STUDY GUIDE

of
(Ph.D Education)

SPECIALIZATION IN EPM

HUMAN RESOURCE MANAGEMENT

Course Code: 4782

Department of Educational Planning, Policy Studies and Leadership

Faculty of Education, Allama Iqbal Open University
Islamabad.

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 (All Rights are Reserved with the Publisher)

Publisher .......................................... Allama Iqbal Open University

Printer .............................................. AIOU Printing Press, H-8, Islamabad

Layout .............................................. Asrar ul Haque Malik

Quantity ........................................... 50

Price ................................................. Rs.

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 HUMAN RESOURCE MANAGEMENT

Introduction

The main purpose of the course is to provide the readers an overview of what human
resource management is, and why it is important for all managers of different
organizations. HRM has emerged as very important discipline which helps better
functioning of enterprises and organizations. It is the focus for a wide ranging debate
concerning the nature of the contemporary employment relationship in many market
economies. The nature of the employment relationship has experienced a series of
important changes and adaptations over the past decade. These are both significant in
itself and will provide the basis for further development in future.

With some understanding of why HRM has risen to prominence, one can undertake a
more detailed examination of its nature of human resources. It is possible to isolate three
key themes which inform, to some extent, most approaches which go under the name of
HRM:
 Human relations psychology
 Strategic management theory
 Doctrines of flexibility and quality management

These approaches provide a convenient framework within which different ‘schools’ of

HRM can be located.

Objectives:

– After going through this course the student / scholar should be able to:
– Understand the concepts and scope of HRM in Education.
– Analyze the process of HR Planning and SWOT analysis.
– Appreciate the concepts of types of training for personnel development.
– Manage stress or conflict situations.
– Apply global HRM practices in Pakistan.

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 COURSE TEAM

Chairman: Dr. Hamid Khan Niazi

Course Development Coordinator: Dr. Hamid Khan Niazi

Writer: Dr. Hamid Khan Niazi

Reviewer: Dr. Syed Hassan Raza

Editor: Mr. Abdul Wadood

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 FOREWORD

Professional experts are essential elements as human resource and play a significant role
in the success of any organization. Their job needs to be up dated to meet the ever
changing needs of the organization and society they serve. Not surprisingly, their status
in some organization has also been elevated. Although personnel management and human
resource management are frequently used interchangeably, yet is important to note that
both the concepts are quite different. HRM has a broader vision that personnel
management and cover all aspects of management.

Most experts agree that HRM is the process of training acquiring, appraising and
compensating employees, which primarily is a basic need of human management.

The study guide on HRM is an effort to provide great deal of information and guidance to
the PhD students enrolled at AIOU in EPM with a view to making them understand the
technical knowledge and concepts of HRM.

I would like to extend my facilitation to the course coordinator on the successful

completion of study guide which is of immense value to scholars of PhD-EPM
programme.

Prof. Dr. Mahmood ul Hassan Butt

Vice Chancellor

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vi
 PREFACE

Human Resource Management provides with a complete, comprehensive review of

essential personnel management concepts and techniques in a highly readable and
understandable form for the students in human resource management courses and
practicing managers. As this new edition goes to press, I feel even more strongly than
before when I wrote the first that all managers-not just HR managers—need a strong
foundation in HR personnel management concepts and techniques to do their job better.
Because all managers do have personnel related responsibilities, I again wrote Human
Resource management, 11th edition, for all students of management, not just those who
will some day carry the title of Human Resource Manager. This edition thus continues to
focus on practical applications that all man-agreed need to deal with their HR related
responsibilities. This publication is designed to provide accurate and authoritative
information with regard to the subject matter covered, but it is not intended to be a source
of legal or other professional advice for any purpose.

To the students taking this course: Welcome! You have been provided study guide (hard
copy) and related web material on CD. Each unit of study guide is written on self
instruction style and supported by web based resources and materials that will make the
reader of the unit to have an access to further readings. These will also assist the readers
for searching recent and related material for inclusion in the course for future students.

The writers have tried to establish link between the resource materials and the topic or
subtopic of the main units for maintaining the consistency among reading.

I hope you will find this style interesting and workable. The material and study guide and
presented for pilot testing. Your feedback will enable the coordinator to improve the course.

Thanks.

(Dr. Hamid Khan Niazi)

Chairman, EPPSL

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viii
 TABLE OF CONTENT
Page No.
Unit 1 PERSPECTIVES OF HUMAN RESOURCE MANAGEMENT ............1
1. Introduction..........................................................................................3
2. Objectives ............................................................................................3
3. Concept of Human Resource Management .........................................3
4. Need and Scope of Human Resource Management .............................4
5. Difference between HRM and Personnel Management .......................4
6. The Human Resource Management Environment ...............................4
7. Human Resource Management in Pakistan .........................................6
8. References............................................................................................7

Unit 2 HUMAN RESOURCE PLANNING PROCESS .......................................9

1. Introduction.........................................................................................11
2. Objectives ...........................................................................................11
3. Concept of Human Resource Planning ...............................................11
4. Need for Human Resource Planning...................................................11
5. Scope of Human Resource Planning...................................................12
6. Recruitment and Selection ..................................................................12
7. Recruitment: Marketing Jobs ..............................................................12
8. Informal Recruiting.............................................................................13
9. Formal Recruiting ...............................................................................13
10. Recruitment and Succession Planning: Finding and Keeping Those
Who 'Fit' ..............................................................................................13
11. Researching Candidates ......................................................................14
12. Interviewing ........................................................................................14
13. Employees Movement and Replacement ............................................14
14. References...........................................................................................16

Unit 3 STRATEGIC HUMAN RESOURCE MANAGEMENT ........................17

1. Introduction.........................................................................................19
2. Objectives ...........................................................................................19
3. Concept of Strategic Human Resource Management .........................19
4. Strategic Human Resource Planning ..................................................20
5. A Strategic Human Resource Planning Model ...................................22
6. Human Resource Database .................................................................23
7. SWOT Analysis ..................................................................................24
8. Low Cost Strategy ..............................................................................25
9. Differentiation Strategy ......................................................................25
10. Formulating Functional-Level Strategy ..............................................25
11. References...........................................................................................26

Unit 4 TRAINING AND PERSONNEL DEVELOPMENT ..............................27

1. Introduction.........................................................................................29
2. Objectives ...........................................................................................29

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 3. Concept of Training ............................................................................29
4. Purpose of Training and Development ..............................................29
5. Training Process .................................................................................30
6. Training Strategy ................................................................................31
7. Training Methods ...............................................................................31
8. Identifying Training Needs (Task Analysis).......................................33
9. Development of Personnel ..................................................................34
10. Employee Recruitment and Development ..........................................35
11. References...........................................................................................37

Unit 5 PERSONNEL PERFORMANCE APPRAISAL .....................................39

1. Introduction.........................................................................................41
2. Objectives ...........................................................................................41
3. Definition & Concepts ........................................................................41
4. Objectives of Performance appraisal ..................................................41
5. Performance Appraisal Information ...................................................42
6. What to Evaluate? ...............................................................................43
7. Who Evaluates? ..................................................................................43
8. Performance Appraisal Methods.........................................................44
9. Approaches to Performance Development .........................................46
10. Appraisal Methods ..............................................................................47
11. References...........................................................................................52

Unit 6 COMPENSATION MANAGEMENT ......................................................55

1. Introduction.........................................................................................57
2. Objectives ...........................................................................................57
3. Concept of Compensation Management .............................................57
4. Determining Pay Rates (Developing Pay Structure) ..........................58
5. Equity Theory and Fairness ................................................................58
6. Compensation Costs ...........................................................................63
7. Employee Risk Management: Reduce Your Workers'
Compensation Cost .............................................................................63
8. Achieving Cost Reductions through Workers Compensation Reform....... 64
9. Problems with Performance Pay .........................................................65
10. Money as Motivator ............................................................................65
11. Pay and the Hygiene Factor ................................................................66
12. Cloudy Relationships ..........................................................................67
13. References...........................................................................................68

Unit 7 MANAGING CHANGE, CONFLICT AND STRESS ............................69

1. Introduction.........................................................................................71
2. Objectives ...........................................................................................71
3. Change ................................................................................................71
4. Barriers to Change ..............................................................................72
5. Organizational barriers to change .......................................................72

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 6. Individual barriers to change ..............................................................72
7. Conflict ...............................................................................................73
8. The Ingredients of Conflict .................................................................73
9. Managing Conflicts.............................................................................74
10. Conflict Management Strategies .........................................................74
11. Interpersonal Conflict ........................................................................75
12. Stress ...................................................................................................77
13. Managing stress ..................................................................................77
14. Managing Personal Stress ...................................................................80
15. Employee Assistance Programs (EAPs) .............................................81
16. References...........................................................................................82

Unit 8 EMPLOYEE MOTIVATIONS .................................................................83

1. Introduction.........................................................................................85
2. Objectives ...........................................................................................85
3. Communication Process .....................................................................85
4. Barriers to Effective Communication .................................................86
5. Reading Nonverbal Communication Cues..........................................87
6. Nonverbal Communication .................................................................88
7. Communication Success Tips .............................................................89
8. Controlling ..........................................................................................89
9. Bureaucratic Control ...........................................................................89
10. Problems of Bureaucratic Control ......................................................90
11. Characteristics of the Control Process ................................................90
12. Management Control Strategies ..........................................................90
13. Designing Effective Control Systems .................................................91
14. Dysfunctional Consequences of Control ............................................91
15. Types of Control .................................................................................91
16. The Primary Types of Organizational Control ...................................93
17. References...........................................................................................94

Unit 9 INTERNATIONAL HUMAN RESOURCES MANAGEMENT ...........95

1. Introduction .....................................................................................97
2. Objectives ........................................................................................97
3. Approaches to Human Resource Management Reforms .................97
4. From Personnel Administration to Human Resource Management ....... 99
5. Human Resource Development in the Asia Pacific: Issues, Challenges
and Responses ................................................................................101
6. Broad development indicators in Asia Pacific................................101
7. Maps and Models of HRM .............................................................102
8. Suggested Readings ........................................................................106

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Unit–1

PERSPECTIVES OF HUMAN
RESOURCE MANAGEMENT

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1. Introduction
Human resource management (HRM) is the understanding and application of the policy
and procedures that directly affect the people working within the project team and
working group. These policies include recruitment, retention, reward, personal
development, training and career development.
Many people find HRM to be a vague and elusive concept - not least because it seems to have
a variety of meanings. Pinning down an acceptable definition can seem like trying to hit a
moving target in a fog. This confusion reflects the different interpretations found in articles
and books about human resource management. HRM is an elastic term (...). It covers a range
of applications that vary from book to book and organization to organization.

2. Objectives
After going through this unit you would able to:
1. Understand the concepts of Human Resource Management
2. Visualize the Human Resource Management Environment
3. Analyze the Human Resource Management in Pakistan

3. Concept of Human Resource Management

Human Resource management is the application of management functions of planning,
organizing, leading and controlling in an organization. Many people find HRM to be a
vague and elusive concept - not least because it seems to have a variety of meanings.
Pinning down an acceptable definition can seem like trying to hit a moving target in a
fog. This confusion reflects the different interpretations found in articles and books about
human resource management. HRM is an elastic term (...). It covers a range of
applications that vary from book to book and organization to organization.

Different authors defined HRM in their own perspectives. Some of the important
definitions of HRM are given below:
i. Human Resource Management (HRM) is a process of bringing people and organization
together so that the goals of each are met. It is that part of the management process which
is concerned with the management of human resources in an organization. It tries to
secure the best from people by winning the whole hearted cooperation...

ii. HRM may be defined as the art of procuring, developing and maintaining
competent workforce to achieve the goals of an organization in an effective and
efficient manner.

iii. All methods and functions concerning the mobilization and development of
personnel as human resources, with the objective of efficiency and greater
productivity in a company, government administration, or other organization.

iv. Human resource management (HRM) is the understanding and application of the
policy and procedures that directly affect the people working within the project
team and working group. These policies include recruitment, retention, reward,
personal development, training and career development.

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4. Need and Scope of Human Resource Management
HRM is the strategic and coherent approach to the management of an organization’s most
valued assets - the people working there who individually and collectively contribute to
the achievement of the objectives of the business.[1] The terms "human resource
management" and "human resources" (HR) have largely replaced the term "personnel
management" as a description of the processes involved in managing people in
organizations. In simple sense, Human Resource Management (HRM) means employing
people, developing their resources, utilizing maintaining and compensating their services
in tune with the job and organizational requirement.

HRM stands for Human Resource Management. It is the application of management, functions
of Planning, Organizing, Leading and controlling to the Human Resource function.

The human resource department of an organization is responsible for job organization,

job descriptions, job responsibilities, hierarchical structures, recruitment, selection,
training and development of employees etc. It is very important for an organization
because it helps in selection and grooming of the right employees.

For further details see Personnel Management in Transition, Stephen Bach (2005)
given in unit one of the allied materials.

5. Difference between HRM and Personnel Management

Some experts assert that there is no difference between human resources and personnel
management. They state that the two terms can be used interchangeably, with no difference in
meaning. In fact, the terms are often used interchangeably in help-wanted ads and job descriptions.

For those who recognize a difference between personnel management and human resources, the
difference can be described as philosophical. Personnel management is more administrative in
nature, dealing with payroll, complying with employment law, and handling related tasks.
Human resources, on the other hand, are responsible for managing a workforce as one of the
primary resources that contributes to the success of an organization.

When a difference between personnel management and human resources is recognized, human
resources are described as much broader in scope than personnel management. Human
resources is said to incorporate and develop personnel management tasks, while seeking to
create and develop teams of workers for the benefit of the organization. A primary goal of
human resources is to enable employees to work to a maximum level of efficiency.

For further details see paragraph 2 of allied materials.

6. The Human Resource Management Environment

The four HRM activities don't exist in isolation. Rather, they are highly affected by what
is occurring outside and inside the organization.

