Section 3 — People

Functional Areas:

1. HR Strategic Planning
2. Talent Acquisition
3. Employee Engagement and Retention
4. Learning and Development (Motivation/Leadership Theories)
5. Total Rewards

3.1 HR Strategic Planning

Key Concepts:

• Approaches to project management (Six Sigma, TQM)
• Organizational mission/vision/values
• Project planning (Critical path, Gantt charts)
• Strategic planning (PESTLE, SWOT)

Systems Theory

Systems theory is widely applied in organizational development interventions and is essential to the quality movement. A system is composed of interacting parts that work together to achieve an objective. A system is intended to absorb inputs, process them, and produce outputs.

Eli Goldratt’s Theory of Constraints:

• Focused on identifying constraints and eliminating them, thus resulting in continuous improvement
• Every organization faces constraints
• The greatest constraints come from policies and not from physical entities such as resources or materials
• TOC uses five steps to concentrate improvement effects on the components most capable of producing the most positive impact on a system

Six Sigma:

• Data-driven methodology for eliminating defects
• A process must not produce more than 3.4 defects per million opportunities

Example: A hospital system studied variations and made improvements in patient care practices, patient costs, and hospital utilization. Other areas of focus were billing errors, excess inventory, excess overtime, and employee turnover.

Total Quality Management (TQM):

TQM is a strategic management system for achieving customer satisfaction that involves all managers and employees, and uses quantitative methods to continuously improve an organization’s processes.

• Key word is continuous improvement. It highlights the importance of organizational learning.

Mission Statement: Specifies quantifiable activities and the course that management has charted for the future.

• Involves an actual plan

Vision statement: Provides a guiding image of the future that the organization wishes to reach

Values statement: Beliefs that are important to an organization, that dictate employee behavior

Gantt Chart:

A Gantt chart is a graphical depiction of a project schedule. It’s a type of bar chart that shows the start and finish dates of several elements of a project that includes resources, milestones, tasks, and dependencies.

• Mainly used in project management

Pert Chart:

A PERT chart is a project management tool that provides a graphical representation of a project’s timeline. It is a visual representation of a series of events that must occur within a project’s timeline.

• It uses circles or rectangles called nodes to represent project events or milestones. These nodes are linked by vectors or lines that represent various tasks.
• A PERT chart allows managers to evaluate the time and resources necessary to manage a project.
• The use of a PERT chart is highly subjective, and its success depends on the management’s experience. These charts can include unreliable data or unreasonable estimations for cost or time for this reason.
• Considered preferable to Gantt charts, because they identify task dependencies.

PESTEL Analysis:

Method of environmental scanning — Used to gather data typically before conducting a business venture such as opening another branch. Referred to just PEST most of the time.

• Political — Government policy, political stability, labor laws
• Economic — Economic growth, interest rates
• Social — Beliefs and attitudes of the population (career attitudes, age distribution, etc.)
• Technological — Population’s access to smartphones, access to high speed internet
• Environmental — Pollution targets, availability of ethically sourced materials
• Legal — Consumer rights, product labeling, product safety (Similar to political)

SWOT Analysis:

• Strengths of the organization (internal)
• Weaknesses of the organization (internal)
• Opportunities (external)
• E.g: Emerging need for your products
• Threats (external)
• E.g: Changing regulations

3.2 Talent Acquisition:

Key Concepts:

• Job Analysis and Job Documentation
• Quality metrics
• Interview Biases

Job Description: A series of statements describing the role, responsibility, duties, and scope of a particular job

• Summarizes the most important features of a job
• Describes the work that details the required tasks, KSA, responsibilities, and reporting structure
• Include the physical requirements of the job for ADA considerations
• Include duties that support exempt status

Job Analysis: Determining the level of responsibility embedded in the job and how it impacts the overall organization

Job Analysis (The KSA’s)

• Knowledge: The information necessary to perform a task
• Skills: Level of competency or proficiency
• Abilities: Traits or capabilities necessary

Job Analysis Methods:

• Observation: Works best for short-cycle jobs in production
• Interview: Good for professional jobs
• Open-ended questionnaire: Good when a large number of jobs must be analyzed and there are insufficient resources to do it.
• Highly-structured questionnaire: Defines job with a relatively objective approach, which also enables analysis to be performed using computer models

Essential Job Functions:

• Fundamental job-related duties necessary to the position
• Essential functions are distinguished from nonessential or marginal functions that are part of the job but are incidental to the purpose and nature of the job

Job Analysis Outcomes:

• Job description: Written description and job requirements (title and duties)
• Job specification: Written statements of the necessary job qualifications (education and experience)

Job Evaluation: A systemic determination of the relative worth of jobs within the organization and is concerned with the value of a job to the organization. The process establishes a relative worth of jobs by establishing a hierarchy of jobs.

