HUMAN RESOURCE MANAGEMENT, 4029 SCHOOL OF BUSINESS, KONKUK UNIVERSITY

HUMAN RESOURCE MANAGEMENT, 4029 SCHOOL OF BUSINESS, KONKUK UNIVERSITY
Midterm Exam Review HUMAN RESOURCE MANAGEMENT, 4029 Oct. 14 , 2010 KIWOOK KWON, PHD SCHOOL OF BUSINESS, KONKUK UNIVERSITY

1. Discuss “Why We Hate HR”
Agenda: 1. Discuss “Why We Hate HR” 2. HRM: Gaining a Competitive Advantage 1) The roles and activities of a company’s HRM function 2) How is the HRM function changing? 3) Competitive challenges influencing HRM 4) What companies should do to compete in the global marketplace

“Why We Hate HR” 1. What are the key / interesting points?
2. What are the four main HR problems that Hammonds communicates and expands on? - What points do you agree or disagree with him? Why? 3. Who is really to blame? 4. What are the main implications for (1) top management / general managers and (2) HR managers? .

“Why We Hate HR” 1. What are the key / interesting points?
2. What are the four main HR problems that Hammonds communicates and expands on? 1) HR people aren’t the sharpest tacks in the box (business acumen…) 2) HR pursues efficiency in lieu of value (satisfaction, %of employees with training, no value..) 3) HR isn’t working for you (one-size-fits-all, rule enforcer…) 4) The corner office doesn’t get HR (and vice versa) - What points do you agree or disagree with him? Why? Unique or general case? High- versus low-performing firm? satisfaction? Measuring value created by HR is not easy. Finance, Marketing… 3. Who is really to blame? - top management or HR? Need resource and power to implement HR practices 4. What are the main implications for (1) top management / general managers and (2) HR managers? .

Introduction Competitiveness – a company’s ability to maintain and gain market share Human resource management – the policies, practices, and systems that influence employees’ behavior, attitudes, and performance .

Opening Case: Starbuck’s HR Practices
Increasing Competitiveness through HRM To be profitable & grow: Key success factor: A positive customer service its employees (partners) Value-and-treat employees-right approach HR practices/system 1. Selecting right new employees - job fair, org-person fit, skills.. 2. Training (paid, “First Impression”) 3. Generous benefits (even part-time) 4. High level of compensation Evidence-based HR: Org. philosophy: Fin. Success from HR Practices Impacts of HRM on bottom-line, turnover, employee engagement & satisfaction High Firm Reputation Attracting & retaining high skill employees .

To be profitable & grow: its employees (partners)
Any Company? Increasing Competitiveness through HRM To be profitable & grow: ? Key success factor: its employees (partners) Value-and-treat employees-right approach HR practices/system 1. Selecting right new employees - job fair, org-person fit, skills.. 2. Training (paid, “First Impression”) 3. Generous benefits (even part-time) 4. High level of compensation Evidence-based HR: Org. philosophy: Fin. Success from HR Practices Impacts of HRM on bottom-line, turnover, employee engagement & satisfaction E.g., High Firm Reputation Attracting & retaining high skill employees .

Responsibilities of HR Departments
Employment and recruiting Training and development Compensation Benefits Employee services Employee and community relations Personnel records Health and safety Strategic planning

What Roles Do HR Departments Perform?
Figure 1.2: HR as a Business with Three Product Lines Developing HR system / helping implement business plans / talent management - knowing the business & exercising influence Business Partner Services Strategic Partner Administrative Services and Transactions Human Resources Contributing business strategy, developing HR practices as strategic differentiators - knowledge of HR and business, competition, the market, and business strategies Ex) SYSCO Compensation, hiring, staffing, training, etc. - resource efficiency - service quality

How is the HRM Function Changing?
Time spent on administrative tasks is decreasing and its roles as a strategic business partner, change agent, and employee advocate are increasing Evidence-based HR – demonstrating that human resource practices have a positive influence on the company’s bottom line or key stakeholders. 1. Do you think an HR department like the idea of evidence-based HR? 2. Why might an HR department resist becoming evidence-based?

Competitive Challenges Influencing HRM
Three competitive challenges that companies now face will increase the importance of HRM practices: The Challenge of Sustainability The Global Challenge The Technology Challenge

The Sustainability Challenge
Sustainability refers to the ability of a company to survive and succeed in a dynamic competitive environment Sustainability includes the ability to: provide a return to shareholders provide high-quality products, services, and work experiences for employees increase value placed on intangible assets and human capital social responsibility Adapting to changing characteristics and expectations of the labor force Legal and ethical issues Effectively use new work arrangements

The Global Challenge To survive companies must compete in international markets Be prepared to deal with the global economy. Offshoring – exporting of jobs from developed countries to less developed countries

The Technology Challenge
The overall impact of the Internet The Internet has created a new business model – e-commerce – in which business transactions and relationships can be conducted electronically

Meeting Competitive Challenges Through HRM Practices
HRM practices that help companies deal with these competitive challenges can be grouped into four dimensions The human resource environment Acquiring and preparing human resources Assessment and development of human resources Compensating human resources

Managing internal and external environmental factors allows employees to make the greatest possible contribution to company productivity and competitiveness Customer needs for new products or services influence the number and type of employees businesses need to be successful

Managers need to ensure that employees have the necessary skills to perform current and future jobs. Besides interesting work, pay and benefits are the most important incentives that companies can offer employees in exchange for contributing to productivity, quality, and customer service

Determinants of Enterprise Value
Strategy And The Firm Determinants of Enterprise Value Goal of strategic management – To deploy and allocate resources in a way that gives an organization a competitive advantage => Increase firms’ value

The Firm As A Value Chain
A firm’s operations can be thought of a value chain composed of a series of distinct value creation activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure

Value Creation (Ham & Egg Sandwiches)
$4 $3 $2 $1 $1 $2 1) Create more value (competitive advantage) 2) Sustain competitive advantage Goal of strategic management – To deploy and allocate resources in a way that gives an organization a competitive advantage.

