HR final Review
December 8, 11
CH 8:Performance Measurement and Feedback
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Performance Management-the process of measuring and providing feedback about
employee contributions to the organization
Measuring Performance
o Merit-based System-specifically seeks to identify and recognize contributions of
high performers (differentiation-free agent &committed expert)
 Relative Measures-performance ratings that assess an employees
contributions with the contributions of other performers
 Forced Distributions (rankings)-spread out ratings by requiring raters to
place a certain percentage of employees in each category
o Parity-based System-seeks to identify/recognize contributions from all employees
without elevating some above others, encouraging cooperation (cost leadersbargain laborers & Loyal Soldiers)
 Absolute Measures-performance ratings that assess an employees
contributions in comparison to a fixed standard or benchmark
 Free Distribution-allows raters to place as many employees as they wish
into each rating category
Job Performance-the contributions that individuals make to the organization
o Task Performance-employee behavior that directly contributes to producing
goods and services
o Citizenship Behavior-employees behavior that helps others and creates a positive
work environment
 Org Citizenship Behavior-positive employee actions aimed at helping the
organization succeed
 Counterproductive performance-employee behavior harmful to org
 Production Deviance-aimed at reducing the speed and accuracy of
production processes
 Property Deviance-aimed at destroying assets of the org
 Political Deviance-designed to harm performance and careers of
others (ex: favoritism)
 Personal aggression-seek to personally harm coworkers
Performance Appraisal-the process of measuring what employees contribute to org
(purpose of appraisals=strategic, administrative, and developmental)
o Objective Measures-numerical and based on counts of behaviors/outcomes
o Subjective Measures-represent judgments made by raters
o Management by Objectives a system that seeks to align employees' goals with the
goals of the organization.
Performance Methods
o Rankings
 Forced Ranking-ask raters to directly compare the contribution of an
employee to the contribution of other employees (20-70-10)
 Forced Distribution-combines a graphic rating with forced ratings (must
rank employees but allows for everyone to get the same rating)
 Paired Comparison-compare two different employees
o Ratings
 Narrative Rating-asks raters to provide a written description of employee
performance
 Graphic Rating-provides a numerical score for an employee on each of
several performance dimensions
 Attributes
 Behaviors
 Critical Incidents-agents identify instances of effective and ineffective
behavior exhibited by people in a specific position
 Behaviorally Anchored Rating Scales (BARS)- focuses on behaviors that
are determined to be important for completing a job task
 360-degree (Multi-source)-obtained from a variety of raters
o Common problems with performance measures
 Rater bias-rater unfairly provides lower ratings to certain groups of
people such as women and minorities
 Situational Influences-factors that affect performance but that are outside
the control of the employee being rated (ex: office rules)
 Changes over time-performance may not be consistent over time
 Rater Errors
 Rater Error/similar to me error/likeness error- high rating given to
an employee based on their personal or professional similarities to
the interviewer.
 Central Tendency Error-raters give almost all employees scores in
the middle of the scale
 Contrast Error-rater unknowingly allows comparisons among
employees to influence ratings
 Halo/Horns Error-raters allow general impression (good or bad) to
influence ratings on specific dimensions
 Recency/Primacy Error-place too much emphasis on performance
observed right before/at the beginning of when measure is taken
CH 9:Training
 Training-a planned effort to help employees learn job-related knowledge (memory of
facts/principles), skills (proficiency at particular act), & attitudes (committed expert and
loyal soldiers), training on business strategy (ALL)
 Bargain Laborer-emphasis on hiring new employees with desired skills,
training focused on reducing costs and improving efficiency
 Free Agent-emphasis on hiring new employees with desired skills
(external), training focused on providing superior service/innovation
 Loyal Soldier-emphasis on training existing employees (internal), training
focused on reducing costs and improving efficiency (cost)
 Committed Expert-emphasis on training existing employees (internal),
training focus to provide superior service/innovation (differentiation)
 Systematic Process-three fundamental components to training
1. Needs Assessment-process to determine what training to offer and who needs it
 Proactive Training-staying ahead of the curve by training initially
o Organizational Analysis-process to identify the characteristics of the
org environment that will influence effectiveness of training
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Training Climate-environmental factors that support training
(include policies, rewards, actions of management)
o Task Analysis-process used to describe work activities of employees
including the knowledge and skills required to complete those
activities (“subject matter expert”)
o Person Analysis-process used to identify who needs training and what
characteristics of individuals will influence effectiveness
 Reactive Training-problem solving process used to determine whether
training is necessary to fix a specific performance problem
1. Problem definition-gap between desired and actual performance
2. Causal Analysis-used to determine underlying cause of problem
3. Solution Implementation
2. Design & Delivery-content (message), methods, & media (how its delivered)
 Presentation-straight forward content in non-interactive fashion
 Discussions-two way communication between trainer and trainee
 Case Study-discuss, analyze, and solve problems based on real or
hypothetical situations
 Discovery- (experimental) present trainees with a task to learn new skills
 Role Play-participants act out part in a simulated situation (practice skills)
 Simulation-reproduce events, process, and circumstances that occur in the
trainees jobs (puts you into situation)
 Behavioral Modeling-observe model and then practice learned skill
 On the job-most common! (Best is structured and systematic)
