Human Resource Management
What’s HRM?
Topic 2 : Introduction
Process of managing human capital and intellectual assets in an effective and efficient way to
achieve an organization’s objectives.
o
Personnel
Generic Approach
People as cost
Maintenance of all personnel and administrative systems
HRM vs. Personnel Management
o
HRM
Generic Approach
People as cost
More strategic approach, forecasting the organizations needs and continuously adjusting
and monitoring all systems.
HRM Process: 3 Core functions
1.
2.
3.
Allocation. Recruitment & Selection.
Qualification. Training & Orientation.
Motivation. Career Development (Perspectives) & Feedback (Performance
Management
HRM Process: Value Chain
Recruiting → Selecting → Training → Rewarding → Leading → Managing → Performance →
Motivating → Releasing
HRM Value Creation
Creates Value by engaging in activities that produce employee behaviours that the company
needs to achieve its strategic goals.
HR Manager + Tasks
Every operating manager is also an HR Manager.
o Advise HR of job openings
o Receive interview training from HR unit
o Do final interviewing and hiring where appropriate
o Review reference information
o Provide feedback to HR unit on hiring / rejecting decisions
HR Specialists + Tasks
Design process and systems that support operating managers on their HRM tasks.
o Develop legal, effective interviewing techniques.
o Train managers in conducting interviews.
o Conduct interviews
o Send top 3 applicants to managers for final review
o Check references
o Do final interviewing and hiring for certain job classifications.
Topic Overview
Human Resource Management
HRM Organization in Large Companies
Topic 2 : Introduction
Departments
o Development & Training / Compensation / Staffing / Safety & Health / Labour Relations
Jobs
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Society for Human Resource Management
(SHRM) Competency Model for HR
Professionals
Guideline developed by a SHRM that sets out the specific skills, knowledge and behavioural
requirements that HR professionals can use as models for their own professional development as
well as use it in the planning and design of their HR departments.
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9.
Boston Consulting Group (BCG)
Future HR Challenges
Topic Overview
HR Manager / Specialist / Business Partner / Advisor / Recruiter / Analyst /
Compensation Specialist / Benefits Specialist / Training Specialist / Employee Relations
Specialist / EEO Coordinator / Talent Manager
HR Knowledge
Ethical Practice
Leadership and Navigation
Business Acumen
Consultation
Critical Evaluation
Communication
Global and Cultural effectiveness
Relationship Management
8 topics that demand the most immediate action.
o Managing Demographics
o Managing Talent
o Managing Globalization
o Managing change and cultural transformation
o Managing work-life balance
o Improving leadership development
o Transforming HR into a strategic partner
o Becoming a learning organization
Human Resource Management
Human Resource Planning
Topic 3 : HR Planning
Process of analysing and identifying the need for and availability of human resources so that the
organization can meet its objectives.
Systematic process of matching the internal and external supply of people with job openings
anticipated in the organization over a specific period.
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Job Analysis
Right people
Right time
Right capabilities
Right place
Systematic way of gathering and analyzing information about the content, context, and
requirements of jobs.
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Tasks
Performance
Responsabilities
Knowledge
Skills
Experience
Job context
Duties
Equipment
⇩
Job Specification & Job Description
Job analysis is conducted
o when an organization is founded
o when new jobs are created
o when jobs are changed significantly because of new technologies, methods,
procedures, or systems.
Job Description
Provides information regarding essential tasks, responsibilities, and duties of a job.
Job Specification
Minimum knowledge, skills and abilities (KSA) a person needs to perform a particular job.
⇨ Specifications based on judgement – Statistical Analysis
Statistical Approach
1.
2.
3.
4.
5.
Topic Overview
Analyze a job and decide how to measure job performance
Select KSA’s that you believe should predict successful performance
Test candidates for these KSA’s
Measure the candidates subsequent job performance
Statistically analyze relationship between KSA’s and job performance.
Human Resource Management
HR Forecasting & Planning
Topic 3 : HR Planning
HR Forecasting is the identification of Staff Requirements.
HR Planning is the identification of Supply Markets.
Pursuing a strategic HR Planning we must match the forecast requirements (Demand) with the
forecast availability (Supply).