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6.1 The External Influences
It is an important to recognize environmental influences because any activity undertaken
in each of the HRM processes is directly or indirectly affected by these external elements.
For example, lets say that when a company downsizes its workforce, does it layoff
workers by seniority? If so, are an inordinate number of minority employees affected.
Although any attempt to identify specific influences may prove insufficient, one can
categorize them into four general areas - the dynamic environment, governmental
legislation, labor unions and current management practice.

6.2 The Dynamic Environment of HRM

It's been stated that the only thing that remains constant during our lifetimes is change
(and paying taxes!). We must, therefore, prepare ourselves for events that have a
significant effect on our lives. HRM is no different. Many events help shape our field.
Some of the more obvious ones include globalization, work-force diversity, changing
skill requirements, corporate downsizing, total quality management, reengineering work
processes, decentralized work sites, and employee involvement.

Globalization reflects the worldwide operations of many businesses today. One is no

longer bound by continents or societal cultures. Work-force diversity includes the varied
backgrounds of employees that are present in the companies today. Homogeneity of
employees and their needs no longer exists. The work today is more complex, requiring
employees with sophisticated skills. Without them, many employees will lack the basic
abilities to successfully perform in tomorrow's organizations.

Corporate downsizing, total quality management, and reengineering relate to one another. As
the world changed, U.S. companies had to compete harder to maintain their leading industrial
status. This meant doing things differently. In an effort to become more productive,
organizations downsized to create greater efficiency by eliminating certain jobs. Of the jobs
and work processes remaining, total quality management (TQM) looks at ways of improving
job effectiveness. By continuously improving on methods, techniques, processes, and the like,
companies made constant efforts to improve what they produce. But what they produce, even
if it's better, still doesn't satisfy the customer? In those cases, reorganization / restructuring
engineering is necessary. Whereas TQM looks at new and improved ways of producing
goods and services, reengineering looks at starting the processes over again from scratch.
That is, instead of improving on an existing product, the organization would analyze what
should be done and how they should do it. Searching for answers would not be constrained by
current business practices.

Decentralized work sites are quickly becoming part of many organizations. With the
technologies that are available (personal computers, fax machines, modems, etc.), work
that was once done on the company premises may now be more cost-effectively handled
at the employee's home. Lastly, employee involvement looks at how employees’ lives are
changing. Involved employees now have more control over their jobs. Certain activities,
like goal setting were once the sole responsibility of managers, such an action today
permits participation with employee involvement.

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7. Human Resource Management in Pakistan
National Commission for Human Development is an organization responsible for the
Development of Human Resource in Pakistan. Pakistan is the first country to establish a
Public-Private Partnership to mobilize global resources for Human Development
following the Monterrey Conference for the International Financing of Development,
March 2002. The Pakistan Human Development Fund (PHDF) is a public-private
partnership that channels resources from the Government of Pakistan, private sector and
the international donor community, into the NCHD and its programs.

Vision
The main objective of the fund is to consolidate efforts towards building human
capabilities by supporting various programs and projects in the social sectors for the
improvement and enhancement of education and literacy; primary health care; poverty
alleviation; development of working skills; improvement of social service delivery. The
Fund lends financial and other support to the efforts of the National Commission for
Human Development (NCHD) to build the capacity, train and enhance the competency of
the government functionaries, elected representatives and non-governmental
organizations, working in the social sector at the district level, provinces as well as
federal level. As a result the Government of Pakistan will incur no recurring expenditure.
Although the Pakistan Human Development Fund is an integral part of the NCHD's
Global Resource Mobilization program, it is an autonomous organization and a separate
legal entity.

Global Support
The Pakistan Human Development Fund is supported by an initial grant of $32 million by
the Government of Pakistan, seed capital of $2.5 million by individual philanthropists
(expatriate and local Pakistanis), and $1.7 million by UNDP. Other international donor
agencies, international foundations and corporate donors have also supported the
initiative of Pakistan Human Development Fund.

Transparency & Accountability

An independent Board of Founding Directors, comprised of distinguished Pakistanis of
international repute, will manage the Fund. President Islamic Republic of Pakistan is
Patron-in-Chief of the Fund.

For further details study unit one of allied materials and visit the following
website please.

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 REFERENCES

Armstrong, Michael (2006). A Handbook of Human Resource Management Practice,

10th edition, London: Kogan Page. ISBN 0-7494-4631-5. OCLC 62282248.

Dessler, G. (N.A.). Human Resource Management. Rawalpindi: S.T. Printers.

Legge, Karen (2004). Human Resource Management: Rhetorics and Realities,

Anniversary Edition, Basingstoke: Palgrave Macmillan. ISBN 1-403-93600-5. OCLC
56730524

Rue, W.L. and Byars, L.L. (2000). Management. (9th Edition). Islamabad: National Book
Foundations.

Wayne, F.C. (2000). Managing Human Resources. Islamabad: National Book Foundation.

Weeratunga, L. (2003). Managing Human Resource-5563. Islamabad: AIOU.

http://www.nchd.org.pk/ws/about_phdf.htm

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8
Unit–2

HUMAN RESOURCE
PLANNING PROCESS

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1. Introduction of the Unit
Human resource basically means to fulfill the human capital no matter in any field.
Apparently, most of the field requires human power to handle and to maintain in order to
manage. The planning will consists of how to optimize this human capital in an
organization for it to achieve the maximum profits.

Traditionally, Human Resource Planning has attempted to reconcile an organization’s

need for human resources with the available supply of labour in the local and national
labour market. In essence, Human Resource Planners initially seek to estimate their
current and future employment needs. However, the task of estimating employment needs
is an extremely complicated process, and in large organizations it requires considerable
specialization and expertise.

2. Objectives of the Unit

After studying this unit, you will be able to:
 Understand the concept of HR planning and why effective enterprises perform it.
 Name, describe and apply some tools and techniques of forecasting demand for
employees.
 Distinguish among different forms of recruiting personnel
 Understand the concepts of interviews and their effective utilization.

3. Concept of Human Resource Planning

Employment planning is the personnel part of HRM that attempts to provide adequate
human resources to achieve future organizational objectives. It includes forecasting
future needs for employees of various types, comparing these needs with the present
workforce and determining the numbers and types of employees to be recruited or fazed
out of the organization’s employment group.

In enterprises, the top management examines the environment, analyses the strategic
advantages of the enterprises, and sets its objectives for the coming period. Then it makes
strategic and operating decisions to achieve the objectives of the enterprise. The
personnel capabilities of the enterprise are among the factors analyzed in the strategic
management process. Once the strategy is developed, personnel do its part to assure the
success of the strategy and achieve the enterprise’s objectives. It does this by comparing
the present supply of human resources with projected demand for them. This comparison
leads to action decisions: add employees, cut employees, or reallocate employees
internally.

4. Need for Human Resource Planning

Every organization has to plan for Human Resource due to:
1. The shortage of certain categories of employees and/or variety of skills despite the
problem of unemployment.
2. The rapid changes in technology, marketing, management etc. and the consequent
need for new skills and new categories of employees.

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3. The changes in organization design and structure affecting manpower demand.
4. The demographic changes like the changing profile of the workforce in terms of
age, sex, education etc.
5. The Government policies in respect to reservation, child labor, working conditions etc.
6. The labor laws affecting the demand and supply of labor.
7. Pressure from trade unions, politicians, sons of the soil etc.
For further details see

5. Scope of Human Resource Planning

The importance of HR or staff planning lies with the contribution it could make to
reducing uncertainties within the employment patterns of large organizations. Staff
planning is a critical managerial function because it provides management with
information on resource flows that is used to calculate, amongst other things, recruitment
needs and succession and development plans. All organizations perform HR or
employment planning, informally or formally. The formal employment techniques are
described here because the informal methods are increasingly unsatisfactory for
organizations requiring skilled labour in a fast-changing labour market. It is important to
point out that most enterprises do more talking about formal employment planning than
performing it.

The major reasons for formal HR planning are to achieve:

 More effective and efficient use of human resources.
 More satisfied and more developed employees.
 More effective equal employment opportunity planning.

For further details please study unit 2 of Allied Materials

6. Recruitment and Selection

Recruitment and selection allow management to determine and gradually modify the
behavioral characteristics and competences of the better workforce. The fashion for team
working, for example, has focused on people with a preference for working with others as
opposed to the individualist 'stars' preferred by recruiters in the 1980's. Attention has
switched from rigid lists of skills and abilities to broader-based competences. In general -
as we noted in the previous section - there is greater regard for personal flexibility and
adaptability - a reorientation from present to future stability.

7. Recruitment: Marketing Jobs

Potential candidates may come from an internal trawl of the organization, or from the
external job market. The latter are reached through channels such as recruitment
advertising, employment agencies, professional associations or word of mouth. The
approach differs according to the organization's resorting philosophy:

– Organizations with a strong culture are likely to seek malleable new employees at
school-leaving or graduate levels. More senior jobs are filled from the internal job
market.

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– Companies looking for the 'right' (best fit for the job) person however may rule out
internal applicants because they do not match the personnel specification prepared
for the job.

8. Informal Recruiting
Word-of-mouth applicants are likely to stay longer and may be more suitable than
recruits obtained by advertising. But word-of-mouth is discriminatory, since it restricts
applications to established communities and excludes recently arrived minority groups
who had not time to become part of informal networks. At senior levels the informal
method known as 'headhunting' or executive search has become common. Specialist
consultancies aim to find 'outstanding' people to fill higher-paying jobs. Whether they
really are 'outstanding' is questionable.

9. Formal Recruiting
Equal opportunity demands equal access. This can only be achieved through public and
open recruitment. The likelihood of attracting 'suitable' applicants depends on the detail
and specificity of the recruitment advertisement or literature. Key factors such as salary,
job title, career and travel opportunities obviously influence response rates. But
remember that employers do not want to be swamped with large numbers of applications
from unsuitable people. This section of Human Resource Management in a Business
Context goes into further detail such as: quality of agency recruiters, comparison of
different media channels, and cultural variation in recruitment practice.

10. Recruitment and Succession Planning: Finding and Keeping Those

Who are the Most 'Fit'
How do you attract and keep the best employees? It is recognized that employee
recruitment and succession planning are critical HR processes in a highly competitive
labor market. Businesses which do not follow these core processes are squandering their
investment in recruitment and damaging their prospects of corporate growth.

Best PracticeDatabase.com analyzed the recruitment practices and tactics for retaining
employees that have the best organizational "fit" in a number of top companies. They
found that the most successful companies in their database indicated the following areas
of concern when managing recruitment as an ongoing core process:

* Designing an automated front end candidate screening process

* Accurate corporate forecasting of recruitment needs
* Tracking key recruitment measures
* Implementing strategies to deal with recruitment advancements and trends

In the same way, they identified these key components of managing succession planning
as an ongoing core process:

* Assigning multi-level responsibilities for the process design, execution and refinement
* Selecting key leadership criteria and providing an outstanding development process

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* Screening employees to identify "high potentials"
* Measuring the results of the succession planning process for alignment with
various goals

11. Researching Candidates

This section looks at the early stages of the selection process - often called pre-selection. The
recruitment campaign should have attracted a pool of applicants from which selectors can
make their choice. If a job analysis has been conducted, the criteria or competences which are
deemed necessary have been identified. These may be well defined and focused on
experience and skills, as in the 'right person' approach; or general and related to education,
intellect and personality for the 'cultural fit' and 'flexible person' models.

12. Interviewing
The interview is a social ritual which is expected by all participants, including applicants.
It is such a 'normal' feature of filling vacancies that candidates for a job would be
extremely surprised not to be interviewed at least once.

12.1. Informal Interviews

Many employers invite applicants for informal interviews prior to the main selection
procedure. These interviews are useful for information exchange, particularly in the case
of professionals. They provide an opportunity to discuss the full nature of the job, the
working environment, prospects for further development and promotion.

There seems to be some ambiguity as to whether informal interviews should be used as

part of the pre-selection process by the employer rather than self-selection by the
candidate. The crux of the issue depends on what interviewees have been told. If they
have been led to believe that it is a truly informal information session they will not
consider the process to be fair if they are subsequently told that they have not been short
listed as a result.

12.2. Formal Interviews

Despite the existence of alternative methods of selection most employers regard the
formal selection interview as the most important source of evidence in making the final
decision. A selection interview can be neatly defined as a conversation with a purpose,
but not infrequently the purpose is obscure to the point of invisibility. More often than
not, pointless chat would be nearer the mark. The interview has attracted severe criticism
for a very long time - being attacked on the grounds of its subjective nature, questionable
validity and unreliability.

For details of types of formal interviews study unit 2 of allied materials

13. Employees Movement and Replacement

Employees who leave jobs within the organization must be replaced unless the organization is
downsizing. Employees who are leaving are a valuable source of feedback about the

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organization itself and the entire process of employee movement provides information for
assessing the organization’s job analysis. Employees leave their jobs in five ways:

 Promotion. The happiest way for employees to leave their jobs is through
promotion, which is the elevation of an employee to a different job that pays better
or is higher in the chain of command.
 Transfer. Employees may also leave their positions through transfer, which is a lateral
move to a different job of similar pay and responsibility within the organization.
 Demotion. Employees who do not perform their jobs adequately or who are
dissatisfied with the amount of work or responsibility required by their position are
candidates for demotion, which is moving an employee to a lower status position. This
isn’t always viewed as a negative outcome, however; in a few cases, employees
appreciate the opportunity of trying a higher-level job and returning to a lower-level
position if they find that the job isn’t a good match for their skills and interests.
 Voluntary Severance. Managers also have to provide for the loss of employees
who voluntarily leave the organization. Employees can leave because a spouse has
been transferred, because they’ve found more attractive jobs in other organizations,
because of serious illness or injury, or for other personal reasons.
 Termination. Employees may leave an organization involuntarily if they are surplus to
the organization’s needs or if they are unacceptable to the organization because of
discipline or performance problems. Any dismissal of an employee is called a
termination. Terminations of employees for strategic reasons that are not connected
with employee performance are called layoffs. Layoffs can be permanent (when caused
by reorganization or by elimination of surplus employees-hired as a result of poor
planning, for example) or temporary (when caused by economic factors such as
recessions or by seasonal factors such as winter in a summer resort).
The last step in the human resource management process leads back to the first two
steps because replacing organization members involves planning and staffing
functions. Finding replacements for organization members can be difficult, and an
inability to replace organization members could require changes in strategic planning.
If employees are leaving the organization voluntarily, it is important to know why.
An organization can get valuable feedback about employees and its own
performance through an exit interview, which is a formal conversation with a
departing employee to learn why the employee is leaving the organization. Exit
interviews can help the organization find and correct problems with employee
morale, job design, planning, and other aspects of the human resource management
process. In the case of involuntarily terminated employees, exit interviews offer
human resource managers the chance to clarify the employee’s rights of appeal, to
head off or gauge the potential for a future wrongful discharge law-suit by the
employee, and to help avoid strong negative feeling among employees who remain
at the organization. Because they can provide candid feedback about employment
situations, exit interviews (and performance evaluations with current employees)
are a valuable source of information for job analysis and the overall task of human
resource management.

