Human Resource Management (HRM)

Human Resource Management (HRM) What? • the functional area of an organization that is responsible for all aspects of hiring and supporting employees (e.g., providing and administering employee benefits). • all the activities related to the recruitment, hiring, training, promotion, retention, separation, and support of employees. • functions within a company that relate to people. Why? • is the effective use of human resources in order to enhance organisational performance. • the process of evaluating human resource needs, finding people to fill those needs, and getting the best work from each employee by providing the right incentives and job environment, all with the goal of meeting the needs of the firm. • applying human resources within complex systems such that people succeed, performance improves, and human error decreases. (Source: web definitions for HRM)

Personnel selection Satisfaction Motivation Personnel development Organization as socio-technical system Performance Performance appraisal / Compensation Leadership Team Road map for HRM: Leading teams (Spring Semester) Task / Work process

Topics HRM: Leading teams

Core functions of HRM • Job analysis and design • Recruitment and selection • Training and development • Performance management and compensation • Labor and employee relations

Examples in the news – HR implications? • Bonus payments in banks • Swiss Re: CEO Aigrain quits after major losses • SR Technics closes Dublin plant with more than 1000 employees • Hitzfeld on managing a national football team as a distributed team of club players • Increasing use of short time work

Strategic Human Resource Management • "a pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals"(Noe et al., 2005) • Derive human resource needs (skills, behaviors, culture) from strategy formulation • Strategy implementation by means of HRM practi-ces, which further individuals' capabilities and motivation as well as actual performance

HRM practices: Strategic choices • Job analysis and design • e.g. simple vs. complex tasks, specific vs. generic job descriptions • Recruitment and selection • e.g. external vs. internal recruitment, specific vs. general skills • Training and development • e.g. focus on current vs. future skills, train few vs. all employees • Performance management and compensation • e.g. behavioral vs. results criteria, internal vs. external equity, input vs. behavior vs. output control • Labor and employee relations • e.g. GAV vs. individual contracts

Examples of contingencies in strategic HRM (Snell & Youndt, 1995; Lepak & Snell, 1999) • Input vs. behavior vs. output control • behavior control only works with low uncertainties • input control most effective with high uncertainties • output control has no effect on performance in any condition • Uniqueness and value of human capital • traditional, loyalty based employment relationship when knowledge and skills are firm-specific and of high competitive value • purely economic employment relationship when knowledge and skills are neither firm-specific nor of high competitive value

HRM practices: Operational decisions • Job analysis and design • e.g. adaptations in job assignments; support for job crafting • Recruitment and selection • e.g. defining specific job requirements; composition of selection teams • Training and development • e.g. individual career planning; internal/external course offers • Performance management and compensation • e.g. defining pay scales; specifying appraisal "curve" • Labor and employee relations • e.g. adjusting contributions/inducements in the psychological contract

Continuous feedback Clear performance-reward relationship Performance Performance criteria adequate for task Congruence of formal/informal performance criteria Clear instrumentalities for individual goals Active coping with unfulfilled expectations Motivation Satisfaction Continuous monitoring of difference between expectation and reality Fit between individual and organizational goals HRM as operational leadership task:Linking motivation, satisfaction and performance

Influence of normative assumptions on strategic and operational HRM Example: assumptions about human nature (Schein, 1988) • Economic man: Employees will do whatever affords them the greatest economic gain • Social man: Social needs are the prime motivator of human behavior, and interpersonal relationships the prime shaper of a sense of identity. • Self-actualizing man: People seek a sense of accomplishment in their work and are primarily self-motivated and self-controlled • Complex man: Human needs fall into many categories and vary according to stage of development and total life situation

Leadership instruments based on the "complex man" assumption • Management by objectives based on goal-oriented theories of leadership • Psychological contract based on social exchange theory

MbO: How to make it work • Coherent company strategy • Increasing personal resources through job design and personnel development for dealing with complex goals and tasks • Sufficient control over the work situation (transparency, predictability, means of influence) • Leadership through coaching instead of command-and-control • Systematic, transparent and participative goal agreement and evaluation of goal attainment • Rules for handling conflicts

Psychological contracts ... complement and super-impose legal contracts. contain reciprocal, though not necessarily correspon-ding expectations and offers between employee and employer. are derived from verbal agreements as well as from behaviors of contract partners and other members of the organization. Complementing MbO: Designing psychological contracts • The more corresponding and • the more explicit the agreement • the sounder the psychological contract.