⇨ If it does match: demand = supply | no action
⇨ If it doesn’t match: demand ≠ supply | we have to start with HR Planning.
o Recruiting: identifying positions that need to be filled and how-to do it.
o Training and development: identifying needed KSA’s and how to acquire them.
If we have shortage of supply: Innovative recruiting, compensation incentives, training
programs…
Forecasting HR Demand & Supply
If we have surplus of supply: Restricted hiring, retirement, layoffs, downsizing, reduced hours…
Using information from past and present to identify expected future conditions.
o
HR Demand: Determining number, skills & location of employees that the organization
will need at future dates to meet its goals.
o
HR Supply:
⇨ External Supply is dependent on economic conditions, unemployment rate,
demographic development, etc.
Calculate Workforce Demand
⇨ Internal Supply comes from information within the organization… qualification
inventories, replacement charts, HRIS etc.
Calculate Internal Supply
Current Staffing Level – Projected Outflows (+ Projected Inflows)
=
Internal Supply for Next Year
Succession Planning
Outflows: Turnover, promotions, terminations, retirements, layoffs…
Inflows: Recalls, external hires, internal transfers, promotions…
Process of ensuring that qualified persons are available (within the company) to assume key
managerial positions once the positions are vacant (orderly replacement of key employees,
deciding how to re-fill important positions in case of unexpected vacancy.)
Goal is to help ensure a smooth transition and operational efficiency (important for small
businesses).
Topic Overview
Human Resource Management
Definition of Recruitment in HR
Topic 4 : Recruitment
Process of attracting individuals and encouraging them to apply for job positions. A good
recruitment process allows you to find qualified candidates quickly and efficiently.
Goals & Constraints of Recruitment
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Staffing Process
Which possibilities are available?
Search - Contact - Recruit (Internally / Externally)
⇨ Preselection ⇨ Selection ⇨ Contracting
2.
HR Leasing. Workers employed by a leasing company (“temp agency”) help
organizations meet short term fluctuations in HR needs.
3.
HR Outsorcing. The transfer of a business function to an external service provider
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Benefits of HR Leasing
No recruitment, payroll, administration cost
Flexible scheduling
Informal ‘probation period’ for possible future employees
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Cost of Temps (Temporary worker)
Higher labour cost (per unit) due to agency fees
Lower commitment to the firm
o
Concerns of Temps
Expectation to get subsequent full-time position
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Working with a Temp Agency
Ensure that agency understands the job to be filled and the sort of person you want to
fill it (job description & specification)
Time sheets: Verification of hours worked and agreement to pay
Temp-to-perm policy: What if you want to hire a temp as a permanent employee?
o
Advantages
Reduced risk through acquaintance with candidate’s strengths, skills, and weaknesses
(performance information available)
Candidates have strong commitment to the company, motivates and encourages
ambitious employees.
Less training & orientation needed. ⇨ Cost saving & opportunity to develop managers.
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Disadvantages
Failed applicants become discontented.
Time waisted interviewing inside candidates who will not be considered.
Possible inferiority of internal candidates, missing good outside talent.
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Topic Overview
Constraints
Employment conditions in a specific area, supply of workers, lack of qualified
candidates.
Image of the company, organizational growth, or decline.
Job attractiveness, working conditions, salary, and benefits.
1.
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Staffing from within Advantages and
Disadvantages
Goals
Provide information that attracts a significant pool of qualified candidates.
Provide information that discourages unqualified candidates from applying.
Human Resource Management
Topic 4 : Recruitment
Why is External Staffing needed?
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Fill entry-level jobs
Acquire skills not possessed by current employees
Obtain employees with different backgrounds to provide diversity of ideas
External Staffing Methods
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Job Advertisements (Media)
Online Recruitment (internet / networks / social media)
Employee Referrals
Public employment agency
College recruitment (FIFO)
Apprentices, Interns, Temps…
Walk-ins, Unsolicited applications…
Job Advertisements
What are factors influencing a positive
response rate on Job Advisements?
What are Blind Box Ads and why would a
company use this Advertisement
Technique?
Creation of effective ads, always making a positive impression of the firm.
o Attention, Interest, Desire, and Action (AIDA)
⇨ (1) the company
⇨ (2) the position (job)
⇨ (3) the responsibilities (duties)
⇨ (4) the requirements
⇨ (5) “what we offer you”
⇨ (6) “how to get into contact”
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Advertisements with no identification of the organization behind the ads.