15
 REFERENCES

Legge, Karen (2004). Human Resource Management: Rhetorics and Realities,

Anniversary Edition, Basingstoke: Palgrave Macmillan. ISBN 1-403-93600-5. OCLC
56730524

Wayne, F.C. (2000). Managing Human Resources. Islamabad: National Book Foundation.

Weeratunga, L. (2003). Managing Human Resource-5563. Islamabad: AIOU.

http://www.bus.ucf.edu/jones/SHRM/Chp5.HRP.ppt#264,12,Determine Feasibility Links 3 & 4.

robustwebservices.com/processes/tech_enabled/process_hum_res_plan.aspx

http://www.buzzle.com/articles/human-resource-planning-process.html

Dessler, G. (N.A.) Human Resource Management. Rawalpindi: S.T. Printers.

16
Unit–3

STRATEGIC HUMAN RESOURCE

MANAGEMENT

17
18
1. Introduction
Strategic human resource management is a complex process which is constantly evolving
and being studied and discussed by academics and commentators. Its definition and
relationships with other aspects of business planning and strategy is not absolute and
opinion varies between writers. The definitions below are from the CIPD book Strategic
HRM: the key to improved business performance1 within which there is comprehensive
coverage of the various definitions and approaches to HRM, strategy and strategic HRM.
Strategic HRM can be regarded as a general approach to the strategic management of human
resources in accordance with the intentions of the organisation on the future direction it wants
to take. It is concerned with longer-term people issues and macro-concerns about structure,
quality, culture, values, commitment and matching resources to future need.

2. Objectives
After going through this unit you would be able to:
i. Understand the concepts of Strategic Human Resource Management.
ii. Apply Strategic Human Resource Planning Model and SWOT Analysis
iii. Formulate Functional-Level Strategy for Your Organization.

3. Concept of Strategic Human Resource Management

Strategic human resource management is a complex process which is constantly evolving and
being studied and discussed by academics and commentators. Its definition and relationships
with other aspects of business planning and strategy is not absolute and opinion varies
between writers to writer. The definitions below are from the CIPD book Strategic HRM: the
key to improved business performance1 within which there is comprehensive coverage of the
various definitions and approaches to HRM, strategy and strategic HRM.
Strategic HRM can be regarded as a general approach to the strategic management of
human resources in accordance with the intentions of the organization on the future
direction it wants to take. It is concerned with longer-term people issues and macro-
concerns about structure, quality, culture, values, commitment and matching resources to
future need. It has been defined as:
 All those activities affecting the behaviour of individuals in their efforts to
formulate and implement the strategic needs of business.
 The pattern of planned human resource deployments and activities intended to
enable the forms to achieve its goals.
Strategic HRM can encompass a number of HR strategies. There may be strategies to
deliver fair and equitable reward, to improve performance or to streamline structure.
However, in itself these strategies are not strategic HRM. Strategic HRM is the overall
framework which determines the shape and delivery of the individual strategies.
Boxall and Purcell argue that strategic HRM is concerned with explaining how HRM
influences organizational performance. They also point out that strategy is not the same
as strategic plans. Strategic planning is the formal process that takes place, usually in
larger organisations, defining how things will be done. However strategy exists in all

19
organisations even though it may not be written down and articulated. It defines the
organization’s behaviour and how it tries to cope with its environment.
Strategic HRM is based on HRM principles incorporating the concept of strategy. So if HRM
is a coherent approach to the management of people, strategic HRM now implies that is done
on a planned way that integrates organizational goals with policies and action sequences.

4. Strategic Human Resource Planning

A comprehensive Human Resource Strategy plays a vital role in the achievement of an
organization’s overall strategic objectives and visibly illustrates that the human resources
function fully understands and supports the direction in which the organization is moving. A
comprehensive HR Strategy will also support other specific strategic objectives undertaken
by the marketing, financial, operational and technology departments.
In essence, an HR strategy should aim to capture "the people element" of what an
organization is hoping to achieve in the medium to long term, ensuring that:-
 it has the right people in place
 it has the right mix of skills
 employees display the right attitudes and behaviour, and
 employees are developed in the right way.
If, as is sometimes the case, organization strategies and plans have been developed
without any human resource input, the justification for the HR strategy may be more
about teasing out the implicit people factors which are inherent in the plans, rather than
simply summarizing their explicit "people" content.
An HR strategy will add value to the organization if it:
 articulates more clearly some of the common themes which lie behind the achievement
of other plans and strategies, which have not been fully identified before; and
 identifies fundamental underlying issues which must be addressed by any organization or
business if its people are to be motivated, committed and operate effectively.
The first of these areas will entail a careful consideration of existing or developing plans
and strategies to identify and draw attention to common themes and implications, which
have not been made explicit previously.
The second area should be about identifying which of these plans and strategies are so
fundamental that there must be clear plans to address them before the organization can
achieve on any of its goals. These are likely to include:
 workforce planning issues
 succession planning
 workforce skills plans
 employment equity plans
 black economic empowerment initiatives
 motivation and fair treatment issues

20
 pay levels designed to recruit, retain and motivate people
 the co-ordination of approaches to pay and grading across the organization to create
alignment and potential unequal pay claims
 a grading and remuneration system which is seen as fair and giving proper reward
for contributions made
 wider employment issues which impact on staff recruitment, retention, motivation etc.
 a consistent performance management framework which is designed to meet the
needs of all sectors of the organization including its people
 career development frameworks which look at development within the organization
at equipping employees with "employability" so that they can cope with
increasingly frequent changes in employer and employment patterns
 policies and frameworks to ensure that people development issues are addressed
systematically: competence frameworks, self-managed learning etc.
The HR strategy will need to show that careful planning of the people issues will make it
substantially easier for the organization to achieve its wider strategic and operational goals.
In addition, the HR strategy can add value by ensuring all its other plans, the organization
takes account of and plans for changes in the wider environment, which are likely to have
a major impact on the organization, such as:
 changes in the overall employment market - demographic or remuneration levels
 cultural changes which will impact on future employment patterns
 changes in the employee relations climate
 changes in the legal framework surrounding employment
 HR and employment practice being developed in other organizations, such as new
flexible work practices.
Finding the right opportunity to present a case for developing an HR Strategy is critical
by ensuring that there will be support for the initiative, and that its initial value will be
recognized by the organization.
Giving a strong practical slant to the proposed strategy may help gain acceptance for the
idea, such as focusing on good management practice. It is also important to build "early
or quick wins" into any new strategy.
Other opportunities may present the ideal moment to encourage the development of an
HR Strategy:-
 a major new internal initiative could present the right opportunity to push for an
accompanying HR strategy, such as a restructuring exercise, a corporate
acquisition, joint venture or merger exercise.
 a new externally generated initiative could similarly generate the right climate for a
new HR strategy - e.g. Black economic empowerment initiatives.
In some instances, even negative news may provide the "right moment", for example,
recent industrial action or employee dissatisfaction expressed through a climate survey.

21
5. A Strategic Human Resource Planning Model
There is no single approach to develop a Human Resources Strategy. The specific
approach will vary from one organization to another. Even so, an excellent approach
towards an HR Strategic Management System is evident in the model presented below.
This approach identifies six specific steps in developing a HR Strategy:-
1. Setting the strategic direction
2. Designing the Human Resource Management System
3. Planning the total workforce
4. Generating the required human resources
5. Investing in human resource development and performance
6. Assessing and sustaining organizational competence and performance

Source: A Strategic Human Resource Management System for the 21st Century. Naval
Personnel Task Force, September 2000

22
6. Human Resource Database
The Human Resources database is where transactions relating to payroll processing,
position management, time and attendance, recruitment, benefits, and other human
resources data collection protocols are recorded, stored and retrieved in a variety of ways.
The transactions recorded ensure the timely payment of employees and provide
information to business staff, managers, leaders, and local and state government for the
purpose of making decisions and accountability reporting.

6.1 Establishing Organizational Objectives

Mutually establishing and reviewing with employees the expectations that guide and
motivate them toward objectives.

Research indicates that setting challenging, attainable program goals that are accepted by
management and employees leads to high performance. Establishing Performance Goals
(Objectives) will ensure that the performance of each employee contributes to your
objectives and the plan of the organization. Goals help employees to establish clear
courses of action and remove any uncertainties about the job. Accomplishment of goals
provides a sense of achievement.

6.2 Key Behaviors:

 Sets challenging and attainable expectations for employees based on program goals.
 Involves employees in setting program goals.
 Finds ways to measure achievement of program goals.
 Reviews progress toward goals with employees as needed.
 Gains employees' commitment to program goals.
 Ties goals to department and organization objectives.

6.3 Assessing and sustaining organizational competence and performance

23
Finally, few organizations effectively measure how well their different inputs affect
performance. In particular, no measures may be in place for quantifying the contribution
people make to organizational outcomes or, more important for estimating how changes
in policies and practices, systems, or processes will affect that contribution.
Implementing clear quantifiable measures, identifying milestones in the achievement of
specific organizational goals, and using concepts such as a "balanced scorecard" will
articulate the results of the HR Strategic Plan in measurable terms. Regular evaluation of
the plan will also assist in fine-tuning the HR strategic plan itself.

6.4. Recommended actions:-

 Evaluate organization culture and climate
 Implement succession planning
 Evaluate HR strategy using quantifiable measures, e.g. balanced scorecard
 Revise and adapt HR strategy

7. SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis are a tool that matches
internal organizational strengths and weaknesses with external opportunities and threats.

SWOT Analysis is the Key Component of Strategic Development. It can prompt actions
and responses. Successful businesses build on their strengths, correct their weaknesses
and protect against internal vulnerabilities and external threats. They also keep an eye on
their overall business environment and spot and exploit new opportunities faster than
competitors. SWOT analysis is a tool that helps many businesses in this process.
SWOT analysis is based on the assumption that if managers can carefully review such
strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring
organizational success will become evident to them.

7.1 Strengths
Two factors contribute to your strengths: ability and resources available.
Ability is evaluated on 3 counts:

1. Versatility: your ability to adapt an ever changing environment.

2. Growth: your ability to maintain a continuing growth.
3. Markets: your ability to penetrate or create new markets.

The strength of resources has three dimensions:

1. Availability: your ability to obtain the resources needed.

2. Quality: the quality and up-to-datedness of the resources employed.
3. Allocation: your ability to distribute resources both effectively and efficiently.

7.2 Weaknesses
Your weaknesses are determined through failures, defeats, losses and inability to match
up with the dynamic situation and rapid change. The weaknesses may be rooted in lack of

24
managerial skills, insufficient quality, technological backwardness, inadequate systems or
processes, slow deliveries, or shortage of resources. There are three possible outcomes to
the analysis of your weaknesses.1

1. Correction of an identified defect.

2. Protection through cover-up and prevention strategies to reduce the exposure of
your weaknesses.
3. Aggression to divert the attention from your weaknesses.

7.3 Opportunities
Opportunities are abundant. You must develop a formula which will help you to define
what comes within the ambit of an opportunity to focus on those areas and pursue those
opportunities where effectiveness is possible. The formula must define product/service,
target market, capabilities required and resources to be employed, returns expected and
the level of risk allowed.

Threats

Weaknesses of your competitors are also opportunities for you. You can exploit them in
two following ways:

1. Marketing warfare: attacking the weak position of leader and focusing all your
efforts at that point, or making a surprise move into an uncontested area.
2. Collaboration: you can use your complementary strengths to establish a strategic
alliance with your competitor.

8. Low Cost Strategy

Under which a firm offers a relatively low price to stimulate demand and gain market
share. It is one of three generic marketing strategies (see differentiation strategy and
focus strategy for the other two) that can be adopted by any firm, and is usually employed
where the product has few or no competitive advantage or where economies of scale are
achievable with higher production volumes. Also called low price strategy.

9. Differentiation Strategy
Your differentiation strategy is an integrated set of action designed to produce or deliver
goods or services that customers perceive as being different in ways that are important to
them. It calls for you to sell non-standardized products to customers with unique needs.

10. Formulating Functional-Level Strategy

The final level of strategy in the organization is the strategy developed by the major
functional departments. These action plans support the accomplishment of the business-
level strategies. The major functions include marketing, production, human resources,
finance, and research and development.

25
 REFERENCES

BARON, A. and ARMSTRONG, M. (2007). Human Capital Management. London:

Kogan Page.
BOXALL, P. and PURCELL, J. (2008). Strategy and Human Resource Management
(2nd edition). Basingstoke: Palgrave Macmillan.
BROWN, D., CALDWELL, R. and WHITE, K. (2004). Business Partnering: A New
Direction for HR. A Guide. London: Chartered Institute of Personnel and
Development. Available at: http://www.cipd.co.uk/guides
MILLMORE, M., LEWIS, P. and SAUNDERS, M. (2007). Strategic Human Resource
Management: Contemporary Issues. Harlow: Financial Times/Prentice Hall.
VERE, D. and BUTLER, L. (2007). Fit for Business: Transforming HR. Research into
Practice. London: Chartered Institute of Personnel and Development.
Journal articles
REILLY, P. (2008) Strategic HR? Ask Yourself the Questions. HR Director . No 44,
February. pp12-14, 16-17
RICHARDS, J. (2007) Aligning HR with the Business: Two Steps Forward, one Step
Back. IRS Employment Review. No 866, 2 March. pp6-12.
http://humanresources.about.com/od/humanresourcesstrategic/Strategic_Human_Resourc
e_Management.htm

http://en.wikipedia.org/wiki/Human_resource_management
http://www.ilead.com.au/ideas/strategic_thinking/strategic_human.htm

26
Unit–4

TRAINING AND PERSONNEL

DEVELOPMENT

27
28
1. Introduction
Training needs can be assessed by analyzing three major human resource areas: the
organization as a whole, the job characteristics and the needs of the individuals. This
analysis will provide answers to the following questions:

 Where is training needed?