Competitive Advantage (Superior Firm Performance)
Where to compete? PORTER’S THE FIVE-FORCES MODEL Power of buyers? Easy to enter this industry? How many competitors? Other products? Power of suppliers?

THE PHARMACEUTICAL INDUSTRY
Merck, J&J, Pfizer, Bristol-Myers Squibb, etc. 1. Threat of entry — ? --Economies of scale in R&D labs --Product differentiation (Tylenol, Bayer, Viagra) --Production cost advantages --New product development takes up to 12 years 2. Threat of rivalry — ? --Firms carve out different product niches based on their R&D skills 3. Threat of substitutes — ? --Few substitutes for particular subscription drugs – Generic drugs can be substitutes, but firms hold patent rights for a long time 4. Threat of suppliers — ? --Large number of suppliers for raw materials—basic chemicals --Threat of forward entry by suppliers is quite small 5. Threat of buyers — ? --Pressure from HMOs and the government to reduce drug prices has increased --So far, though, the power of buyers remains quite small Company Profit Margin Return on Equity Merck Johnson & Johnson Pfizer Bristol-Myers Squibb

HOW MUCH DOES INDUSTRY MATTER?
20 % 33 % 80 % 47 %

Sustained Source of Competitive Advantage
How to compete? With what will we compete?

Resource Based-View (RBV): Assumptions
Heterogeneity. Different firms possess different bundles of resources and capabilities, even if they are competing in the same industry. Some firms may have better resources (i.e., smarter people, a better location, a key patent, etc) and/or capabilities (i.e., the capacity to develop new products, reduce costs, etc.) than other firms. Immobility. Resources and capabilities are “sticky,” this is, they are not perfectly transferable from firm to firm. It is difficult (slow and disruptive) and costly for firms without particular resources and capabilities to develop or acquire them.

RBV & Sustained Competitive Advantage
(Barney & Wright) Value. Does the resource allow the firm to formulate and implement its strategic goals? Does the resource enable the firm to exploit opportunities and mitigate threats in its particular environment? Rarity. Is the resource held by only a small number of competing firms? Inimitability. Do firms without the resource or capability face a cost disadvantage in obtaining or developing it? How difficult is it to get? Organization (substitutability ). Do the other elements of a firm’s organizational system (i.e., structure, processes, technology, people, and culture) support the exploitation of the valuable, rare, difficult to imitate resource or capability?

Competitive Implications
Performance Below Normal Normal Above Normal Above Normal

Types of Resources 1) Physical capital (plant, equipment, finance, etc.) 2) Organizational Capital (structure, planning, coordinating, HR system, etc.) 3) Human capital - skills, judgment, intelligence of the firms’ employees Human Resources - The characteristics of a firms’ human resources & HR practices Value. Does the resource allow the firm to formulate and implement its strategic goals? Does the resource enable the firm to exploit opportunities and mitigate threats in its particular environment? Rarity. Is the resource held by only a small number of competing firms? Inimitability. Do firms without the resource or capability face a cost disadvantage in obtaining or developing it? How difficult is it to get? Organization (substitutability ). Do the other elements of a firm’s organizational system (i.e., structure, processes, technology, people, and culture) support the exploitation of the valuable, rare, difficult to imitate resource or capability?

Competitive Implications
Performance Below Normal Normal Above Normal Above Normal Human Resources? Plant? Financial Resource? etc…

Implications for Competitive Advantage Sustained competitive advantage stems from firm-specific more than general skills Sustained competitive advantage comes from teams more than from individuals Sustained competitive advantage stems from HR systems more than from single HR practices Implications for HR Executives Understand the Value of People in the Firm and Their Role in Competitive Advantage Understand the Economic Consequences of the Human Resource Practices in a Firm Understand How the Human Resources and Human Resource Practices in a Firm Compare to Those in Competing Firms Understand the role of the Human Resources Function in Building Organizational Capability for the Future

Pfeffer (1994): Sources of Sustained Sucess
An industry could matter. But, how about firms within an industry? How about firms in a seemingly not profitable industry? (Southwest airline, Nordstrom, Wal-Mart, Lincoln Electric, etc.) To provide extraordinary returns over time, any source of competitive advantage must be difficult to imitate. Product and Process Technology - erode quickly and must be renewed - the skill and motivation of workforce is required “Machines don’t make things, people do.” Protected and Regulated Markets - globalization (tariff, etc) Access to Financial Resources - increasingly efficient financial markets (globalization of capital) Economies of Scale - more fragmented markets, the customization of products, etc. Key to Sustained Success: motivated, skillful, committed, workforce (inimitable, valuable, rare, nonsubstitutable)

Chapter 2: Key Ideas Goal of strategic management – To deploy and allocate resources in a way that gives organization a competitive advantage. Strategic Management is a process, an approach to addressing the competitive challenges an organization faces. Strategic human resource management (SHRM) is the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals. HRM function must be integrally involved in the company’s strategic management process. Different organizational strategies require a different configuration of HRM practices. (internal and external fit)

Components of the Strategic Management Process
Strategy Formulation During this phase, strategic planning groups decide on a strategic direction by defining the company's mission and goals, its external opportunities and threats, and its internal strengths and weaknesses. Strategy Implementation During this phase, the organization follows through on the strategy that has been chosen. This includes structuring the organization, allocating resources, ensuring that the firm has skilled employees in place, and developing reward systems that align employee behavior with the strategic goals