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Provide the kind of privacy needed for a variety of reasons.
Terminate a top-level employee but wishes to find its replacement first, to avoid any
negative impact.
To increase the number of applicant population in the database of different
recruitment firms or other organizations.
Avoid being contacted by rejected applicants for any sort of follow up.
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Corporate career sites accessible from company’s homepage.
Job Boards. (Indeed, Stepstone)
Busines social networks & social media. (Linked-In, Company’s’ Social Media)
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Advantages
Cost-effectiveness.
Immediate applicant responses.
Online pre-screening of applicants.
Automation of applicant tracking and evaluation.
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Disadvantages
Exclusion of older and minority workers.
Information privacy concerns.
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Online Recruitment Possibilities
Online Recruitment Advantages &
Disadvantages
Topic Overview
Identification of the organization
Labour market conditions
Specification of listed requirements
Date of publication
Human Resource Management
What are Employee Referrals?
Advantages & Disadvantages of Employee
Referrals
Topic 4 : Recruitment
Employee Referrals is a recruiting strategy in which employers encourage current employees, to
refer qualified candidates for jobs in their organizations.
⇨ Cost effective
⇨ Highly efficient
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Advantages
Employee’s motivation to make a good recommendation (Reputation).
Applicants are more likely to accept an offer.
Workers tend to have a higher survival rate.
Disadvantages
Potential for nepotism (Practice among those with influence of favouring relatives or
friends)
Possibility of friendship being confused with job performance.
Employer Attractiveness
Interest Value
Extent to which an individual is attracted to an employer.
Employer Attractiveness
Social Value
Attraction based on a collegial work environment with good team atmosphere.
Employer Attractiveness
Economic Value
Attraction based on salary and benefits. (Mercadona)
Employer Attractiveness
Development Value
Based on recognition of work and career-enhancing opportunities
Employer Attractiveness
Application Value
Based on employee’s ability to apply what they have learned to teach others and interact
with customers in a positive and humanitarian way.
Employer Branding
Employer Branding is a process built from the set of characteristics that current and
potential employees connect a company as an employer. This process reinforces its potential
to attract and retain more talent. This in turn gives a positive impact in achieving the
business plan of the company.
Employer Brand
The Employer Brand is the identity of the company as an employer, internally and externally
promoting a clear view of what makes a firm different and desirable as an employer.
Employer Branding Goals
Topic Overview
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Establish an image of the employment experience.
Create synergy with consumer brand.
Align promise to customer with promise to employees
Employee value proposition (EVP) is the unique set of benefits that an employee
receives in return for the skills, capabilities, and experience they bring to a
company.
Human Resource Management
Employer Branding Steps
(5 Steps)
Topic 4 : Recruitment
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3.
4.
5.
Controlling Recruitment Method
Effectiveness
Understand the organization.
Create a compelling brand promise that mirrors your customer brand promise,
articulate your value proposition for employees.
Develop standards to measure the fulfilment of the brand promise.
Align all people practices supporting and reinforce the brand promise.
Execute and measure.
We can control the effectiveness of our recruitment method by collecting, processing, and
analysing:
⇨ The quality of hire by Recruiting Channel.
⇨ The 1st year performance by Recruiting Channel.
⇨ The 1st year turnover by Recruiting Channel.
⇨ The turnover cost of 1st year by Recruiting Channel.
Topic Overview
Human Resource Management
What’s Employee Selection?
Why is it important to have effective
Employee Selection methods?
Topic 5 : Selection
Selection is the process of choosing a qualified person for specific role who can successfully
deliver valuable contributions to the organization.
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Improves effectiveness of other HR practices.
Motivated employees can reduce disciplinary problems.
Maximizes productivity – Organizational performance.
Saves time.
Reduces turnover cost – Cost of Recruiting and Hiring.
Strategic Selection Decisions
Job / Person Fit
Seeks to match an individual’s abilities and interests with the demands of a specific job.
⇨ abilities & interests = demands of job.