 What specifically must an employee learn in order to be more productive?
 Who needs to be trained?

Once you have determined where training is needed, concentrate on the content of the
program. Analyze the characteristics of the job based on its description, the written
narrative of what the employee actually does. Training based on job descriptions should
go into detail about how the job is performed on a task-by-task basis. Actually doing the
job will enable you to get a better feel for what is done.

Individual employees can be evaluated by comparing their current skill levels or

performance to the organization's performance standards or anticipated needs. Any
discrepancies between actual and anticipated skill levels identify a training need and a
program to fill the gap.

2. Objectives
After studying this unit you are expected to be able to:

i. Understand the concept of training and its purpose

ii. Appreciate different types of training methods
iii. Training and development for motivation and retention

3. Concept of Training
Summary of a training course or program that highlights its key features such as type of
training, presentation environment, teaching techniques, and the benchmarks by which
the learning performance will be measured.

The quality of employees and their development through training and education are major
factors in determining long-term profitability of a small business. If you hire and keep
good employees, it is good policy to invest in the development of their skills by sending
into reputable organization internally and externally, so they can increase their
productivity.

Training often is considered for new employees only. This is a mistake because ongoing
training for current employees help them to adjust in rapidly changing job requirements.

4. Purpose of Training and Development

Reasons for emphasizing the growth and development of personnel include
 Creating a pool of readily available and adequate replacements for personnel who
may leave or move up in the organization.

29
 Enhancing the company's ability to adopt and use advances in technology because
of a sufficiently knowledgeable staff.
 Building a more efficient, effective and highly motivated team, which enhances the
company's competitive position and improves employee morale.
 Ensuring adequate human resources for expansion into new programs.

Research has shown specific benefits that a small business receives from training and
developing its workers, including:

 Increased productivity.
 Reduced employee turnover.
 Increased efficiency resulting in financial gains.
 Decreased need for supervision.

Employees frequently develop a greater sense of self-worth, dignity and well-being as

they become more valuable to the firm and to society. Generally they will receive a
greater share of the material gains that result from their increased productivity. These
factors give them a sense of satisfaction through the achievement of personal and
company goals.

5. Training Process

The model below traces the steps necessary in the training process:
 Organizational Objectives
 Needs Assessment
 Is There a Gap?
 Training Objectives
 Select the Trainees
 Select the Training Methods and Mode
 Choose a Means of Evaluating
 Administer Training
 Evaluate the Training

Your business should have a clearly defined strategy and set of objectives that direct and
drive all the decisions made especially for training decisions. Firms that plan their
training process are more successful than those that do not. Most business owners want to
succeed, but do not engage in training design that promise to improve their chances of
success. Why? The five reasons most often identified are:

Time – Small businesses managers find that time demands do not allow them to train
employees.

Getting familiar – Most small business managers have not practiced training employees.
The training process is unfamiliar.

30
Broad expertise – Managers tend to have broad expertise rather than the specialized
skills needed for training and development activities.

Lack of trust and openness – Many managers prefer to keep information to themselves.
By doing so they keep information collected from subordinates and others who could be
useful in the training and development process.

Skepticism as to the value of the training – Some small business owners believe the
future cannot be predicted or controlled and their efforts, therefore, are best centered on
current activities i.e., making money today.

A well-conceived training program can help your firm succeed. A program structured
with the company's strategy and objectives in mind has a high probability of improving
productivity and other goals that are set in the training mission.

6. Training Strategy
For any business, formulating a training strategy requires addressing a series of questions.

 Who are your customers? Why do they buy from you?

 Who are your competitors? How do they serve the market? What competitive
advantages do they enjoy? What parts of the market have they ignored?
 What strengths does the company have? What weaknesses?
 What social trends are emerging that will affect the firm?

The purpose of formulating a training strategy is to answer two relatively simple but
vitally important questions: (1) What is our business? and (2) What should our business
be? Armed with the answers to these questions and a clear vision of its mission, strategy
and objectives, a company can identify its training needs.

7. Training Methods
There are two broad types of training available to small businesses: on-the-job and off-
the-job techniques. Individual circumstances and the "who," "what" and "why" of your
training program determine which method to use.

7.1 On-the-Job- Training

This is delivered to the employees while they perform their regular jobs. In this way they
do not lose time while they are learning. After a plan is developed for what should be
taught, employees should be informed of the details. A timetable should be established
with periodic evaluations to inform employees about their progress. On-the-job
techniques include orientations, job instruction training, apprenticeships, internships and
assistantships, job rotation and coaching.

7.2 Off-the-Job- Techniques

This method includes lectures, special study, films, television conferences or discussions,
case studies, role playing, simulation, programmed instruction and laboratory training.

31
Most of these techniques can be used by small businesses although, some may be too
costly.

7.3 Orientations
This is used for new employees. The first several days on the job are crucial in the
success of new employees. This point is illustrated by the fact that 60 percent of all
employees who quit during first ten days. Orientation training should emphasize the
following topics:

 The company's history and mission.

 The key members in the organization.
 The key members in the department, and how the department helps fulfill the
mission of the company.
 Personnel rules and regulations.

Some companies use verbal presentations while to others have written presentations.
Many small businesses convey these topics in one-to-one orientations. No matter what
method is used, it is important that the newcomer understand his or her new place of
employment.

7.4 Lectures
Lectures present training material verbally and are used when the goal is to present a
great deal of material to many people. It is more cost effective to lecture to a group than
to train people individually. Lecturing is one-way communication and as such may not be
the most effective way to train. Also, it is hard to ensure that the entire audience
understands a topic on the same level; by targeting the average attendee you may under
train some and lose others. Despite these drawbacks, lecturing is the most cost-effective
way of reaching large audiences.

7.5 Role playing and Simulation

These are training techniques that attempt to bring realistic decision making situations to
the trainee. Likely problems and alternative solutions are presented for discussion. The
adage there is no better trainer than experience is exemplified with this type of training.
Experienced employees can describe real world experiences, and can help in and learn
from developing the solutions to these simulations. This method is cost effective and is
used in marketing and management training.

7.6 Audiovisual Methods

IT includes different media, such as television, videotapes and films are the most
effective means of providing real world conditions and situations in a short time. One
advantage is that the presentation is the same no matter how many times it's played. This
is not true with lectures, which can change as the speaker is changed or can be influenced
by outside constraints. The major flaw with the audiovisual method is that it does not
allow for questions and interactions with the speaker, nor does it allow for changes in the
presentation for different audiences.

32
7.7 Job Rotation
Job rotation involves moving an employee through a series of jobs so he or she can get a
good feel for the tasks that are associated with different jobs. It is usually used in training
for supervisory positions. The employee learns a little about everything. This is a good
strategy for small businesses because of the many jobs an employee may be asked to do.

7.8 Apprenticeships
Apprenticeships develop employees who can do many different tasks. They usually
involve several related groups of skills that allow the apprentice to practice a particular
trade, and they take place over a long period of time in which the apprentice works for,
and with the senior skilled worker. Apprenticeships are especially appropriate for jobs
requiring production skills.

7.9 Programmed Learning

Programmed learning, computer-aided instruction and interactive video all have one
thing in common: they allow the trainee to learn at his or her own pace. Also, they allow
material already learned to be bypassed in favor of material with which a trainee is
having difficulty. After the introductory period, the instructor need not be present, and the
trainee can learn as his or her time allows. These methods sound good, but may be
beyond the resources of some small businesses.

7.10 Laboratory Training

Laboratory training is conducted for groups by skilled trainers. It usually is conducted at
a neutral site and is used by upper- and middle management trainees to develop a spirit of
teamwork and an increased ability to deal with management and peers. It can be costly
and usually is offered by larger small businesses.

8. Identifying Training Needs (Task Analysis)

Training needs can be assessed by analyzing three major human resource areas: the
organization as a whole, the job characteristics and the needs of the individuals. This
analysis will provide answers to the following questions:

 Where is training needed?

 What specifically must an employee learn in order to be more productive?
 Who needs to be trained?

Begin by assessing the current status of the company, how it does, what it does, best
abilities of your employees to do these tasks. This analysis will provide some benchmarks
against which the effectiveness of a training program can be evaluated. Your firm should
know where it wants to be in five years from its long-range strategic plan. What you need
is a training program to take your firm from here to there.

Second, consider whether the organization is financially committed to supporting the

training efforts. If not, any attempt to develop a solid training program will fail.

33
Next, determine exactly where training is needed. It is foolish to implement a
companywide training effort without concentrating resources where they are needed
most. An internal audit will help point out areas that may benefit from training. Also, a
skills inventory can help determine the skills possessed by the employees in general. This
inventory will help the organization determine what skills are available now and what
skills are needed for future development.

Also, in today's market-driven economy, you would be negligent about your customers
what they like about your business and what areas they think should be improved. In
summary, the analysis should focus on the total organization and should tell you (1)
where training is needed and (2) where it will work within the organization.

Once you have determined where training is needed, concentrate on the content of the
program. Analyze the characteristics of the job based on its description, the written
narrative of what the employee actually does. Training based on job descriptions should
go into detail about how the job is performed on a task-by-task basis. Actually doing the
job will enable you to get a better feel for what is done.

Individual employees can be evaluated by comparing their current skill levels or

performance to the organization's performance standards or anticipated needs. Any
discrepancy between actual and anticipated skill levels identifies a training need.

9. Development of Personnel
Development of personnel may be achieved through the following processes:

9.1 Training and Development of Human Resources

In every company, Human Resources (HR) training in many employee-related and
legally-related topics is mandatory, especially for managers and supervisors. We need to
equip our employees to handle their employee relations responsibilities competently. But,
for maximum positive impact and learning, we need to make the HR training
motivational and engaging.

The right employee training, development and education at the right time provides big
payoffs for the employer in increased productivity, knowledge, loyalty, and contribution.
Learn the approaches that will guarantee a return on your investment in training.

9.2 Training and Development for Motivation and Retention

One key factor in employee motivation and retention is the opportunity to continue to
grow and develop job and career enhancing skills. There are a couple of secrets to what
employees want from training and development opportunities, however, training and
development opportunities are not just found in training classes and seminars. Learn
more about what employees want in training and development opportunities.

34
10. Employee Recruitment and Development
You can hire the best and develop the rest of your employees. These seven practices will
help you develop a high performance, superior workforce that is focused on continuous
improvement. And, what's more important than that for you?

These leadership and management tips will help you to develop the talented workforce
you need for progress, resiliency and agility. This leadership and management tips about
training and development will help to make training work more effective and more result
oriented.

10.1 Job Rotation

This is an approach to management development where an individual is moved through a
schedule of assignments designed to give him or her breadth of exposure to the entire
operation.

Job rotation is also practiced to allow qualified employees to gain more insights into the
processes of a company, and to reduce boredom and increase job satisfaction through job
variation.

The term job rotation can also mean the scheduled exchange of persons in offices,
especially in public offices, prior to the end of incumbency or the legislative period. This
has been practiced by the German green party for some time but has been discontinued.

At the senior management levels, job rotation - frequently referred to as management

rotation, is tightly linked with succession planning - developing a pool of people capable
of stepping into an existing job. Here the goal is to provide learning experiences which
facilitate changes in thinking and perspective equivalent to the "horizon" of the level of
the succession planning.

For lower management levels job rotation has normally one of two purposes:
promotability or skill enhancement.

In many cases senior managers seem unwilling to risk instability in their units by moving
qualified people from jobs where the lower level manager is being successful and
reflecting positively on the actions of the senior manager.

Many military forces use the job rotation strategy to allow the soldiers to develop a wider
range of experiences, and an exposure to the different jobs of an occupation.

The evolution of this formal discipline has been influenced by and enhanced through the
incorporation of pertinent maxims from other fields of study including personal
development philosophies, adult education practices, elements of psychology (sports,
clinical, developmental, organizational, social and industrial) and other organizational or
leadership principles. Since the mid 1970's, coaching has developed into a more

35
independent discipline and has a set of training standards (Davidson & Gasiorowski,
2006).

10.2 Coaching
Today, coaching is a recognized discipline used by many professionals engaged in people
development. However, as a distinct profession it is relatively new and self-regulating.
There are six self-appointed accreditation bodies for business and life coaching: the
International Coaching Council (ICC), the International Coach Federation (ICF), the
International Association of Coaching (IAC), the Certified Coaches Federation (CCF),
the European Coaching Institute (ECI) and the International Guild of Coaches (IGC). No
independent supervisory board evaluates these programs and they are all privately owned.
These bodies all accredit various coaching schools as well as individual coaches, except
the IAC and ECI which only accredits individuals.

According to Davidson & Gasiorowski (2006) ICF has been "key in identifying training
criteria and ethical standards in this rapidly evolving field" (p.189).

It is important for future clients to distinguish between coaches who are professionally
trained and/or accredited and those who "hang their name plate" out as a coach.
Professional coaching skills are transferable across the variety of areas in which a coach
may be employed. Whitworth, et al (1998) stated that "the coach’s experience is confined
to the coaching process. The coach’s job is to help clients articulate their dreams, desires
and aspirations, help them clarify their mission, purpose and goals, and help them achieve
that outcome" (p.5) in any area of life (i.e. personal, professional, relationship, health
etc...).

10.3 Orientation
The orientation process has three stages:

 A general orientation
 A departmental orientation, and
 A specific job orientation

They are conducted by different parties. The General Orientation is usually managed by
either the Training Department or the Human Resources Department, with the
Departmental Orientation by the Department Head or first Assistant, while the specific
Job Orientation can be carried out by an experienced and trained employee (trained on
how to train).