Model of the Strategic (Human Resource) Management Process
Choice Strategy Formulation Goals Mission External Analysis Opportunities Threats Internal Strengths Weaknesses Strategy Implementation HR Practices Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits Firm Performance Productivity, Quality, Profitability HR Capability Abilities, Knowledge, Skills Human Resource Needs Behavior Culture 1. Differentiation 2. Cost-leadership 3. Focus Strat. Eval. Human Resource Actions Behaviors, Results Turnover Productivity

Strategy Formulation External analysis Opportunities Threats Mission
Goals Strategic Choice Internal analysis Strengths Weaknesses

Strategy Formulation Five components of the strategic management process: A mission is a statement of the organization's reasons for being. Goals are what the organization hopes to achieve in the medium-to long-term future External analysis consists of examining the organization's operating environment to identify strategic opportunities and threats. Internal analysis attempts to identify the organization's strengths and weaknesses. Strategic choice is the organization's strategy, which describes the ways the organization will attempt to fulfill its mission and achieve its long term goals.

SWOT Analysis Strengths Weaknesses Opportunities Threats Financial
Technological Quality of human capital Productivity Weaknesses Opportunities Customer market Technological advances Labor supply (high quality) Threats New competitors Competitors’ innovation Labor shortage 37

HRM in Strategy Formulation
Level of Integration - sequential - planning & HRM Interdependent - continuing interaction - HR executive in strategic planning group - “strategic partner” role - day-to-day activities - “administrative” role - system design - HR in implementing strategy Fortune 500 corporations: 49 % - 69%

Strategy Implementation
Organizational structure Types of Information Task Design Product market strategy Performance Reward systems Selection, training, and development of people

HRM Practices Job Analysis - the process of getting detailed information about jobs. Recruitment - the process through which the organization seeks applicants. Training - a planned effort to facilitate learning of job-related knowledge, skills, and behavior. Job design - making decisions about what tasks should be grouped into a particular job. Selection - identifying the applicants with the appropriate knowledge, skills, and ability. Development - the acquisition of knowledge, skills, and behavior that improves employees' ability to meet the challenges of future jobs. Performance management - helps ensure that employees’ activities and outcomes are congruent with the organization’s objectives. Pay structure, incentives, and benefits. Labor and employee relations.

Strategic Types / HRM Needs
Porter's Generic Strategies overall cost leadership, or differentiation. Different strategies require different types of employees. Role Behaviors: Cost strategy firms seek efficiency and therefore carefully define the skills they need in employees and use worker participation to seek cost-saving ideas. Differentiation firms need creative risk takers.

Vertical (external) & Horizontal (internal) alignments
(Gateway) Cost-leadership Strategy Differentiation Strategy (Apple) Vertical (external) & Horizontal (internal) alignments

Southwest Airlines Case
1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? 4. What does it take to execute this strategy? 5. How does SW’s HR system support this strategy? 6. What are SW’s source of competitive advantage? 7. Are these sustainable? Imitable?

A REASONABLE STRATEGY MAP FOR SOUTHWEST RESOURCES/CAPABILITIES
ORGANIZATION RESOURCES/CAPABILITIES COMPETITIVE ADVANTAGE LOW FARES Asset Productivity Daily aircraft utilization (11 vs. 8 hours) Flights/gate/day (10.5 vs. 4.5) Labor Productivity Passengers/employee (2400 vs. 800) Employees/gate (7 vs. 15) Labor costs (100K/70 hours vs 200K/50 hours) CUSTOMER SATISFACTION Lost Bags Complaints On-Time

1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? Low cost, high frequency - quick turnaround - high productivity - equipment usage (training, spares, maintenance) Focused Point-to-point (niche) Clear target market Customer service 4. What does it take to execute this strategy? 5. How does SW’s HR system support this strategy? 6. What are SW’s source of competitive advantage? 7. Are these sustainable? Imitable?

ORGANIZATION RESOURCES/CAPABILITIES COMPETITIVE ADVANTAGE Tangible Assets Underutilized airports 737s Point-to-point routes No cross-boarding Processes No meals No assigned seats No meals/snacks Low Technology Rewards programs Fares HR System Labor relations Staffing Training Compensation 1 2 4 LOW FARES Asset Productivity Daily aircraft utilization (11 vs. 8 hours) Flights/gate/day (10.5 vs. 4.5) Labor Productivity Passengers/employee (2400 vs. 800) Employees/gate (7 vs. 15) Labor costs (100K/70 hours vs 200K/50 hours) 15 Minute Turnaround Service-Based Culture Teamwork Attitude Humor 1 2 4 3 CUSTOMER SATISFACTION Lost Bags Complaints On-Time

1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? 4. What does it take to execute this strategy? Tasks - keep costs down, productivity up - consistency - high utilization People - energetic - positive - committed - friendly - interpersonally skilled Leadership Formal Organization - flat structure - teams - compensation - unionized Culture - initiative - fun - teamwork - cost conscious - hard work - autonomy

1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? 4. What does it take to execute this strategy? 5. How does SW’s HR system / Leadership support this strategy? 6. What are SW’s source of competitive advantage? 7. Are these sustainable? Imitable? Reward - compressed pay - public recognition - continual - fits employees Selection - clear standards - focus on KSAs - customer input - incremental Leadership - visible role models - symbolic - accessible, caring Training - socialization - continual - SW specific - managers go first Information Sharing - open - egalitarian Ownership - profit sharing - high involvement - security