Strategic Selection Decisions
Organization / Person Fit
Is concerned with how well the individual’s characteristics match the broader culture, values, and
norms of the firm.
⇨ individual’s characteristics = culture, values & norms of the firm.
Selection Instruments
Selection instruments are the tools used to find the optimal candidate for a specific job position.
⇨ Document Analysis.
o Cover letter
o C.V
o Application Form: Address, Education, Work Experience… (Provides a standardized
date base)
o Certificates and References (Contacting previous employers to learn more about
the applicant)
What are the four Interviewing methods?
⇨ Interviewing
o (Appraisal Interview) Formal discussion process between an employee and his/her
manager regarding performance and other aspects of job role
o (Exit Interview) Formal discussion process between a company and an employee
that we want to fire / that has decided to leave the business.
o Selection Interview. Decisions made on answers and impressions from non-verbal
behaviour. Allows providing information about the job, select qualified candidates,
learn about expectations, and discuss contact issues… (Validity: r= 0,51 – Schmidt
& Hunter 1998)
o Unstructured Interview. Documents, information, first impression, attractiveness
and gestures can influence interviewer’s predictions and assessment (Validity: r=
0,38 – Schmidt & Hunter 1998)
What are the different testing methods?
⇨ Testing
o Cognitive Ability Testing. Measures learning, understanding, reasoning, and ability
to solve problems. e.g., Intelligence, Mental Ability Tests, Wonderlic Cognitive
Ability Test…
o Tests Personality Testing. Measures patterns of thought, emotion, and behaviour.
Big 5 Personality: Openness to experience, Conscientiousness, Extraversion,
Agreableness, Neuroticism. e.g., Myers Briggs
o Physical Ability Testing. Assesses muscular strength, cardiovascular endurance,
and coordination
o Integrity Testing. Assess the likelihood that applicants will be dishonest or engage
in illegal activity Drug Testing.
Topic Overview
1
Human Resource Management
What are the steps for conducting a
Structured Interview?
Types of Interview Questions
What is Assessment Center?
Topic 5 : Selection
1.
Determine what to measure.
Job Analysis to determine KSA’s.
Focus on attributes that are critical for success.
2.
Write Questions.
Create behavioural and situational questions that measure attributes.
3.
Plan Evaluation.
⇨ Situational. What would you do in this situation?
⇨ Behavioural. Have you ever been in this situation? How did you overcome it?
⇨ Job Knowledge. Are you familiar with this software?
⇨ Stress. Ask questions that put the applicant under stress to see their behaviour.
⇨ Background. Ask questions to get a deeper knowledge about applicant’s background.
⇨ Assessment Center (Work Sample Testing)
o Measures performance on some element of the job.
o 1–3-day seminar where candidates are observed and assessed by managers and
experts. (Oral Presentation, Roleplays, Physiological tests, Group Discussions
with/without objectives, Simulation, In-Basket)
What are the goals in conducting an AC?
o
Goals are testing the participants:
Team skills
Communication skills
Decision-making ability
Analytic skills
Customer orientation
Leadership skills
Assertiveness
Persuasiveness
What are the steps for conducting an AC?
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Steps: Prepare / Conduct / Decide & Feedback
Testing the quality of Selection Instruments
When choosing specific selection method, we need to check that they are objective, reliable, and
valid.
⇨ Objectivity.
o Indicates whether results are independent from persons who handle the selection
instrument
o Are results independent from interviewer’s /test operator’s subjective judgments?
⇨ Reliability
o Indicates whether results are consistent for a person when retested with
identical/equivalent tests/instruments
o Are results stable over time?
⇨ Validity
o Indicates whether an instrument is measuring what it is supposed to measure
o Does the instrument measure what it is intended to measure (future job performance)?
⇨ Further Criteria
o Utility (Is the instrument cost effective?)
o Legality/Fairness (Is the instrument legal? Is it fair?)
o Acceptability (How will applicants react?)
Topic Overview
2
Human Resource Management
How do we structure Selection Decisions?
Topic 5 : Selection
o Predictor Weighting Approach
Combines a set of selection scores into an overall score in which some measures count more
than others.
o Minimum Cutoff Approach
Requires an applicant to have at least a minimum score on defined selection methods.
o Multiple Hurdle
Applicants must meet the minimum requirements of one selection method before they can
proceed to the next.
