rational bases for revising current policies, programs and
activities
→ Appraising proposed policies, programs and activities
Types of Research
So
Most research can be classified as basic or applied.
→ Basic research, or pure research, is undertaken simply to advance knowledge
in a particular field or to gather information about a given subject.
• This is knowledge for the sake of knowledge.
• Basic research may not have an immediate application.
→ Applied research is conducted to solve a particular problem.
• The results of applied research may be put to immediate use.
• Most HR research is applied research.
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HR research is conducted by individuals and by a variety of public and private
organisations. There are five important groups conducting HR research:
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→ Government
Many government departments and government-funded organisations conduct both
basic and applied research. A leader in the HR field of research is the DepartmentCleo
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Labour and the Human Sciences research Council (HSRC).
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→ Private Organisations
Many private organisations undertake periodic HR research.
→ HR Associations/ Professional Bodies
HR associations/ professional bodies periodically conduct research about the
practices and activities of their members’ organisations. Some of these institutions
include the Institute of People Management (IPM) and the South Africa Board for
People Practices (SABPP).
→ Universities/ Institutions of Higher Education
Institutions of higher learning not only distribute information but are also one of the
greatest sources of basic and applied research in the HR field. Many institutions also
conduct research in conjunction with the business community.
→ Businesses
Many businesses conduct applied HR research to solve a particular problem or
evaluate a present or proposed program or project. Most organisations require HR
professionals to perform research as a normal part of their jobs. Research
responsibilities of the HR staff include:
▪ Evaluate training and development programs and talent management
▪ Conducting periodic wage and salary surveys
▪ Predicting future HR staffing requirements
▪ Conducting surveys of employee attitudes
▪ Performing studies of employee productivity
▪ Validating selection processes and testing instruments
HR professionals frequently receive requests from line managers to conduct special
ad hoc studies of HR problems, often to do with a problem the manage is facing.
Special studies of this type are an important part of the HR department’s service
responsibility.
HR Research Publications
The results of HR research can be found in a wide variety of printed media. A
knowledge of important research is one way to keep up to date with newly developed
policies, programs and techniques that show promise for making organisations
function more efficiently.
HR professionals can keep on top of research by regularly reading a selected group
of HR journals, magazines and electronic bulletin boards. This media for managers
is usually in a type of ‘how to’ format.
HR Metrics
HR metrics are different types of measurements used to calculate the success or
failure of workforce-related HR projects, or initiatives related to the HR function, in
terms of cost and impact. There are three types of measures in HR metrics:
→ Diagnostic measures are used to generate regular reports that management
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→ Evaluative measures focus mainly on measuring effectiveness. This is usually
done by means of quantitative data or qualitative data.
→ Human capital metrics include the measurement of HR practices but go
further by also looking at other work practices and people management
strategies in general, including the overall strategy of the organisation.
Research Techniques
The choice of particular research techniques depends on the purpose of the
research and the type of problem under study. Familiarity with research techniques
is important for two reasons:
→ An appropriate research technique must be applied to the problem in question
in an attempt to solve the problem.
→ A broad knowledge of research techniques is necessary to read and
understand the studies reported by other employers and researchers.
There are four research techniques that are most commonly used: surveys,
interviews, historical studies and controlled experiments.
Survey
The employee survey is the most widely used technique among HR professionals.
The two most common surveys are the wage survey and the job satisfaction survey.
→ Job Satisfaction Survey
Managers often use job satisfaction surveys to analyse employee attitudes on
specific topics. there are many factors that contribute to and detract from employee
job satisfaction.
Elements that Contribute to Job
Satisfaction (According to Most
Surveyed Employees)
The Job Itself
Co-worker Relations
Good Supervision
Opportunity to Grow
Elements that Detract from Job
Satisfaction (According to Most
Surveyed Employees)
Poor Supervision
Interpersonal Conflicts
Poor Work Environment
Poor Pay
Poor Employee Engagement
→ Specific-Use Questionnaire
HR researchers often find it useful to gather employees’ opinions about specific jobrelated issues at the workplace. These are generally custom-made by the HR staff in
order to focus on particular problems and issues being addressed. Great care should
be taken when writing survey questions.
→ Survey Administration
The total process of planning, implementing and analysing employee surveys and
questionnaires includes a number of important elements. Regardless of the type of
survey implemented, there are nine steps that should be considered. These steps
make up the Employee Survey Process.
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1. Objectives
Management must identify the objectives of the survey as an initial step.
2. Top Management Commitment
The support of top management is critical if the survey is to be of benefit to the
organisation.
3. Survey Development
Surveys may either be developed internally of prepared by an outside consulting
firm. Outside consultants bring proven competence, experience and objectivity to the
survey admin, and employees are likely to have more faith in the process when they
see an outside firm develop and administer the survey.
4. Announcing the Survey
If the survey is a regularly scheduled event at the workplace, there may be a benefit
in sending notice to employees explaining what is and is not the purpose of the
survey.
5. Implementation
Important considerations for administering the survey include:
• Allow employees sufficient time to complete the survey
• Administer the survey to all employees at the same time
• Administer the survey on the organisation’s premises
6. Analysis
Survey results can reflect total organisational results in comparison to individual
employee groups. Based on results, problem areas may be identified, and
recommendations to overcome these problems can later be developed.
7. Feedback
Survey results should be communicated to employees soon after they have been
reviewed by top management.
8. Follow-up
Survey follow-up is important to ensure that good relations are maintained between
employees and management and that action is undertaken and completed.
9. Caution
Survey results gain meaning only by virtue of relevant comparisons. This means that
great care should be taken in deciding what the goals of the survey are and asking
appropriate questions.
Interview
Organisations often conduct exit interviews with employees who have voluntarily
decided to leave. The employees can provide valuable information about the work
environment that might not be otherwise available.
The success of exit interviews depends largely on the employees’ belief that their Cleo Appies
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Interviewers generally agree that, to obtain the employee’s cooperation, the
interviewer should be someone from the HR department and definitely not the
immediate supervisor.
Historical Study
HR researchers often find that tracking certain data over time helps them gain
greater insight into human behaviour. By isolating a small number of variables, a
historical study analyses patterns over weeks, months, or years.
Controlled Experiment
Controlled experiments are seldom conducted at actual work sites. HR researchers
do not have much control over variables in the workplace. Manipulating human or
technological factors simply for experimentation is generally impractical.
There are some occasions when the technique is feasible and may help a research
effort. There are eight steps involved in controlled experiments:
1. Define the problem
2. Evaluate alternatives and select an alternative
3. State the hypothesis
4. Select experimental and control groups
5. Measure experimental and control groups prior to the experiment
6. Conduct the experiment
7. Measure experimental and control groups after the experiment
8. Analyse data, draw conclusions, and report results
Human Resource Information Systems
High-quality research takes a good deal of planning and organising by a competent
researcher. Extremely important in carrying out high-quality HR research is timely,
accurate and relevant HR information.
Because of the importance of collecting meaningful information quickly and
inexpensively, more and more HR managers have implemented a formal Human
Resource Information System (HRIS).
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A Cost-Benefit Analysis refers to the process of attaching Rands-and-cents criteria to
HR programs and problems. By doing this, HR professionals are able to generate
support and confidence from top management, who ultimately decide on the size of
the HR budget.
n.
Cost-Benefit Analysis
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By analysing HR activities and problems by cost, HR professionals can not only
evaluate proposed programs, but also identify cost personnel problems that require
immediate attention. Activities that can be analysed in this way include:
→ Employee turnover
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→ Employee attitudes
→ Labour contracts
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Chapter 5: Job Design and Job Analysis
The work that needs to be completed in an organisation and how it is done matters
to both employers and employees. There are different factors that are important for
both, and these should be considered when organizing work duties.
Dividing Work into Jobs
An organisation can be seen as an entity that takes inputs from the surrounding
environment and, through some kind of work, turns these inputs into goods and
services. However, the total amount of work to be done needs to be divided up into
different jobs so that it can be coordinated in some logical way.
Work is an effort directed towards producing or accomplishing particular results.
A job is the grouping of tasks, duties and responsibilities that constitute the total work
assignment for an employee.
Workflow Analysis
Workflow analysis studies the way work moves through an organisation. This
analysis helps determine whether there are too many steps involving too many
different jobs in the firm, and if so, helps redesign the process.
A workflow analysis usually consists of the following:
1. A workflow analysis usually begins with an examination of the desired and
actual outputs (goods and services) in terms of both quantity and quality.
2. The activities (tasks and jobs) are then evaluated to see whether they can
achieve the desired outputs.
3. Finally, the inputs are assessed to determine whether these inputs make the
outputs and activities more efficient and better.
The use of an integrated workflow analysis could lead to increased employee
involvement, increased efficiency and greater customer satisfaction.
Re-engineering Business Processes
While workflow analysis provides an understanding of how work is being done, reengineering generates the changes that the business processes need.
The purpose of business process re-engineering is to improve activities such as
product development, customer service and service delivery. Re-engineering may
ultimately require the use of work teams, training employees to do more than one
job, and reorganizing operations, workflow and offices to simplify and speed up the
work.
There are three major aspects involved in the re-engineering of the business
process.
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Rethink
Redesign
Revisit
Examine how the
current organisation of
the work and jobs affect
the satisfaction of, and
service to, the
customers.
How are the jobs put
together? How does the
work flow? How are
results achieved?
Design these processes
as needed.
Use new technology to
improve the production
and productivity,
customer satisfaction
and the quality of the
service provided.
External Organisation Factors
In addition to the above two issues that affect the design of jobs in the organisation,
other factors will play a major role. These include environmental uncertainty,
availability and introduction of new technology, and the profile of the labor market
within which the organisation operates.
Internal Organisation Factors
Factors internal to the organisation can also be important when designing jobs, for
example, management and leadership style, and technology available within the
organisation and the system it uses.
Designing Jobs
Two of the most important concerns of HR managers in South Africa today are
employee productivity and job satisfaction. A critical factor affecting these areas is
the type of work performed by the employee.
Job design is the manipulation of the content, functions and relationships of jobs in a
way that both accomplishes organisational goals and satisfies the personal needs of
individual jobs holders.
Job design determines how work is performed and greatly affects how an employee
feels about a job, how much authority an employee has over the work, how much
decision-making the employee performs. On the job, and how many tasks the
employee should complete.
There are three approaches to job design which are available to managers:
→ Specialization-intensive jobs
→ Motivation-intensive jobs
→ The Sociotechnical approach
Specialization-Intensive Jobs
Job specialization is characterized by jobs with very few tasks that are repeated
often during the workday. Job specialization was the primary component of the
scientific management approach developed by Frederick Taylor.
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There are a few issues that arise from the use of the specialization-intensive job
method. These include the following:
The problem in this comes with overspecialization – or going to extremes. It is a
frequently mentioned reason why employees feel alienated from their work.
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→ The problem of Overspecialization
Job specialization evolved from a preoccupation with command and control systems.
Jobs were narrowly designed to achieve standardization, simplification and division
of labor. Maximum efficiency is the goal.
→ Repetition
Employees performing only a few tasks which must be repeated many times during a
work shift will quickly become bored. Most people need to be stimulated and
challenged.
→ Mechanical pacing
Employees who are restricted by a requirement of mechanics (e.g. an assembly line)
to maintain a certain pace of work will soon transfer their attention to anything other
than the task at hand.
Identifying the optimum pace is not easy; however, what is just right for one may be
too fast for another.
→ No end product
Overspecialization makes it difficult for employees to identify the end product as they
often are only responsible for one small aspect of the product, and not the complete
product. Consequently, they will have little pride in and enthusiasm for their work.
→ Little social interaction
Employees may complain that, because assembly lines require constant attention,
there is little chance to interact on a casual basis with co-workers. This makes it
difficult for employees to develop significant social bonding at work.
→ No input
Employees tend to complain that they have little chance to determine how they
perform their jobs, the tools they use, or their work procedures. The lack of personal
control creates a lack of interest in the job because there is nothing they can change
or improve.
→ Job dimensions
The degree to which a job is highly specialized can be determined by measuring two
dimensions of the job, namely the scope and the depth.
The first dimension used, job scope, is the measure of how long it takes an
employee to complete their total ask.