ORGANIZATION RESOURCES/CAPABILITIES COMPETITIVE ADVANTAGE Tangible Assets Underutilized airports 737s Point-to-point routes No cross-boarding Processes No meals No assigned seats No meals/snacks Low Technology Rewards programs Fares HR System Labor relations Staffing Training Compensation 1 2 4 LOW FARES Asset Productivity Daily aircraft utilization (11 vs. 8 hours) Flights/gate/day (10.5 vs. 4.5) Labor Productivity Passengers/employee (2400 vs. 800) Employees/gate (7 vs. 15) Labor costs (100K/70 hours vs 200K/50 hours) 15 Minute Turnaround Service-Based Culture Teamwork Attitude Humor 1 2 4 3 CUSTOMER SATISFACTION Lost Bags Complaints On-Time

1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? 4. What does it take to execute this strategy? 5. How does SW’s HR system / Leadership support this strategy? 6. What are SW’s source of competitive advantage? 7. Are these sustainable? Imitable?

ORGANIZATION RESOURCES/CAPABILITIES COMPETITIVE ADVANTAGE Tangible Assets Underutilized airports 737s Point-to-point routes No cross-boarding Processes No meals No assigned seats No meals/snacks Low Technology Rewards programs Fares PRODUCTIVITY Asset Productivity Daily aircraft utilization (11 vs. 8 hours) Flights/gate/day (10.5 vs. 4.5) Labor Productivity NUMBERS COSTS 15 Minute Turnaround 1 1 2 BEHAVIORS DEPLOYMENTS 2 HR System Labor relations Staffing Training Compensation 4 CUSTOMER SATISFACTION Lost Bags Complaints On-Time 4 3 Leadership

1. What does it take to make money in this business? 2. What are SW’s competitive advantage? 3. What’s their strategy? Competencies? 4. What does it take to execute this strategy? 5. How does SW’s HR system / Leadership support this strategy? 6. What are SW’s source of competitive advantage? 7. Are these sustainable? Imitable?

HOW SUSTAINABLE IS THE ADVANTAGE?
How do we make the case that a resource/capability is a source of sustainable competitive advantage? Inimitability: Causal Ambiguity, Social Complexity, Path Dependence Organization: We look to see how well the firm has aligned other organizational elements around the critical resource/capability. To what extent do the culture, technology, other supporting processes, and structures support the firm’s ability to exploit the VRI resource/capability? What additional pieces would a competitor require to match the critical resource/capability?  Prioritize. 54

A B C HP D HOW SUSTAINABLE IS THE ADVANTAGE?
How do we make the case that a resource/capability is a source of sustainable competitive advantage? Inimitability: Causal Ambiguity, Social Complexity, Path Dependence Causal ambiguity occurs if the source from which a firm’s competitive advantage stems is unknown. => idiosyncratic to the firm in which it resides Social complexity results from human interactions (e.g., culture, relationship, trust, etc.) Path dependence: accumulated over time and a competitor may not be able to perfectly imitate in a short period of time (example, firm reputation) A B C HP D 55

Can Southwest sustain a competitive advantage?
VALUE: Their productivity creates value by allowing Southwest to earn profits despite charging lower fares. Further, Southwest consistently delivers better service (measured in terms of the triple crown) than the competition. Together, productivity and service are a greater source of advantage than one alone. RARE: No other airline can match these capabilities singly, let alone in combination. INIMITABLE: The low fares and solid service capabilities are highly inimitable due to the four critical mechanisms through which they are derived. 1. Asset productivity  20 minute turnarounds  Tangible assets, core processes, and simple technology. Path dependent and causally ambiguous. 2. Labor productivity  service-based culture  HR system (with a heavy emphasis on labor relations). Socially complex and path dependent. 56

MAKING AN ARUGMENT FROM THE STRATEGY MAP
Customer satisfaction  tangible resources, processes, simple technology. Path dependent. Customer satisfaction  service-oriented culture (of teamwork, positive attitude, and humor/fun)  HR system (heavy emphasis on staffing and training). Socially complex, path dependent. Path Dependent Social Complexity Causal Ambiguity Mechanism 1 X Mechanism 2 Mechanism 3 Mechanism 4 Mechanisms 3 is the easiest to imitate. However, it would still take a long time for another airline to shed its systems and replicate Southwest’s model (probably have to be a start-up and Southwest already has many of the airports and routes locked up). Plus, it doesn’t guarantee a 15-minutes turnaround or low fares. Mechanism 2 is the toughest to match. It would next to impossible to replicate the labor productivity advantages because it would require replicating Southwest’s path-dependent and socially complex culture. 57

MAKING AN ARUGMENT FROM THE STRATEGY MAP
ORGANIZATION: The culture and the 15 minutes turnaround are closely related. So, any firm would need both to be able match Southwest’s levels of productivity and satisfaction. Mechanisms 1 and 3 are mutually reinforcing: the “O” of assets, processes, and simple technology drive both productivity and satisfaction. Mechanisms 1, 2 and 4 are mutually reinforcing: the culture drives not only labor productivity, but also the ability to execute the 20 minute turnaround, and also greater customer satisfaction. Conclusion. Any firm looking to unseat Southwest will need to match all four mechanisms. This is really unlikely, for all of the reasons noted. Our analysis suggests that Southwest is likely to retain a competitive advantage for a long time. 58