Which are the four Job Competencies?
Legal Liabilities
1.
Technical Competencies
KSA that enable somebody to conduct the functional tasks of a job independently.
(Familiarity with specific working tools)
2.
Methodological Competencies
KSA that enable somebody to plan and organize a job and to develop solutions and
implement them. (Excel Skills)
3.
Social Competencies
KSA that enable somebody to perform adequately regarding necessary
relationships to others. (Communication ability, ability to manage conflict…)
4.
Personal Competencies
KSA that express somebody‘s work related attitudes: personality features
important for success in the job. (Ambitiousness, flexibility…)
⇨ Defamation. Harming the reputation of another by making false statements.
⇨ Negligence.
Negligent referral: when a past employer fails to warn a potential employer of inherent
danger presented by a former employee.
Negligent hiring: failing investigating of an applicant’s background
Topic Overview
3
Human Resource Management
Topic 6 : Training & Development
What’s Training?
Training is providing learners with the knowledge and skills needed for their current jobs.
Destined to improve competencies and organizational performance.
What’s Development?
Development goes beyond the current job and has a more long-term focus. Qualifying and
empowering employees for future promotions / careers.
New Hire Orientation
New Hire orientation is the process of onboarding and welcoming a new hire. The process
facilitates familiarization with the organization, workflow, KPIs, and company policies resulting in
a more efficient integration of new hires.
o Shortens the time to full productivity.
o Contributes to longer employee retention.
KPI’s
Key performance indicators are a quantifiable measure of performance over time for a specific
objective.
What are the 5 KPI’s?
⇨ Revenue growth
⇨ Revenue per client
⇨ Profit margin.
⇨ Client retention rate.
⇨ Customer satisfaction.
Job Enlargement
Adding extra tasks and activities within the same level to an existing role. All tasks at same level
of responsibility.
Job Enrichment
Job enrichment is the process of adding motivators to existing roles in order to increase
satisfaction and productivity for the employee.
Job Rotation
Moving employees from one job to another to broaden their experience. Often required for
higher-level tasks.
Training Evaluation.
Kirkpatrick’s four levels of Evaluation
Model
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Reaction. Did they enjoy their training?
Learning. Did they learn from the training?
Behavior. Did they use and apply what they learn?
Results. Did the training impact the business?
(ROI. Did the training provide Return On Investment?)
Boundaryless Career
A boundaryless career differs from a traditional career in that individuals are deemed to not be
limited to working for one employer, in one job, in one organisation or even in one field of
expertise. A boundaryless career attitude is characterized by a high physical and/or psychological
mobility.
Protean Career
The protean career is a name given to describe a career that is driven by the individual and not by
the organization. A protean career attitude implies that a person strives towards a developmental
progression and self-fulfillment
Topic Overview
1
Human Resource Management
John Holland (1973) Career Type Model
Topic Overview
Topic 6 : Training & Development
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Conventional (Organizer) – Working with well-structured data
Enterprising (Persuader) – Lead, manage, influence.
Social (Helper) – Helping others, intrapersonal skills.
Artistic (Creator) – Unstructured challenges, creative solutions.
Investigating (Thinker) – Research, observe, analyse.
Realistic (Doer) – Concrete over abstract problems, working outdoors, physical jobs.
2
Human Resource Management
Topic 7 : Performance Management
What’s Performance Management?
Performance Management is about actually helping an employee to develop and increase his
performance and productivity.
What’s Performance Appraisal?
Performance appraisal evaluates the actual performance of the employee, but it does not focus
on the employee's performance productivity.
⇨ Measure work output and goal achievement
What are Performance Management
Systems?
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Performance Assessment (Appraisal)
Direction Sharing & Role Clarification
Goal Setting and Alignment
Ongoing Feedback, Coaching & Support
Performance linked Rewards, Recognition and Compensation.
Workload Management & Process Control
Ongoing Performance Monitoring
What are the functions of Performance
Appraisals?
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Motivates employees to improve / maintain performance.
Guides supervision.
Informs career planning.
Structures communications.
Contributes to optimal utilization of HR.
Who does the Appraisal?
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Clients.
Managers / Supervisor.
Subordinates.