The second dimension used, job depth, is more difficult to determine because it
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Motivation-Intensive Jobs
Modern management has found that the increased cost of employee absenteeism
and turnover, as well as decreased productivity and quality, may outweigh the
advantages of highly specialized jobs.
The challenge of motivation-intensive jobs is to balance employees’ human needs
and employers’ economic goals.
There are many advantages of the motivational approach: less absenteeism, higher
productivity of challenged employees, lower levels of turnover, higher product
quality, more employer ideas and suggestions, and greater employee job
satisfaction.
There is a broad range of approaches used for motivation-intensive jobs:
→ Job Rotation
Job rotation is the process of shifting an employee from job to job.
The advantage of job rotation is that employees do not have the same routine job
day after day, and this also means they have the opportunity to broaden their skills.
Job rotation only addresses the problem of assigning employees to jobs of limited
scope; the depth of the job does not change. Because job rotation does not change
the basic nature of jobs, it is criticized as nothing more than several boring jobs
instead of just one.
This technique is still commonly and effectively sued as a training technique for new,
inexperienced employees. It can also be used to develop managerial generalists
because it exposes them to several different operations.
→ Job Enlargement
Job enlargement is the process of changing the scope of a job to provide greater
variety to an employee. This means more tasks are added on the same level of the
job (horizontal expansion).
The focus of designing work for job enlargement is the exact opposite of that for job
specialization. Jobs are therefore designed to have many tasks for the employee to
perform.
Although job enlargement actually increases the pace of the work and the operation
by reallocating tasks and responsibilities, it does not increase the depth of a job. Job
enlargement also requires a longer training period because there are more tasks to
be learnt.
Although job enlargement is still considered a valid means of addressing
specialization problems, it has been augmented by a more sophisticated technique
known as job enrichment.
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→ Job Enrichment
Job enrichment refers to the process of enhancing a job by adding more meaningful
tasks and duties to make the work more rewarding or satisfying. More tasks are
added, but they are also on more advanced levels (vertical expansion).
With job enrichment, jobs are redesigned in both scope and depth. The overall
purpose is to improve a job by making it more exciting and challenging.
Not only are more tasks added, thus increasing variety, but the work can see the
process from start to finish – this is called task identity.
Labor leaders are typically skeptical of job enrichment programs. Since most job
enrichment programs result in employees taking on additional responsibilities,
determining whether a program will result in increased job autonomy or simply
increase workloads is difficult.
The Sociotechnical Approach
This approach was originally developed at the Tavistock Institute of Human
Relations in London. It is based on two premises:
→ That an organisation or work unit is a combined, social-plus-technical system
(sociotechnical), and
→ That this system is open in relation to its environment.
The most popular application of this approach can be found in self-managed work
teams. These are teams that control their own work, schedules and tasks and whose
members often train each other. If everything goes as planned, these teams are
empowered to manage themselves and the work they do.
Members are often expected to perform, or rotate to, more than one job for the team.
This is called multiskilling and usually involves being paid for the variety of skills
mastered rather than for the job actually being performed.
Virtual teams are teams of people who are not in the same geographical area but
work together on projects or jobs using technology to accomplish particular goals.
These types of teams help management to compete in today’s international online
markets.
Organisations also use two other types of teams.
→ The problem-solving team consists of volunteers from a unit or department
who meet for one or two hours per week to discuss quality improvement or
improvements in the work environment.
→ The special-purpose team consists of employees who span functional or
organisational boundaries, and their purpose is normally to examine complex
issues.
Newer Organisational Approaches
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to meet/exceed the expectations of customers. TQM is one of the fastest-growing
productivity improvement programs around the world.
To be successful, it requires the support of top management and the belief that
quality is a key part of every employee’s job. Another key facet is its customer focus
in the process of designing and improving quality.
Proper implementation requires a clear vision and support of top management. The
focus should be on results, not only on process.
In South Africa, the total quality effort is coordinated by the South African Quality
Institute (SAQI). Its vision is to contribute to the establishment and maintenance of a
quality culture in SA.
The Office Environment
The work environment (space, workstations, light, etc.) affects employee morale,
productivity and quality, absenteeism and turnover. A good idea is not always born at
a desk; creativity can happen anywhere. In the right office environment, work will
continue when employees are theoretically on their own time.
Robotics
Robotics refers to the use of robots to perform routine tasks. Industrial robots are
often divided into two classes:
→ Anthropomorphic robots approximate the appearance and functions of
humans.
→ Nonanthropomorphic robots are machine-like and have limited functions.
New robots must perform most of the shaping, bending and drilling work that workers
used to perform. In South Africa, many of these robots can be found in the motor
manufacturing industry.
Ergonomics
Ergonomics is an approach to designing equipment and systems within work
environments to ensure that employees can use them easily and efficiently.
Considering the human factor in designing an employee’s workstation means
designing a relationship between the employees and their workstations. Machines
used, lighting, noise, chairs and other similar factors can affect a worker’s
productivity.
There are a few aspects that should be considered when designing employee
workstations:
→ Posture
→ The back
→ The hand
→ The environment
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Productivity Measures
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Productivity is a measure of the output of goods and services directly relative to the
input of labor, material and equipment. An accurate measure of productivity is vital to
any organisational improvement effort.
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The prime objective of productivity measurement is to gain a competitive advantage.
To do so, HR professionals frequently implement strategies for improving
productivity and quality in their organisations.
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Organisations must be careful not to measure the wrong things or to overlook those
that are critical to success. Merely implementing quality techniques (employee
empowerment and benchmarking) will not produce benefits).
Productivity has three major components:
→ Utilization – The extent to which we use the resources.
→ Efficiency – The rate of conversion while resources are being used, or “doing
things right”.
→ Effectiveness – “Doing the right things”.
Work Schedules
The traditional work schedule, in which employees work full time, eight hours a day,
five days a week, is changing. Many employers have adopted some flexibility in work
schedules, allowing organisations to make better use of workers.
→ Flexitime
In a typical flexitime system, the employer establishes a core time during which all
employees must work. Flexible working hours provide a true alternative work
schedule for employees who may follow different schedules of work each day of the
working week.
→ Compressed Workweeks
Compressed workweeks are schedules with fewer than the traditional five work days
a week. The hours worked per day are increased so that the hours worked per week
are still the same.
Alternative Physical Work Locations
A growing number of employers are allowing workers to use widely different working
locations.
Telecommuting refers to the new technological opportunities that have created an
alternative to work scheduling. Employees can use technology to enable them to
complete some or all of their assigned duties at home. For some people,
telecommuting does not work; but for those that it does work for, it can free up
commuting time and costs.
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The Nature of Job Analysis
Job analysis is a systematic way to gather and analyze information about the
content, context and the human requirements of jobs. It is the process wherby
management investigates the tasks and responsibilities of the organisation’s jobs.
The process can also be referred to as job review or jobs classification, and includes
investigation of:
→ Levels of decision-making
→ Skills employees need to do a job adequately
→ Autonomy of the job
→ Mental effort required to perform the job
→ Machines operated, reports completed and special, financial and other
responsibilities
→ Working conditions
The Importance of Job Analysis
HR professionals frequently need drastically to overhaul existing job descriptions to
reflect new realities. These new realities are:
→ Organisational restructuring due to downsizing
→ The need to motivate and reward people
→ The impact of technology of jobs throughout the organisation
→ Labor legislation pertaining to employment equity and general discriminatory
practices
→ The implementation of teams
Components of a Job
To understand a specific job and to be able to make comparisons among or between
jobs, it is important that anyone analyzing a job should know that it can be broken
down into several components and arranged into a hierarchy of work activities.
Hierarchy of Work Activities
Job Family
A category in which similar occupations are grouped together.
Occupation
Jobs that are combined across organisations based upon the skills, efforts and
responsibilities required by the job.
Job
A group of positions that are similar enough in their job elements, tasks and
duties to be covered by the same job analysis.
Position
The combination of all the duties required of the person performing a job. Each
person in an organisation holds a position.
Duty
Several distinct tasks that are performed by an individual to complete a work
activity for which they are responsible.
Task
An identifiable unit of work activity that is produced through the application of
methods, procedures and techniques.
Element
The smallest practical unit into which any work activity can be subdivided.
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Program Implementation
Job analysts are specially trained HR staff whose primary function is to collect and
process job information.
The creation and implementation of a job analysis program varies from organisation
to organisation. The standard format for conducting a job analysis program is:
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1.
2.
3.
4.
5.
Committee Review
Information Collection
Choosing a Job Analysis Method
Product Completion
Updating
1. Committee Review
Experience indicates that the best way to initiate an effective program s through a
representative committee. Participants on the committee usually include:
→ Representatives from the labor unions
→ Representatives from all major departments
→ Members from professional bodies of which employees are members
The committee must make the critical decisions in choosing the appropriate job
analysis technique and the important job elements to be evaluated.
The quality of the job analysis will depend on the accuracy of the information
gathered, the consistency and objectivity of the evaluation of the information, and the
ability of committee members to make critical decisions.
2. Information Collection
When analyzing a job, background research must always be among the first steps to
be undertaken. Information involving job content is collected, analyzed and
interpreted. There are a variety of ways to collect this information.
General Methods
Whether one or several sources are used, most organisations use the following
general methods to gather job-related information. There are five general methods of
data collection.
→ Site Observation
Observing people at work enables the analyst to pinpoint precise details about the
timing, frequency and complexity of various tasks and duties; to gather information
about workflow, production efficiencies, work conditions, materials and equipment
used on the job; and to assess the actual physical tasks that make up the job.
→ Work Sampling
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→ Interviews
An analyst can interview job holders or their supervisors to probe and clarify areas of
confusion about complex portions of the job.
→ Diaries
Job holders may be asked to keep a diary of their work activities during an entire
work cycle.
→ Questionnaires
This method is quick and effective for gathering standardized, specific information
about jobs in the organisation.
Specific Methods
A number of specific techniques have also been developed for data collection that
provide structured and quantitative procedures. There are eight specific methods of
data collection.
→ The Job Element
The job element was developed by Dr Ernest Primof, which establishes selection
standards and validates selection tests for jobs.
→ Ability Requirement Scales
The ability requirement scales were developed by Edwin Fleishman, which list 50
physical and non-physical abilities that may be necessary for performing jobs.
→ The Comprehensive Occupational Data Analysis Program (CODAP)
The CODAP was developed by R Christal and his colleagues and was designed
specifically for the personnel of the US Air Force and includes task checklists.
→ The Position Analysis Questionnaire (PAQ)
Developed by Ernest J McCormick and his colleagues, the PAQ describes jobs in
terms of worker activities and consists of 194 elements that are grouped within 6
major divisions and 27 sections.
The PAQ has the advantage of being quantitative which means that jobs can easily
be compared to each other. The PAQ is also standardized, reliable and supported by
a considerable number of HRIS softwares.
→ The Management Position Description Questionnaire (MPDQ)
This was developed by Walter W Tornow and Patrick R Pinto, which includes 208
items that describe a manager’s job.
→ Functional Job Analysis (FJA)
Developed by Sidney Fine, this produces information about what an employee does
and how a task is performed in relation to three work domains: things, data, and
people.
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FJA generates a job description that sounds like a reasonable rendering of what the
job is all about; however, it takes time to learn how to use it and is therefore costly.
→ The Common-Metric Questionnaire (CMQ)
The CMQ was developed by Robert J Harvey, which is comprehensive enough to be
used within any organisation and for any job.
The disadvantage of CMQ is that the respondent must read through all the questions
to determine whether the questions apply to the job or not – this is time-consuming.
→ The Work Profiling System (WPS)
This was designed by Saville and Holdsworth Ltd in London. The WPS is a job
analysis system containing three different questionnaires that relate to: Managerial
and professional; Service and administrative; and Manual and technical. Each
questionnaire contains a job content part and a job context part.
This computerized system offers many output options, which include the following:
• Job description
• Person specification
• Assessment methods
• Individual development planner
• Performance review form
• Person-job match
3. Information Review
Regardless of the methods used to collect information, the information must be
assembled into a first report draft. This must be presented to employees, supervisors
and the review committee. Job analysts must ensure that all information is factually
correct, and a clear picture of the job is being presented.
4. Product Completion
This step involves the completion for whatever end products are desired by
management. Two of the major end products of job analysis are the job description
and job specification.