Using the psychological contract to handle employment uncertainties • Communicate and match reciprocal expectations and offers • Early, comprehensive information also on uncertain developments (individual and organizational) • Support employability through training, job design, and systematic career management • Distribute risks between organization and employee according to individual coping capabilities • Further organizational commitment which allows for flexibility and "thinking in options"

Purposes of appraisal • Improving performance • Making reward decisions • Motivating staff • Developing subordinates • Identifying potential • Formal recording of unsatisfactory performance • Note: Conscious decision on which purpose(s) to focus on is important

Appraisal criteria • Assessment of personal characteristics/ behaviors/outcomes • Recommendation: Focus on assessing behaviors, e.g. by means of behaviorally anchored rating scales (BARS), and on assessing outcomes based on achievement of objectives • Compare performance between individuals • rank order • grouping according to a predetermined percentage per evaluation category

Typical errors in appraising others • Primacy/recency • Halo • Implicit theories • Stereotypes • Central tendency and positive skew • Persistence of impression despite information to the contrary • Attribution errors

Attribution errors • Attribution=attributing causes to behaviors • evaluating differences in behavior by comparing people, tasks, and situations in terms of causes for behavior (dimensions: e.g. internal/external causes; stable/variable causes) • Examples of attribution errors: • Fundamental attribution error: overemphasizing the actor as a cause of events • Protecting self-esteem: Underestimating person-related causes for ourselves especially for failure • Underusing consensus information: little use of information from comparisons with others` behavior • Confirming expectations: e.g. assuming person-related causes for behaviors that are atypical for a particular situation; assuming situation-related causes in highly structured situations

Measures to avoid rating errors • Systematic preparation of appraisal interview • Conscious reflecting of potential errors and their influence on the appraisal • Use of structured assessment scales (e.g. BARS) • Open communication climate that also allows critical feedback on the appraisal by the appraised person

Pay is ... • money • compensation • reward • incentive • recognition • Procedural and distributive justice at least as important as absolute amount

Basics for determining pay • Decomposition of pay into • base/fixed pay (task-related) and • variable pay (person-related, e.g. performance, experience, social situation) • Considering value of the work done for the company, the market rate for the job, and individual needs • Considering task requirements and qualification requirements

Problems of current job evaluation systems • Overestimation of intellectual and leadership requirements • Underestimation of physical, social and emotional requirements • Consequence: Low evaluation of many “female-dominated” jobs and person-related service jobs in general

Personnel development • Systematic furthering of personal aptitude in relation to individual expectations and organizational requirements by means of - education/training - counselling/coaching - management by objectives - team development - job design

"Fit human to task":Linking personnel development to strategic HRM demands • Analyze requirements • define goals and target group(s) for personnel development • define required qualification profiles • identify indivdiual employees who need development • Personnel development intervention • Evaluation concerning learning, behavior, and performance outcomes

"Fit task to human":Tailoring personnel development to individual career demands • Define possible career paths • e.g. management versus technical career • Identify individual career needs • e.g. locals versus cosmopolitans • Continuous adaptation of career needs and career paths

Leadership is … • the process of influencing the activities of an organized group towards goal achievement. • the ability of an individual to motivate others to forego self-interest in the interest of a collective vision (House & Shamir, 1993) • the influential increment over and above mechanical compliance with the routine directives of the organization (Katz & Kahn, 1978)

Basic leadership functions • group internal functions • Task orientation/initiating structure Set goals, distribute tasks, check work results etc. • Employee orientation/consideration resolve conflicts, support/coach team members etc. • group external functions • Boundary regulation Adjusting external demands in terms of group internal demands and possibilities

Prerequisites of effective leadership:The "right" ... • Person • extravert, intelligent, emotionally stable, conscientious, dominant, self-confident, socially perceptive • However: • Differences on personality dimensions between people with/without leadership positions are often small (overlapping distributions). • Personality differences may be causes and/or effects of being in leadership positions. • Different situations may demand different personality profiles.