 Orientation-2nd most common
3. Evaluation-how successful was training?
 Reactions-satisfaction evaluations
 Learning-how much was learned (new knowledge, skills, and attitudes)
 Transfer-amount of applied training to workplace (hard to assess)
 ROI- Monetary Value of training/costs of delivering training (1/2 mil to
develop training, 1 mil/year saved as result (benefits vs cost))
Common Training Programs
o On-the-job training
o Orientation-socialization of new employees
o Diversity
o Ethics training-“road map”, helps employees to recognize that ethical standard
CH 10:Development
 Employee Development-activities that influence personal and professional growth
o Career Development-activities that help people manage the progression of their
work experiences across their lives
 Developmental Strategies
o Bargain Laborer-focus on low cost development for external labor market
o Free Agent-focus on developing skills needed for high-level service and
innovation, development to attract external labor market
o Loyal Soldier-focus on low cost development of existing employees
o Committed Expert-focus on developing skills needed for high-level service and
innovation, develop skills of existing employees
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Development Approaches
1. Formal Education-courses, certifications, and licenses
 Courses-help employees learn a particular set of skills that are likely to be
relevant to future work
 License-legally required designation of competence within a professional field
 Certification-optional designation of competence within a professional field
 Executive education-series of short courses
2. Assessment/Feedback-collecting info and providing feedback
 World of Work Map-two dimensions, do people prefer to work with ideas/data or
with people/things (link interests to wide variety of occupations)
 Holland Typology (most widely used)-classification of peoples interests, values,
and skills, and of job environments to identify personality time (people will be
more satisfied in jobs that closely match with their characteristics)
 General Career Assessments
 Assessment Centers
 Communication Style
 Leadership Style
 Multi-source (360-degree)-developmental feedback by a number of sources
3. Work Experiences-enrich employees
 Job Enrichment-the addition of challenges/new responsibilities to jobs
o Lateral Move-change in duties w/o increase in pay or responsibilities
 Job Rotations-time-limited assignment for the purpose of helping
employees develop new skills and knowledge
 Job Transfer-permanent assignment for the purpose of helping
employees develop new skills and knowledge
o Upward Move (promotion)-increase in responsibility, pay, status
o Downward Move (demotion)- decrease in responsibility, pay, status
4. Developmental Relationships-coaching and mentoring
 Coaching-person works with others to equip them with the tools, knowledge, and
opportunities that need to become more effective (specific skills)
 Mentoring-an experienced person helps less experienced person learn/grow (can
be formal or informal mentoring)
Integrating Developmental Efforts with company’s strategy and goals
o Competency Model-developed to indicate what types of knowledge, skills, and
behaviors will help the organization accomplish its strategy
o Career Development Process-steps used to pursue long-term goals
Career Development Challenges
o Glass Ceiling-women and minorities invisible barrier to moving up to senior
positions (developing a diverse workforce)
o Lack of effective succession planning-who’s a high performer and is there a
system in place?