Job Description
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A job description is a written summary of task requirements for a particular job. This
is the most common end product of job analysis.
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There is no exact format for job descriptions and they are often used for many
different purposes. There are 10 common uses for job descriptions:
→ Recruitment
→ Interviewing
→ Orientation/ Onboarding
→ Training
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→ Job Evaluation (The part of a compensation system in which a company
determines the relative value of one job in relation to another)
→ Job Design
→ Wage/ Salary Survey
→ Performance Appraisal
→ Health and Safety
→ Outplacement
Although there is no format for job descriptions, most contain certain common
elements. The three elements that are almost always found in a job descriptions
nuclide:
→ Job Identification
• This section usually includes the title of the job, the location of the job, the
title of the immediate supervisor, the job status, and the pay grade or
range.
→ Job Summary
• This section is a one-to-three-line description of the essence of the job.
These should emphasise the most common functions, primary output and
objectives of the job.
→ Job Duties and Responsibilities
• The is the heart of the job description. Duties can be listed and grouped
under different sections or they can be written out in a paragraph format.
Job Specification
A job specification is a statement of the knowledge, skills and abilities (SKA) required
of the person who is to perform the job (minimum qualifications).
→ Skills include observable capabilities performed on the job.
→ Knowledge constitutes the body of information in a particular subject area that
is required by a new employee to perform the job satisfactorily.
→ Ability refers to any mental or physical activities required of a new employee.
5. Future Use and Updating
The last step in the job analysis procedure is to determine how information will be
stored for future use. The HR department should have access to the information in
case additional end products are desired, and for access for future period updating
of information.
Job Analysis Problems
Any job analysis is likely to run into certain problems. The most common problems of
job analysis include:
→ Employee fears
→ The need to update information regularly
→ The problem of a job being held by only one or two employees
→ Managers feeling restricted from their opinion that the JA and JD have an
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Chapter 6: Recruitment and Selection
Recruitment is the process of acquiring applicants who are available and qualified to
fill positions in the organisation.
Selection is the process of choosing from a group of applicants the individual best
suited for a particular position.
The Recruitment Process
The recruitment process consists of a sequence of steps that should be followed to
ensure that the organisation obtains the best selection of possible applicants who
could be above-average employees.
Employers in South Africa are responding to the skilled labour shortage with a
number of non-traditional recruitment strategies:
→ Training programs for disadvantaged groups
→ Mentoring
→ Learnerships/apprenticeships and mentoring programs
→ Career exhibition
→ Tele-recruiting
→ Diversity data banks
Labour Market Information
A labour market is the geographical area from which employees are recruited for a
particular job. The first step in the recruitment process is to investigate the
environment, determine the relevant labour market and gather information about it.
The people most available for recruitment are the unemployed, who can be
contacted through direct application, employment agencies or advertisements. Other
labour market sources include:
→ Part-time employees
→ Underemployed individuals
→ Pirating
The labour market does not operate according to the simple economic model of
salary levels and labour supply. Most applicants are not aware of the labour market
they are in and possible alternatives around them.
Typically, employees will not know what is a ‘better offer’ from another job because
they do not know the standards that are set for their job. People with more
professional jobs and qualifications usually have a better idea of what to accept and
reject, and what factors they should consider.
Recruitment Sources
The first decision to make in the recruitment process is whether a particular job
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Advantages of Internal Recruitment
→ Increases the morale of current
employees
→ Knowledge of the person and
employee records
→ Chain effect of promotion is
possible
→ Need to hire only at entry level
→ Usually faster and less expensive
than external recruitment
→ Employee becomes productive
sooner
→ Little or no orientation needed
→
→
→
→
Disadvantages of Internal
Recruitment
Unhealthy competition among
existing employees
Inbreeding resulting in no new
ideas developing
Morale problem for those not
promoted
Strong management
development program is needed
Advantages of External Recruitment
→ Applicant pool is bigger
→ New ideas and contacts are
brought into the organisation
→ Reduces internal fighting
→ Minimizes Peter principle (every
employee will be promoted
beyond their level of
competence)
Disadvantages of External
Recruitment
→ Destroys incentive of current
employees to strive for promotion
→ The individual’s ability to fit in
with the rest of the organisation
is unknown
→ Increased adjustment problems
→ Takes longer for the individual to
become productive
→ Comprehensive orientation is
required
Methods of Recruitment
There are a variety of different methods, both internal and external, of recruitment.
Each method has its advantages and disadvantages.
Internal Recruitment Methods
→ Job Posting
→ Bidding
External Recruitment Methods
→ Direct Applications
→ Employee Referrals
→ University/Campus Recruitment
→ Private Employment/
Recruitment Agencies
→ Advertising
→ Direct Mail
→ Re-recruiting
→ E-recruiting (internet)
→ Radio and TV recruiting
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Hiring Alternatives
Employers are increasingly seeking alternatives to the recruitment and selection of
permanent new employees. They are willing to pay a premium to escape the legal
responsibilities, paperwork and commitment that hiring employees traditionally
involves.
→ Assigning Overtime
This is an attractive alternative because it is temporary. Choosing overtime means
using experienced, knowledgeable employees who do not require any additional
training or orientation. Overtime does also mean additional fatigue for employees
who have already worked their full shift though.
→ Temporary Help
Temporary help may be less costly than hiring new permanent employees,
particularly for organisations with seasonal demands or for an un-forecasted
temporary absence of important personnel. These kinds of employees can quickly be
trained to be productive on the job with relatively low start-up costs.
→ Leasing Employees
Organisations may lease employees for cost-saving benefits, as the responsibility of
training, benefits and other employee costs are handled by the hiring organisation.
The organisation also gets more time running the business instead of constantly
spending time on HR functions. The main disadvantage of leasing employees is the
lack of loyalty to the company they offer.
Recruitment and the Law
Employers now have to scrutinise their recruitment policies and procedures carefully
and, where necessary, compile new recruitment and selection procedures to be
applied consistently and fairly to all job applicants. Failure to do so could have major
implications.
n.
The implementation of the following acts brought up these important issues relating
to the recruitment process:
→ Labour Relations Act
→ Basic Conditions of Employment Act
→ Employment Equity Act
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Selection involves choosing the best applicant to fill a position. With the new
employment equity legislation, this process has become more complicated. The
selection process is perhaps the heart of an organisation’s HR program, but it also
involves individuals from other departments too.
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Selection
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Selection and the Law
With the implementation of the Employment Equity Act No. 55 of 1998, racial
discrimination is not allowed, and preferential treatment must be implemented to
previously disadvantaged workgroups.
The Selection Process
Selection pulls together organisational goals, job design and performance appraisal,
as well as recruitment. Each of these elements above make up the entire selection
framework.
Steps in the Selection Process
There are six individual steps in the selection process:
1. Initial screening
2. Application blanks
3. Interviews
4. Pre-employment testing
5. Reference checks
6. Medical examination
Step 1: Initial Screening
Initial screening minimizes the time the HR department must spend on the selection
process by removing obviously unqualified or undesirable applicants.
This step primarily determines whether the applicant has the critical job
specifications or requirements as stipulated in the Employment Equity Act and
expedites the departure of the unqualified applicants to minimize the total cost of the
selection process.
The CV must be carefully scrutinised to ensure there are no ‘red flags’ present. A CV
tracking system can also be implemented to aid the process of going through
employee CVs.
Step 2: Application Blanks
An application blank is a formal record of an individual’s application for employment.
The information obtained is compared to the job specification to determine whether a
potential match exists between the organisation’s requirements and the applicant’s
qualifications.
The best method for evaluating an application is a weighted application blank
procedure. This involves placing a score for the items on the application blank that
has been found to predict successful job performance.
The CV method can also provide some background information to prospective
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HR specialists use the application blank to do background checks and develop
interview questions. They can also be sued as screening devices to generate global
assessments, in which the HR specialist reviews the application and determines the
general desirability of each applicant.
Step 3: Interviews
The purpose of the interview is to determine three things: If the applicant has the
ability to perform the job; to be motivated to perform the job and to determine if the
applicant’s needs match those of the organisation.
Research has constantly shown that the selection interview is low in both reliability
and validity. The interview does not have the consistency of form that a written test
or reference check may have. Because of low reliability and consistency of
interviews, other problems can arise:
→
→
→
→
Personal biases
All interviews and interviewees are different
Setting of the interview may affect the outcome
If a maximum number of people to interview and a deadline for filling the
position has been set, there is additional pressure placed on the interviewer
The problems with the traditional interview process are well known. Various
organisations have developed structured, objective interview processes with the goal
of achieving controlled subjectivity.
Effective Interviewing
Conducting objective interviews is primarily a two-phase process. The first phase is
to create a good interview setting before the applicant actually arrives and to prepare
for the interview beforehand. The second phase is to establish a useful questioning
period during the interview. The following eight steps encompass the characteristics
of objective and effective interviewing:
→ Setting
→ Documentation
→ Standardisation
→ Scoring
→ Reviewing specifications
→ Reviewing the application blank
→ Training the interviewer
→ Job-related questions
Types of Interviews
The panel interview is an interview in which a board of interviewers questions and
observes a single candidate.
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A structured (directive or patterned) interview is an interview in which the same set of
predetermined questions is asked of all applicants. A structured interview usually
shows the following characteristics:
→ Questions
• Situation questions
• Job-knowledge questions
• Job-simulation questions
• Employee-requirement questions
→ Scored responses
→ Interview committee
→ Consistency
An unstructured interview is an interview in which questions are not prearranged,
allowing for spontaneity and for questions to be developed and formulated during the
interview.
A realistic job preview is the process through which a job applicant receives an
accurate picture of a job.
Step 4: Pre-Employment Testing
Two aspects of a test are important:
→ Reliability is the consistency with which a test measures an item.
→ Validity is the extent to which a test actually measures what it says it
measures.
In terms of the Employment Equity Act, psychological testing and other similar
assessments of an employee are prohibited, unless the test or assessment being
used:
→ Has been scientifically shown to be viable and reliable.
→ Can be applied fairly to all employees.
→ Is not biased against any group or employee.
Managerial Selection Devices
Assessment centres evaluate how well applicants or current employees might
perform in managerial or higher-level positions. Assessment centres are very
expensive, but they appear to be a valid predictor of managerial job performance.
Although there is considerable variability in what an assessment centre includes,
most evaluate each candidate’s abilities in four areas: organising, planning, decisionmaking, and leadership. In order to achieve this, the assesses are required to
complete a variety of tasks:
→ In-basket techniques
→ Leaderless group discussion
→ Role-playing
→ Delivering speeches
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Step 5: Reference Checks
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Thoroughly check the backgrounds of prospective employees has become
increasingly necessary. A reference check can be both an energy-saving procedure
and a cost-efficient means of screening out undesirable applicants. These can be
done by:
→ Telephone checks
• Immediate clarification of significant issues
• More information can be obtained than through mailed forms
• Relatively little expense is involved
• Additional areas of needed enquiry can be uncovered
• A structured form can be used, making a fast and efficient conversation
possible
→ Personal references
• Verifying data received on application blank
• Evaluating the quality of the personal recommendation
• Determine how well the person knows the applicant
• Including a specific person as a reference
→ Previous employer references
Step 6: Medical Examination
After the decision has been made to extend the job offer, the next step is a physical
or medical exam, if necessary. The job will be awarded contingent on the applicant’s
passing of the exam.
The Employment Equity Act states that medical testing is prohibited unless the test
can be justified, or legislation requires that the test be done.
The Selection Decisions
There are two processes that can help decide which applicant should be offered the
position:
→ Compensatory selection – All applicants who pass the initial screening will be
tested, interviewed, etc.
→ Multiple Hurdles Selection – Each applicant needs to pass each step, in order
to advance onto the next step.
Record Keeping
In view of the Employment Equity Act and the Labour Relations Act, it has become
necessary for organisations to keep a complete set of records pertaining to the
recruitment and selection of staff. There must be proof of non-discrimination during
these processes, and the organisation must keep documents such as
advertisements, contracts, and all relative information to the processes.
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Chapter 7: Employee Onboarding, Motivation and Retention
Onboarding is a process that starts before the employee joins the organisation,
continuing for several months and which aims to develop employee behaviours and
knowledge that will ensure the employee’s long-term success and commitment to the
organisation. It aims to enable newcomers to become productive and fully functional
employees as soon as possible.