For further details study Unit 4 of the Allied Materials enclosed

36
 REFERENCES

Wayne, F.C. (2000). Managing Human Resources. Islamabad: National Book

Foundation.

Wayne, F.C. (2000). Managing Human Resources. Islamabad: National Book

Foundation.

Weeratunga, L. (2003). Managing Human Resource-5563. Islamabad: AIOU.

Whetten, D.A. and Cameron, K.S. (1995). Developing Management Skills. Harper
Collins College Publishers.

http://humanresources.about.com/od/training/Training_Development_and_Education_for
Employees.htm

http://www.wonderlic.com/hiring-solutions/employee-training-and-development.aspx

37
38
Unit–5

PERSONNEL PERFORMANCE
APPRAISAL

39
40
1. Introduction
Managers cite performance appraisals or annual reviews as one of their most disliked tasks.
Performance management eliminates the performance appraisal or annual review and
evaluation as the focus and concentrates instead on the entire spectrum of performance
management and improvement strategies. These include employees performance
improvement, performance development, training, cross-training, challenging assignments,
360 degree feedback and regular performance feedback.

2. Objectives
After studying this unit you should be able to:

i. Understand the concept of performance appraisal and different steps in a

Performance Review
ii. To identify key factors to an effective performance appraisal program design
iii. Appreciate different appraisal methods
iv. To identify some commonly encountered conflicts in performance appraisal and
suggest remedial steps.

3. Definition & Concepts

Performance appraisal is the process of obtaining, analyzing and recording information
about the relative worth of employees. The focus of the performance appraisal is
measuring and improving the actual performance of the employees and also the future
potential of the employees. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of human resources,

“performance appraisal is the systematic, periodic and an impartial rating of an
employee’s excellence in the matters pertaining to his present job and his potential for a
better job." Performance appraisal is a systematic way of reviewing and assessing the
performance of an employee during a given period of time and planning for his future.
It is a powerful tool to calibrate, refine and reward the performance of the employee. It
helps to analyze his achievements and evaluate his contribution towards the achievements
of the overall organizational goals.

By focusing the attention on performance, performance appraisal goes to the heart of

human resource management and reflects the management’s interest in the progress of
the employees.

4. Objectives of Performance Appraisal

 To review the performance of the employees over a given period of time.
 To judge the gap between the actual and the desired performance.
 To help the management in exercising organizational control.
 Helps to strengthen the relationship and communication between superior –
subordinates and management – employees.
 To diagnose the strengths and weaknesses of the individuals so as to identify the
training and development needs of the future.

41
 To provide feedback to the employees regarding their past performance.
 Provide information to assist in the other personal decisions in the organization.
 Provide clarity of the expectations and responsibilities of the functions to be
performed by the employees.
 To judge the effectiveness of the other human resource functions of the
organization such as recruitment, selection, training and development.
 To reduce the grievances of the employees.

5. Performance Appraisal Information

Performance appraisal (PA) is one of the important components in the rational and
systemic process of human resource management. The information obtained through
performance appraisal provides foundations for recruiting and selecting new hires,
training and development of existing staff, and motivating and maintaining a quality
work force by adequately and properly rewarding their performance. Without a reliable
performance appraisal system, a human resource management system falls apart,
resulting in the total waste of the valuable human assets a company has.

There are two primary purposes of performance appraisal: evaluative and developmental.
The evaluative purpose is intended to inform people of their performance standing. The
collected performance data are frequently used to reward high performance and to punish
poor performance. The developmental purpose is intended to identify problems in
employees performing the assigned task. The collected performance data are used to
provide necessary skills training or professional development.

The purpose of performance appraisal must be clearly communicated both to raters and
ratees, because their reactions to the appraisal process are significantly different
depending on the intended purpose. Failure to inform about the purpose or misleading
information about the purpose may result in inaccurate and biased appraisal reports.

Critical Criteria of Developing a PA System:

In order for performance appraisal information to be useful, the PA system must be able
to consistently produce reliable and valid results. Measurement items in the performance
appraisal system must be designed in such a way that the results of rating are consistent
regardless of the raters and the timing of the assessment.

Another critical criteria in developing a PA system is the validity of the measurements. It

is important to make sure that the appraisal items are really measuring the intended
performance or target behavior. If they are not, the PA system encourages the wrong kind
of work behaviors and produces unintended, frequently negative, organizational
outcomes. For instance, if the number of traffic violation tickets issued is an item in
performance appraisal of police officers, it encourages them to sit on a corner of a street
and pull over as many violators as possible during heavy traffic hours. The true purpose
of a police force, which is public safety, may become secondary to issuing a large
number of tickets.

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6. What to Evaluate?
The first important step in developing a PA system is to determine which aspects of
performance to evaluate. The most frequently used appraisal criteria are traits, behaviors,
and task outcomes.

6.1 Traits.
Many employees are assessed according to their traits, such as personality, aptitudes,
attitudes, skills, and abilities. Traits are relatively easy to assess once a rater gets to know
ratees. But traits are not always directly related to job performance. Trait-based
assessment lacks validity and thus frequently raises legal questions.

6.2 Behaviors.
For many jobs, performance is so broadly defined or so conceptual in nature— such as
ensuring public safety in the police department—that it is hard to come up with reliable
performance measures. In such cases, desirable behaviors can be identified and assessed
in the belief that such behaviors lead to successful performance. Such behavior-focused
assessment encourages employees to adopt desirable behavioral patterns in the
workplace.

6.3 Task outcomes.

When information about task outcomes is readily available, it is the most appropriate
factor to use in evaluating performance. When an organization has a clear and measurable
goal as in the case of a sales force, this approach is recommended. However, it has its
own pitfalls. There is a problem if employee behaviors are not directly related to the task
out-come. Too narrow a focus on measuring out-come only sometimes results in
unintended negative consequences. When sales staff narrowly focuses on target sales
figures to increase their performance measure, for example, they are encouraged to help a
few large-volume customers and to ignore many smaller buyers. This may result in poor
customer service on the floor.

7. Who Evaluates?
The most common raters of performance are employees' immediate supervisors, who are
usually in the best position to know and observe the employees' job performance. They
are also responsible for employees' work. Their evaluation is a powerful tool in
motivating employees to achieve successful and timely completion of tasks. However, as
a result of working together over a long time with the same employees, the immediate
supervisor may build up a fixed impression about each employee and use it every time he
or she has to evaluate performance.

Some companies find that subordinates, are in an excellent position to observe and
evaluate their managers' performance, especially when it comes to measuring effective
management of their department. While there is merit in asking subordinates to evaluate
how they are managed, such evaluation may turn into a popularity contest. Accurate and
objective assessment may not be obtained if employees are fearful of possible retaliation

43
from their supervisors. Anonymity of the evaluators is key to the successful use of
subordinates for objective evaluation.

Other raters who are frequently used in some companies include peers, customers, and
the employees themselves. Peer evaluation is particularly useful when teamwork and
collegiality are important to successful task performance. Peer pressure is sometimes a
powerful motivator in encouraging teamwork among members. Customer satisfaction is
vital to a company's success and can be used in performance appraisal. Many companies
systematically collect performance information from customers, typically through
anonymous surveys and interviews. Self-assessment is also a useful means, especially
when the performance appraisal is intended to identify the training and development
needs of potential employees.

Each of these raters contributes to assessing certain aspects of performance. Since job
performance is multidimensional in nature, it is important to use different raters or a
combination of multiple raters depending on the goal of a performance appraisal system.
This multirating evaluation, or so-called 360-degree feedback system, is becoming
increasingly popular among many American corporations, including General Electric,
AT&T, Warner Lambert, and Mobil Oil.

8. Performance Appraisal Methods

To ensure the reliability and validity of a PA system, a company must design the
evaluation process carefully and develop appropriate measuring scales. Among the many
assessment methods developed by human resource management experts, commonly used
ones include the Graphic Rating Scale, Behaviorally Anchored Rating Scale, Narrative
Technique, Critical-Incident Method, Multiperson Comparison Method, Forced Choice
Method, and Forced Distribution Method.

The Graphic Rating Scale is the simplest and most popular method for performance
appraisal. The Graphic Rating Scale offers a list of areas related to job performance. A
manager rates each employee on the listed areas according to a numerical score.
Although this method is relatively simple and quick to complete, some experts question
its validity and reliability. Without elaborate description, appraisal items and scores are
subject to various interpretations of raters.

In order to overcome pitfalls of the Graphic Rating Scale, numerous other methods have
been developed. The Behaviorally Anchored Rating Scale (BARS), offers rating scales
for actual behaviors that exemplify various levels of performance. Because raters check
off specific behavior patterns of a ratee, PA results of BARS are more reliable and valid
than those of the Graphic Rating Scale. Human resource managers must carefully analyze
each job and develop behavior patterns pertinent to various levels of performance for the
job before they use the BARS.

The Narrative Technique is a written essay about an employee's job performance

prepared by a rater. The essay typically describes the rate's job-related behaviors and

44
performance. Without standard performance description, it is a cumbersome task for
raters to write an essay for several employees. For example, a rater can be asked to
describe the activities, achievements, and level of performance of the employee in a
completely open-ended format (unstructured narration). Alternatively, the rater can be
provided with some structure to use in the evaluation; for example, "Describe briefly the
activities, achievements, and level of performance of the staff member in the following
areas: (1) work habits, (2) planning and organizing the tasks, (3) management skills,
communications, and development of others."

The performance review form at a college asks an evaluator to describe the activities,
accomplishments, and creative works of the professors in the areas of (1) teaching and (2)
research/creative activity. A dean of the college writes about the professor's teaching
performance: "Dr. Michael Johnson has been nominated by his students for the Outstanding
Teacher Award several times during his service. He introduced many teaching innovations
into his classes. His teaching record is exemplary." In the area of creative activity, the dean
writes: "Dr. Johnson has a strong and productive research record with a defined focus in
organizational leadership. His research has been recognized with several awards given by
professional organizations. His creative activity is exemplary."

Similar to the Narrative Technique is the Critical-Incident Method, which involves

keeping a running log of effective and ineffective job performance. For example, the PA
log of an employee, Mr. Campbell, contains unsatisfactory incidents as follows:
1/28/2000: "Refused to try a new work procedure," and 2/15/2000: "Argued with a
customer about the origin of error in the paperwork." The log also contains satisfactory
incidents as follows: 1/20/2000: "Volunteered to help Charlie complete his assignment in
time"; 2/19/2000: "Trained new employees in safety regulations."

The Multiperson Comparison Method asks raters to compare one person's performance
with that of one or more others. It is intended to effectively eliminate the possibility of
giving the same rating to all employees. In order to separate performance scores among
multiple employees, the Forced Choice or Forced Distribution Methods are adopted.
Raters must choose one high performer from the list of employees or distribute certain
scores to employees at different ranks.

For example, only one top person will get 40 percent, two second-rank persons 20
percent, and the bottom one person 10 percent. The Paired Comparison Method is a
special case of the Multiperson Comparison Method. Everyone in the evaluation pool is
compared against everyone else as a pair and recorded "plus" or "minus" when the target
ratee is better or worse, respectively, than his/her comparison. The final performance
ranks are determined by the numbers.

8.1 Subjectivity and Objectivity

Accuracy is critical to performance appraisal. In order to obtain accurate performance
information, raters must provide objective and unbiased ratings of employees. But,
because it is almost impossible to develop a perfectly accurate performance checklist,

45
managers' subjective opinions are frequently called for. Many companies use some
combination of subjective and objective assessment for actual performance appraisal.

Yet there are numerous problems in the actual assessment of employee performance,
mainly due to rater bias. Some raters tend to rate all employees at the positive end rather
than to spread them throughout the performance scale; this is called "leniency."
Alternatively, "central tendency", which places most employees in the middle of the
scale, also raises concern about possible appraisal error.

Another common error in performance appraisal is the halo effect. This occurs when a
manager's general impression of an employee, after observing one aspect of performance,
influences his/her judgment on other aspects of the employee's performance.

Researchers have found that personal preferences, prejudices, appearances, first

impressions, race, and gender can influence many performance appraisals. Sometimes
raters' personal opinions or political motives creep into the performance appraisal
process. They intentionally inflate or deflate performance ratings of certain employees as
a way to punish them or promote them out of the department.

Using unreliable and invalidated performance appraisals may cause a legal problem. A
number of court cases have ruled that the performance appraisal systems used by many
companies were discriminatory and in violation of Title VII of the Civil Rights Act.

In order to avoid legal problems, companies must develop an appraisal system based on
careful job analysis and establish its reliability and validity. They must give clear written
instructions to raters for completing evaluations and provide them adequate training if
necessary. The company must allow employees to review the results of the appraisals.
Human resources departments must play a key role in the development and
implementation of an effective performance appraisal system.

9. Approaches to Performance Development

There are different approaches which are being used for the performance development.
These are discussed in the following paragraphs:

9.1 Performance Appraisal - Traditional approach

Traditionally, performance appraisal has been used as just a method for determining and
justifying the salaries of the employees. Than it began to be used a tool for determining
rewards (a rise in the pay) and punishments (a cut in the pay) for the past performance of
the employees.

This approach was a past oriented approach which focused only on the past performance
of the employees i.e. during a past specified period of time. This approach did not
consider the developmental aspects of the employee performance i.e. his training and
development needs or career developmental possibilities. The primary concern of the

46
traditional approach is to judge the performance of the organization as a whole by the
past performances of its employees.

Therefore, this approach is also called as the overall approach. In 1950s the performance
appraisal was recognized as a complete system in itself and the Modern Approach to
performance appraisal was developed

9.2 Performance Appraisal - Modern Approach

The modern approach to performance development has made the performance appraisal
process more formal and structured. Now, the performance appraisal is taken as a tool to
identify better performing employees from others, employees’ training needs, career
development paths, rewards and bonuses and their promotions to the next levels.

Appraisals have become a continuous and periodic activity in the organizations. The
results of performance appraisals are used to take various other HR decisions like
promotions, demotions, transfers, training and development, reward outcomes. The
modern approach to performance appraisals includes a feedback process that helps to
strengthen the relationships between superiors and subordinates and improve
communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is

developmental in nature. This recognizes employees as individuals and focuses on their
development.

