Organizational
Behavior, 8e
Schermerhorn, Hunt, and
Osborn
Prepared by
Michael K. McCuddy
Valparaiso University
John Wiley & Sons, Inc.
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Organizational Behavior: Chapter 7
2
Chapter 7
Human Resource Management Systems
 Study questions.
– What are the essentials of human resource
strategy and practice?
– What is training and career planning and
development?
– What is performance appraisal?
– What are rewards and reward systems?
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Human resource (HR) strategic planning.
– The process of providing capable and
motivated people to carry out the
organization’s mission and strategy.
– A key element is the staffing function, which
consists of:
• Recruitment.
• Selection.
• Socialization.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Job analysis.
– Staffing begins with job analysis.
– The process and procedures used to collect
and classify information about tasks the
organization needs to complete.
– Identifies the worker characteristics needed to
perform the job.
– Forms the basis for a job description and job
specifications.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Recruitment.
– The process of attracting the best qualified
individuals to apply for a given job.
– Typical recruitment steps.
• Advertisement of a position vacancy.
• Preliminary contact with potential job candidates.
• Preliminary screening to obtain a pool of
candidates.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Recruitment approaches.
– External recruitment.
– Internal recruitment.
– Realistic job previews.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Selection.
– A series of steps from initial applicant
screening to final hiring of the new employee.
– Selection process.
•
•
•
•
•
Completing application materials.
Conducting an interview.
Completing any necessary tests.
Doing a background investigation.
Deciding to hire or not to hire.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Completing application materials.
– Gathering information regarding an applicant’s
background and experiences.
– Typical application materials.
• Traditional application forms.
• Résumés.
• Sometimes tests may be included with application
materials.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Conducting an interview.
– Typically used though they are subject to
perceptual distortions.
– Interviews can provide rough ideas concerning
the person’s fit with the job and the
organization.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Completing any necessary tests.
– Administered before or after the interview.
– Common examples of employment tests.
• Cognitive, clerical, or mechanical aptitudes or
•
•
•
•
abilities.
Personality.
Drug use.
Performance.
Assessment centers.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Doing a background investigation.
– Can be used early or late in selection process.
– Background investigations include:
• Basic level checks.
• Reference checks.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Deciding to hire or not to hire.
– Draws on information produced in preceding
selection steps.
– A job offer is made.
– A physical examination may be required if it is
relevant to job performance.
– Negotiation of salary and/or benefits for some
jobs.
Organizational Behavior: Chapter 7
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What are the essentials of human
resource strategy and practice?
 Socialization.
– The final step in the staffing process.
– Involves orienting new employees to:
• The firm.
• The work units in which they will be working.
• The firm’s policies and procedures.
• The firm’s organizational culture.
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 Training.
– A set of activities that provides the opportunity
to acquire and improve job-related skills.
– Types of training.
• On-the-job training.
• Apprenticeships.
• Job rotation.
• Off-the-job training.
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 Career planning and development.
– Focus is on the long term.
– Individuals work with their managers and/or
HR experts on career issues.
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 Framework for formal career planning.
– Personal assessment.
– Analysis of opportunities.
– Selection of career objectives.
– Selection and implementation of plan.
– Evaluation of results and revision of plan as
necessary.
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 Career planning and development
implications.
– The nature of work is changing and
continuous learning is required.
– People must take charge of their own careers
and build a portfolio of skills.
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 When considering a new job or possible
job change, a person should ask and
answer two questions.
– What are my potential gains and losses?
– What are the potential gains and losses for
significant others?
Organizational Behavior: Chapter 7
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What is training and career
planning and development?
 Traditional career paths.
– Entry and establishment.
• Involves on-the-job development of relevant skills and
abilities.
– Advancement.
• The individual seeks growth and increased responsibility.
– Maintenance, withdrawal, and retirement.
• Individuals may experience continued growth of
accomplishments or may encounter career stability.
• At some point, individuals consider withdrawal and ultimate
retirement.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Performance appraisal.
– A process of systematically evaluating
performance and providing feedback upon
which performance adjustments can be made.
– Performance appraisal should be based on job
analysis, job description, and job
specifications.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Functions of performance appraisal.
– Define the specific job criteria against which
performance will be measured.
– Measure past job performance accurately.
– Justify rewards, thereby differentiating
between high and low performance.
– Define ratee’s needed development
experiences.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Purposes of performance appraisal.
– The four functions describe two general
purposes of good performance appraisal.