Orientation is the process of integrating the new employee into the organisation and
acquainting them with the details and requirements of the job. Orientation has a
shorter time span than onboarding.
Purposes of Onboarding and Orientation
The onboarding process and orientation programs have several important objectives:
→ Employees need to know they fit into the organisation
→ Employees must understand the goals, policies and procedures of the
organisation.
→ They must understand how things are done in the firm.
→ The importance of becoming a member of the team must be emphasised.
→ Employees must be made aware of the developmental opportunities inside
the organisation and externally.
→ A sense of belonging should be created by showing employees how their job
fits into the overall organisation.
→ Basic responsibilities of the job must be identified.
→ The required behaviour patterns for effective job performance must be
indicated.
→ A bond should be built with new employees by means of effective
communication and guidance.
The main objective of orientation is the integration of new employees into the
organisation without delay, so that they can become an effective employee as soon
as possible.
The focus of onboarding is to strike a balance between providing information and
equipping new employees with knowledge of the job and the work environment,
while making a positive long-term impact on the employee that will influence their
behaviour and commitment to the organisation.
Model for Orientation
According to Feldman, the objectives of onboarding and orientation can be achieved
by a three-phased orientation process.
Phase 1: Anticipatory Socialisation
The first phase of this model is anticipatory socialisation, which encompasses all the
learning that occurs before a new employee joins the organisation. There are four
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→
→
→
→
Realism about the organisation
Realism about the job
Congruence of skills and abilities
Congruence of needs and values
Phase 2: Encounter
The second phase is the encounter phase, in which new employees see what the
organisation is really like and in which some initial shifting of values, skills and
attitudes may occur. There are five aspects in this phase in which the employee will
have to adjust and adapt:
→ Management of outside-life conflicts
→ Management of intergroup role conflicts
→ Role definition
→ Initiation to the task
→ Initiation to the group
Phase 3: Change and Acquisition
In the third phase, the change and acquisition phase, relatively long-lasting changes
take place. There are three important aspects:
→ Resolution of role demands
→ Task mastery
→ Adjustment to the norms and values
Outcomes
Both behavioural and attitudinal criteria can be used to measure progress in the
organisation’s orientation process. Feldman identified three types of behaviour that is
essential for the organisation to function effectively:
→ To carry out the role assignment dependably
→ To remain with the organisation
→ To innovate and cooperate spontaneously
There are three effective outcomes of the model for orientation:
→ General job satisfaction
→ Internal work motivation
→ Job involvement
Benefits of Orientation
The following benefits can result from an effective orientation program and will also
support the onboarding process.
→ Higher job satisfaction
→ Lower employee turnover
→ Improved safety
→ Improved quality
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→
→
→
→
→
→
Fewer costly and time-consuming mistakes
Reduction in absenteeism
Better customer service through heightened productivity
Improved manager/ subordinate relationships
Lower costs
Better understanding of the organisation’s policies, goals and procedures
Reasons for Ineffective Onboarding and Orientation
Paying too little attention to proper onboarding can have a huge impact on the
organisation. Reasons for ineffective onboarding and orientation include:
→ The supervisors responsible for the task either lack the time or ability to fulfil
this obligation.
→ Organisations do not regard anxiety and stress, owing to insecurity and
unfulfilled expectations, as a primary cause of labour turnover among new
employees. They, therefore, consider orientation to reduce anxiety and stress
as unnecessary.
→ Organisations regard effective recruitment, selection, training and developed
as substitutes for orientation.
→ Where orientation programs are introduced, the key components are lacking.
→ Orientation is aimed at inducing new employees to adhere to organisational
practices and procedures while little attention is paid to instilling loyalty and
commitment to the organisation.
→ Employees who are transferred or promoted within the organisation are not
subject to orientation programs.
→ Orientation programs are not followed up – the success of these programs is
not determined.
→ Orientation programs often concentrate on promoting the image of the
organisation.
Responsibility for Onboarding and Orientation
The number of people involved in the implementation of the orientation program
normally depends on the size of the organisation. There are six people that are
primarily responsible for orientation:
→ The Supervisor
The supervisor must ensure that the employees in the section receive all the
information necessary to enable them to function as efficiently and effectively as
possible.
→ The Chair/Dead of Department
It is the responsibility of the head/chair to meet all new employees and briefly explain
to them the role and responsibilities of the particular department with the
organisation.
→ The HR Department
The HR department is responsible for issues regarding the worker’s employment and
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→ The ‘Mentor’ or ‘Buddy’
A mentor or buddy is responsible for assisting the new employee regarding how to
operate basic equipment and the ‘ins and outs’ of the social aspect of the work
environment.
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→ The Staff Representative
The staff representative is responsible for explaining issues such as disciplinary
procedures and how to deal with grievances.
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→ New Employees
New employees are responsible for the completion of orientation participation and
feedback.
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Who Should be Exposed to Onboarding and Orientation?
Many categories of employees will benefit from onboarding and orientation training.
There are three main types of employees who should be exposed:
→ New Employees
→ Transferred/Promoted Employees
→ All Current Employees
The Scope of Orientation
Orientation should be concerned with two distinct levels:
1. General Organisational Orientation
→ This type of orientation will affect all employees within the organisation.
2. Specific Departmental Orientation
→ This type of orientation will be tailored to the new employee’s specific
department and job.
An employee handbook consists of the policies, procedures, working conditions and
expectations that guide employees. Traditionally these were in printed format, but
most firms today use an electronic format that can be accessed through the HRIS.
Approaches to Orientation
There are two types of employee orientation:
→ Formal Orientation
• The organisation plans and officially conducts orientation at a given
time.
→ Informal Orientation
• This type of orientation is unplanned and unofficially conducted by coworkers, as well as the individual.
There are four basic approaches that can be followed during the orientation program:
→ Verbal
• This kind of approach is expensive and time-consuming, but it
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→ Written
• This approach allows for continuous reference to be made to the
material used because it is on physical record.
→ Audio-Visual
• This kind of approach combines both verbal and written approaches,
and once developed, can be used repeatedly if it is kept up to date.
→ Systems-Based
• This can be an HRIS or web-based approach. The system can keep
track of the issues that have been dealt with.
How Long Should Orientation Training Be?
The aim of the orientation program is to produce individuals who will function
effectively in the organisation. To be successful in this regard, it is important to avoid
cramming all orientation into one long session. Sessions should not be longer than 2
hours.
The period of orientation should be linked to the length of time it takes to become
effective on the job and to learn and understand new activities. Follow-up sessions
are also very important to conduct after about 2 months of employment.
Planning an Orientation Program
Developing an orientation program takes about 3-6 months. Before the program can
be developed, there are 3 key planning considerations that need to be addressed:
→ Orientation Policy
• A properly formulated orientation policy, drawn up jointly by
management and employees, should be officially adopted by top
management before the program is designed.
→ Budget
• An adequate budget should be made available in relation to necessary
orientation costs.
→ Other Planning Considerations (a number of other aspects must also be
considered)
• Time needed to plan and implement the program
• Program goals, topics to be included, materials, facilities and
personnel to be used
• General organisation topics VS department and job topics to be
covered
• Qualifications and training needs of HR personnel, line managers and
supervisors
• Program flexibility to accommodate employee differences in education,
intelligence and work experience
Designing an Orientation Program
It is important to note that different groups of employees within the organisation
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The orientation program should be designed to include all the information that the
newcomer will need to do their job effectively and efficiently. Information should be
divided into two sections:
→ ‘Need to Know’ information is essentially information that the newcomer
requires as soon as possible to fit in and be effective.
→ ‘Nice to Know’ information can be given over a period of time as the
employee settles in.
The information that the newcomer will require can be divided into two main
categories:
→ Job-Related Information
• This information describes what the job entails and how it is done.
→ General Information
• This includes a great deal of information, such as fringe benefits,
safety and accident prevention, and physical facilities.
Implementing the Onboarding Process and Orientation Program
There are 15 steps to take when implementing the onboarding process and the
orientation program:
1. Pre-Employment Preparation
The onboarding process begins during the recruitment and selection stage. First
impressions of the organisation are formed at this stage.
2. Pre-Employment Information
A formal letter of appointment congratulating the new employee on being selected
for the new job must be written.
3. First Day Instructions
Once the job has been accepted, the newcomer should be sent instructions for their
first day., when orientation starts. The instructions should include:
→ The office’s address
→ Parking and other arrangements
→ Name and title of who the employee reports to
→ The date on which to report and the starting time
→ What the employee should bring
→ What the employee should expect
4. The Welcome Pack
The welcome pack contains more information about the organisation. It could
include:
→ A letter of welcome
→ Organisational structures
→ Details of policies and procedures
→ Map of the facility
→ Telephone numbers and locations of key employees and operations
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→ A small welcome gift
5. Organising the Work
The duties that the new employee will perform must be discussed during orientation.
It is important that the employee is given some meaningful work on their first day.
6. Briefing Colleagues
Other staff and colleagues should be briefed about the new employee. This could
include the employee’s name, position, background and the date of their
commencement.
7. Administrative Arrangements
The office the newcomer will occupy must be prepared for their arrival.
8. Training
Consideration should be given to any training the newcomer may need.
9. Duration
The first day should be a short one, and the days that follow can be longer.
10. On Arrival
When employees arrive at work for the first time, someone should be there to greet
them and welcome them. This creates a favourable impression.
11. Basic Information
On arrival, the newcomer may first be introduced to a senior manager of the
organisation or may proceed directly to the HR department. Any outstanding details
will be discussed here.
12. The Initial Discussion
The employee will then meet the department head to give the newcomer an idea of
what to expect during the first day and week.
13. Building the Relationship
The department head should begin by establishing rapport, taking the first step to
build a relationship based on mutual respect.
14. Immediate Supervisor
The immediate supervisor will then introduce the newcomer to fellow workers and
conduct a tour of the workplace. The employee will also receive information about
their orientation and training.
15. The Buddy or Mentor
Many organisations assign a buddy or mentor to a new employee. This person will
assist the newcomer informally by answering questions as they arise and showing
the newcomer how ‘things are done’ in the work environment.
All of the events above should be arranged for the employee’s first day. Further
onboarding aspects include the following:
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→ Weeks 2-5
When all activities have been covered, the newcomer can settle in and practice their
skills. During this period, the employee will attend a number of formal and informal
orientation sessions.
→ By the End of Week 6
By now, the recruit should be settling into a steady work routine. Performance levels
should be improving, and they should be integrated into the workgroup.
→ Weeks 7-12
The organisation starts to expect results from the newcomer. Promotion and transfer
possibilities should be explained if they have not already been discussed.
→ Weeks 13-24
Regular follow-ups should be done with the newcomer to ensure that they are on
track and the onboarding process should also be evaluated.
→ The Rest of the First Year to 18 Months
Inputs should be provided as and when needed and there should be regular contact
with the newcomer to ensure that they have everything they need to perform
efficiently and be a productive, contributing employee.
Evaluation of the Orientation Program
The evaluation of the orientation program is one of the most important steps in the
onboarding process. The benefits of orientation include:
→ To ensure that the organisation is spending its money wisely and achieving
positive results.
→ To ensure that the methods used to assist new employees to integrate and
become effective employees are the most suitable.
Depending on the complexity of the program, evaluation can cover many aspects
and be carried out at different levels. By using questionnaires, surveys, exit
interviews and course evaluation forms, qualitative information can also be gathered.
So
→ Who should be involved?
• Depending on the type of information to be collected, the HR
department will be directly involved.
→ What will be measured?
• Various elements will need to be measured over different timescales.
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If the organisation has planned wisely, evaluation will show that the orientation is
effective, and the new employees perform well within a reasonable period.
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Motivation is the force that energises behaviour, gives direction to behaviour and
underlies the tendency to persist, even in the face of obstacles.
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Completing the onboarding process successfully does not guarantee satisfactory
employee performance. Many factors affect the performance of individual employees
– their abilities, efforts expended and the continued organisational support they
receive.
HR should analyse and address these areas and ensure that they can contribute to
the competitive performance of the organisation and its individuals at work.