10. Appraisal Methods

In a landmark study, Locher & Teel (1977) found that the three most common appraisal
methods in general use are rating scales (56%), essay methods (25%) and results-
oriented or MBO methods (13%). For a description of each, follow the button links on
the left. Certain techniques in performance appraisal have been thoroughly investigated,
and some have been found to yield better results than others.

10.1 Rating Scales

The rating scale method offers a high degree of structure for appraisals. Each employee
trait or characteristic is rated on a bipolar scale that usually has several points ranging
from "poor" to "excellent" (or some similar arrangement).

The traits assessed on these scales include employee attributes such as cooperation,
communications ability, initiative, punctuality and technical (work skills) competence.
The nature and scope of the traits selected for inclusion is limited only by the imagination
of the scale's designer, or by the organization's need to know.

The one major provision in selecting traits is that they should be in some way relevant to
the appraisee's job. The traits selected by some organizations have been unwise and have
resulted in legal action on the grounds of discrimination.

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1. Advantages
The greatest advantage of rating scales is that they are structured and standardized. This
allows ratings to be easily compared and contrasted - even for entire workforces.

Each employee is subjected to the same basic appraisal process and rating criteria, with
the same range of responses. This encourages equality in treatment for all appraisees and
imposes standard measures of performance across all parts of the organization.

Rating scale methods are easy to use and understand. The concept of the rating scale
makes obvious sense; both appraisers and appraisees have an intuitive appreciation for
the simple and efficient logic of the bipolar scale. The result is widespread acceptance
and popularity for this approach.

2. Disadvantages
Despite its popularity this method has following disadvantages:

i. Trait Relevance
Are the selected rating-scale traits clearly relevant to the jobs of all the appraisees? It is
inevitable that with a standardized and fixed system of appraisal that certain traits will
have a greater relevance in some jobs than in others.

For example, the trait "initiative" might not be very important in a job that is tightly
defined and rigidly structured. In such cases, a low appraisal rating for initiative may not
mean that an employee lacks initiative. Rather, it may reflect that fact that an employee
has few opportunities to use and display that particular trait. The relevance of rating
scales is therefore said to be context-sensitive. Job and workplace circumstances must be
taken into account.

ii. Systemic Disadvantage

Rating scales, and the traits they purport to measure, generally attempt to encapsulate all the
relevant indicators of employee performance. There is an assumption that all the true and best
indicators of performance are included, and all false and irrelevant indicators are excluded.

This is an assumption and very difficult to prove in practice. It is possible that an

employee's performance may depend on factors that have not been included in the
selected traits. Such employees may end up with ratings that do not truly or fairly reflect
their effort or value to the organization. Employees in this class are systemically
disadvantaged by the rating scale method.

iii. Perceptual Errors

This includes various well-known problems of selective perception (such as the horns and
halos effect) as well as problems of perceived meaning. Selective perception is the human
tendency to make private and highly subjective assessments of what a person is "really
like", and then seek evidence to support that view (while ignoring or downplaying
evidence that might contradict it).

48
This is a common and normal psychological phenomenon. All human beings are affected
by it. In other words, we see in others what we want to see in them.

An example is the supervisor who believes that an employee is inherently good (halo
effect) and so ignores evidence that might suggest otherwise. Instead of correcting the
slackening employee, the supervisor covers for them and may even offer excuses for their
declining performance.

On the other hand, a supervisor may have formed the impression that an employee is bad
(horns effect). The supervisor becomes unreasonably harsh in their assessment of the
employee, and always ready to criticize and undermine them.

The horns and halo effect is rarely seen in its extreme and obvious forms. But in its more
subtle manifestations, it can be a significant threat to the effectiveness and credibility of
performance appraisal.

iv. Perceived Meaning

Problems of perceived meaning occur when appraisers do not share the same opinion
about the meaning of the selected traits and the language used on the rating scales.

For example, to one appraiser, an employee may demonstrate the trait of initiative by
reporting work problems to a supervisor. To another appraiser, this might suggest an
excessive dependence on supervisory assistance - and thus a lack of initiative.

As well, the language and terms used to construct a scale - such as "Performance exceeds
expectations" or "Below average skill" - may mean different things to different appraisers.

v. Rating Errors
The problem here is not so much errors in perception as errors in appraiser judgment and
motive. Unlike perceptual errors, these errors may be (at times) deliberate.

The most common rating error is central tendency. Busy appraisers, or those wary of
confrontations and repercussions, may be tempted to dole out too many passive, middle-of-the-
road ratings (e.g., "satisfactory" or "adequate"), regardless of the actual performance of a
subordinate. Thus the spread of ratings tends to clump excessively around the middle of the scale.

This problem is worsened in organizations where the appraisal process does not enjoy strong
management support, or where the appraisers do not feel confident with the task of appraisal.

10.2 Essay Method

In the essay method approach, the appraiser prepares a written statement about the
employee being appraised.

The statement usually concentrates on describing specific strengths and weaknesses in job
performance. It also suggests courses of action to remedy the identified problem areas.

49
The statement may be written and edited by the appraiser alone, or it be composed in
collaboration with the appraisee.

i. Advantages
The essay method is far less structured and confining than the rating scale method. It
permits the appraiser to examine almost any relevant issue or attribute of performance.
This contrasts sharply with methods where the appraisal criteria are rigidly defined.

Appraisers may place whatever degree of emphasis on issues or attributes that they feel
appropriate. Thus the process is open-ended and very flexible. The appraiser is not locked
into an appraisal system the limits expression or assumes that employee traits can be
neatly dissected and scaled.

ii. Disadvantages
Essay methods are time-consuming and difficult to administer. Appraisers often find the
essay technique more demanding than methods such as rating scales.

The techniques greatest advantage - freedom of expression - is also its greatest handicap.
The varying writing skills of appraisers can upset and distort the whole process. The
process is subjective and, in consequence, it is difficult to compare and contrast the
results of individuals or to draw any broad conclusions about organizational needs.

10.3 Management By Objectives (MBO)

The use of management objectives was first widely advocated in the 1950s by the noted
management theorist Peter Drucker.

MBO (management by objectives) methods of performance appraisal are results-oriented.

That is, they seek to measure employee performance by examining the extent to which
predetermined work objectives have been met.

Usually the objectives are established jointly by the supervisor and subordinate. An
example of an objective for a sales manager might be: Increase the gross monthly sales
volume to $250,000 by 30 June.

Once an objective is agreed, the employee is usually expected to self-audit; that is, to
identify the skills needed to achieve the objective. Typically they do not rely on others to
locate and specify their strengths and weaknesses. They are expected to monitor their
own development and progress.

i. Advantages
The MBO approach overcomes some of the problems that arise as a result of assuming
that the employee traits needed for job success can be reliably identified and measured.

Instead of assuming traits, the MBO method concentrates on actual outcomes.

50
If the employee meets or exceeds the set objectives, then he or she has demonstrated an
acceptable level of job performance. Employees are judged according to real outcomes, and
not on their potential for success, or on someone's subjective opinion of their abilities.

The guiding principle of the MBO approach is that direct results can be observed,
whereas the traits and attributes of employees (which may or may not contribute to
performance) must be guessed at or inferred.

The MBO method recognizes the fact that it is difficult to neatly dissect all the complex
and varied elements that go to make up employee performance.

MBO advocates claim that the performance of employees cannot be broken up into so
many constituent parts - as one might take apart an engine to study it. But put all the parts
together and the performance may be directly observed and measured.

ii. Disadvantages
MBO methods of performance appraisal can give employees a satisfying sense of
autonomy and achievement. But on the downside, they can lead to unrealistic
expectations about what can and cannot be reasonably accomplished.

Supervisors and subordinates must have very good "reality checking" skills to use MBO
appraisal methods. They will need these skills during the initial stage of objective setting,
and for the purposes of self-auditing and self-monitoring.

Unfortunately, research studies have shown repeatedly that human beings tend to lack the
skills needed to do their own "reality checking". Nor are these skills easily conveyed by
training. Reality itself is an intensely personal experience, prone to all forms of
perceptual bias.

One of the strengths of the MBO method is the clarity of purpose that flows from a set of
well-articulated objectives. But this can be a source of weakness also. It has become very
apparent that the modern organization must be flexible to survive. Objectives, by their
very nature, tend to impose certain rigidity.

Of course, the obvious answer is to make the objectives more fluid and yielding. But the
penalty for fluidity is loss of clarity. Variable objectives may cause employee confusion.
It is also possible that fluid objectives may be distorted to disguise or justify failures in
performance.

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Russell (eds.), Human Resource Management: An Experiential Approach. New
York: McGraw-Hill, 482-515.

Sanches, J. I., De La Torre, P. (1996). "A Second Look at the Relationship Between
Rating and Behavioral Accuracy in Performance Appraisal," Journal of Applied
Psychology, 81:3-10.

Schneier, C. E. and R. W. Beatty, "Developing Behaviorally Anchored Rating Scales

(BARS)" The Personnel Administrator, August (1979), 60.
Smith, H. P. (1997). Performance Appraisal and Human Development, Reading, MA:
Addison and Wesley Longman Inc.

Wynne, B. (1996). Performance Appraisal: A Practical Guide, Philadelphia: Technical

Communications, Oct.

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54
Unit–6

COMPENSATION MANAGEMENT

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1. Introduction
Studies revealed that nearly two-thirds of today’s senior executives name pay-for-
performance as the number one tool for achieving positive financial results at their
companies. But this type of compensation structure in different organizations is much
easier said than done.

Compensation Management helps managers significantly boost the performance of their

employees via compensation rewards, creating a more engaged workforce that’s willing
to go the extra mile for their organization. This provide the a clear visibility into
individual employee performance when it comes time to make critical compensation
planning decisions.

2. Objectives
After going through this unit you will be able to:
i. Understand the concept of compensation management
ii. Apply equity theory and fairness in your organization
iii. Analyze and apply the employee risk management
iv. Understand how costs reduction of workers is attached.

3. Concept of Compensation Management

Studies reveal that nearly two-thirds of today’s senior executives name pay-for-
performance as a major tool for achieving positive financial results at their companies.
But as you’ve probably discovered, instituting this type of compensation structure at your
organization is much easier said than done.

Compensation Management helps you significantly boost the performance of your employees
via compensation rewards, creating a more engaged workforce that’s willing to go the extra
mile for your organization. Plus you’ll enjoy clearer visibility into individual employee
performance when it comes time to make critical compensation planning decisions.

3.1. True Pay-for-Performance Culture

Provide a clear linkage for employees between their compensation and your performance
expectations.

3.2. Improved Retention

Recognize employees for a job well done using variable pay and other proven methods.
So your top performers stay happy—and more likely to stay with your company.

3.3. Budget Optimization

Run “what-if” scenarios and instantly see how increasing merit pay to your best
employees would impact your budget.

3.4. Cost Savings. Save your business thousands of dollars every year by making sure
you’re not unfairly compensating those employees who fall short in their efforts to help
your company achieve its key objectives.

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4. Determining Pay Rates (Developing Pay Structure)
The interaction between 13 factors affects the actual pay rates employees receive, according to
Richard I. Henderson, author of Compensation Management in a Knowledge-Based World.
While each factor is straightforward when considered in isolation, it becomes far more
complicated when considered alongside the other factors. The 13 factors are:

1. Types and levels of skills and knowledge required.

2. Type of business.
3. Union affiliation or no union affiliation.
4. Capital-intensive or labor-intensive.
5. Company size.
6. Management philosophy.
7. Complete compensation package.
8. Geographic location.
9. Labor supply and demand.
10. Company profitability.
11. Employment stability.
12. Gender Difference.
13. Length of employment and job performance.

5. Equity Theory and Fairness

Equity theory is a theory about fairness. Its application to close relationships has been
primarily advanced by Elaine Hatfield (previously known as Elaine Walster) and her
colleagues in the book Equity: Theory and Research (Walster, Walster, and Berscheid
1978). The book outlines four interlocking propositions of equity theory and discusses
the application of equity theory to different types of relationships, including intimate
ones. The propositions are:

Proposition 1: Individuals will try to maximize their outcomes (where outcomes equal
rewards minus costs).

Proposition 2: Groups can maximize collective reward by evolving accepted systems for
equitably apportioning resources among members. Thus, groups will evolve such systems
of equity, and will attempt to induce members to accept and adhere to these systems.

Proposition 2b: Groups will generally reward members who treat others equitably, and
generally punish (increase the costs for) members who treat others inequitably.

Proposition 3: When individuals find themselves participating in inequitable

relationships, they become distressed. The more inequitable the relationship, the more
distressed the individuals feel.

Proposition 4: Those Individuals who discover they are in an inequitable relationship

attempt to eliminate their distress by restoring equity. The greater the inequity that exists,
the more distress they feel, and the harder they try to restore equity.

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As noted in Proposition 1, equity theory rests on the assumption that people are self-
interested and will try to maximize their personal gains. This proposition has sometimes
been questioned by researchers who believe that the nature of close relationships differs
from other types of relationships. They argue that close relationships should not be based
on individual calculations of costs and rewards and a self-interested focus on maintaining
relationships solely for the personal profit they may provide. Instead, they argue that
relationships should be based on a mutual concern for each others' welfare or needs
(Clark and Chrisman 1994; Clark and Mills 1979).

Three primary ways of dealing with challenges to this assumption exist. One is to consider that
individuals may vary in "exchange orientation" or the importance they give to monitoring equity
in their relationships (Murstein, Cerreto, and Mac-Donald 1977). For example, some individuals
may be high in exchange orientation, constantly keeping track of how much they and their
partners put into or get out of a relationship. Other individuals may be low in exchange orientation,
not paying attention to inputs, outputs, costs, and rewards of their relationships at all.

Measuring exchange orientation may be a way of measuring self-interest in relationships.

Research by Susan Sprecher (1998) has supported this notion. Her findings suggest that
different motivations for "keeping score" of costs and benefits in a relationship have
different effects on relationship quality. People who keep track of inputs and outputs to
make sure they are not under benefited by the relationship seem to be less satisfied by
their relationship whereas people who keep track of inputs and outputs to make sure they
are not over-benefited by the relationship seem to be more satisfied by it.