• Evaluation.
• Feedback and development.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Evaluative decisions.
– Concerned with issues regarding:
•
•
•
•
Promotions
Transfers.
Terminations.
Salary increases.
– When these issues are decided on the basis of
performance, a performance appraisal system
is needed.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Feedback and development decisions.
– Letting ratees know where they stand in terms
of expectations and performance objectives.
– Feedback should involve a detailed discussion
of the ratee’s strengths and weaknesses.
– Feedback can be used as a basis for coaching
and training by the manager.
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What is performance appraisal?
 Who does the performance appraisal?
– Ratee’s immediate superior.
– Ratee’s peers.
– Ratee’s subordinates.
– 360-degree evaluation.
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What is performance appraisal?
 Dimensions and standards of performance
appraisal.
– Output measures.
• Quantity of work output.
• Quality of work output.
– Activity measures.
• Behavioral measures that are typically obtained
from the evaluator’s observation and rating.
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What is performance appraisal?
 Performance appraisal methods.
– Comparative methods.
• Seek to identify a person’s relative standing among
those people being rated.
– Absolute methods.
• Specify precise measurement standards.
– Collectivist-oriented cultures are less likely to
use comparative methods and more likely to
use absolute methods.
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What is performance appraisal?
 Comparative methods of performance
appraisal.
– Ranking.
– Paired comparison.
– Forced distribution.
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What is performance appraisal?
 Ranking.
– Consists of rank ordering individuals from
best to worst on each performance dimension.
– Relatively simple to use.
– Can be burdensome when evaluating a large
number of people.
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What is performance appraisal?
 Paired comparison.
– Each person is directly compared with every
other person being rated.
– Final performance ranking reflects the
frequency of endorsement across all pairs.
– Can be very tedious when many people must
be compared.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Forced distribution.
– Uses a small number of performance
categories, and rater assigns a specific
proportion of employees to each category.
– Forces rater to use all categories.
– Can be problematic if most of the employees
perform similarly.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Absolute methods of performance
appraisal.
– Graphic rating scales.
– Critical incident diary.
– Behaviorally anchored rating scales.
– Management by objectives.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Graphic rating scales.
– List of dimensions related to high
performance, and the rater assigns an
individual score on each dimension.
– Easy and efficient to use.
– Conundrum of job relevance and generality
across jobs.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Critical incident diary.
– Record of incidents of each subordinate’s
behavior that led to unusual success or failure
in a give performance aspect.
– Excellent for development and feedback due
to qualitative emphasis.
– Difficult to use for evaluation due to lack of
quantitative emphasis.
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What is performance appraisal?
 Behaviorally anchored rating scales
(BARS).
– Developed through the careful collection of
observable job behaviors that describe both
superior and inferior performance.
– A rating scale is developed that anchors
specific critical behaviors, each of which
reflects a different degree of performance
effectiveness.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Behaviorally anchored rating scales
(BARS) — cont.
– Provides specific behaviors that are useful for
counseling and feedback.
– May not be as superior as once thought.
– The Behavioral Observation Scale (BOS) is a
simpler variation of BARS.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Management by objectives (MBO).
– Subordinates work with their supervisor to
establish specific task-related objectives.
– MBO is the most individualized appraisal
method .
– MBO works well with counseling, provided
the goals focus on important activities.
– MBO is not highly subjective to rating errors.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 To be meaningful, an appraisal system must be:
– Reliable — provide consistent results across time.
– Valid — actually measure people on relevant job
content.
 Measurement errors can threaten the reliability or
validity of performance appraisals.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Measurement errors in performance
appraisal.
– Halo errors.
• The rater evaluates the ratee on several different
dimensions and gives a similar rating for each
dimension.
– Leniency errors.
• Raters tend to give everyone relatively high
ratings.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Measurement errors in performance
appraisal — cont.
– Strictness errors.
• Raters tend to give everyone relatively low ratings.
– Central tendency errors.
• Raters lump everyone together around the average
or middle.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Measurement errors in performance
appraisal — cont.
– Low differentiation errors.
• Raters restrict themselves to a small part of the
rating scale.
• Examples include leniency, strictness, and central
tendency errors.
– Recency errors.
• Raters allow recent events to exercise undue
influence on ratings.
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What is performance appraisal?
 Measurement errors in performance
appraisal — cont.
– Personal bias errors.