The success of any organisation depends on its employees. Motivators are, to a
large extent, specific to the individual. A manager should, therefore, attempt to meet
the employee’s important needs and basic requirements for working productively. As
the workforce becomes more diverse, recognising the individuality of needs
becomes challenging.
There are various motivational theories used in the workplace.
→ Maslow’s Hierarchy of Needs
Abraham Maslow believed that when a need occurs, motivational tension develops
and is directed towards satisfaction of the felt need. The intensity of the effort is a
function of how strong the need is.
There are 5 levels of needs in the hierarchy. Maslow contends that individuals will
climb the ladder of need fulfilment until they have become self-actualised. If any
need is not fulfilled, the individual will continually strive to fill that need.
→ Alderfer’s ERG Theory
Alderfer’s ERG theory is closely related to Maslow’s hierarchy of needs. The ERG
theory (existence, relatedness and growth) proposed that, when one need is
frustrated, we simply concentrate on the other needs we possess.
→ Achievement Motivation
David McClelland emphasised that there are only three needs that need to be
considered:
• The Need to Achieve (nAch)
• The Need for Affiliation (nAff)
• The Need for Power (nPow)
→ Goal-Setting
Edwin Locke has shown that job performance can be increased through goal-setting
- when individuals are given measurable goals rather than vague performance
standards. The best- known expression of the goal-setting theory is Management by
Objectives (MBO).
Goal-setting strategies involve a systematic process in which the manager and
subordinate discuss and agree on a set of jointly determined goals. Each party
should be able to present a case for or against each goal. The final result is a set of
goals that are in keeping with the overall goals of the organisation.
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Feedback on progress should be periodically supplied, enabling the worker to make
performance and rewards
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is made very clear, and emphasis is on ‘what’ is achieved rather than on ‘how’ it was
achieved.
→ Positive Reinforcement
Positive reinforcement is the practice of giving valued rewards to someone who has
just engaged in a desired behaviour.
The technique is based on the Law of Effect, which means that behaviour that leads
to a pleasant response will be repeated, whereas behaviour that results in an
unpleasant response tends not to be repeated.
Reinforcement is at the heart of merit increases. For reinforcement to continue to
affect employees’ future behaviour, a manager must make certain that rewards are
meaningful and desired by each employee. Managers must, therefore, tailor the
reward and ensure that employees realise that rewards are contingent on correct
behaviour.
→ Herzberg’s Two-Factor Theory of Motivation
Frederick Herzberg applied his motivational theory specifically to the workplace.
There are two factors in this theory:
• Hygiene factors are those that cause work dissatisfaction.
• Motivator factors are those that cause work satisfaction.
Through this, Herzberg concluded that satisfaction and dissatisfaction are not simple
opposites.
Individual/ Organisational Relationships
Individual performance is the result of motivated employee behaviour. It is also
known that motivated employee behaviour is best achieved by integrating personal
goals with the goals of the organisation.
The Psychological Contract
A psychological contract is the unwritten mutual expectations/ obligations employees
and employers have about the nature of their work relationships. This unwritten
contract defines the employment relationship and manages expectations.
Psychological contracts that lay the foundation of employment relationships involve
employees’ beliefs about what they are entitled to receive or should receive because
they perceive that their employer promised to provide these things.
Violations of the Psychological Contract
Two types of violations of the psychological contract can occur:
→ Reneging
• This occurs when either party to a psychological contract knowingly breaks
a promise to the other, is unable to fulfil a promise, or does not want to
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→ Incongruence
• This occurs when the parties have different understandings about their
obligations in the contract.
Both of these violations occur because the terms and conditions of psychological
contracts are often perceptual.
Changing of the Psychological Contract
New trends and changing workforce demographics have resulted in revised
expectations of the psychological contract from employees. There seems to be a
significant shift in employee attitudes and values relating to career management,
leadership styles, rewards and motivation.
Several authors suggest that a new type of psychological contract is emerging,
which is more situational and short-term, and that assumes each party is much less
dependent on the other for survival and growth.
The differences between the old and the new psychological contracts can be
highlighted as below.
Old Psychological Contract
The organisation is ‘parent to the
employee ‘child’.
The employee’s identity and worth are
defined by the organisation.
Those who stay are good and loyal;
others are bad and disloyal.
Employees who do what they are told
will work until retirement.
The primary route for growth is through
promotion.
New Psychological Contract
The organisation and employee enter
into ‘adult’ contracts focused on
mutually beneficial work.
The employee’s identity and worth are
defined by the employee.
The regular flow of people in and out of
the organisation is healthy and should
be celebrated.
Long-term unemployment is unlikely;
expect and prepare for multiple
relationships.
The primary route for growth is a sense
of personal accomplishment.
Employees have different needs from a few years ago, which organisations have to
consider and accommodate to a certain extent.
Practical Implications for Companies Regarding the Psychological Contracts
Considering the potential importance of psychological contracts – that good
contracts normally result in committed, motivated and trusting employees –
organisations are asking a number of relevant questions in this area.
While not all of these questions can be answered fully, psychological contracts can
serve as a basis for helping practitioners and researchers to predict individual
behaviour.
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Employee Engagement
Employee engagement is a relatively new concept that focuses on the psychological
commitment of an employee to the roles assigned to them in the organisation. If
employees are engaged, they will be more motivated to try harder and will probably
perform better. This process requires time, energy and effort.
Retention of Human Resources
Organisations expect employees to perform the following obligations:
→ Work contracted hours
→ Do a quality piece of work
→ Deal honestly with clients
→ Be loyal and guard the organisation’s reputation
→ Treat property carefully
→ Dress and behave correctly
→ Be flexible and go beyond one’s job description
Employees expect employers to perform the following obligations:
→ Provide adequate onboarding and training
→ Be fair in the allocation of benefits
→ Allow time off to meet family and personal needs
→ Provide a safe and congenial work environment
→ Provide what job security they can
There are numerous other variables that impact favourably on the retention of talent.
These variables are grouped into four broad areas.
Variables Identified Within the Area
Variable pay
Performance bonuses
Health benefits
Retirement benefits
Share options
Organisational Environment
Diversity
Fairness
Networking opportunities
Job security
Competitive technology level
Work/Development Environment
Recognition
Role clarity
Teamwork
Status
Mentoring program
Work-Life Balance
Flexible working hours
Childcare facilities
Option to work from home
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Compensation and Benefits
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Chapter 9: Performance Management and Appraisal
Performance Appraisal (PA) is the process of evaluating how well employees
perform their jobs when compared to a set of standards, and then communicating
that information to employees.
Performance Management (PM) is a process which significantly affects
organisational success by having managers and employees work together to set
expectations, review results and reward performance.
South Africa’s Performance Appraisal Dilemma
The way performance is managed and rewarded in South Africa is unfortunately
quite bleak. Major problems that have been identified include:
→ The existence of a negative working culture
→ Changes in corporate strategy have not resulted in corresponding behaviour
changes
→ Insufficient line management support for performance management
Regarding periodic and formal performance reviews, the following is apparent:
→ Lack of follow-up performance reviews
→ Overemphasis on the appraisal aspect at the expense of development
→ Inadequate preformation information and inadequately maintained objectivity
It also appears that more than 60% of organisations do not have a formal
performance management system in South Africa (out of those surveyed).
Performance Criteria
There are three types of performance criteria:
→ Trait-Based Criteria
These focus on the personal characteristics of an employee – for example, loyalty,
dependability, creativity and communication skills. Here the focus is on what a
person is and not on what they do to accomplish the job.
→ Behaviour-Based Criteria
These are concerned with specific behaviours that lead to job success. For example,
instead of ranking leadership ability, the rater is asked to assess whether an
employee exhibits certain behaviours.
→ Results of Outcome-Based Criteria
These focus on what was accomplished or produced, rather than how it was
accomplished or produced. This type of criterion is not appropriate for every job and
it is often criticised for missing important aspects of the job, such as quality.
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Performance Appraisal Objectives
PAs are a key element in the use and development of an organisation’s most vital
resource – its employees. Effective appraisals can significantly contribute to the
satisfaction and motivation of employees.
The objectives of PA fall into two categories:
→ Evaluative Objectives
One of the primary purposes of performance appraisals, according to employees, is
looking at past performance. The most common decisions based on evaluative
objectives concern compensations decisions, staffing decisions and evaluation
selection systems.
→ Developmental Objectives
The second type of objectives, developmental objectives, encompasses developing
employee skills and motivation for future performance. Developmental objectives
include areas of performance feedback, giving employees direction for future
performance, and identifying training and development needs.
The Appraisal Process
The specific steps followed in developing a PA system will vary from organisation to
organisation, but, the general guidelines are followed by most employers when
developing an appraisal system.
1. Determine Performance Requirements
Administrators must determine which skills, outputs and accomplishments will be
evaluated during each appraisal. Policy-makers must determine exactly which areas
of performance are going to be reviewed and how these areas relate to the
organisation’s strategic goals.
2. Choose an Appropriate Appraisal Method
No one method is best for all organisations. Different methods may be used for
different groups. The manner in which a supervisor conducts the PA is strongly
determined by the method.
3. Train Supervisors
Training supervisors is a critical step, so that they prepare fair and accurate
appraisals and effectively communicate the evaluation to the employee.
4. Discuss Methods with Employees
This discussion between employees and supervisors should specify which areas of
performance are evaluated, how often, how the evaluation takes place and its
significance to the employee.
5. Appraise According to Job Standards
The PA should evaluate the employee’s work according to predetermined work
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6. Discuss Appraisal with Employees
The general trend is to make sure that supervisors discuss the appraisal with their
employees, allowing employees to discuss areas of agreement and disagreement.
The supervisor should emphasise positive work performance as well as areas that
need improvement.
7. Determine Future Performance Goals
Setting goals for the employee’s future appraisal period is critical because it gives
the employee direction for continued or improved performance.
Performance Problems
Determining why an employee is performing at an unsatisfactory level is of critical
importance because a problem cannot be corrected unless its causes are known.
If an employee is not performing satisfactorily, the organisation could follow the three
steps below. It is important to remember that the expected performance standards
should be defined in the mutually agreed-upon performance context.
Step 1: Define Expectations
Managers often assume that employees know what good performance is and think it
unnecessary to state management’s expectations. An employee’s perception of
good performance may differ from that of management. A major responsibility of the
manager is to define clearly and precisely what good performance means.
Step 2: Identify Causes
Recognising that a gap exists between ideal and actual employee performance leads
management to ask what the cause of the performance gap is.
Managing unsatisfactory performance effectively depends heavily on identifying the
correct causes of the problem. The four major causes of performance gaps include:
→ Lack of skills
→ Lack of motivation
→ Lack of respect for rules
→ Personal problems
Step 3: Select a Corrective Approach
There is a range of possible tactics the manager may take to solve performance
problems. The best approach will be one that is based on the proper analysis of the
cause of the performance problem.
Legal Considerations
Experts suggest several guidelines that, if strictly followed, will help protect an
organisation from problems related to its PAs.
→ Written appraisals conducted regularly
→ Supervisors should be trained thoroughly
→ Appraisers should apply consistent, explicit and objective job-related
standards
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Methods for Appraising Performance
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→ Problem areas should be detailed and documented
→ Specific goals and timetables should be established for improvement
→ Employees should be given clear opportunities to respond to negative
appraisals
→ Employers should be able to prove that the employee received the PA
→ The circulation of the PA should be restricted
→ Organisations should check past PAs
The methods and instruments chosen are critical in determining whether the
organisation manages its performance successfully. Performance appraisal methods
can be broken down into four categories: Category rating methods; comparative
methods; behavioural/objective methods; and narrative methods.
Work Standards
Work standards are used primarily to measure the performance of clerical and
manufacturing employees whose jobs are production or output-orientation. Work
standards establish average production output for employees on the job.
Few organisations use work standards as the only PA method. In many cases, they
are used as a part of an appraisal process especially if the organisation pays on a
piece-rate basis.
Category Rating Methods
Category rating methods include three main methods:
→ Graphic Rating Scale
The graphic rating scale requires the rater to indicate on a scale where the employee
rates such factors such as quantity of work, dependability, job knowledge and
cooperativeness.
Graphic rating scales are popular with managers because they can be filled out
quickly and require little training. However, these scales are particularly prone to the
rater errors, so some training is required.