A second way to account for differences in philosophies regarding self-interest in

relationships is to include relational-level outcomes such as mutuality, sharing, and
respect as types of benefits that individuals can receive from relationships. Relational
partners may see themselves as a unit, with both of them maximally benefiting from the
relationship. In this type of relationship, where identities of the individual partners have
merged, what benefits one partner will also benefit the other. Relational-level outcomes
have not regularly been considered in equity research, although similar concepts arise
during discussions of entitlement processes (Desmarais and Lerner 1994) and fairness
rules (Clark and Chrisman 1994) in close relationships.

Finally, equity in a relationship may be seen as its own reward. This idea is suggested by
Proposition 2 that attempts to account for the development of rules, or norms, that limit self-
interest behavior. If individuals were to continually strive for the most resources, anarchy and
violence would dominate society as each member tried to gain more. However, Proposition 2
asserts that societies, groups, and couples will develop rules that foster fairness to each
member in order to prevent such a condition. People who follow the rules of fairness will be
rewarded, and people who do not will be punished. Thus, behaving equitably becomes a
means to maximize one's outcomes, and fairness, more than self-interest, becomes the norm.

Understanding the concept of fairness is essential to understanding equity theory. Elaine

Hatfield (Walster) and her colleagues (Walster, Walster, and Berscheid 1978) argue that

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fairness rules are culturally bound, indicating that generally one of three rules of fairness
can apply: proportionality, equality, or need. Rules based upon proportionality mean that
individuals receive "equal relative gains from the relationship" (p. 10, emphasis in
original). In other words, each person should get out of the relationship gains that are in
proportion to what they have put into the relationship. The equality rule, on the other
hand, means that regardless of how much each person has put into the relationship, they
should each reap equal rewards. Finally, the need-based rule indicates that need should
be the determining factor in what partners get from a relationship, regardless of their
individual contributions to it (Deutsch 1985).

Understanding fairness rules is very important to students, scholars, and practitioners

interested in equity theory because distinct bodies of research have developed based on
the different fairness rules. Moreover, considerable scholarly debate centers around
which fairness rule is best applied to close relationships. Finally, the term equity has
become synonymous with the use of the proportionality rule (e.g., Clark and Chrisman
1994), and theorists seem to fall into two categories: proportionality researchers who are
identified as equity theorists and equality researchers who are identified as social (or
distributive) justice researchers. Work from researchers who examine other fairness rules,
such as the need-based rule, can be found in both bodies of work. Because equity theory
as outlined in the four principles above is primarily concerned with perceived fairness in
relationships, the term equity as used here will apply to fairness. Proportionality and
equality will be used to refer to research and findings based on their respective rules.
However, one should note that in the majority of the literature, the term equity is
synonymous with the term proportionality, and equity and equality are the two terms that
one will find most fruitful when searching databases and libraries for information.

Equity theorists have realized the importance of fairness rules and have debated their
application to the study of close relationships. Although Elaine Hatfield (Walster) and her
colleagues (1978) propose proportionality as the appropriate fairness rule, Margaret Clark and
K. Chrisman (1994) note "we could not find work clearly documenting that people actually do
tend to follow an equity [proportionality] norm more often than other possible norms in their
intimate relationships" (p. 67). After reviewing relevant research regarding all three fairness
rules, they argue that the need-based fairness rule is the most appropriate for intimate
relationships. They also suggest that certain factors, such as the stage of development of the
relationship, may affect the application of fairness rules. The idea that people may invoke
different rules under different circumstances has also been supported by other theorists. For
example, Linda Keil and Charles McClintock (1983) review literature that indicates situational
factors may interact with age related cognitive and social process to make certain fairness rules
salient. Serge Desmarais and Melvin Lerner (1994) propose that situational and contextual cues,
such as strong feelings of "weness" in a relationship determine which fairness rules are
appropriate, and Morton Deutsch (1975) contends that people choose the fairness rule they
believe will be most effective for them in reaching their particular relational goals.

One situational variable that has received much attention in examining fairness in close
relationships is power. Hatfield W. and her colleagues (1978) address the role of power in

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equity theory by postulating that due to their self-interested nature, people will try to persuade
others that their contributions are more valuable than the others' contributions. Those who
successfully accomplish this will receive more benefits, will be able to persuade others that they
are entitled to more benefits, and will develop ideologies that reinforce their right to receive
more benefits. Over time, people will see this lopsided allocation of benefits as normal and
acceptable. However, as Hatfield (Walster) and her colleagues note, a marked shift in social
power would enable under benefited individuals to feel entitled to more and encourage them to
begin efforts to change the allocation of benefits. It is interesting to note that parallels can be
drawn between this scenario, gender relations in the United States over the past few decades,
and research regarding marital relationships.

Researchers across disciplines have noted changes in marital relationships over the past few
decades. This is not surprising because marital relationships across time and cultures differ
with the social circumstances in which they exist. Among other factors, the feminist
movement in the 1960s and 1970s has influenced changes in the labor market, with more and
more women entering the workforce. Research on intimate relationships has shown that
higher income for one partner can be associated with increased relational power (Blumstein
and Schwartz 1983), and researchers often cite the increased numbers of women in the
workforce as having affected changes in women's power, in sex-role expectations, and in
marital ideals (VanYperen and Buunk 1994). One particular change is that marital partners
are striving for more equality in the distribution of domestic, economic, and emotional
contributions to their relationships (Scanzoni and Scanzoni 1988).

Even with changes in social and relational power between men and women, many
researchers suggest that judgments of fairness in heterosexual relationships should not be
based on the proportionality rule but should be based on the equality rule. Reasons for
this assertion come in two forms. First, it is argued that because we live in a social system
that values men's contributions more than women's, proportionality-based evaluations of
contributions to a relationship can never be fair; for even though men and women may
contribute equally to a relationship, men's contributions will be valued more that would,
therefore, entitle them to more (Steil 1997). Research examining the perceived value of
different relational contributions has been sparse, and mixed results have been found. For
example, Janice Steil and Karen Weltman (1991) found support for gender-based valuing
of careers when their research showed that women's careers are often not perceived as
important as men's. However, Pamela Regan and Susan Sprecher (1995) found that men
and women valued their own and their partner's contributions similarly on sixteen of
twenty-two characteristics such as having a prestigious and important career, being easy
to get along with, being passionate and taking care of inside chores.

The second reason for equality-based rules of fairness is rooted in research related to
equity theory that focuses on the outcomes of inequitable relationships by asserting that
individuals in inequitable relationships will become distressed. Researchers exploring the
area of equitable outcomes in marital relationships often measure outcomes through
reports or observations of behaviors rather than perceptions. This is because individuals'
perceptions of their relationships can become skewed through gender-biased valuing of

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relational inputs, because an incongruence often exists between perception of one's
behavior and the actual behavior itself, and because people in low-power positions often
feel entitled to less that leads them to perceive an unfair situation as fair. Given this
caveat, people do still report perceived inequity in their relationships, and it has been
associated with negative outcomes, including less sexual intimacy, less sexual
satisfaction, less commitment to the relationship, decreased happiness and satisfaction
with the relationship, and relationship breakup (Sprecher 1995).

In 1972, Jesse Bernard published her book The Future of Marriage and argued that the
outcome of marriage is unequal for men and women in terms of psychological well-being or
distress. Well-being differences have been reported between married men and women in
many studies, with women reporting more instances of psychosomatic illnesses, such as
depression, distress, and headaches (Gove, Hughes, and Style 1983), even when they report
satisfaction within their marriages (Steil and Turetsky 1987). According to Proposition 3, the
presence of distress in a relationship can indicate the presence of inequity.

On the flip side of the coin, inequality is costly to men as well, although in different
ways. Men become alienated from their families and do not participate in the domestic
sphere or with their children. They have a reduced capacity for intimacy (Kaufman
1994). Furthermore, wives often resent their husbands' absence from the family
(Schwartz 1994) and children become unhappy with their fathers' lack of emotional and
physical participation in their lives (Kaufman 1994; Schwartz 1994; Silberstein 1992).
Disconnection from the family often results in relational boredom and increases the
potential for divorce (Schwartz 1994).

Support for the equality rule of fairness comes from researchers interested in close
relationships and equality. Pepper Schwartz (1994; Blumstein and Schwartz 1983) and
other researchers have found qualitative differences between couples who are able to
create equality in their relationships and couples who are not or who come close but do
not quite make it (Blaisure and Allen 1995; Hochschild and Machung 1989; Knudson-
Martin and Mahoney 1998). Their findings show that equality is the essential ingredient
for prevention of these negative outcomes. When marital equality is present, men are
relieved of the pressures associated with the provider role and they have more intimate,
more meaningful, and more satisfying relationships with their families (Steil 1997).
Higher levels of marital satisfaction are related to equality in shared decision making and
shared task control (Gray-Little and Burks 1983), and higher levels of wives' well-being
have been associated with men's participation in housework (Steil 1997). Furthermore,
husbands do not suffer from shouldering domestic duties. In fact, in marital relationships
where economic and domestic responsibilities are shared equally, both husbands and
children benefit from increased family time (Schwartz 1994); male empathy,
understanding, and attentiveness (Coltrane 1996); more intimate and stable parent-child
bonds; and more intimate and stable marital bonds (Schwartz 1994).

Given all the costs of relationship inequality, it is not surprising that states people involved in
inequitable relationships will try to restore equity. Hatfield (Walster) and her colleagues (1978)

62
provide two ways that a person can restore equity to a relationship: by restoring actual equity or
by restoring psychological equity (the perception that equity actually exists when it does not).
As noted earlier, researchers who use behavior to measure relational equity instead of
perceptions may do so because they believe partners in an inequitable relationship do not see the
inequity. This assumption is congruent with the concept of restoring psychological equity.

Research examining equity-restoring behaviors is scant but supportive of the proposition. In a

study asking participants to imagine they were in an inequitable relationship, Sprecher (1992)
found that participants expected that they would engage in equity-restoring behaviors,
including increasing their partner's rewards, asking their partners to contribute more to the
relationship, or changing their perceptions of the relationship so that it seemed fair. She also
found that women were more likely to expect to engage in equity-restoring activities than
men. Women in inequitable relationships have also reported engaging in or wanting to
engage in extramarital sexual behavior. Engaging in sex outside of one's marriage may be a
way of restoring perceived inequity (Sprecher 1995).

Proposition 4 of equity theory can provide an interesting framework for examining

negative family behavior, such as extramarital relationships. Although it may be
unpleasant to think about, the restoration of equity can help explain parent-child abuse. In
this framework, abuse may be perceived as a way to restore equity to an inequitable
parent-child relationship. Parents who feel exploited by their children may attempt to
restore equity by retaliating against their children with verbal or physical abuse or by
psychologically or physically abandoning their children (Walster, Walster, and Berscheid
1978). Furthermore, research regarding family violence has examined and supported a
relationship between domestic violence and inequitable gender perceptions (Bryant
2001). Finally, the equitable or inequitable division of inheritance property may be
another way for families to reestablish equity among its members (Stum 1999).

6. Compensation Costs
Compensation cost is a measure closely related to labour cost, although it does not entirely
correspond to the ILO definition of total labour cost contained in the 1966 ILO resolution
concerning statistics of labour cost, adopted by the 11th International Conference of Labour
Statisticians (ICLS) in that it does not include all items of labour costs

In particular, the costs of recruitment, employee training, and plant facilities and services,
such as cafeterias, medical clinics and welfare services, are not included

As work environments become safer, the number of workers' compensation claims

continues to decline. At the same time, the cost per claim has continued to rise along with
the rising cost of health care in general, making the business costs substantial. Along with
death and taxes, workers' compensation

7. Employee Risk Management: Reduce Your Workers' Compensation Costs

By working with your risk management insurance carrier, you can implement both pre-
and post-claims programs that will reduce your workers' compensation costs overall.

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Besides implementing procedures that make your business a more desirable client in
terms of insurance rates, you can save even more on your risk management costs by
implementing the following practices:

 When paying an employee time and a half for overtime, you may only have to
report the regular wages, decreasing the amount of payroll that determines your
insurance premiums.
 Implement programs that bring workers back into the workforce at a faster rate,
even if it means bringing them back part time or in a limited capacity. Rising
workers' compensation costs are primarily due to increased use of benefits and
longer duration of disability. The more time an employee spends on disability, the
more wage replacement and medical services increase in cost.
 Look for a pattern to claims. Do some locations or areas in your business have
fewer claims than others? Determine the reason why. Reducing the number of
workers' compensation claims gives your business a better safety record. This
makes you a much better risk to an insurance company, making it more likely they
will give you better rates in the long run. Overall, this is the best way to reduce
your risk management expenses.

8. Achieving Cost Reductions through Workers Compensation Reform

Workers compensation systems are very dynamic and can change significantly from year
to year. In some instances the benefits paid to injured workers become inadequate over
time because maximum benefit rates have not kept pace with inflation or eligibility rules
are stretched to unanticipated limits by court decisions. A workers compensation system
can reach the point where it is totally out of balance because it provides either inadequate
benefit to injured employees or unbearable costs for employers who must pay the bill. In
some instances, workers compensation systems produce both inadequate benefits and
extremely high costs at the same time.

Each year, a number of states review their workers compensation legislation and
regulations and make an attempt to restore balance to the system. The process is
commonly referred to as "reform." Frequently the goal of reform is to increase benefits
for injured workers while making technical corrections designed to reduce fraud or waste.
The reduced costs resulting from technical corrections are expected to partially offset the
higher costs resulting from benefit increases.

Employers and insurer representatives are usually asked to participate in the reform
process. This article provides a list of issues that employers should consider when there is
an opportunity to reform their state's workers compensation system.

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9. Problems with Performance Pay

Graphic: This diagram shows Maslow's hierarchy of needs, represented as a pyramid

with the more primitive needs at the bottom.
Julie Bishop, the Minister for Education in Australia's Howard Government, has
announced that the Commonwealth Government intends to force the introduction of
performance based pay for teachers in Australia's public schools.

Background
For the benefit of my international readers, education is a state responsibility under
Australia's Federal Constitution.