IDENTIFYING CRITICAL WORKFORCE ATTRIBUTES
NUMBERS: Lean and mean: passengers per employee, employees per gate, average labor costs per employee. TYPES: Pilots. Gate attendants/baggage/flight attendants. Top Managers. Focused more on attitude (not the skills per se). Skills can be taught. Not competing on the basis of superior skills. People who reinforce and strengthen Southwest’s culture for service, teamwork, and fun. DEPLOYMENTS: Routinized jobs for the most part. Fly the plane, get people on the plane, load the bags, be safe. Not a lot of discretion here with one notable exception: employees are expected to do whatever it takes to (1) get the plane turned around in 15 minutes and (2) provide terrific customer service. BEHAVIORS: Teamwork, attitude, humor and fun (safely) COSTS: Low, low, low. (100K for 70 hours versus 200K for 50 hours) 59

PEOPLE AS A SOURCE OF ADVANTAGE
1. Labor productivity  (1) reduced headcount and (2) lower costs. 2. Customer satisfaction  (1) deployments (teamwork) and (2) behaviors (customer service, positive attitude, and humor/fun). 3. Asset productivity  (1) deployments and (2) behaviors 60

Chapter 4: The Analysis and Design of Work (pp. 158-175)
1. The importance of job analysis in strategic and human resource management 2. The different approaches to job design 3. The trade-offs among the various approaches to designing jobs

Model of the Strategic Management Process
Choice Strategy Formulation Goals Mission External Analysis Opportunities Threats Internal Strengths Weaknesses Strategy Implementation HR Practices Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits Firm Performance Productivity, Quality, Profitability HR Capability Abilities, Knowledge, Skills Human Resource Needs Behavior Culture 1. Differentiation 2. Cost-leadership 3. Focus Strat. Eval. Human Resource Actions Behaviors, Results Turnover Productivity

Opening Case: Toyota & BMW
Strategy Cost-leadership Differentiation -Premium segment Emphasis Cost/standardization Creativity/complexity Required Employee Behaviors -minimize mistakes -continuous improvement - creativity, teamwork, risk taking, etc. Work design -simplified/detailed Jobs -standardized -relatively low discretion -top-down communication => “one best way” -complex/flexible -teams (project, cross-) -autonomy/discretion -lateral communication => “diversity” Other HR practices Selection, training & development, compensation, performance appraisal…

Vertical (external) & Horizontal (internal) alignments
Toyota BMW (Gateway) Cost-leadership Strategy Differentiation Strategy (Apple) Vertical (external) & Horizontal (internal) alignments

Job Analysis and Job Design
Job Analysis: the process of getting detailed information about jobs Job Design: Job design is the process of defining the way work will be performed and the tasks that will be required in a given job.

The important of Job Analysis to HR Managers
Job Analysis: the process of getting detailed information about jobs. Performance Appraisal Work Redesign Job Analysis HR Planning Job Evaluation Career Planning Selection Training and Development

Job Analysis Information
Job Description is a list of tasks, duties, and responsibilities (TDRs) Job Specification is a list of knowledge, skills, abilities, and other characteristics (KSAOs)

Job Analysis Methods Position Analysis Questionnaire (PAQ)
Fleishman Job Analysis System (FJAS) Occupational Information Network (O*NET) Ex) Job Analysis: Human Resource Manager Business School Professor

Job Dimensions and Job Tasks of a University Professor
Teaching prepares and presents lecture material in class Research prepares research reports for publication in journals Advising gives career counseling advice to students Service serves on departmental committees as needed Consulting performs work for external organizations

Job Design Job design: The process of defining the way work will be performed and the tasks that will be required in a given job Four approaches used in job design are: mechanistic approach motivational approach biological approach perceptual-motor approach

Mechanistic Approach Has its roots in classical industrial engineering
=> maximize efficiency Focuses on designing jobs around the concepts of: task specialization skill simplification repetition Scientific management is one of the earliest mechanistic approaches sought to identify the “one best way” to perform the job through the use of “time-and-motion” studies time-and-motion studies identify the most efficient movements for workers to make Job not people Low skilled and inexpensive labor

Motivational Approach
The motivational approach to job design focuses on the job characteristics that affects the psychological meaning motivational potential of job design. Attitudinal variables (job satisfaction, intrinsic motivation, etc.) and behavioral variables (attendance and performance) A focus on increasing job complexity through: job enlargement (broadening the types of tasks performed) job enrichment (empowering workers by adding decision-making authority to jobs) the construction of jobs around sociotechnical systems.

Job Characteristics Model
A model of how job design affects employee reaction is the “Job Characteristics Model”. Core Job Dimensions Skill Variety Task Identity Task Significance Autonomy Feedback Psychological States Meaningful Work Responsibility for Outcome Knowledge of Results Work Outcomes High Motivation High Quality of Work High Satisfaction Low Absenteeism and Turnover

Chapter 5 & 6: HR Planning, Recruitment, & Selection

Team Case Presentation #1
Cappellie Talent Management for the Twenty-First Century. Harvard Business Review. V.S. Pfeffer Fighting the War for Talent is Hazardous to Your Organizations’ Health. Organization Dynamics.

Cappelli versus Pfeffer
Why should we develop our people when our competitors are willing to do it for us? (CEO in the medical device industry) In a knowledge-driven turbulent economy? Key assumptions in each perspective? Whose arguments do you buy? Pros and cons of each perspective? Market-based approach versus internal-development/succession? How to design HRM system from each perspective? Which approach is more likely to support that HR can be a source of sustained competitive advantage of a firm? How about HRM?