→ Non-Graphic Rating Scale
A non-graphic scale is usually more valid than a graphic scale because the former
contains a brief description of each point on a scale rather than simply low and high
points of a scale. The rater can give a more accurate description of the employer’s
behaviour regarding a particular attribute, because a description clarifies each level
of the rating scale.
Most rating scales have the disadvantage of not being related to a specific job;
however, they provide a mathematical evaluation of the employee’s performance.
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→ Checklist of Critical Incidents
Critical incidents may also be used in PA by developed a checklist of critical
behaviours related to an employee’s performance. The supervisor can simply tick
whether the employee has performed in a superior manner in any one of the
incidents.
The checklist is fairly fast and easy to use since can produce a mathematical total,
but it is time-consuming and expensive to develop because checklists need to be
specific for each job.
Comparative Methods
Comparative methods include rating the overall performance of one employee
directly against each other and ranking or forced distribution. These methods help
supervisors differentiate between employee’s behaviours.
→ Ranking
Ranking refers to the listing of all employees from highest to lowest in performance.
There are usually many different rankings as there are department areas within the
organisation.
Some managers try to combine departmental rankings into total organisation
ranking, but this is difficult because employees have not been compared to any
common standard.
Ranking is fast and easy to complete and completely avoids the problem of central
tendency and leniency; however, it is seldom developmental because employees do
not receive feedback about performance strengths and weaknesses or any future
direction.
→ Forced Distribution
Forced distribution is a method in which ratings of employees’ performance are
distributed along a bell-shaped curve. This requires supervisors to spread their
employee evaluations in a pre-determined distribution.
Forced distribution eliminates central tendency and leniency; however, it also is
seldom developmental for employees due to a lack of feedback. This method is also
only valid if each department has an equal distribution of good, average and bad
employees – this assumption is difficult to make.
→ Paired Comparison
Paired comparison is a variation of the ranking method, where the performance of
each employee is compared with that of every other employee in the particular
group. Raters pair employees and choose one as superior in overall job
performance.
Paired comparison is quick and fairly easy to use as employees are only compared
to one other behaviour at a time. The disadvantage of this; however, is that
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Narrative Methods
Narrative methods include three main methods:
→ Critical Incidents
Critical incidents are a special category of employee behaviour focusing on two
distinct areas: particularly outstanding behaviours and particularly questionable
behaviours.
The critical incident method is where the rater keeps a written record of highly
outstanding/favourable and questionable/unfavourable employee work behaviours.
These incidents are then used as a basis for evaluating the employee’s
performance.
→ Annual Review File or Calendar
This method involves the supervisor or appraiser keeping an ongoing record of
employees’ critical incidents that occur during the period of appraisal. The supervisor
could then look at the annual review file before preparing for the PA.
The advantage of this method is that it is very job specific; however, it is very difficult
to keep the annual file accurate and up-to-date. This method also has a lack of
comparable data on different employees.
→ Essay Method
In this method, a supervisor or appraiser writes an essay, in narrative styles,
describing the employee’s performance, specifying examples strengths and
weaknesses.
Because the essay method forces the supervisor to discuss specific examples of
performance, it can also minimise supervisory bias and the halo effect. The
disadvantage of this method is that the time supervisors must spend writing separate
essays about each employee can be formidable.
Behavioural/Objective Methods
Behavioural methods rate the employee against some objective, selected or
imaginary goal.
→ Behaviourally Anchored Rating Scales (BARS)
BARS consist of a series of vertical scales, one for each important dimension of job
performance. Instead of using break employee attributes, the points of the rating
scale are critical incidents.
This method is evaluative because mathematical tools can easily be related to merit
increase and promotion probability, but this system takes time and effort involved in
adapting critical incidents to a rating-scale format.
The main advantages of BARS are:
• A more accurate gauge
• Clearer standards
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•
•
Independent dimensions
Consistency
→ Management by Objectives
Management by objectives (MBO) is a philosophy of management that rates
performance on the basis of employee achievement of goals set by mutual
agreement between the employee and manager.
→ Goal-Setting
Goal-setting lies at the heart of the MBO process. The goal-setting process begins
with the formation of long-term objectives and cascades through organisational
objectives, organisational goals and finally, individual goals.
MBO focuses on setting measurable goals as opposed to vague or subjective ones.
In the context of MBO, characteristics of good goals include:
• Description of what is to be accomplished and how the accomplishment will
be measured
• Expected results must be under the employee’s control
• Target dates for goal accomplishment
• The amount of resources to be used in accomplishing the goal must be
available
→ Action Planning
Action plans specify how goals are to be achieved – they are essentially road maps
to reaching goals. Action plans are important because the provide direction as well
as milestones (mechanism) for measuring progress towards reaching goals.
→ Self-Control
A primary assumption of MBO is that employees will accomplish their goals if given
management and organisational support. Inherent in this assumption is that those
who are being appraised have a fairly high level of motivation, commitment and
achievement drive.
→ Periodic Review
Most MBO systems include a mechanism for periodically measuring progress
towards achieving goals. A review process is particularly important to discuss
problems that an employee may be experiencing in reaching goals.
Advantages of the MBO method include that both the supervisor and employee
participate in the appraisal process, and the focus is on specific goals and not on
broad personality traits. The disadvantage of the MBO method is the time and effort
that must be spent by both parties in the appraisal process.
Combination Methods
It has become common practice to combine multiple PA methods into an employer’s
overall PA program.
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The question of how often to appraise employee performance formally is an
important one. The most common answer is that there should be a fixed, specific
interval between formal appraisals. The schedule provides consistency in the
evaluation process because all employees are evaluated or the same period of time.
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A variable-interval process can be used when a goal-setting approach establishes
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Rating problems should be recognised and minimised by trained supervisors and
other raters. Appraisers should not only become aware of the most common rater
errors but should also learn how to avoid committing them.
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All methods of PA are subject to errors, but training and information can minimise
many of them.
→ Rater Bias
Rater bias (conscious or unconscious) is an error that occurs when a rater’s values
or prejudices distort the rating. This is the most common error that exists in any
appraisal method.
→ Stereotyping
Stereotyping refers to mentally classifying a person into an affinity group, and
identifying the person as having the same assumed characteristics as the group.
Regardless of whether the stereotype is negative or positive, they generate the
possibility for substantial errors in evaluations.
→ Halo Effect
The halo effect refers to rating a person high on all items because of performance in
one area. A negative halo effect, or a “devil’s horns” effect also exists. These
problems can be minimised by supervisory training.
→ Central Tendency
Central tendency is a common error in performance appraisal that occurs when
employees are incorrectly rated near the average or middle of a scale. This also
occurs when supervisors cannot evaluate employee performance objectively
because of the fear of being reprimanded.
→ Leniency
Leniency refers to giving an undeserved high PA rating to an employee.
Inexperienced or poor supervisors may feel that this is the easiest way to appraise
performance.
→ Strictness
Strictness refers to being unduly critical of an employee’s work performance.
Strictness is the opposite of leniency. Unreasonable performance expectations from
employers that employees find impossible to achieve can be demoralising.
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→ Recency/Primacy Effect
The recency effect is a rating error occurring when an appraiser assigns a rating on
the basis of the employee’s most recent performance rather than on long-term
performance. To avoid this effect, supervisors should conduct frequent appraisals
and/or keep a running log of critical incidents of the employee’s behaviour and
outcomes.
Overall Ratings
Many appraisal forms require the supervisor to provide an overall rating of an
employee’s performance. It is difficult for a rater to combine all the separate
performance dimensions into one accurate overall rating. Behavioural research
indicates that raters are not consistent in this process.
Solutions to appraisal problems focus on two areas: the appraisal system and rater
training.
→ Appraisal systems should be based on a job analysis that specifies the
content of the job, and an employee’s job performance must be measured
against criteria determined for each content area.
→ Effective training for people who perform the appraisal can minimise appraisal
problems such as leniency, the halo effect and recency.
Who Should Do the Rating?
The standard approach of performance appraising has been to have a single rater,
with the immediate supervisor performing the appraisal as a managerial duty. Most
organisations now use multiple raters for appraisals.
→ Supervisors
The person in the best position to observe the employee’s behaviour and determine
whether the employee has reached specific goals and objectives is the best person
to conduct the appraisal. Traditionally, this has been the supervisor, and in many
cases, it still is. Often, only the supervisor directly and consistently observes the
employee’s performance and knows what level of performance should be expected.
→ Peer Evaluations
Peer evaluation is performance appraisal done by one’s fellow employees, generally
on forms that are compiled into a single profile for use in the performance interview
conducted by the employee’s manager.
Peers can sometimes offer information that the organisation could not get from the
employer’s supervision due to a lack of direct contact. Co-workers will often not give
objective, honest appraisals though, because of possible retaliation.
→ Customer Evaluations
Evaluations by clients and customers include everything from comment cards to
specialised questionnaires, telephone research and other techniques to enable the
employer to receive a customer evaluation of the employee’s performance.
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It is difficult for customers to give a total PA because they generally view only part of
the employee’s performance. Supervisors are therefore still responsible for the
overall PA.
The 360 Appraisal (Multirater)
The 360 appraisal or multirater approach is being used where supervisors now
interview an employee’s customers, suppliers, peers, and sometimes subordinates
to get a more complete picture of the employee’s performance. Because of the
involvement of various groups, the assessment is deemed to be fairer and more
objective.
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For this approach to be successful, anonymity must be assured. Respondents must
also be held accountable for the input they make.
The multirater assessment can still fail as a result of the following aspects:
• Changing the ground rules after the process has begun
• Inadequate attention to identifying what each rater should rate
• Involvement in design
• Choice of raters
• Concise VS meaningful
• Different interpretations
Advantages for the organisation using the 360 approach include:
• Improved two-way communication and increased opportunity for employee
involvement
• Demonstrates respect for the employees by showing them that their opinions
count
• It can create better working relationships within the organisation and improve
the ability to work in teams
→ Self-Ratings
Self-ratings are performance appraisals done by the employee being evaluated,
generally on an appraisal form completed by the employee prior to the performance
interview. Research suggests that supervisors react to employees’ self-ratings.
→ Reverse Appraisals
In reverse appraisals, the employee rates the supervisor. These evaluations should
identify specific strengths and weaknesses in order to be helpful, and anonymity is
essential. Fear of retaliation must be eliminated for this method to be effective.
→ Team Portfolio Appraisals
This approach consists of having a team appraise the performance of individual
team members. Peers and co-workers have shown to be more reliable and more
valid judges of merit and promotability than supervisors.
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→ The Human Asset Accounting Method
This method links human capital to the amount of income that a specific employee is
generating, the sales lead that they have established, or how satisfied customers
are. This reflects directly on the profits of the organisation.
Assessment Centres
Many of the employee PA systems focus on the employee’s past performance. By
using the assessment centre method, it is possible to also attempt to assess a
candidate’s potential for future advancement.
Assessment centres are used increasingly to:
→ Identify employees who have higher-level management potential
→ Select first-line suppliers
→ Determine employee development needs
Monitoring Employees on the Job
With the advancement of computers and other technology, it is now also possible to
evaluate employee performance electronically. This can occur in many ways in the
workplace:
→ Video surveillance is used to discourage theft and other rule violations.
→ Telephone surveillance of service representatives has been used for a long
time to monitor the timing and content of customer contacts.
→ Computer programs can monitor keystrokes to track employee performance,
eavesdrop on employee email, and record who accesses which databases at
what times.
Monitoring employees by computer or any method is open to serious invasion and
privacy issues.
Effective PA Systems
Organisations prefer quantitative approaches, and the consistency of using the same
rating scales over time for all employees offers a sense of equity and predictability.
PA systems are designed to do more than fulfil some evaluative and developmental
objectives. HR professionals want PA systems to be designed to:
→ Help determine merit pay increases and bonuses
→ Comply with employment equity legislation
→ Be easy to administer
Design Input
Employee involvement has become the standard approach for PA systems,
changing from the traditional approach of the HR department dominating the
process.
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There are four steps suggesting for involving employees in the PA design or
redesign project.
1. Group Formation
A cross-functional team should be assembled and the charge to this team from
management should be clear.
2. Objectives and Concerns
Team members should discuss their own goals and the problems they would like the
new PA system to overcome. A list of desired benefits and concerns should be
constructed.