• Follows job analysis, which focuses on job description and specification
• Supports the need for the total rewards system to further the organization’s strategic objectives and is intertwined with the organization’s concern for pay equity.

Job Competencies:

• These represent the knowledge, skills, abilities, and personal characteristics that work together to produce outstanding performance, they are the critical success factors needed to perform in a job or functional area.

Job Specifications:

• Qualifications necessary for an incumbent to be able to perform the job
• Include experience, training, education, licenses, and certification required
• Can be a separate section of the job description or a separate document
• Should reflect what is necessary for satisfactory performance, not what the ideal candidate should have.

Internal Workforce Planning:

Staffing:

• Identifies human capital needs
• provides qualified individuals for jobs in the organization

Workforce Planning:

• Organization analyses its workforce and prepares for future needs.
• Forecasts future conditions and identifies gaps between current and future staff

Staffing Needs Analysis Process:

• Supply Analysis
• Demand Analysis
• Budget Analysis
• Strategic Analysis

Trend and Ratio Analysis:

The use of statistics to determine whether relationships exist between two variables

Trend analysis:

Plots the number of employees for the last six years and projects the trend out for two more years.

Organizational Approach to International Business

• Ethnocentric: Headquarters maintains tight control over international operations
• Polycentric: Each international operation is treated as a distinct national entity
• Regio-centric: Operations are managed regionally
• Geocentric: Organization is viewed as a single international business rather than a collection of individual headquarters-country and international operations

Reliability: Ability of an instrument to measure with a high degree of consistency

Validity: Degree to which inferences made from tests are correct and accurate

Content validity: Degree to which a test measures knowledge, skills, and abilities that are part of the job.

• Least sophisticated type of validity to assess.
• Used primarily to evaluate job knowledge and skill
• Not appropriate for evaluating the ability to learn new skills

Construct Validity: Degree to which a selection device measures a theoretical construct or trait. Typical constructs are intelligence, mechanical comprehension, or personality traits (e.g: anxiety)

• E.g: Using a heart-rate monitor during a flight simulator to gauge anxiety during a flight, when evaluating potential pilots.

Criterion-related Validity: Correlation of test results to job performance

• Concurrent
• Predictive

Concurrent Validity:

• Test employees on a key attribute ???? measure employee’s job performance ???? then correlate the two things

Predictive Validity:

• Measure all applicants on attribute ???? Hire and wait for some period ???? Measure performance of newly hired employees.

Errors in Performance Appraisal:

Halo effect: When an employee is extremely competent in one area and therefore is rated high in all categories

Horn effect: When one weakness results in an overall low rating

Recency: Occurs when an appraiser gives more weight to recent occurrences and discounts the employee’s earlier performance

Primacy: Occurs when an appraiser gives more weight to the employee’s earlier performance and discounts recent occurrences

Strictness: When appraisers believe that standards are too low and they inflate the standards in an effort to make the standards more meaningful in their eyes

3.3 Employee Engagement & Retention

Cost Leadership Strategy is used to increase efficiencies and reduce production costs below the industry average or their closest competitor. To have the lowest priced good(s).

• E.g: Walmart as opposed to Target. Walmart is the cost leader.
• Most appropriate in a stable business environment. Low-cost firms’ emphasis on efficiency makes it difficult to change quickly if needed.

Unit Labor Cost: Average cost of workers divided by their average levels of output

• Used to measure the average cost of labor per unit of output.

Fill Rate: The decision rule for which proportion of openings in a particular job will be covered by internal promotions versus new hires

Hofstede’s Cultural Dimensions:

Power Distance: The extent to which inequality and power are tolerated.