Self-Rating.
Rating Committee.
What are the most common used Appraisal
Methods?
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Graphic Rating Scale. A graphic rating scale lists the traits each employee should have
and rates workers on a numbered scale for each trait.
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BARS. Behaviorally Anchored Rating Scale is a tool for evaluating employees in a
defined set of performance dimensions by comparing their behaviors with specific
behavior examples that anchor each performance level, usually on a five-, seven- or
nine-point scale.
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Alternation Ranking. Ranking employees from best to worst on a particular trait,
choosing highest, then lowest, until all are ranked.
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Forced Distribution. Form of employee evaluation in which employees are ranked
against one another rather than performance standards,
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Critical Incident Method. Analyses the behavior of employee in certain events in which
either he performed very well and the ones in which he could have done better. The
observer provides feedback in critical human behaviors, skills used, incidents that occur
on the job.
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MBO. Comprehensive & formal organization-wide goal-setting & appraisal program
Topic Overview
1
Human Resource Management
Topic 7 : Performance Management
What do SMART Goals mean?
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Specific
Measurable
Attainable
Relevant
Timely
What are some Appraisal Problems /
Errors?
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Hierarchy Effect
Emotional Rating
Focus on few Incidents
Low Rating for Low Challenge
Topic Overview
2
Human Resource Management
What is a Reward Strategy?
What are the two kinds of Rewards?
Topic 8 : Reward Management
Reward strategy involves designing and implementing reward policies and practices support your
organization’s objectives, delivering a motivated and effective workforce. Based on stimulus
contribution theory, we assume that rewards offered by the company stimulate contributions by
the employee.
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2.
Non-Financial. Training Opportunities, Career Opportunities, Leadership…
Financial (Direct & Indirect). Salary, Incentives & Benefits (Indirect compensation) (e.g.
health care benefits, sick leave, free meals, vacation, holidays, free gym subscription,
life insurance…)
How do we call the sum of all the rewards?
Total Rewards.
What is the most important thing when
creating a reward system?
Is important that the reward package is aligned with the company’s strategy so that it elicits
exactly those behaviors the company needs to realize its competitive strategy.
What is the requirement of a reward
system?
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Aligned
Legally compliant
Cost effective
Fair
Increase the company’s performance
Recognize employee’s performance
What questions should a company ask
itself when creating an aligned reward
strategy?
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What must our company do tofachieve its desired competitive position?
Which employee behaviors are necessary to implement the competitive strategy?
Which compensation programs can reinforce these behaviors?
How can we measure whether compensation programs are successful?
How well do current compensation programs perform against those measures?
Money Compensation
⇨ Base pay. Wages and Salary.
⇨ Merit pay.
⇨ Incentive pay.
⇨ Deferred pay. Payments that arrive with a time lag from the employee’s side. (e.g saving plan,
annuities…)
What is a Salary?
Determined on a month / annual basis and paid to employees.
What a Wage?
Determined and calculated on an hourly basis and paid to workers.
Topic Overview
1
Human Resource Management
How do you determine the salary that you
would pay an employee?
What are some salary determination
methods?
Job evaluation methods
Topic 8 : Reward Management
Jobs are normally priced by a collective agreement in large enterprises.
Entitlement Oriented / Performance Oriented
⇨ Job value
⇨ Requirements
⇨ Performance
⇨ Qualification
⇨ How well the job holder performs
⇨ Skills, competencies & qualification a job holder should have to perform the job.
⇨ How much the job is paid on the market.
⇨ How long the job holder has performed that job. (Seniority)
⇨ Where the job is in the organizational hierarchy. (Hierarchical status)
⇨ Social status.
⇨ Town or area where the job is located.
1.
2.
3.
4.
Job Ranking. Ranking jobs relative to others with regards to defined criteria.
Job Classification Method. Looking at the job description, grading the jobs. (Jobs can
fall into same grades)
Factor Comparison Method. Ranking tasks from most important to least important…
Point Method. Grading tasks looking at the job description. At the end a final grade
average of the job would be calculated.
What other factors can be accounted for?
Skills, effort, responsibility, working conditions…
What happens after we get the results of
the job evaluation?
Jobs are grouped in pay grades.
What is the Wage Curve and where is
used?