Prerequisites of effective leadership:The "right" ... • Behavioral style • task-centred and employee-centred • democratic rather than autocratic • transformational rather than transactional • However: • Individualized leader-member-exchange is also crucial. • Different situations may demand different behavioral styles.

Prerequisites of effective leadership:The "right" ... • Instruments • Management by objectives • Systematic performance management • Standardized HRM processes for selecting, appraising, compensating, developing people • However: • Instruments can support, but not replace personal leadership. • Most instruments tend to work better in stable situations.

Core concept of job design:Self-regulating teams • Teams: several people who work together over a period of time to reach common goals and who share a sense of belonging together • Self-regulation: individual and collective autonomy in order to coordinate work processes and to cope with process variances and uncertainties locally

Prerequisites for good team work • Adequate common task • Complexity higher than individual competencies • Clear performance criteria • Collective decision competence • Shared goal orientation • Positive goal coupling • Goal transparency and feedback • Adequate group composition • Different perspectives on the task • Shared language • Development of group rules • Adequate group size • Support for team development (form, storm, norm, perform) • Explicit handling of conflicts between individual and collective autonomy

Team diagnosis:Characteristics of effective teams • Goals are clear and accepted • Individual and team goals melt together • Responsibilities are clear and change depending on situational demands • Leadership is seen as a shared responsibility • Conflicts are dealt with • Team learns and develops • Contributions are recognized and valued • Communication is open and engaged • Group processes are reflected upon and discussed

Changing leadership roles depending on stage in work processes • Providing structure at the start of a process • Deciding in critical phases • Coach/motivator in on-going work processes • Team member (= no leadership) in routine processes • Moderator in decision processes • Evaluator at the end of a process

New demands on leadership in distributed teams Increasing complexity of situation also requires increasingly complex leadership behaviors: situated and shared leadership

What is meant by team diversity? • Demographic diversity: differences in observable attributes such as age, gender, ethnicity • Psychological diversity: differences in underlying attributes such as abilities, personality, attitudes, values

Why are organizations concerned with diversity management? • demographic change • e.g. problems in recruiting personnel • globalization of business • e.g. international supply chain relationships and mergers/acquisitions/international cooperations • increasing service orientation • e.g. responding to special needs in regional markets and of particular target groups • new concepts of organization • e.g. increasing mix of functions/professions in work teams

Success of Diversity Management ? • Studies on the relationship between team diversity and performance • Negative effects through social categorization • Positive effects through increased information; however: sharing information is generally difficult • With time negative effects of demographic diversity ( social categorization) decrease and positive effects of psychological diversity ( information sharing) increase (Harrison et al., 1998) • Cultural majorities profit from cultural minorities more than vice versa in student groups(Brodbeck, 2005)

Success of Diversity Management ? • Studies on the relationship between team diversity and performance (contd.) • Positive attitude towards diversity is important to achieve positive effects (Van Dick et al., 2008). • More complex tasks are dealt with better by heterogeneous groups (Bowers et al., 2000). • Group goals support performance in diverse (individualists/collectivists) and non-diverse teams (Crown, 2007) • No studies available on diversity and firm performance

"Benchmarking": Characteristics of HRM in successful companies (Pfeffer, 1998) • Employment security • Selective hiring • Self-managed teams and decentralization • High compensation contingent on organizational performance • Extensive training • Reduction of status differences • Sharing information

Human Resource Management (HRM)