View points in the two articles
B Outputs B D Outputs C C D Sum of Each Individual efforts Cooperation among individuals Uncertainty & Maximize efficiency: Management Control Uncertainty & Maximize efficiency: By Employees Themselves Costs-Benefits: Explicit Costs-Benefits: Implicit / psychological Time: Short Time: Long

HR planning and Firm Performance
Economic Individual Cappelli Market-based Uncertainty Pfeffer Internal Market Sociological Collective Low External Hiring High

TCP #2 SG Cowen: New Recruits

SC Cowen: New Recruits Strategy, Target Markets, Strategic Directions, etc. - Investment banking (health care and technology) - Research emphasis & Global expansion - Credential, compensation costs (the biggest expense item), etc. HR Strategy - recruit & keep the best people Hiring Strategy (supply and demand) - Core school strategy Hiring Processes - presentation (Who, What, distinguishing factors, next steps), job characteristics - on-campus interviews, Super Saturday Hiring Criteria - KSA, culture fit, people for SG Cowan Hiring Decision - consensus, raters’ bias, etc.

SC Cowen: New Recruits 1. Why do SC Cowen spend so much effort and resource? - retention / hiring best performer, MBA from good university. Clint cares for the credential (reputation), compensation costs occupies 50 to 60% of company costs. Social capital/network, relatively high impact of individuals on firm performance. Training is less important, etc. 2. What is your evaluation of “core school strategy” ? - why core school strategy (signaling individuals’ ability & signaling their quality of service), change the core schools (in the middle of top schools => top students of next top schools), market situation (suppliers’ market => buyers’ market, so if they kept top core schools, they could have hired top students from top business schools). Negative impact on clients’ perception of their service. 3. Do you think of any points/parts that SC Cowen consider in order to improve their recruitment/selection processes? – structured? Raters’ bias? Realistic job previews? Too informal? Situational interview? Two many people involved? Core school strategy? Questions and evaluation they use? Training for interviewers? (have two children? Legality? ideal type for himself not for SC Cowen?) 4. What is your evaluation of the criteria used by SC Cowen in making hiring decision? - individual ability? GPA? Matters? How to quantify diverse selection criteria? Just overall impression? Raters’ Biases? Consensus is good but may not be systematic? Items are related to the criteria specifically for SG Cowen (no difference with other firms)? Where is cultural fit?.. International experience? 5. Which two candidates would you select if you were a member of the recruiting committee?

Forecasting Stage of Human Resource Planning
Determining Labor Demand derived from product/service demanded external in nature (ex. terrorism & instability) Determining Labor Supply internal movements caused by transfers, promotions, turnover, retirements, etc. transitional matrices identify employee movements over time Determining Labor Surplus or Shortage

Strategies for Reducing an Expected Labor Surplus
Option Speed Extent of Human Suffering 1. Downsizing 2. Pay reductions 3. Demotions 4. Transfers 5. Work sharing 6. Hiring freeze 7. Natural attrition 8. Early retirement 9. Retraining Fast Slow High Moderate Low

Strategies for Reducing an Expected Labor Shortage
Option Speed Extent of Human Suffering 1. Overtime 2. Temporary employees 3. Outsourcing 4. Retrained transfers 5. Turnover reductions 6. New external hires 7. Technological innovation Fast Slow High Moderate Low

Downsizing Downsizing is the planned elimination of large numbers of personnel designed to enhance organizational competitiveness. Reasons for downsizing include: need to reduce labor costs technological changes reduce need for labor mergers and acquisitions reduce bureaucratic overhead organizations choose to change the location of where they do business

Effects of Downsizing Studies show that firms that announce a downsizing campaign show worse, rather than better financial performance. Reasons include: The long-term effects of an improperly managed downsizing effort can be negative. Many downsizing campaigns let go of people who turn out to be irreplaceable assets. Employees who survive the staff purges often become narrow-minded, self-absorbed, and risk-averse.

Employing Temporary Workers
Hiring temporary workers helps eliminate a labor shortage. Temporary employment affords firms the flexibility needed to operate efficiently in the face of swings in demand. Other advantages include: temporary workers free a firm from many administrative tasks and financial burdens temporary workers are often times tested by a temporary agency many temporary agencies train employees before sending them to employees

Human Resource Recruitment
The practice or activity carried on by the organization with the primary purpose of identifying and attracting potential employees. Recruitment activities affect: 1) # of people who apply for vacancies 2) the type of people who apply for them 3) the likelihood that those applying for vacancies will accept positions if offered. => The goal of HR recruitment: quantity & quality

The Human Resource Recruitment Process
Job Choice Job Choice Vacancy Characteristics Applicant Characteristics Personnel Policies Recruiter Traits and Behaviors Recruitment Sources - Internal vs external - extrinsic & intrinsic rewards Recruitment Influences

Personnel Policies Characteristics of the vacancy are more important than recruiters or recruiting sources. Personnel Policies vary: Internal versus External recruiting Extrinsic versus Intrinsic rewards Employment-at-will policies Image advertising (a good place to work)

Recruiters Functional Area Traits Realism
HR- versus operating area-specialist Traits warm and informative Realism realistic job preview, honesty

Steps to Enhance Recruiter Impact
1. Provide timely feedback 2. Avoid rude behavior 3. Recruit in teams 1. Provide timely feedback 2. Avoid rude behavior 3. Recruit in teams

Selection Method Standards for Evaluation Purposes
Reliability Validity Generalizability Utility Legality

Reliability Reliability is the degree to which a measure of physical or cognitive abilities, or traits, is free from random error. - the consistency of a performance measure - ex) measuring one’s height: a ruler versus a visual guess (measuring instrument)

Validity Validity is the extent to which a performance measure assesses all the relevant—and only the relevant—aspects of job performance.

Generalizability Generalizability is the degree to which the validity of a selection method established in one context extends to other contexts. Ex) SAT, GMAT, GRE, LSAT, etc. Three contexts include: different situations different samples of people different time periods

Utility Utility is the degree to which the information provided by selection methods enhances the effectiveness of selecting personnel in organizations. It is impacted by reliability, validity, and generalizability.

