Strategic Human Resource Management CHAPTER 10 Strategic Human Resource Management

Learning Objectives slide 1 of 2 Identify and explain the components of the strategic human resource management process. Define job analysis and explain its importance. Explain the role of forecasting in human resource planning. Summarize the different recruiting techniques used by organizations. Clarify the major employee selection methods. Explain the different types of employee training.

Learning Objectives slide 2 of 2 Describe the role of performance appraisals in the organization. Explain how compensation and benefits are used in organizations. Describe the key factors of the legal environment in which human resource management functions. Explain the importance of labor management relations. Clarify the primary challenges of SHRM in the multinational organization.

Strategic Human Resource Management (SHRM) Job Analysis Forecasting Staffing Training Performance Appraisal Compensation

Job Analysis A job analysis refers to studying a job in order to understand what is needed to help the job holder perform a job successfully. Knowledge Skills Abilities Attitudes

Job Description and Specification A job description explains the job in terms of: Tasks Behavior Responsibilities A job specification lists what is needed to perform the job successfully. Specific knowledge Skills Abilities Employee characteristics

Forecasting Demand Forecasting Supply Forecasting Determining the number of employees that the organization will need at some point in the future as well as the knowledge, skills, and abilities that these employees must possess. Supply Forecasting Determining what human resources will be available, both inside and outside the organization.

Recruitment The process of finding and attracting job candidates who are qualified to fill job vacancies. Internal recruitment Identifying candidates from inside the organization and encouraging them to apply for jobs that are vacant. External recruitment Advertising for and soliciting applicants from outside the organization.

Selection Selection is the process of evaluating and choosing the best qualified candidate from the pool of applicants recruited for the position. It entails the exchange of accurate information between employers and job candidates to optimize the person-job match. Although organizations usually make these decisions, applicants also self-select by choosing to join, not to join, or to leave, organizations according to their individual needs.

Validity and Reliability To select the right person for a job, any method used to make an employment decision must demonstrate validity and reliability. Validity requires that the method accurately measure or predict what it is intended to measure or predict. Reliability means that the method must measure, or predict, the same thing each time it is used.

Selection Methods Application forms and resumes Tests Interviews Physical exams and drug tests

Application Forms and Resumes Application forms and/or resumes are usually the first sources of information about a potential employee. Applications and resumes usually record the applicant’s desired position and job-related qualifications and experience. Both serve as prescreening devices to help determine whether an applicant meets the minimum requirements of a position. Both also allow for preliminary comparisons with the credentials of other candidates.

Selection Methods Application forms and resumes Tests Interviews Physical exams and drug tests

Tests Tests help pick the best candidate for the position. There are three categories of tests: Written tests Performance tests Personality or personal tests

Written Tests Test the applicant in a variety of areas: Knowledge Ability Skill Intelligence Interest

Performance Tests Performance tests require the job candidate to actually perform it the job, usually in a small part or for a short time. There are two common types of performance tests: Work samples Assessment centers

Work Sample Performance Tests Work samples are more appropriate for jobs that are more routine and/or more specific. If work samples are designed and selected well, then the person’s performance in the work sample should accurately predict their performance on the job. Work samples do show high validity scores, especially when compared to written aptitude, personality or intelligence tests.

Assessment Center Performance Tests Assessment centers are usually more appropriate to judge a candidate’s predicted performance in a more complex job. The candidate typically is presented with a fairly large number and varying types of tasks to do (sometimes more than can reasonably be done). The intent of the assessment center is to judge how a candidate would behave and perform in selected tasks to predict performance on the job.

Personality or Personal Tests Judge whether a person “fits” into the organization. The goal is to hire people who already have characteristics and attitudes that are line with the core values of the organization and it’s culture. It is assumed that it is easier to teach a person the details of a job than it is to teach him or her to change deeply help attitudes or change personality characteristics.

Selection Methods Application forms and resumes Tests Interviews Physical exams and drug tests

Interviews Interviews are relatively formal, in-depth conversations conducted for the purpose of assessing a candidate’s knowledge, skills and abilities Interviews also provide the candidate information about the organization and potential jobs. Interviews tend to have low validity. While many people conduct interviews, few are trained in how to do them well. Interviews also tend to be fairly informal and no two are alike which raises issues with reliability.

Interview Guidelines slide 1 of 2 To increase the validity and reliability of an interview: Base the interview questions on a complete and current job analysis. Ask precise, specific questions that are job related. Avoid biases, making snap judgments, stereotyping, or looking for only negative, or only positive, information. Be careful about having a perception, or stereotype, of what the “good” candidate is.

Interview Guidelines slide 2 of 2 Be careful about making up you mind about the applicant in the first several minutes, as is usually the case. Avoid questions that can lead to discrimination. Keep written records of the interview.

Realistic Job Preview The interviewer explains to the applicant what the job “really” requires rather than giving just the positive points of a job or company and avoiding the negative.

Selection Methods Application forms and resumes Tests Interviews Physical exams and drug tests

Physical Exams and Drug Tests A physical exam is intended to ensure that a person is physically able to carry out certain job requirements. A physical exam can also be used to enroll employees in fringe benefits such as health, life, or disability insurance. Drug tests, while controversial, are used by many companies for both hiring and for continued employment.

Training A planned effort to assist employees in learning job-related behaviors in order to improve performance. Companies train employees in an effort to prepare them to work toward achieving the goals and objectives of the organization.