3. Dimensions of Performance
The team should identify the dimensions of performance that need to be evaluated,
and these will appear on the final PA instrument.
4. Policies and Procedures
The team should prepare guidelines for implementing the new PA system that
support the objectives established in step 2.
Total Quality Management (systems approach) is founded on the philosophy that
quality products are a function of the system in which they are produced. TQM
should be focused on system factors instead of person factors for performance.
TQM advocates contend that PA systems are attempts by management to place the
blame for poor organisational performance on lower-level employees. They also
believe that PAs should be abandoned, and TQM implemented.
Training Appraisers
Modern Approaches
So
There is agreement that training will improve performance of the rater in PA systems.
Appraisal processes and techniques are often included in training programs. Topics
normally included in appraisal training are:
→ The purposes of performance appraisal
→ How to avoid problems
→ The ethics of appraisals
→ How to conduct effective appraisal interviews
→ How to conduct non-discriminatory appraisals
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between raters should increase if they receive training.
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A topic that is usually overlooked in training programs on PA systems is the strategy
that the employee-ratee uses to get a favourable rating.
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Employees disguise their shortcomings and dramatize their strengths to create a PA
rating that is higher than their actual performance warrants. This is referred to as
engaging in impression management.
There are two general strategies used by employees to engage in impression
management:
→ Demotion-prevention strategies seek to minimize responsibility for some
negative event or are used to get out of trouble.
→ Promotion-enhancing strategies seek to gain credit or enhance the
employee’s viability.
Formal and Informal Methods
Performance feedback for developmental purposes is a continuous responsibility of
supervision. Frequent supervisory recognition is an important technique for
sustaining high levels of employee motivation.
While formal performance appraisals are usually only conducted annually or semiannually, informal continuous appraisals should take place between formal
appraisals.
Appraisal System Evaluation
An organisation’s PA program is generally created and implemented to meet both
evaluative and developmental objectives. Many organisations fail to assess
periodically whether those objectives are being achieved.
Appraisal systems can be evaluated with these procedures:
→ Interviews
→ Analysis of employees’ records
→ Analysis of the relationship between employees and their ratings
→ Analysis of PA systems in comparable settings
The Appraisal Interview
Discussing the performance appraisal process with the employee is a critical step in
the process. Performance-related feedback has been described as one of the most
important methods for enhancing employee development and improving individual
performance.
There are three types of information that the supervisor raters try to relay in PA
interviews:
→ Performance improvement feedback
→ Corporate goal feedback
→ Salary information
Problems with the Appraisal Interview
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There are five situational variables that contribute to supervisors’ failure to rate
subordinates. There are four psychological variables that are concerns for the
interview:
→ Playing God
→ Inability to give criticism
→ Personality biases
→ Inability to give effective feedback
Interview Format
The various problems associated with interviews may be minimised by following a
planned, standardised approach. Although the precise interview format will vary,
there are five steps that should be followed:
1. Prepare for the interview
2. State the purpose of the interview
3. Indicate specific areas of good performance and areas that need
improvement
4. Invite participation
5. Focus on development
Problem-Solving Interviews
The problem-solving interview lies at the core of the employee development process.
To conduct a problem-solving interview successfully, a supervisor must assume a
certain role and possess certain attitudes and skills.
There are several characteristics of the problem-solving interview technique:
→ Objectives
• Stimulate growth and development in employee.
→ Psychological assumptions
• Growth can occur without correcting faults. Discussing job problems leads
to improved performance.
→ Role of interviewer
• Helper.
→ Attitude of interviewer
• Discussion develops new ideas and mutual ideas.
→ Skills of interviewer
• Listening and reflecting feelings, reflecting ideas, using exploratory
questions and summarising.
→ Reactions of employee
• Problem-solving behaviour.
→ Employee’s motivation for change
• Increased freedom, increased responsibility – motivation is inherent in the
task.
→ Possible gains
• Almost assured of improvement in some respect.
→ Risks of interviewer
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→ Probable results
• Both learn, because experiences and views are pooled. Change is
facilitated.
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Chapter 11: Managing Compensation and Benefits
Compensation refers not only to extrinsic rewards such as salary and benefits, but
also to intrinsic rewards such as achieving personal goals, autonomy and more
challenging job opportunities.
Total rewards include monetary aspects and holistic aspects such as opportunities to
grow and develop, work-life balance, the work environment, flexibility, health and
well-being.
Wage and salary administration usually refer strictly to the monetary rewards given
to employees.
Hourly Wage
Salary
Bonuses
Commissions
Pay Incentives
Skills-Based/ Competency-Based
Insurance
Retirement
Paid Holidays
Paid Public Holidays
Food Services
Medical
Recreation
Recognition
Promotion Opportunities
Working Conditions
Interesting Work
Training Opportunities
Monetary Rewards
(Direct Payments)
Extrinsic Rewards
(Financial)
Compensation of
Employees
Benefits (Indirect
Payments)
Intrinsic Rewards (Non-Financial)
Compensation Objectives
Organisations have many objectives in designing compensation systems. The HR
specialist must keep in mind the goals of the system and what the organisation
needs to accomplish to achieve these goals.
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Attracting Talented Employees
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Job applicants compare job offers and pay scales, and they naturally compare
monetary offers. Employees’ general perceptions of the type of work and their
offered salary are factors they must consider when choosing employment.
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Most employers will try to remain competitive and will use a wage survey to estimate
average salaries for entry-level positions offered to new employees. The
organisation will either conduct a wage survey and determine the going rate for jobs
in the local labour market, or they will use published data.
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Retaining Talented Employees
After the organisation has attracted and hired new employees, the compensation
system in place should be able to retain them. Inadequate compensation is often one
of the major causes of turnover. If employees perceive that they are being treated
inequitably by the organisation, tensions are caused.
Job satisfaction is considered to be a strong determinant of staff turnover, but
inequitable treatment is a stronger force in making employees want to work
somewhere else.
To provide for equity among jobs, administrators usually create a systematic
relationship among the pay scales for various jobs within an organisation. This
process is usually called job evaluation.
Motivating Talented Employees
Employees expect that their performance will correlate with the rewards received
from the organisation. They set expectations about rewards and compensation if
they achieve certain levels of performance. these expectations determine goals and
levels of performance for the future.
Organisations need to ensure that their compensation system allows employees to
be rewarded to reach these goals. If employees see rewards to motivate them, they
will set higher performance goals for the future. This can be seen as the motivation
and performance model.
To safeguard the relationship of performance and motivation, the organisation must
provide the following:
→ Accurate appraisal
→ Performance rewards
→ Supervisors’ feedback
Job Evaluation
Job Evaluation is the process of systematically analysing jobs to determine the
relative worth of jobs within the organisation that results in an organisation’s pay
system. This analysis is the basis of a job hierarchy and pay ranges.
The result is a pay system with pay rates for each job depending on the status of the
job according to the hierarchy. Job evaluation does not review the employees in the
job, but the worth of the position itself.
A few terms are important when considering the equity of pay:
→ Internal equity is the relationship between the pay structure and the design of
the organisation and the work.
→ External equity is comparing what an employee earns in the organisation for
which they work to similar jobs in other organisations.
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→ Wage rate compression is an internal equity problem which occurs when the
starting salaries for newly appointed staff members are higher than those of
experienced staff members whom the organisation already employs.
Job Evaluation Methods
The 4 most popular job evaluation methods are:
→ Job Ranking
• The job with the most ‘worth’ to the organisation is identified first; then
the next job with the most worth; and so on.
→ The Factor Comparison Method
• A decision on how many grade levels to the job value structure is to be
broken into is made and generic descriptions at each level are written.
→ The Classification Method
• Jobs are evaluated on a component basis and compared against a
predetermined scale.
→ The Point Method
• Jobs are evaluated on a component basis and compared against other
jobs.
Job Evaluation Methods
Job Ranking
Job Classification
Factor Comparison
Point Method
Advantages
Qualitative Methods
It is easy and fast to
complete.
Usually can be done in
hours.
Relatively inexpensive.
Easy to explain.
Employees accept it
readily.
Readily adaptable to
large organisations.
System can last for a long
time without changing.
Quantitative Methods
Detailed and specific.
Easier to develop than
the point method.
Tied to external market
wage rates.
Detailed and specific.
Generally accepted for its
mathematical nature.
Easy to keep current as
jobs change.
Easy to assign monetary
values to jobs.
Disadvantages
Limited to small
organisations.
Assumes equal intervals
between rankings.
Highly subjective.
Classification descriptions
are extremely broad.
Job evaluators may
abuse the system.
Difficult to explain to
employees.
Not easily adaptable to
changes in jobs.
Time-consuming and
costly to develop.
Requires significant
interaction and decisionmaking.
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Work evaluation is a job evaluation system that aims to meet the needs and
demands of the ever-changing environments in which organisations operate. This is
a system in which work is valued relative to the goals of the organisation and not by
the point method that is applied internally.
Job Evaluation Committee
A job evaluation committee is necessary because it is impossible for one person to.
Have adequate knowledge of all the jobs in the organisation. The expertise and
varying backgrounds of different committee members also contribute to the accuracy
of the evaluation process.
The job evaluation committee can review the job evaluation system in order to
ensure that it is flexible and periodically adjusted.
Outside Assistance
A job evaluation committee must decide whether to produce a job evaluation system
or hire outside consultants. Outsiders are often faster and more objective than
internal employees, but they do need substantial internal input to analyse jobs and
make difficult comparison decisions.
A better alternative might be to hire an evaluation consultant to organise the
evaluation process and train the job evaluation committee. Once trained, the
committee can perform the evaluations and the outsider can make necessary
adjustments.
Pay Systems
The method by which individuals are paid for performing their job constitutes the pay
system of the organisation. There are 3 major systems that can be implemented in
business compensation systems:
→ Time-Based Systems
→ Person-Based Systems
→ Performance-Based Systems
Time-Based Systems
Most time-based systems use a schedule of pay grades and steps. The matric can
include hourly rates or annual rates of pay, depending on whether the jobs are hourly
or salaried. Jobs are assigned to a particular pay grade depending on the results of
the job evaluation.
If the firm has done a point method of job evaluation, the pay system can be
illustrated on a scatter diagram. Each employee is then represented by one dot in
the diagram.
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performance will be small because the increase is small. Having too few steps
creates larger increases and motivates employees to work for merit increases.
Employees reach the top of their pay grades quickly when there are few steps.
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When employees reach the top of their pay grades they are usually promoted and
transferred to jobs with higher pay grades. Organisations with few opportunities for
promotion usually use more steps and wider-ranging pay grades.
→ Red Circle and Green Circle Rates
A red circle job indicates that the individual receives red circle rates, where payment
rates are above the maximum rates of the pay range. A green circle job indicates the
individual receives green circle rates, where payment rates are below the minimum
rates of the pay range.
→ Overlap of Grades
Organisations may overlap pay grades so that the maximum of one pay grade is
higher than the minimum of the next higher pay grade. An advantage of this is that
employees can be transferred or promoted without necessarily being given pay
increases. This also gives grades a greater range with more steps of a meaningful
size.
A disadvantage of overlapping pay grades is that a promotion may not bring a pay
increase but could bring a cut in pay. Also, it becomes possible for individuals in
higher pay grades to supervise employees in lower pay grades who receive a higher
pay then the supervisor.
→ Pay Increases
There are 2 primary types of pay increases: across-the-board increases and merit or
seniority increases.
Across-the-Board increases occur when everyone in the organisation receives an
equal pay increase, normally based on a percentage. These increases mean that
employees with higher pay grades will receive greater actual increases than
employees in lower grades.
Merit or seniority increases occur when selected individuals receive pay increases.
These are designed to motivate employees by tying part of their pay to their
performance. merit pay systems rely on 3 assumptions:
1. Differences in employee performance can be accurately measured.
2. Employees can effectively perceive pay differences as relating to performance
differences.
3. Individuals will improve their future performance to gain more merit increases.
There are 3 main frequent problems with merit systems:
• There is only a sight relationship between performance appraisals and
percentage pay increases, and employees know this.
• Supervisor bias remains more important in performance appraisals
than employee productivity.
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Person-Based Systems
Person-based programs allow employees to increase their pay by taking on new or
additional activities.