• E.g: China has high power distance
• Low power distance indicates that a culture encourages organizational structures that are flat, decentralized decision-making responsibility, and places emphasis on power distribution

Individualism vs Collectivism: The degree to which societies are integrated into groups

Uncertainty Avoidance Index: The extent to which uncertainty and ambiguity are tolerated.

• High uncertainty avoidance index indicates a low tolerance for uncertainty, ambiguity, and risk-taking.

Masculinity vs Femininity: Considers the preference of society for achievement, attitude towards sexuality equality, behavior, etc.

Long-term vs Short-term: The extent to how a society views its time horizon.

• Long-term focuses on the future and involves delaying short-term success or gratification in order to achieve long-term success. Emphasis on persistence, perseverance, and long-term growth
• Short-term focuses on the near future, involves delivering short-term success or gratification and places a stronger emphasis on the present than the future.

Indulgence vs Restraint: The extent and tendency for a society to fulfill its desires.

Balanced Scorecard:

The balanced scorecard is a management system. It is a way of looking at an organization that focuses on big-picture strategic goals.

• Consists of: Financial, Learning and growth, Customers, and Internal Business Processes
• Aligns business function measures with organizational strategies

Learning and Growth:

Looks at overall corporate culture. Is it easy for employees to collaborate and share knowledge? Does everyone have access to training opportunities?

Internal Business Processes:

About how smoothly the business is running. About reducing waste, speeding things up, doing more with less. Are you providing what your customers with what they actually want? What should you be best at?

Customer:

Focuses on the people who buy the products. Are you winning new business? How are you viewed in your industry compared to competitors?

Financial:

The majority focus of the balanced scorecard. How do you look to shareholders? Is the business making money? How is the financial health of the company?

Step 1: Plan the process

• Confirm the scope of the project and establish a project timeline
• Outline a project communication approach
• Determine organizational participation
• Confirm expected project deliverables

Step 2: Design the scorecard

• Focus on specific measures that support business strategy
• Identify critical success factors for implementation
• Develop an action plan to support implementation
• Collect and prepare data

Step 3: Employ and refine measures

• Employ scorecard
• Monitor performance gaps
• Refine measures of scorecard
• Identify implementation issues

Attrition: Refers to the phenomenon of employees leaving the company. It is the normal life cycle of employment. Employees are not leaving because they have a problem with the company, it is a matter of life unfolding. Attrition is higher in companies located in transient cities and in organizations that hire older employees as a matter of practice.

Turnover: Applies to employees who leave the company due to termination, taking a better job, or because they felt there was no room for growth. A high turnover rate typically means working conditions are not optimal, pay is below market average, or staffers are not well trained.

Layoffs: Can be a temporary cessation of employment usually initiated because the company is having financial problems.

Termination: A permanent end to employment that can happen for any reason, usually through poor performance or policy violations.

Organizational Commitment: The bond employees experience with their organization. Broadly speaking, employees who are committed to their organization generally feel a connection with their organization, feel that they fit in, and feel they understand the goals of the organization.

• This is a significant contributor to organizational performance.

3.4 Learning and Development

This can get pretty detailed so I’m just going to cover the basic motivation/leadership theories and a few other things

Principles of Motivation:

• All human behavior is caused. People have a reason for acting.
• All behavior is directed towards achieving a goal. Behavior is not random
• Each person is unique. No two people have exactly the same characteristics

Maslow’s Hierarchy of Needs:

1. Physiological — Physical needs like food/water
2. Security — Shelter, feel free from threats
3. Social — The need to belong, social groups
4. Esteem — Training, recognition, high status
5. Self-Actualization — Opportunity for growth, problem solving, creativity

Herzberg’s two-factor Theory:

Unacceptable conditions in regards to hygiene factors will lead to job dissatisfaction. Posits that employee satisfaction is achieved mainly through changes in job content.

• Consists of extrinsic hygiene factors, and intrinsic motivation factors
• Acceptable hygiene conditions will lead only to a state of satisfaction; they do not motivate, they only satisfy.
• However, hygiene factor levels must be acceptable in order for the motivation factors to become operative.
• Extrinsic Hygiene Factors: Pay, working conditions, coworkers
• Intrinsic Motivation Factors: Personal growth, achievement, recognition

McClelland’s Theory:

Based on studies showing that some people have an intense need to achieve while others do not. His work identifies the characteristics of people with high needs of achievement.