The Wage curve is the result of pricing pay grades in a chart.
What are Competencies?
Demonstrable characteristics of a person, including knowledge, skills, and behaviors, that enable
performance.
What is Competency-Based Pay?
Paying for the employee’s range, depth, and types of skills and knowledge, rather than for the job
title he/she holds
What’s the result of a competency Based
Pay?
Triggering the motivation of employees to acquire and develop competencies.
What are Pay Surveys?
Pay Surveys are a collection of data on compensations for employees / workers performing
similar jobs in other organizations.
What is the purpose of Pay Surveys?
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Creating market-price wages for job.
Creating companies’ compensation strategy
Topic Overview
2
Human Resource Management
Topic 8 : Reward Management
What is the ‘Meet the market’ Strategy?
They don’t want to pay one euro more than competitors and think that they will get the best
people available.
What is the ‘Lag the market’ Strategy?
People with required competencies are available in abundance / very low – common skills are
needed.
What is the ‘Lead the market’ Strategy?
Company pays more than competitors to get the best people available.
What is a Pay for Performance Plan?
Is an incentive plan / financial reward given only when certain performance result occurs.
What are Incentives?
Incentives are given in advance to motivate employees whose performance excess a
predetermined standard.
What’s the idea of Incentivising?
Motivate performance of employees
What’s Skinner’s behaviour modification?
This is a reinforcement theory.
o Rewards positive behaviors.
o Punish negative behaviors.
Vroom’s expectancy Theory?
Motivation is product of the expectancy that the effort will lead to performance x valence of the
outcome.
o M=ExV
o Managers can increase expectancy by training and building confidence.
o They can increase valence by attaching rewards to the outcome, given that the
outcome itself is not valuable to the company.
What’s Herzberg Motivation Two-FactorsTheory?
Suggested that satisfaction and dissatisfaction present two different dimensions.
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Hygiene motivators (Dissatisfaction – No Dissatisfaction): What frustrates you when
absent doesn’t make you happy when given. (e.g. salary, incentives…)
Motivation factors (Satisfaction – No Dissatisfaction) : What makes you happy when
given doesn’t frustrate you when absent. (e.g. challenge, recognition…)
Extrinsic Motivation
Motivation is driven by external factors. (e.g. promised rewards)
o People get accustomed by extrinsic rewards.
Intrinsic Motivation
Motivation is driven by internal factors. (e.g. joy…)
o More sustainable that extrinsic rewards.
What’s Daniel Pink’s theory of Intrinsic
motivation?
Autonomy + Mastery + Purpose = Intrinsic Motivation.
Topic Overview
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Human Resource Management
What are three Incentive & Recognition
plans for an individual employee?
Topic 8 : Reward Management
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Merit Pay: Better the performance higher salary.
o Can be cumulative or permanent.
o Are tied to the companies organizational performance is down.
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Incentives: Bonuses, stock options, improved pension plans… are linked to
performance.
3.
Recognition-based awards: Social recognition linked with financial rewards. (e.g
employee of the month)
What are Team-Based Variable Pay Plans?
Reinforce team planning, team spirit and problem solving. But it can be a con, when not
proportional to efforts.
It can be:
o Equally distributed equally to all members.
o Distributing according to individual outcomes
o Team leader decides
What are sales compensation plans? What
types there are?
A sales compensation plan lays out how you are going to pay different salespeople for their
contribution to the business.
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What are organization incentive plans?
Straight Salaries: Pay independent of sales result.
Commission: Pay percentage of sales result.
Combination: Combination of salary & commission.
Profit Sharing Plans:
o Cash plans: Once a year shared with the employees.
o Profit-Based: Tying it to based salary.
o Deferred Profit-Sharing Plans: A predetermined proportion is placed in employee’s
account under a trustee’s supervision.
Employee Stock Ownership: Firm annually contributes own stock so employees develop and
sense of ownership and commitment to the company.
What’s the comp-to-comp method of profit
sharing?
What is the criteria for Incentive plans?
Calculation formula for a cash plan where a part of the company’s profit is shared and tied
to the base salary of employees.
Using this calculation, an employer derives the sum of all its employees' compensation.