o International Assignments-from pre departure to repatriation
o New employee orientation
o Helping employees balance work and personal life
o Reducing burnout
CH 11:Compensation
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Employee Compensation-the human resource practice of rewarding employees for their
contributions (total package of rewards)
o Market-base Pay-determines how much to pay employees by assessing how much
they could make working for other organizations
Linking compensation with strategy
o Equity: External VS Internal
 External Equity-employees perception of fairness based on how much
they are paid relative to people working in other organizations
 Internal Equity-employee perception of fairness based on how much they
are paid relative to others working in the same organization
o Rewards: Uniform VS Variable
 Uniform Rewards (cost)-reward system that minimizes differences among
workers and offers similar compensation to all employees
 Variable Rewards (differentiation)-reward system that pays the same
employees substantially more than others in order to emphasize
difference between high and low performers (based upon merit)
o Commitment: Relational VS Transactional
 Relational Commitment-a sense of loyalty to an org that is based not only
on financial incentives but also on social ties (internal)
 Transactional Commitment-a sense of obligation to an org that is created
primarily by financial incentives (external)
o Pay Level-compensation decision concerning how much to pay employees
relative to what they could earn doing the job elsewhere
 Lag-the-market Strategy (bargain laborer)
 Meet-the-market Strategy (loyal soldier)
 Lead-the-market Strategy (free agent & committed expert)
Strategies
o Uniform Transactional-bargain laborer (short term and little difference in pay)
o Uniform Relational-loyal soldier (long term, pay increases linked with time)
o Variable Transactional-Free Agent (short term, strong monetary incentives for
high performers) “salary compression”-new employees receive higher pay
o Variable Relational-Committed expert (long time and pay for performance)
Pay Can:
1. Reduce attention to task at hand
2. Signal that work is work, not fun, interesting, engaging=reduced motivation
3. Signal that our organization values us, increasing job satisfaction, commitment,
retention, and motivation
Motivation-the sum of forces that cause an individual to engage in certain behaviors
rather than alternative actions
o Reinforcement Theory-people are motivated by antecedents (environmental cues)
and consequences (rewards and punishments)
 Contingency (pay for performance)-desirable consequences only given
after occurrence of desirable behavior
o Goal Setting Theory-persons conscious choices explain motivation (SMART)
o Justice Theory-motivation is driven by beliefs about fairness
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Equity Theory-people determine fairness of their pay by comparing what
they give/receive from the org with what others give/receive
 Distributive Justice-fairness view based on outcomes (ex: pay)
 Procedural-fairness view based on processes used to allocate
outcomes used by org
o Expectancy Theory-people are motivated by a combo of three believes: Valence,
instrumentality, and expectancy (all 3 must be present=motivation)
 Expectancy-if I try hard I can achieve desired level of performance
 Instrumentality-achieving this level will lead to reward
 Valence-I value the reward
o Agency Theory-economic theory that uses differences in the interests of the
principles (owners) & agents (employees) to explain reaction to compensation
(align interests of agents and principles, ex: wage rates should be higher when
employees bear risk)
Legal Regulations
o Fair Labor Standards Act (FLSA)-formed during great depression, governs
compensation practices and helps ensure fair treatment of employees
 Exempt Employees-paid by salary, not hourly (NOT covered)
 Nonexempt Employees-hourly wage workers (rules apply)
 Established overtime (>40 hours=time + ½), child labor, and equal pay
 Equal Pay Act-amendment to FLSA that requires orgs to pay equal wages
for equal work regardless of gender
o Title VII-portion of Civil Rights Act (1964) focus on employee discrimination
CH 12: Compensations and Benefits
 Compensation packages-the mix of salary, benefits, and other incentives that employees
receive from the organization
 Strategy and compensation
o At-risk Pay-compensation where the amount varies across pay periods depending
on performance (“motivation higher with some at risk pay”)
 Differentiation Strategies-committed expert & free-agent
o Line of sight-the extent to which employees can see that their actions influence
the outcomes used to determine whether they receive a particular reward (ex:
group project vs individual)
o Pay scale & market
 Lag the market-Bargain Laborer
 Meet the market-Loyal Soldier
 Lead the market-Committed expert and free agent
 Elements of compensation
o Base Pay-compensation that is consistent across time periods and not directly