Legality All selection methods must conform to existing laws and legal precedents.

Types of Selection Methods
Interviews Honesty Tests and Drug Tests References and Biographical Data Work Samples HR JOBS Physical Ability Tests Personality Inventories Cognitive Ability Tests

Interviews Selection interviews are defined as a dialogue initiated by one or more persons to gather information and evaluate the qualifications of an applicant for employment. The utility of an interview can be increased by the following suggestions: Interviews should be structured, standardized, and focused on goals oriented to skills and behaviors that are observable. Interviewers should plan to come out of each interview with a quantitative rating. Interviewers should also have a structured note-taking system that will aid recall when it comes to satisfying the ratings.

Other Selection Methods
References, Biographical data, and Application Blanks gather background information on candidates. Physical ability tests are relevant for predicting not only job performance but occupational injuries and disabilities. Types of physical ability tests include: muscular tension, power, and endurance flexibility balance coordination

Chapter 7: Training Training can...
Increase employees’ knowledge of foreign competitors and cultures. Help ensure that employees have the basic skills to work with new technology, Help employees understand how to work effectively in teams to contribute to product and service quality. Ensure that the company’s culture emphasizes innovation, creativity, and learning. ….

Training Training is a planned effort by a company to facilitate the learning of job‑related knowledge, skills, or behavior by employees. => Moving to increasing intellectual capital (basic skills, sharing information, understanding of customers or manufacturing system, etc.) Effective training: is linked to strategic business goals and objectives, has top management support, relies on an instructional design model, and is benchmarked to programs in other organizations.

Strategic training and development initiatives: Learning-related actions that a company takes to achieve its business strategy.

Ions Consulting: The MP^2 Training Program

Ions Consulting Strategy, Target Markets, etc. Problems HR Strategy
- Provides superior solutions (health care and telecom companies) - Core competencies: IT project solution (system integration, network management, etc) - competitive advantage (CA) from having a large pool of experienced consultants. Problems - layoff & high turnover => lack of experienced consultants (diminishing C.A) - low employee morale, difficulty to hire experienced consultants HR Strategy - develop & implement a training program => speed up learning of employees, reduce turnover, increase employee morale, etc. Training Program - Mentoring Management Project for Professionals (MP^2) Need to implement the MP^2 program - resistance to the program. - choice: (1) give up, (2) just implement as it is, (3) revise & implement

VS Large pool of experienced consultants
Strategic Choice Strategy Formulation Goals Mission External Analysis Opportunities Threats Internal Strengths Weaknesses Strategy Implementation HR Practices Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits Firm Performance Productivity, Quality, Profitability HR Capability Abilities, Knowledge, Skills Human Resource Needs Behavior Culture Provides Superior solutions Strat. Eval. Human Resource Actions Behaviors, Results Turnover Morale Large pool of experienced consultants Lack of pool of experienced consultants VS

Discussion points 1. Give up, just implement as it is, or revise & implement? 2. Benefits and concerns of the current MP^2 program? Benefits: increase the efficiency and the speed of delivery of projects, allow them to connect as a team to help their clients, gain from mentoring experience, etc.. Costs: less manpower to attract more projects, no time to supervise junior members, incompetent mentors / junior members, etc.. 3. How to improve the effectiveness of the current MP^2 program? - Alignment (internal) with other HR practices (compensation, performance appraisal, etc.) - Top management support - Gain program acceptance through employee support - Implement a training program for the mentors - Take time. Do not enforce this program company-wide. Do not make it mandatory… (e.g., project characteristics…) - Rotation of mentors and rotation of proteges (social integration, more exposure to different types of projects, better match between them, etc). - Involvement of diverse stakeholders in developing & revising MP^2 program 4. Measuring the effectiveness of the current MP^2 program?

Designing Effective Training Activities

A process used to determine if training is necessary
1. Needs Assessment A process used to determine if training is necessary Ex) Ions Consulting

1. Need Assessment Organizational Analysis involves determining the business appropriateness of training, given - company’s business strategy - resource availability for training - support by managers and peers for training activities Person Analysis - performance deficiencies (a lack of KSA vs motivation / work-design) - identifying who needs training - determining employees’ readiness for training Task Analysis - identifying the important tasks, knowledge, skill, and behaviors that need to be emphasized in training for employee to complete their tasks.

2. Ensuring Employee Readiness for Training
Motivation to learn is the desire of the trainee to learn the content of the training program. Self-efficacy is the employees' belief that they can successfully learn the content of the training program. Letting employees know that the purpose of training is to try to improve performance rather than to identify areas in which employees are incompetent. Providing as much information as possible about the training program and purpose of training prior to the actual training. Showing employees the training success of their peers who are now in similar jobs. Providing employees with feedback that learning is under their control and they have the ability and the responsibility to overcome any learning difficulties they experience in the program.

3. Creating a Learning Environment
Employees need to know why they should learn. Employees need meaningful training content. Employees need to have opportunities to practice. Employees need feedback. Employees learn by observing, experiencing, and interacting with others. Employees need the training program to be properly coordinated and administered. Training objectives based on the training needs analysis help employees understand why they need training.

