Human Resources Management

1. Human Resources Management

2. HRM Questions To Consider • Why is HRM not just “personnel” anymore? • Should you “promote from within” or look for “new blood?” • What tools will best help you select a job candidate? • What are the keys to running a good interview? • Should you measure employee performance using objective or subjective measures? • How do you give feedback effectively?

3. Human resource management and competitive advantage • Big trend in the past two decades to link human resource practices, strategy and performance • “Strategic” HRM: managing the HRM system to support the organization’s strategy and goals • Work closely with the “line” organization to improve efficiency, quality, innovation, and responsiveness. • Support high performance work practices • E.g., Cross-functional and self-managed work teams, TQM, employee involvement, training, information sharing • Contrast with HRM as “personnel” – administering policies

4. HRM Systems and Market Value $410,000 Market Value in Dollars per Employee $390,000 $370,000 $350,000 $330,000 $310,000 $290,000 $270,000 $250,000 Lowest Quintile Middle Quintile Top Quintile Firms with excellent HRM Systems have greater market value per employee Quality of the HRM System

5. The HRM Process Environment Human Resource Planning Recruitment Selection Identification and selection of competent employees Derecruitment Orientation Training Adapted and competent employees with up-to-date skills and knowledge Performance Management Career Development Compensation and Benefits Competent employees who are capable of sustaining high performance over the long term Environment

6. Recruitment: A dizzying variety of methods

7. Internal vs. External Recruitment Pros & Cons • External Recruiting – seeking outside the firm • Pro: Brings in new skills and ideas • Con: Outsider’s actual capabilities and fit (e.g., with organizational culture) are relatively unknown • Internal Recruiting – moving people in the firm • Pro: Job candidates and qualifications are relatively better known • Pro: “Promotion from within” motivates employees • Con: Often costly if job skills must be learned on the job • A balance is typically most effective

8. Selection: The prediction exercise • Selection: Assessing applicant’s qualifications in order to hire the most appropriate candidates • Tools for selection: • Resumes • Interviews • Tests and Simulations • Key issue: • Validity of tools varies

9. Each selection tool has strengths and weaknesses • Standard Tools: • Resumes and application forms – initial screening • Interviews – almost universal, reasonably valid • Written tests - measure intelligence, ability, personality, interest, etc. – popular; validity varies • Reference checks – tough to get negative information • Performance-simulation tests • Work sampling - perform key tasks (non-managerial jobs) • Assessment center - simulate challenges of managerial jobs • Most valid • Most expensive

10. Suggestions For Interviewing • Structure the interview to maximize validity of information: • Structured (job-related questions) interviews in preference to unstructured (conversational) interviews • Use multiple interviews rather than just a single one • Get detailed answers about actual job behaviors rather than generalities about job responsibilities • Take notes during the interview – things blend together! • Avoid over-talking; practice active listening • Watch cognitive biases (stereotyping; same-as-me; halo) • Ask appropriate questions

11. Training and Development • Training (individual performers and managers): Helping employees be effective performers in their current jobs: • Example: Learn technical, interpersonal, problem-solving skills. • Development (usually managers or professionals): Enabling employees to take on new challenges: • Example: Varied job experience is key developmentally

12. Employee Performance Management • Performance appraisals are often done poorly • They are put off because of “today’s crisis” • Managers often don’t deliver negative feedback well • High-performing organizations put enormous attention on “fixing” these problems with performance management • Through systems and through training

13. Doing performance appraisal well • What basis to evaluate performance on? • Subjectively (manager’s perceptions) • Rich information • Potential for favoritism of certain employees • Potential for inconsistency across managers • Potential for biased perceptions (think cognitive biases) • Objectively (measurable results) • (Apparently) less bias • Information not as rich • Recommendation: Incorporate both types of evaluation

14. Doing performance appraisal well • To use subjective evaluation effectively: • Evaluate behaviors rather than traits • Describe specific, important job-related behaviors rather than making overall judgments or citing outlying incidents. • To use objective evaluation effectively: • Work with employees to set goals • Consider degree to which employee efforts controls goal achievement

15. Example of subject evaluation:Graphic Rating Scale Evaluates poorly by the subjective evaluation criteria

16. Better subjective evaluation:Behaviorally Anchored Rating Scale

17. Additional evaluation techniques: Forced Rankings • The Problem: Every employee gets rated as high-performing, so it is not possible to differentiate between employees. • Potential Solution: Forced ranking • Each manager is required to categorize employees using a pre-set, fixed scheme • Example: Managers must rate 10% as excellent; 20% as exceeds requirements; 50% meets requirements; 20% below requirements • Sometimes coupled with additional rules (two consecutive below requirement ratings = dismissal required). • Pros: • Better differentiation of high and low performers • Deters retention of low performers • Cons: • Assumes each department has equal # of high / low performers • Employees feel they are in competition with each other • Labels often leave good employees uncomfortable (“I’m average?”)

18. Delivering Feedback Effectively • The recommended imagery is joint problem-solving rather than chewing someone out. • What: Be specific and focus on correctable behavior. • How: Focus on problem-solving / improvement, not criticism. • When: Set a timetable for agreed changes. • Treat subordinates with respect. • Express confidence in worker’s ability to improve. • Use both formal and informal feedback opportunities. • Obviously, chewing someone out has its uses, at times.

19. Compensation And Benefits • Compensation trends are following the move towards flat, flexible, responsive organizations: • Reduce number of pay levels – “bands” not levels • Skill-based pay • Pay for performance • Benefits • Legally required: social security, workers’ compensation • Voluntary: health insurance, retirement, day care • Cafeteria-style benefits plans

20. Pay for performance • Traditional model: • Salary with (permanent) increases based on individual performance • Pay-for-performance: Variable compensation based on individual, group and/or organization performance. • For example, commissions; bonuses; employee stock options • Benefits of pay-for-performance: • Increased motivational leverage • Large changes (tied to current performance) rather than small • Encourage focus on team or organizational goals • Flexible • Allows costs to naturally vary with firm success • Reduced need for downsizing or salary “cuts”.