• Raters let personal biases, such as stereotypes,
unduly influence the ratings.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Rating errors can be reduced and performance
appraisals improved by:
– Training raters to understand the evaluation process
–
–
–
–
and recognize errors.
Ensuring that raters observe ratees on an ongoing
basis.
Not having the rater evaluate too many ratees.
Ensuring the clarity and adequacy of performance
dimensions and standards.
Avoiding terms that have different meanings for
different rates.
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What is performance appraisal?
 Guidelines for ensuring the legality of
performance appraisal systems.
– Base appraisal on job requirements as
reflected in performance standards.
– Ensure that employees clearly understand the
performance standards.
– Use clearly defined dimensions.
– Use behaviorally-based dimensions supported
by observable evidence.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Guidelines for ensuring the legality of
performance appraisal systems — cont.
– Avoid abstract trait names.
– Ensure that scale anchors are brief and
logically consistent.
– Ensure that the system is valid and
psychometrically sound.
– Provide an appeal mechanism to handle
appraisal disagreements.
Organizational Behavior: Chapter 7
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What is performance appraisal?
 Group evaluation.
– Group or team performance appraisal is
consistent with:
• Self-managed teams.
• High performance organizations.
– Frequently accompanied by a group-based
compensation system.
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What are rewards and reward systems?
 Types of rewards.
– Extrinsic rewards.
• Positively valued work outcomes given by some
person or source in the work setting.
– Intrinsic rewards.
• Positively valued work outcomes received directly
from task performance.
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What are rewards and reward systems?
 Pay as an extrinsic reward.
– Positive aspects of pay.
• Helps firms attract and retain capable workers.
• Helps satisfy and motivate workers.
– Negative aspects of pay.
• Dissatisfaction with pay can lead to strikes,
grievances, absenteeism, turnover, and poor
physical and mental health.
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What are rewards and reward systems?
 Pay as a source of motivation.
– High job performance must be viewed as the
path for achieving high pay.
– Merit pay is a method for connecting
performance and pay.
– Merit pay makes pay contingent on job
performance.
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What are rewards and reward systems?
 To be effective, merit pay should:
– Use realistic and accurate performance
measures.
– Create a strong linkage between high
performance and high pay.
– Discriminate between high and low
performers in amount of pay.
– Not be confused with cost-of-living
adjustments.
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What are rewards and reward systems?
 Creative pay practices.
– Merit pay plans do not recognize employee
interdependence, and are thus inconsistent
with the demands of HPOs.
– Pay practices should be consistent with:
• The demands of HPOs.
• The HR and overall organizational strategies.
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What are rewards and reward systems?
 Types of creative pay practices.
– Skill-based pay.
– Gain-sharing plans.
– Profit-sharing plans.
– Employee stock ownership plans (ESOPs).
– Lump-sum pay increases.
– Flexible benefit plans.
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What are rewards and reward systems?
 Skill-based pay.
– Rewards people for acquiring and developing
job-relevant skills.
– Advantages.
• Employee cross-training.
• Fewer supervisors needed.
– Disadvantages.
• Higher pay and training costs.
• Establishing appropriate monetary values for skills.
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What are rewards and reward systems?
 Gain-sharing plans.
– Workers share in enhanced earnings resulting
from productivity gains.
– Advantages.
• Increased worker motivation.
• Greater sense of personal responsibility.
• Encourages participation and teamwork.
Organizational Behavior: Chapter 7
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What are rewards and reward systems?
 Profit-sharing plans.
– Reward employees based on entire
organization’s performance.
– Not connected to productivity gains.
– Often fund employee retirement plans.
• Considered to be a benefit rather than an incentive.
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What are rewards and reward systems?
 Employee stock ownership plans (ESOPs).
– Based on total organization’s performance.
– ESOP options.
• Stock may be given to employees.
• Employees may purchase stock at a below-market price.
– Advantage.
• Nontaxable to organization until redeemed by employees.
– Disadvantage.
• Risk of stock investments.
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What are rewards and reward systems?
 Lump-sum pay increases.
– Individuals elect to receive a pay increase in
one or more lump-sum distributions that
increase the base salary.
– Lump-sum payments — which differ from
lump-sum increases — are one-time bonus
payments that do not increase the base salary.
Organizational Behavior: Chapter 7
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What are rewards and reward systems?
 Flexible benefit plans.
– Fringe benefits are indirect incentives.
– Plans accommodate individual differences to
capitalize on motivational value of benefits.
– Plans allow workers to select benefits
according to their needs.
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