dependent on performance level (hourly wage or annual salary)
o Employee Benefits-rewards other than salary and wages
o Individual Incentives-rewards dependent on the performance of the individual
employee (at risk and line of sight)
o Group Incentives-rewards dependent on the collective performance of a group of
employees (distant line of sight)
o Organizational level rewards-profit sharing and stock ownership
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Common Employee Benefit Plans
o Required by Law-mandated by government regulations
 Social Security-federal program that requires workers to pay into a
retirement fund, from which they draw when they reach certain age
 Unemployment Insurance-a network of state-mandated insurance plans
that provide monetary assistance to workers who lose their job through no
fault of their own
 Workers Compensation-state programs that provide workers and families
with compensation for work related injuries
 Unpaid Leave
o Discretionary Benefits-used as a tool to attract employees (optional)
 Health Insurance-plan that provides workers with medical services
 Health Maintenance Org (HMO or PPO)-plan under which
provider receives a fixed amount for providing necessary services
to the individual enrolled (aka: “managed care”)
 Health Savings Account (HAS)-a personal savings account
(employer pays) that an employee uses to pay healthcare costs
 Life Insurance-pays benefits to family members or other beneficiaries
when an insured person passes away
 Disability Insurance-provides benefits to individuals who develop mental
or physical conditions that prevent them from working
 Retirement Savings- (in addition to social security)
 Defined Benefit Plan-organization provides a retired individual
with a fixed amount of money each month (based on the number
of years of employment and pay upon retirement)
 Defined Contribution Plan-employer and/or employee contribute
to a fund for which only the contributions are defined and benefits
vary according to the amount accumulated in the fund upon
retirement, money collected each month (not fixed, depends on
how the money is invested)
 Paid Leave (pay w/o work)-vacation, sick days, holidays, personal day
 Lifestyle Benefits –ex: flexible schedule
Incentive Pay
o Individual Rewards-work for “free-agents”
 Piece-rate-employee is paid a certain amount for each piece of output
 Commission-employee paid a percentage of sales revenue that he/she
generates (greater commission based =more incentive to close sale)
 Merit pay increase-increases to employees salary based on performance
(“pay for performance”)
 (Merit) Bonus-one time payment to individual w/ high performance
o Group Rewards-work for “loyal soldiers”
 Group-based bonus- supervisor observers high collective performance
(goal based team reward vs discretionary team bonus)
 Gainsharing-rewards groups of employees for working together to reduce
costs and improve productivity
o Organizational-Level Rewards
 Profit Sharing-organizational wide program under which a portion of orgs
profits are shared
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Stock Ownership
 Stock Plan-give employees company stock (ownership interest)
 Stock Options-gives employees the right to purchase company
stock at a specified price in the future
 Employee Stock Ownership Plans (ESOPs)-org sets up a trust
fund to manage company stock given to employees
CH 13: Labor Relations
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Labor Union-an organization representing the collective interests of workers
o Primary objectives of a union
1. Provide employee security and long-term employment
2. Secure fair wages and benefits for all workers
o Labor Relations-the dealings the result from interactions between a labor union
and an employer
Labor Unions and Strategyo Loyal Soldier-labor union support and long term orientation & equality
o Committed Expert-misfit between labor unions and innovation
o Free Agent-labor unions create problems for short-term orientation and employee
differentiation
o Bargain Laborer-short-term orientation and few labor unions
Governmental Influences
o Railway Labor Act (RLA) Federal law passed in 1926 to regulate the relationship
between railroad companies and unions
o Wagner Act- (1935) (National Labor Relations Act (NLRA)
 Provided employees with the express right to organize unions
 Historical Timeframe- created during the Great Depression
 Gave too much power to the unions
 Created the “National Labor Relations Board” (NLRB)- 5 members
appointed by president to enforce Wagner Act
 Unfair Labor Practices-prohibited acts by employees or unions
1. Threatening employees with loss of jobs/benefits if they join
2. Threatening to close a plan if union is organized
3. Questioning employees about union activities or membership
4. Spying on union gathering
5. Granting wage increases deliberately timed to discourage
employees from forming a union
 Protected Activities
 Collective action-banding together
 Union organizing
 Joining a union
 Going on strike
 Collective bargaining
o Taft-Hartley Act (1947)-Regulates union activities and requires unions to bargain