Types of Training Programs Orientation Technical training On-the-job training Management development programs

Performance Appraisal A systematic process of evaluating employee job-related achievements, strengths, weaknesses, as well as determining ways to improve performance. Uses of performance appraisal information: Motivation Personnel movement Training Feedback for improvement and personal development

Rating Performance Behavior-oriented approaches Results-oriented approaches

Behavior-Oriented Approaches Behavior-oriented approaches to performance appraisal focus on assessing employee behavior. The approach is based on the idea that certain behaviors will lead to successful performance on the job. Two commonly used methods are: Graphic rating scales Behaviorally-anchored rating scales

Graphic Rating Scales Assess employee’s on a series of performance dimensions such as: Initiative Tardiness Accuracy of work Performance dimensions on a graphic rating scale tend to be fairly general. As a result the scales are relatively flexible and can be used to evaluate individuals in a number of different jobs.

Behavioral-Anchored Rating Scales (BARSs) BARSs are similar to graphic rating scales, but they use more detailed examples of job behaviors to represent different layers of performance. The BARSs approach relies on job analysis information to describe a range of desirable and undesirable behaviors for each performance dimension.

Rating Performance Behavior-oriented approaches Results-oriented approaches

Problems with Performance Appraisal Halo Effect Rater Patterns Contrast Error Regency Error

Halo Effect Occurs when a manager rates an employee high or low on all items because of one characteristic. For example, an employee that is good at handling customer complaints may receive high ratings in all other areas of work, just because the rater is impressed with the employee’s skills in this area.

Rater Patterns Occurs when a rater develops a pattern in his or her ratings of employees. Central tendency occurs when the rater judges all employees as average, even though their performance varies. A leniency-severity error occurs when the rater is unjustifiably easy or harsh in evaluating employee performance.

Contrast Error The tendency to rate employees relative to each other rather than to performance standards. For example, if almost everyone in a group is doing a mediocre job, then a person performing somewhat better may be rated as excellent because of the contrast effect.

Recency Error Occurs when a manager bases an evaluation on the employee’s most recent performance. This is typically a problem when the evaluations are not frequent enough for the rater to recall performances over a long period of time.

Organizational Rewards Organizations must reward employees for doing good work, for helping achieve the goals and mission of the organization. Frequently, when the work reward is used, we think of money. However, there are very important non-monetary rewards the employees are also seeking from their work.

Direct Compensation Base pay Incentives Refers to wages and salaries employees receive in exchange for performing their jobs. Incentives Compensation beyond base pay used to attract, retain, and motivate employees. Bonuses, commissions, profit-sharing plans, stock options.

Indirect Compensation Benefits Rewards employees receives as part of their employment relationship with the organization. Benefit categories Required and voluntary security Retirement Time-off Insurance and financial Social and recreational

Designing Equitable Reward Systems Compensation designers are concerned with three sources of fairness expectation: External Fairness Is the pay for the job fair in one organization relative to the pay for the same job in other organizations? Internal Fairness Is the pay for the job within the organization fair relative to the pay of other jobs in the same organization? Employee Fairness Is the pay fair relative to what coworkers are making on the same job?

Legal Environment of SHRM Federal and state laws specify requires, acceptable and prohibited employment practices. These place constraints on recruitment, selection, placement, training and other human resource activities. We will look at four prominent legal issues facing SHRM today. Important laws Affirmative action Workforce diversity Sexual harassment

Important Laws Equal employment opportunity (EEO) laws prohibit the consideration of race, color, religion, national origin, or gender in employment decision-making. In addition, there are laws prohibiting employment decisions based on biases against qualified individuals with disabilities and the elderly. An exception to discrimination based on the protected areas listed above is a “bona fide occupational qualification” which means the determination not to hire is based on job analysis, not personal attitude, opinion, bias or stereotype.

Affirmative Action The legal requirement that federal contractors, some public employees and private organizations under court order for short term remedies must actively recruit, hire, and promote members of minority groups and other protected classes if such individuals are underrepresented in the organization.

Workforce Diversity Demographic changes in the work force have forced organizations to introduce new SHRM programs, beginning with the recruiting and hiring of diverse individuals. Diversity can be a competitive advantage if people in an organization are accepting of diverse perspectives and issues and are taught to work well together.

Sexual Harassment Sexual harassment refers to actions that are sexually directed, are unwanted, and subject the worker to adverse employment conditions. Two major forms of sexual harassment : “Quid pro quo” harassment refers to conditions where sexual compliance is required for job-related benefits and opportunities such as pay and promotion. “Hostile environment” harassment refers to conditions where the victim does not suffer any tangible economic injury but workplace conduct is sufficiently severe to create an abusive working environment.

Labor-Management Relations The formal process through which labor unions represent employees to negotiate terms and conditions of employment, including: Pay Hours of work Benefits Other important aspects of the working environment

Challenges of SHRM in Multinational Organizations Multinational organizations face greater diversity in their work force and, as a result, must develop an SHRM system that is flexible and adaptable to a wide variety of cultural situations. Managing expatriate personnel can be especially challenging in terms of selection, training and compensation. An expatriate is an organizational member who is a citizen of the country in which the organization is headquartered but is assigned to facility in another country.

Implications for Leaders: SHRM slide 1 of 2 Recognize that strategic human resource management is a critical element of the strategic planning process and is essential for long-term organizational success. Keep in mind that job analysis is essential in order to understand what knowledge, skills, abilities, and attitudes each job requires. Carefully evaluate both internal and external sources for recruiting people. Base all SHRM decisions on job-related criteria and not on racial, gender or other unjustified bias.

Implications for Leaders: SHRM slide 2 of 2 To keep pace with rapid changes in technology, be sure to upgrade the knowledge and skill base of employees through training programs. Develop equitable pay systems, unbiased performance appraisals, and equal access to training opportunities. Be innovative in scheduling work, designing jobs, and rewarding employees so that you can respond effectively to the changing composition and needs of the work force.