High achievers:

• Set moderately difficult but potentially achievable goals
• Prefer to work on a problem rather than leave the outcome to chance
• Seem to be more concerned with personal achievement than with the rewards of success
• Seek situations in which they get concrete feedback on how well they are doing with regards to their work

McGregor’s Theory X and Theory Y

Represents two types of management styles.

• Theory X managers believe that people inherently dislike work and will try to avoid it.
• Authoritative style of management
• Theory Y managers believe that employees dislike rigid controls and inherently want to accomplish something.
• Participative style of management

Vroom’s Expectancy Theory

• Basically, people will be motivated to exert effort towards a goal if they believe that there is a favorable outcome
• Expectancy — A person’s belief that a chance exists that a certain effort will lead to a particular level of performance, which, in turn, will lead to certain outcomes
• E.g: If I make more calls, I’ll increase my sales numbers, and be rewarded with a new company vehicle
• Instrumentality — A person’s belief that a specific action leads to a specific outcome
• E.g: If I increase my sales numbers by 10%, i’ll be rewarded with a new company vehicle
• Valence — The strength of an individual’s desire for a particular outcome.
• E.g: I REALLY want a new company vehicle
• Tension exists when similar inputs do not equal similar outcomes. Employees may adjust their behavior or quit their jobs.
• Tip: Vroom → Cars go vroom → Company vehicle example

Leadership Theories:

• Leadership requires alignment to the organization’s vision and mission
• Leaders influence others toward the achievement of goals, act as change agents, serve by example, and develop other leaders
• Produces useful change
• By itself never keeps an operation on time and on budget year after year
• Establishes direction
• Aligns people
• Motivates and inspires
• Management
• Can create orderly results that keep something working efficiently
• By itself never creates significant, useful change
• Planning, budgeting, organizing, staffing, controlling and problem solving
• Is about coping with day-to-day operations.
• Brings order and consistency to the organization
• Establishes systems and structures that get results

Obstacles to Leadership Development:

• Slowly developing crises (as opposed to explosive crises that seem to call forth leadership talents)
• Suppressive effects of large and complex organizations
• Prestige of specialist professional training
• Educational system rewards that value individual performance over teamwork
• Negative publicity often associated with high visibility

Trait Theories of Leadership

• Early approaches focused on the qualities of leaders and held that leaders were born not made
• The “Great Person” theory of leadership
• Five personal traits of effective leaders
• Intelligence
• Dominance
• Self-confidence
• High levels of energy and activity
• Task-relevant knowledge

Behavioral Dimensions of Leadership:

The concept that how a person behaves determines that person’s leadership effectiveness

Consideration (Employee-centered)

• Behavior aimed at meeting the social and emotional needs of groups and individuals
• Helping group members and explaining decisions

Initiating Structure (Job-centered)

• Behavior aimed at careful supervision of work methods and performance levels
• Clarifying roles and setting goals

Blake Mouton’s Theory (Behavioral)

• Tip: Mouton sounds like mutton, which only fancy people eat. Fancy people hang out at country clubs (Blake Mouton Theory = Theory with the country club)

Authoritarian Managers: High Production, Low People

• Task-oriented, very strong on schedules
• Tend not to foster collaboration

Team Leaders: High Production, High People

• Lead by positive example, fosters a team environment
• Encourages individual and team development

Country Club Managers: Low Production, High People

• Use rewards to encourage team members
• Tend to avoid punitive actions

Impoverished Managers: Low Production, Low People

• “Delegate and disappear” management style
• Detach themselves, often creating power struggles

Situational Leadership:

Emphasizes that leadership style should vary according to the situation or the employees involved. Situational leadership has 2 components:

Task Behavior: Refers to the extent to which leaders are likely to organize and define the roles and activities of members of the group

Relationship Behavior: Refers to the extent to which leaders are likely to maintain personal relationships with members of the group

Hersey — Blanchard’s Theory (Situational)

The Hersey-Blanchard theory is distinctive because it does not depict an ideal mode of behavior that is appropriate for all situations. It suggests that leadership style should be matched to the maturity of the employees.