in good faith (aka: Labor Management Relations Act)
 Neutralized power-shifted power back toward management interests by
creating a list of unfair labor practices for unions
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Unfair labor practices for unions list
1. Mass picketing in numbers physically bar others from entering
2. Threatening bodily injuries or loss of job to other employees
3. Entering a contract with an employer when majority of employees
have not chose the union
4. Fining/expelling members for filing unfair labor changes
o Landrum-Griffin Act (1959) prevents corruption and regulates internal union
affairs (requires reports on inner workings of unions)
Union Organizing
o Authorization Card Campaign-employees of labor union representatives seek
signatures from employees requesting a vote for union representation (30% of
bargaining unit must have signed cars)
 Bargaining Unit-group of employees within an organization who are
represented by a particular labor union (similar employees)
o Certification Election-NLRB conducts union certification secret-ballot and union
becomes certified if 50% of bargaining unit vote in favor
 Objection-management or union can file objection within 7 days
o Decertification Election-an election to remove a unions authorization to represent
employees (need 30% support from bargaining unit)
Collective Bargaining-the process in which labor unions and employers negotiate
contracts defining the terms and conditions under which union members will work
o Exclusive representative of bargaining unit
o Negotiations include-wages, hours, terms and conditions of employment
 Interest Based Negotiations
 Distributive Issues-resolutions provide value to one side at the
expense of the other party (ex: benefits)
 Integrative Issues-resolution provides value to both sides
o Grievances-complaint filed by an employee who perceives that he is being treated
unfairly by an organization
 Grievance procedures
1. Initial complaint made in writing
2. Union steward-a representative of the union who acts as an
advocate for employees if grievance is not resolved in first step
3. Mediation-optional step similar to arbitration but without the
issuance of a binding decision to resolve the dispute
4. Arbitration-a process in which a neutral third part resolves a
dispute by issuing a “binding decision”
o Union security provisions-Right to work laws
 Right to Work Laws- employees are not required to join/contribute to the
union (open shop agreement), employees get a “free-ride”
 Open Shop-an org that does not require employees to affiliate
with or pay dues to union elected to represent the employees
 Union Shop-an org that requires workers to join a union upon
being hired (legal in states that don’t have “right to work”)
 Agency Shop-org requires employees to pay the equivalent of the
union dues even if they are not union members
 Closed Shop-hires only individuals who are members of a
particular labor union (illegal, “Taft-Hartley Act”)
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o Bargaining topics
 Mandatory-classified as fundamental by NLRB (ex: wages)
 Permissive-not required but allowed to be discussed (ex: strategy)
 Illegal-prohibited from being discussed (ex: race discrimination)
o Work stoppages-result of the failure to reach an agreement
 Lockout-an action in which an employer closes a workplace or prevents
union members from working as a result of labor dispute
 Strike-an action in which union members refuse to perform their job
duties as a result of a labor dispute
 Boycott-an organized action in which consumers refuse to purchase
goods or services from a company (unions engaged in labor disputes may
support boycotts of the companies involved in the disputes)
Union’s today
o 40% of public employees are unionized
o Declining union membership-12% in 2010
o More union organization for committed expert and bargain laborer in future
Impacts of Unions-on average:
o Unionized employees receive higher pay and better benefits
o Union shops have
 Higher productivity
 Lower profits-higher wages to pay
 Less flexibility-contracts restrict what they are able to do
CH 14: Aligning Strategy with practice
 Alignment-the state in which organizational practices are in their proper place relative to
other practices
o Vertical Alignment-orgs human resource strategy supports competitive business
strategy (ex: free agent & differentiation through innovation)
o Horizontal Alignment-individual human resource practices fit together and
support each other (ex: team players and appraisals reducing competition)
 Variations on Basic Strategy
o Turnaround Strategy-competitive business strategy that focuses on radical change
to return a company to profitability
o Global Expansion Strategy-focus on increasing presence in foreign countries
o Growth Strategy-focused on expanding products/services into new market
o Rational Strategic Approach-leaders carefully plan strategy before embarking
o Evolutionary Strategic Approach-org strategy unfolds over time in response to
common issues