To determine what percentage of the profit-sharing plan an employee is entitled to, the
company divides each employee's annual compensation by the sum of the total
compensation.
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Incentives must be linked to strategy
Reward must be related to efforts
Plan must be transparent and easy to understand
Employees must accept and support the plan
Plan must be treated like a contract
Plan must emphasize long-term as well as short-term success
Topic Overview
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Human Resource Management
What are methods to address equity issues
for fair pay?
Topic 8 : Reward Management
Internal Equity: Work more / harder / have more responsibility earn more.
Individual Equity: He who achieves more, earns more. (e.g., performance appraisal & incentive
pay)
External Equity: An employee earns approximately the money stated on salary surveys (e.g.,
actors, singer, professional football players…)
Procedural Equity: Possible to complaint about compensation.
Equity in General: Participating & communicating in respective systems development.
Topic Overview
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Human Resource Management
Topic 9 : Retention Management
What is Employee Turnover?
Is the rate in which an employee leaves an organization.
What are the two different classifications
of turnover?
Voluntary: Refers to employees who willingly choose to leave organization
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Functional: Loss of such employees does not impact effectiveness of organization.
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Dysfunctional: Turnover of top performers whose performance has direct impact on
the profitability of organization.
⇨ Avoidable: Voluntary turnover that originates from causes that
organization can influence.
⇨ Unavoidable: voluntary turnover stemming from causes, over which
organization has no control.
Involuntary: Refers to discharge or termination of employees by the organization.
How is Employee turnover measured?
Employee Turnover Index
What are the main cons of employee
turnover?
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Is costly. (e.g., damaged employee-customer relationship)
Affects business performance.
Replacement is challenging. (e.g., millennial workforce tends to shift jobs quickly to
advance in their careers.)
What are the factors affecting the cost of
employee turnover?
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Direct cost (DC) of recruiting a replacement. (e.g., ads, interviews…)
DC of introducing / training replacement
DC of processing leaving cost
Opportunity Cost (OC) of time spent finding a replacement
Loss output for delays / lost employee leaving sooner.
Loss output new starters on their learning curves.
What is risk determination calculation?
What are the reasons why an employee
leave?
Risk = Product of Probability x Loss/Damage
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Poor Selection (e.g., unclear descriptions, unprepared interviews, wrong tools…)
Salaries
Poor career perspectives
Bad Management
Boring Job
Scarce development opportunities
Internal Communication
Personal Issues
Bas Interpersonal Relations
Labor Market
Topic Overview
1
Human Resource Management
What can we do against voluntary
turnover?
Topic 9 : Retention Management
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What are factors affecting retention?
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Employee surveys. To check employees morale and implement an action plan.
Socialization. Facilitate integration in the company.
Perception of organizational Support. Supporting the employee in contrary to maybe
their future employer (e.g., advising to take a sabbatical year…)
Teamwork. Make a good team environment to stand out for each participant.
Exit Interviews. Conducting an interview to collect data about why employees leave for
counteracting.
Company image.
The employee value proposition - Working position, working environment…
Poor job allocation process.
Bad leadership quality.
Career / learning opportunities.
Performance recognition and rewards.
What areas can we act on to avoid those
factors affecting retention?
Review / revise:
o Selection and promotion procedures to make sure that there is a match of employee’s
capacities and workforce demands.
o Design job to maximize skill variety, control over work task…
o Reduce losses of the people who can adjust to new jobs. (e.g., induction crisis)
o Deal with unfair pay systems.
o Eliminate unpleasant working conditions.
o Select good team leaders.
What is employee satisfaction / desatisfaction in organizational behaviour?
Positive and negative perceptions of the job and specific elements of the job (job content,
interpersonal relations, availability of tools necessary to do the job) (e.g., tools, salary,
environment…)
What is employee commitment in
organizational behaviour?
Positive or negative connection to job, team, organization, or goal. It constitutes a major attitude
and results loyalty and ‘doing the extra mile’ (e.g., commitment, pride, job purpose…)
Which are the forms of Organizational
Commitment?
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Continuance Commitment: Employee cannot afford to leave due to economic reasons.
Normative Commitment: Faces pressure from others to stay.
Affective Commitment: A agrees with the organization and desires to remain
wholeheartedly.
Topic Overview
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