• Tip: Hersey sounds like Hershey’s. The Hersey-Blanchard model looks kind of like a Hershey’s kiss

Directive: Degree of one-way communication

Supportive: Degree of two-way communication

As the employee’s maturity increases, leadership should become more relationship-motivated than task-motivated. Leadership consists of four tasks based on the employee’s maturity:

1. Directing employees what to do (for employees who need the most guidance)
2. Coaching/Selling ideas to employees
3. Supporting employees
4. Delegating to employees (for employees who need the least guidance)

Fiedler’s Contingency Theory (Situational)

States that group performance is dependent upon the interaction between leadership style and situational favorableness. Success is determined by three factors:

• Leadership-member relations: The degree of trust that followers have in their leaders.
• Task structure: The extent to which tasks are defined
• Position power: The degree of power and influence a leader has over subordinates

Leaders should change the factors rather than changing their style.

Other Leadership Styles:

Transactional leadership offers the promise of reward or threat of discipline, depending upon followers’ performance of measurable tasks.

• Looks for deviation from rules
• Intervenes when standards are not met
• Abdicates responsibility and avoids making decisions

Transformational leadership inspires and simulates followers to join together in a mutually satisfying achievement of genuine consequence.

• Provides vision and sense of mission
• Communicates high expectations
• Promotes intelligence and problem solving
• Gives personal attention and coaches

Performance Management:

• The process of maintaining or improving employee job performance through the use of performance assessment tools, coaching, and counseling as well as providing continuous feedback
• The performance review process is the opportunity for the employee and the manager to discuss development goals and jointly create a plan for achieving those goals.

Performance Management Standards:

In setting and communicating performance standards, the HR professional needs to consider:

• Behaviors — What does the organization want employees to do
• Results — What does the organization want the employees to produce?

Skinner’s Behavioral Reinforcement Theory:

Individual Performance Appraisals

1. Observe employees performing the job
2. Identify and record strengths and areas for improvement
3. Rate employee on progress towards previously stated objectives
4. Provide reinforcing and corrective feedback on employee performance
5. Set goals on performance improvement

Special Methods:

Management by Objectives (MBO): Employees help set their objectives defining what they intend to achieve. Objectives are based on the overall organizational goals

Behaviorally anchored rating scale (BARS): Designed to combat the problems of category ratings by describing examples of desirable and undesirable behavior. Examples are then measured against a scale of performance levels. Works best when many employees are performing the same task. Requires extensive time and energy to develop and maintain.

Legal Performance Appraisals:

Performance appraisal methods must be:

• Valid and free from discrimination
• Based on formal evaluation criteria
• Based on personal knowledge and interaction with employees
• Designed to prevent one manager from influence an employee’s career
• Based on equitable treatment of all employees

Appraisal Feedback Guidelines:

• Describe the behavior, don’t judge it.
• Assume an attitude of helpfulness
• Empathize and listen actively
• Give specific examples

Documentation Guidelines

• Document as situations happen
• Keep notes on all employees, not just a few
• Use objective criteria
• Support job-related observations with facts, but avoid conclusions
• Focus on deficiencies, not causes
• Remember that others will read your document.

Employee Development Programs

Job Rotation — The movement between different jobs

Job Enlargement — Occurs when the employee is doing different tasks within the same job. Adding more tasks gives employees a variety of responsibilities that require the same level of skill

Job Enrichment — Increases the depth of a job by adding responsibilities such as planning, organizing, controlling, and evaluation.

Dual-Ladder Programs

Identify meaningful career paths for people who are not interested in traditional management roles. Technical experts may or may not be well-suited for future management and executive leadership roles. The employee can earn as much as they would in a management position.

Succession and Replacement Planning

Succession planning is a talent management strategy to help identify and foster the development of high-potential employees. This activity identifies employees who may be considered ready for future higher-level positions as they become available.

• Fast-track programs speed up the development of potential leaders

Succession:

• Long term; 12–36 months
• Focuses on leadership talent for the future
• Develops leaders capable of filling multiple assignments

Replacement:

• Short-term; 0–12 months
• Focuses on immediate needs
• Develops back-up staff for key positions.