Broadbanding is a compensation technique that collapses many pay grades (salary
grades) into a few wide bands in order to improve organisational effectiveness. The
idea is to encourage flexibility in moving from one job to another without being
constrained by narrow salary grades.
Not all bands are alike. Career bands are mainly a management development
compensation strategy, where the aim is to support the contemporary organisation.
Traditional bands aim to alleviate the ‘topping-out’ problem – a situation of having too
many employees who are at or near the maximum of their range.
Broadbanding can impact the organisation’s remuneration policy in the following
ways:
→ Pay ranges are longer
→ Movement through the pay range is based on skill acquisition and not
necessarily on traditional job descriptions
→ Some element of skill-based pay and/or gainsharing is usually introduced to
reward increases in productivity
→ Fringe benefit policies need to be modified so that they are pegged to bands
and not to subgrades
→ To determine external equity with the market, reference needs to be made to
salary surveys that report on broadbands
→ Pricing skills is a new experience for most
→ Line managers must certify employees as competent to qualify for the pay
→ Employees can easily move to the top of their pay band and get overpaid in
relation to the market
→ A policy on the pay-for-skills approach must be developed
→ In the first years, the salary expense usually goes up
Skills-Based or Competency-Based Pay is an approach in which pay is based on
how many skills employees have or how many jobs they can perform. There are 5
types of skill-based plans:
→ Vertical Skill Plans
• These measure the acquisition of input/output skills within a single job.
→ Horizontal Skill Plans
• These reward the acquisition of complementary skills across several
jobs.
→ Department or Depth Skill Plans
• These reward skill specialisation.
→ Basic Skill Plans
• These reward employees for developing expertise in basic skill areas.
→ Combination Plans
• These plans use combinations of other skill plans.
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This type of pay system can affect the reward culture in an organisation so that
individuals will no longer be paid simply for moving up a job hierarchy but will be paid
for the skills or competencies they acquire and for developing themselves.
Performance-Based Systems
The purpose of an incentive or performance-based system is to relate employees’
pay directly to their performance. employees are more likely to increase their
productivity if they perceive a direct relationship between their level of performance
and the rewards they receive.
In general, performance-based systems or variable pay can be divided into 3
categories:
1. Individual Incentive Systems
Individual incentive systems are piece-rate or related plans which provide a pay
incentive to each worker based on their own level of productivity.
→ Piece-Rate Systems
Piecework refers to work paid according to the number of units produced. These
systems are usually best suited for manufacturing and production jobs.
Variations of straight piece-work plans include rising and falling differentials. With
falling piece rates, any gain is shared between the employer and employee. A rising
piece rates give workers even more incentive for exceeding the standard.
Piece-rate systems are easy to understand, simple to calculate and effective
motivational tools. However, most jobs do not have output that can be objectively
measured, and jobs are becoming more interrelated, so a person’s output is
becoming dependent on the output of others.
→ Standard Hour Plans
Standard hour plans are similar in concept to piece-rate plans except that a standard
time is set to complete a particular job instead of paying the employee a price per
piece.
→ Commissions
Commission is used when employees are given a percentage of sales measured in
units or currency. Employees paid on commission generally receive either straight
commission or salary plus commission.
Straight commission means that their total pay is determined by the commission
formula, and salary plus commission combines a monthly salary based with a
commission incentive. The salary plus commission method has the advantage of
providing a minimum income level that employees can count on to pay their living
expenses.
→ Special Incentive Programs
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2. Team-Based Incentive Systems
Some individual incentive systems are not suited for situations where teamwork and
coordination among employees occurs. For interrelated tasks, one employee’s
performance may influence the productivity of another employee.
Team incentive arrangements have goals and results clarified and established for
teams, not individuals. Teams are evaluated on the degree to which performance
targets are met. This type of system requires a solid communication system between
employees, and employees and management. Team-based incentive systems are
typically more comparable across participants.
A problem with strong individualism within a team is the difficulty of putting the
group’s needs first. Team members who cannot put the good of the group before
their own are called social loafers and free riders.
An important measurement tool used in team-based incentive systems is 360-degree
feedback. This is where every member of a team gives feedbacks on other
employees and themselves.
3. Organisation-Wide Incentive Systems
The problems of individual incentive systems and the increasing design of more
technical and interdependent jobs has led to the greater use of organisational
incentive plans.
Organisational incentive plans are used primarily because employers want
employees to realise the link between a portion of their compensation and the
performance of their group or the entire organisation.
There are 3 types of organisational incentive systems: profit-sharing plans,
gainsharing plans, and employee stock ownership plans.
→ Profit-Sharing Plans
Profit-sharing plans include any procedure where employees receive a share of the
organisation’s profits in addition to their regular salaries. There are 3 major types of
profit-sharing plans:
• Distribution Plan – Annual or quarterly payments are paid out in a cash
bonus according to a predetermined formula.
• Deferred Plan – Employees earn profit-sharing credits instead of cash
payments, which are only distributed in the case of disability,
retirement, or death.
• Combination Plan – This plan uses a combination of distribution and
deferred plans.
→ Gainsharing Plans
Gainsharing plans tie compensation to specific productivity measures, such as time,
materials, or cost savings. This type of plan has the advantage of simplicity. It is
easy to negotiate, easy to explain, and easy to implement.
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An employee shares ownership plan offers incentive that allows employees to buy
shares in the company by ‘borrowing’ against corporate assets.
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It is suggested that employees who have an ownership interest in the company will
be more concerned about the efficiency and profitability of the company than
employees who do not share in the ownership.
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Guidelines for Incentive Plans
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In South African organisations, productivity and quality problems are directly linked
to a failure to involve employees in their jobs and in the success of the organisation.
Incentive plans can provide the involvement by following 5 guidelines:
→ Bold Incentives
• Bold financial incentives must be provided to everyone so that
everyone recognises that performance is linked to improved
organisational performance.
→ Emphasis on Team Performance
• Everyone in an incentive program must clearly perceive how they can
influence the results.
→ Quick Feedback
• Feedback must be given as often as possible (ideally monthly) about
group and individual performance and the resulting bonus.
→ Above-Average Base
• Pay base should be set above the norm for comparable jobs in the
geographical area. With incentives added, total pay will be substantially
above the norm.
→ Simple Formula
• The formula and process should be straightforward – people’s
motivation to increase productivity and profits will not improve if they do
not understand the formula.
Problems with Incentive Plans
Individual-based plans are limited to jobs in which the employee can directly
increase their output without affecting the productivity of others and without having
output affected by others. Quality standards must also be carefully maintained to
ensure that quality is not sacrificed for quantity. Individual-based systems also
escalate rivalries among employees.
Organisational plans can create major morale problems if employees start to rely on
their bonus cheques and then receive smaller bonuses because of unanticipated
deadlines in productivity or profits. Employees may develop a short-term mentality
where they forget about their long-term goals for the firm. Employee apathy can
occur, and productivity may decrease if employees perceive that they are being used
or mislead.
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Economic Value Added (EVA)
EVA is used to measure performance and measures an organisation’s financial
performance based on the residual wealth calculated by deducting cost of capital
from its operating profit (adjusted for taxes on a cash basis). The formula for
calculating EVA is:
𝐸𝑉𝐴 = 𝑁𝑒𝑡 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥𝑒𝑠 (𝑁𝑂𝑃𝐴𝑇) − (𝐶𝑎𝑝𝑖𝑡𝑎𝑙 × 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑎𝑝𝑖𝑡𝑎𝑙)
EVA differs primarily from other performance measures in that it defines an
organisation’s true economic profit after subtracting the cost of the capital employed
to generate those profits.
Executive Compensation
In large, established companies, members of top management are paid differently
from mid-level and lower-level managers. Executives’ employment pay comes in 4
forms:
→ Base Salary
→ Annual Bonus
→ Long-Term Incentives
→ Benefits and Prerequisites (Perks)
A popular incentive is the ‘Golden Parachute’. This is a prerequisite provided for the
purpose of protecting executives in the event of their organisation being acquired by
another. This gives the executive certain compensation if their employment is
terminated for certain reasons, such as acquisition, merger, or demotion.
Golden handcuffs are bonuses available only if the executive stays for a specified
period. Similar protection of non-executives is called a silver parachute.
A Stock Option Plan is an incentive plan in which managers can buy a specified
amount of stock in their company in the future at or below current market price.
These are complex but critical parts of executive compensation plans.
Benefits
The policy of awarding benefits has increased dramatically in South Africa, and the
cost of benefits is high and getting higher. Benefits are not yet a motivational tool, as
many employees do not appreciate their benefits until later years.
Types of Benefits
There are 5 types of benefits that employers can offer:
→ Those that are required by law
→ Retirement benefits (Voluntary benefits)
→ Paid time off work
→ Insurance
→ Employee services
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Benefits Required by Law
The organisation must provide certain benefits to its employees whether it wants to
or not, and these must be provided in a non-discriminatory manner. These benefits
include:
→ Unemployment Insurance
• The Unemployment Insurance Act No 63 of 2001
→ Compensation for Injuries and Diseases
• The Compensation for Occupational Injuries and Diseases Act No 130
of 1993
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Voluntary Benefits (Retirement Benefits)
The number of benefits that an organisation offers depends on management’s
budget or creativity. The most popular types include retirement plans, time off work,
and disability, medical, and life insurance benefits.
Individuals are expected to provide for their retirement through either a private or
government pension, or through personal savings. Planning for retirement can be a
highly complicated process.
A Contributory Pension Plan is a plan in which the employee and employer share the
cost of providing pension benefits in the future. A Non-Contributory Pension Plan is a
plan in which the costs of providing a pension plan are financed entirely by the
employer.
Paid Time Off
Employees expect to be pad for holidays and miscellaneous days they do not work.
Employers’ policies covering such benefits vary greatly. The most common
examples of time off with pay are for:
→ Public holidays
→ Sick leave
→ Vacations
→ Time off to vote/ acting as an election official
→ Study leave
→ Moving leave
→ Witness in court
→ Paternity/Maternity leave
→ Sport leave
→ Sabbatical leave
→ Family responsibility leave
Insurance
Many employers provide employees with life and medical insurance plans and
contribute partially to the costs of these. Medical aid schemes and life/disability
insurance are two of the most important components of the insurance package.
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The health and life insurance packages are usually part of a group insurance plan,
which allows the company to offer the employees benefits from lower rates on the
total value of the group policy.
Employee Services or Creative Benefits
Employee services have been developed to increase employee loyalty to the
organisation and decrease absenteeism and turnover. Employers thus aim to
provide unique benefits that will attract the best candidates and ensure that the
current workforce remains motivated to stay within the firm.
The services offered by employers vary greatly, but the most common employee
services include:
→ Child-care programs (Onsite programs, flexible benefits, referral centres,
consortium of employers)
→ Food services
→ Education expenses
→ Transportation programs
→ Housing subsidy
Total Benefits Planning
Many benefit packages have little effect on employee motivation and performance.
since many costly and expensive benefits are tied to seniority, employers seldom link
benefits to level of performance.
Organisations can assess employees’ needs to determine which benefits are truly in
demand. The organisation’s total benefit package should be reviewed as a whole,
and not as separate components.
Flexible Benefit Plans
In a typical flexible benefit plan, employees are allowed to choose the benefits they
believe will best meet their needs. Their choices are usually limited to the total cost
the employer is willing to spend.
There are 3 types of flexible employee benefit plans:
→ Core Cafeteria Plan
• These provide employees with core (minimum) coverage in several
areas and allows them to choose either additional benefits or cash, up
to a maximum total cost to the employer.
→ Buffet Plan
• Employees start with their exact current benefit coverage and allows
them to decrease coverage in some areas to earn credits for other
benefits.
→ Alternative Dinners Plan
• These plans provide a number of predetermined packages to choose
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Advantages of flexible plans include:
→ Meeting diverse needs of employees
→ Controlling benefit costs
→ Improved benefits offered
→ Attracting and retaining employees
→ Avoiding unions
→ Avoiding duplicate coverages
Employee Compensation Audits
An Employee Compensation Audit is the evaluation of employee salary, benefits,
and incentives to determine their effectiveness, competitiveness and legal
compliance.
Salaries should be audited on a regular basis to ensure that the packages are fair,
equitable, market-related, effective and that it complies with all relevant legal
requirements.
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