4. Transfer of Training Transfer of Training Climate for transfer
Opportunity to use learned capability Technological Support Transfer of Training Self-management skills Manager support Peer Support

6. Outcomes Used in Evaluating Training Programs
Cognitive Outcomes Skill-based Outcomes Affective Outcomes Results Return on Investment WHAT IS MEASURED Acquisition of Knowledge Behavior Skills Motivation Reaction to Program Attitudes Company Payoff Economic value of Training HOW MEASURED Pencil and paper tests Work sample Observation Ratings Interviews Focus groups Attitude surveys Data from information system or performance records Identification and comparison of costs and benefits of the program

Chapter 9: Employee Development

ED Strategy, HR system Goals of ED Approaches to ED
Development refers to formal education, job experiences, relationships, and assessment of personality and abilities that help employees prepare for the future Goals of ED 1. Develop managerial talent 2. Allows employees to take responsibility for their careers 3. Execute a growth strategy 4. Retain talented employees 5. Increase adaptability to changing environment => gaining a competitive advantage Approaches to ED Formal Education (off- and on-site) Assessment (information=> feedback) Personality test Myers-Briggs Type Indicator (MBTI) Assessment Center Benchmarks PA and 360° Feedback Job Experiences - Job Enlargement, Job Rotation, Transfers, Promotions, Downward Moves 4. Interpersonal Relationships ED Career Management & Development 1. Self-assessment 2. Reality Check 3. Goal Setting 4. Action Planning Special Issues 1. Glass Ceiling 2. Succession Plan Strategy, HR system Competitive advantage

Approaches to Employee Development
Formal education - off-site and on-site programs - corporate university, in-house development center, customized education program, MBA programs in universities (tuition reimbursement), etc. Assessment (collecting information and providing feedback) - Myers-Briggs test (identify individuals’ preference for energy, decision making, life-style) - Assessment center (multiple raters evaluate employee performance) - Benchmarks (measure the factors that are important to managerial success) - Performance appraisals - 360-Degree Feedback Systems Job experiences - The relationships, problems, demands, tasks, and other features that employee face in their jobs - Job enlargement, job rotation, promotion, transfer, downward move, etc. Interpersonal relationships (a more experienced organizational members) - mentoring (an experienced, productive senior employees) - coaching (a peer or manager who works with an employee)

Comparison between Training and Development
Development refers to formal education, job experiences, relationships, and assessment of personality and abilities that help employees prepare for the future Focus Use of work experience Goal Participation Training Current Low Preparation for current job Required Development Future High changes Voluntary

GE’s Talent Machine: The Making of a CEO
TCP #4 GE’s Talent Machine: The Making of a CEO Succession planning: Identifying and tracking high-potential employees capable of filling higher-level managerial positions

Human Resource Management Process
Strategic Choice Strategy Formulation Goals Mission External Analysis Opportunities Threats Internal Strengths Weaknesses Strategy Implementation HR Practices Recruiting, Training, Performance management, Labor relations, Employee relations, Job analysis Job design, Selection, Development, Pay structure, Incentives, Benefits Firm Performance Productivity, Quality, Profitability HR Capability Abilities, Knowledge, Skills Human Resource Needs Behavior Culture 1. Differentiation 2. Cost-leadership 3. Focus Strat. Eval. Human Resource Actions Behaviors, Results Turnover Productivity

People say that GE’s management development practice is a source of sustained competitive advantage of GE. 1. What are the key features / functions of GE’s MDP? 2. How is MDP in GE aligned with other HR practices as well as GE’s business strategy? Do you think that other competitors can imitate GE’s MDP? Do you think Immelt need to change GE’s current “vitality curve”, recruitment strategy, and executive bands?

People say that GE’s management development practice is a source of sustained competitive advantage of GE. 1. What are the key features / functions of GE’s MDP? => Session C, formal education programs, mentoring, job experience with challenging work, continuous test, CEO support/leadership, social recognition (symbolic), sophisticated development program, alignment with other HR practices and business strategy… 2. How is MDP in GE aligned with other HR practices as well as GE’s business strategy? - strategy (concentration (focus) to diversification => decentralization => managers who are competent in operating businesses => corporate university in Crotonville), meritocracy based on measured performance, law suit…acceptability… Do you think that other competitors can imitate GE’s MDP? => Resource based view of the firm: Valuable, rare, inimitable, & organization => Inimitable: social complexity (culture, shared belief on the system, leadership), causal ambiguity (my experience: people say 9 block matrix but more important thing is one-over-one review. But, I may be wrong… because many things are involved at the same time). Organization (alignment. Just implementing MDP may not work. Need to implement what GE does) Do you think Immelt needs to change GE’s current “vitality curve”, recruitment strategy, and executive bands?

Assessment Centers At an assessment center, multiple raters or evaluators evaluate employees’ performance on a number of exercises. Usually off-site. Types of exercises include: Leaderless group discussion Interviews In-baskets Role plays

Job Experiences Job enlargement refers to adding challenges or new responsibilities to an employee’s current jobs. Job rotation is the process of systematically moving a single individual from one job to another over the course of time. A transfer is a movement of an employee to a different job assignment in a different area of the company Promotions advances into positions with greater challenge, more authority than the employee’s previous job. A downward move occurs when an employee is given a reduced level of responsibility and authority.

Employee Development: Job Experiences

Mentoring A mentor is an experienced, productive senior employee who helps develop a less experienced employee. Benefits of Mentoring Relationships Career Support Coaching, protection, sponsorship, and providing challenging assignments, exposure, and visibility. Psychological support Serving as a friend and role model, providing positive regard and acceptance, and creating an outlet for a protégé to talk about anxieties and fears. Group Mentoring Program A program pairing a successful senior employee with a group of four to six less experienced protégé.

Coaching A coach is a peer or manager who works with an employee to:
motivate him help him develop skills provide reinforcement and feedback Three roles a coach can play include: one-on-one help employee learn for himself or herself may involve providing resources such as mentors, courses, or job experiences

HUMAN RESOURCE MANAGEMENT, 4029 SCHOOL OF BUSINESS, KONKUK UNIVERSITY

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