Each state maintains a centrally managed public school system intended to make universal
education available to all, but also sets curriculum, standards and final examinations for the
whole education system, including the growing non-government sector.

While the Commonwealth Government does not have constitutional responsibility for
education, Commonwealth Governments of all political persuasions have become increasingly
active in the education area in recent years through provision of funds. Now Minister Bishop
wants to use this leverage to force new teacher pay arrangements on the states.

Performance based pay arrangements exist to some degree in the non-governmental

sector. The proposal to extend the concept has met with strong opposition from State
Governments and teachers' unions.

10. Money as Motivator

Does money motivate? Does higher pay, or the chance of higher pay, lead to improved
performance? I have seen little evidence to suggest that it does, although I have to be
careful how I phrase this.

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Clearly, all firms operate in the marketplace for talent. They need to set pay structures
that will attract and retain the people they want. One of the reasons why Australia has had
a problem attracting teachers is that pay scales for teachers have been too low relative to
other opportunities.

Individual firms also adopt specific recruitment and pay policies targeting the type of
person they want (can afford). This includes specific areas like sales or corporate finance
where performance pattern including commissions are common. This may but need not
lead to commercial success.

All this said, there is little hard data that I am aware of to say that higher pay or
performance pay will improve performance at sector level beyond the market pay
required to attract and hold people in the first place.

In fact this study is of the transition of firms from good to great, Jim Collins found that
there was no link between remuneration and performance. The only discernible
difference between the good to great and the rest was that the good to great companies in
fact paid their senior executives slightly less!

11. Pay and the Hygiene Factor

To understand some of the reasons why performance pay may not work and even are
counter productive we need to look at the work of Herzberg.

Frederick Herzberg (1923 - 2000) was a noted psychologist who became one of the most
influential names in business management. He is possibly most famous for his work in
job enrichment and Motivator-Hygiene theory. According to Wikipedia (link above) his
1975 publication "One More Time, How Do You Motivate Workers?" is still the most
requested article from the Harvard Business Review.

In 1959, Herzberg proposed the two factor theory of human motivation in the workplace.
According to his theory people are influenced by two factors:

 Satisfaction and psychological growth are a result of motivation factors. These

include achievement, recognition, work identity, responsibility, promotion, growth.
 Dissatisfaction is a result of a lack of hygiene factors. These include pay, fringe
benefits, relationship with co-workers, physical environment, and supervisor-
employee relations.

So Herzberg puts pay in the hygiene class, something that can de-motivate if it’s wrong,
but not a motivator in its own right.

Now link this to the work of Abraham Maslow (1908-1970).

In 1943 Maslow proposed his hierarchy of needs. This is often depicted as a pyramid (see
graphic) consisting of five levels: the four lower levels are grouped together as deficiency

66
needs associated with physiological needs, while the top level is termed growth needs
associated with psychological needs.

While deficiency needs must be met, growth needs are continually shaping behaviour.
The basic concept is that the higher needs in this hierarchy only come into focus once all
the needs that are lower down in the pyramid are mainly or entirely satisfied. Growth
forces create upward movement in the hierarchy, whereas regressive forces push
prepotent needs further down the hierarchy.

I have never been a supporter of all the detail in Maslow, but his work does explain why I
think that Herzberg was correct to classify money as a hygiene factor. It all comes back
to the impact of pay and changes in pay on Herzberg's motivational factors and the higher
levels in the Maslow pyramid including especially esteem.

12. Cloudy Relationships

Problems become more complex where the relationship between those things being
measured and the success of the organisation are more complex or even contradictory.

Take time based charging, a common practice in many parts of the professional sector. If,
as is usually the case, performance measurement focuses on billings, this creates an
incentive to maximize billings at the expense of the client. Problems here have been well
explored on Chris Marston's Inside the Firm of the Future blog as well as on blogs such
as Adam Smith Esq or David Maister's. David's latest post actually provides a specific
example of assessment problems.

Problems arise too where you actually want your people to perform across a range of
dimensions.

Assume that you want staff to take a degree of personal responsibility for marketing, but
measure only billings and focus on that in remuneration. You can be sure marketing will
be ignored.

Assume that you need your staff to work in teams, but focus instead on individual
performance. You can be sure that team work will suffer.

Particular problems can also arise where elements of performance depend on factors
outside individual control or are not directly measurable.

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 REFERENCES

http://chrimarston.blogspot.com

http://en.wikipedia.org/wiki/maslow

http://en.wikipedia.org/wiki/Fredrick_Herzberg

www.macquarie.com.au/au/index.html

www.the-halo-effect.com

http://www.successfactors.com/compensation-planning/small/

http://www.referenceforbusiness.com/encyclopedia/Clo-Con/Compensation-
Administration.html

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Unit–7

MANAGING CHANGE,
CONFLICT AND STRESS

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70
1. Introduction
Organizational change and increased stress levels seem to be life partners these days. To
help workers to cope with the stress of change, a colleague and I developed a Stress
Management Programme using the concepts of Rational Emotive Behaviour Therapy.
REBT is based on the assumption that emotional and behavioural reactions are largely
caused by conscious and unconscious beliefs (Ellis, 1998). During organizational change,
self defeating internal self talk may cause employees to experience strong self defeating
emotions such as resentment, hostility, anxiety, depression, and the like.

REBT focuses on providing employees with strategies and tools that can lead to
professional growth and development, better workplace relationships and less conflict
and stress. These can be used individually or as part of a team to accept change and come
to terms with the difficulties involved.

The Stress Management programme described in this article is designed to show the links
between change and stress, identify common work place stressors and the physical and
emotional consequences to employees, and teach REBT strategies and tools to help
minimize these effects. The programme is intended for organization employees who are
not in any life threatening situation or specifically seeking treatment, so the format is
different than when using REBT as a clinical/therapeutic intervention.

2. Objectives:
After going through this unit you will be able to:

v. Differentiate between change, conflict and stress

vi. To identify the barriers to resistance to change
vii. Determine management strategies to resolve conflicts and stresses

3. Change
Nothing is as upsetting to your people as change. Nothing has greater potential to cause
failures, loss of production, or falling quality as changes. Yet nothing is as important to
the survival of your organization as change. History is full of examples of organizations
that failed to change and that are now extinct. The secret to successfully managing
change, from the perspective of the employees, is definition and understanding.
Resistance to change comes from a fear of the unknown or an expectation of loss. The
front-end of an individual's resistance to change is how they perceive the change. The
back-end is how well they are equipped to deal with the change they expect.

An individual's degree of resistance to change is determined by whether they perceive the

change as good or bad, and how severe they expect the impact of the change to be on
them. Their ultimate acceptance of the change is a function of how much resistance the
person has and the quality of their coping skills and their support system.
Your job as a leader is to address their resistance from both ends to help the individual
reduce it to a minimal, manageable level. Your job is not to bulldoze their resistance so
you can move ahead.

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On the front end, you need to define the change for the employee in as much detail and as
early as you can. Provide updates as things develop and become clearer. In the case of the
desk that has to be moved, tell the employee what's going on. "We need to bring in more
workers. Our sales have increased by 40% and we can't meet that demand, even with lots
of overtime. To make room for them, we'll have to rearrange things a little." You could
even ask the employees how they think the space should be rearranged. You don't have to
accept their suggestions, but it's a start toward understanding.

Definition is a two-way street. In addition to defining the problem, you need to get the
employees to define the reasons behind their resistance.

4. Barriers to Change
Kotter and Schlesinger identified basic causes of resistance to change. These are
discussed under following headings:

i. Parochial self interest

 Individuals are more concerned with the implications for themselves

ii. Misunderstanding
 Communications problems
 Inadequate information

iii. Low tolerance of change

 Sense of insecurity
 Different assessment of the situation

iv. Disagreement over the need for change

 Disagreement over the advantages and disadvantages

Some negative comments often received on proposed changes:

 "My needs are already being met"
 "There is no justification for change"
 "I don’t like the way they propose to do it"
 "The risks outweigh the benefits"
 "It will now be harder for me to meet my own needs"

5. Organizational Barriers to Change

 Structural inertia
 Existing power structures
 Resistance from work groups
 Failure of previous change initiatives

6. Individual Barriers to Change

 Tradition and set ways:

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 Loyalty to existing relationships
 Failure to accept the need for change
 Insecurity
 Preference for the existing arrangements
 Break up of work groups
 Different person ambitions
 Fear of:

Loss of power
Loss of skills
Loss of income
The unknown

 Redundancy

7. Conflict
Conflict is a natural disagreement resulting from individuals or groups that differ in
attitudes, beliefs, values or needs. It can also originate from past rivalries and personality
differences. Other causes of conflict include trying to negotiate before the timing is right
or before needed information is available.

8. The Ingredients of Conflict

8.1. Needs
Needs are things that are essential to our well-being. Conflicts arise when we ignore
others' needs, our own needs or the group's needs. Be careful not to confuse needs with
desires (things we would like, but are not essential).

8.2. Perceptions
People interpret reality differently. They perceive differences in the severity, causes and
consequences of problems. Misperceptions or differing perceptions may come from: self-
perceptions, others' perceptions, differing perceptions of situations and perceptions of threat.

8.3. Power
How people define and use power is an important influence on the number and types of
conflicts that occur. This also influences how conflict is managed. Conflicts can arise
when people try to make others change their actions or to gain an unfair advantage.

8.4. Values
Values are beliefs or principles we consider to be very important. Serious conflicts arise
when people hold incompatible values or when values are not clear. Conflicts also arise
when one party refuses to accept the fact that the other party holds something as a value
rather than a preference.

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8.5. Feelings and Emotions
Many people let their feelings and emotions become a major influence over how they
deal with conflict. Conflicts can also occur because people ignore their own or others'
feelings and emotions. Other conflicts occur when feelings and emotions differ over a
particular issue.

Conflict is not always negative. In fact, it can be healthy when effectively managed.
Healthy conflict can lead to the following:

i. Growth and innovation

ii. New ways of thinking
iii. Additional management options

If the conflict is understood, it can be effectively managed by reaching a consensus that

meets both the individual's and society's needs. This results in mutual benefits and
strengthens the relationship. The goal is for all to "win" by having at least some of their
needs met.

9. Managing Conflicts
There are five steps to managing conflicts. These steps are:
i. Analyze the conflict
ii. Determine management strategy
iii. Pre-negotiation
iv. Negotiation
v. Post-negotiation

Step 1: Analyze the conflict

The first step in managing conflict is to analyze the nature and type of conflict. To do
this, you'll find it helpful to ask questions.

Answers may come from your own experience, your partners or local media coverage.
You may want to actually interview some of the groups involved. Additional information
regarding analyzing conflicts can be found in the Guide to Information and Resources.

Step 2: Determine management strategy

Once you have a general understanding of the conflict, the groups involved will need to
analyze and select the most appropriate strategy. In some cases it may be necessary to
have a neutral facilitator to help move the groups toward consensus.

10. Conflict Management Strategies

Collaboration
Compromise
Competition
Accommodation
Avoidance

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10.1. Collaboration
This results from a high concern for your group's own interests, matched with a high
concern for the interests of other partners. The outcome is "win/win." This strategy is
generally used when concerns for others are important. It is also generally the best
strategy when society's interest is at stake. This approach helps build commitment and
reduce bad feelings. The drawbacks are that it takes time and energy. In addition, some
partners may take advantage of the others' trust and openness. Generally regarded as the
best approach for managing conflict, the objective of collaboration is to reach consensus.
(See the Building Local Partnerships guide for more information about consensus.)

10.2. Compromise
This strategy results from a high concern for your group's own interests along with a
moderate concern for the interests of other partners. The outcome is "win some/lose
some." This strategy is generally used to achieve temporary solutions, to avoid
destructive power struggles or when time pressures exist. One drawback is that partners
can lose sight of important values and long-term objectives. This approach can also
distract the partners from the merits of an issue and create a cynical climate.

10.3 Competition
This strategy results from a high concern for your group's own interests with less concern
for others. The outcome is "win/lose." This strategy includes most attempts at bargaining.
It is generally used when basic rights are at stake or to set a precedent. However, it can
cause the conflict to escalate and losers may try to retaliate.

10.4 Accommodation
This result from a low concern for your group's own interests combined with a high
concern for the interests of other partners. The outcome is "lose/win." This strategy is
generally used when the issue is more important to others than to you. It is a "goodwill
gesture." It is also appropriate when you recognize that you are wrong. The drawbacks
are that your own ideas and concerns don't get attention. You may also lose credibility
and future influence.

10.5. Avoidance
This result from a low concern for your group's own interests coupled with a low concern
for the interests of others. The outcome is "lose/lose." This strategy is generally used
when the issue is trivial or other issues are more pressing. It is also used when
confrontation has a high potential for damage or more information is needed. The
drawbacks are that important decisions may be made by default.

11. Interpersonal Conflict

Conflict is an expressed struggle between at least two interdependent parties who
perceive incompatible goals, scarce rewards, and interference from the other party in
achieving their goals (Joyce Hocker and William Wilmot)

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Look at the circumstances, and think about the style that may be appropriate.

Then use the process below to resolve the conflict:

Step One: Set the Scene

If appropriate to the situation, agree the rules of the IBR Approach (or at least consider
using the approach yourself.) Make sure that people understand that the conflict may be a
mutual problem, which may be best resolved through discussion and negotiation rather
than through raw aggression.

If you are involved in the conflict, emphasize the fact that you are presenting your
perception of the problem. Use active listening skills to ensure you hear and understand
other’s positions and perceptions.
 Restate
 Paraphrase
 Summarize

And make sure that when you talk, you're using an adult, assertive approach rather than a
submissive or aggressive style.

Step Two: Collect Information

Here you are trying to get to the underlying interests, needs, and concerns. Ask for the
other person’s viewpoint and confirm that you respect his or her opinion and need his or
her cooperation to solve the problem.

Try to understand his or her motivations and goals, and see how your actions may be
affecting these.

Also, try to understand the conflict in objective terms: Is it affecting work performance?
damaging the delivery to the client? disrupting team work? hampering decision-making?
or so on. Be sure to focus on work issues and leave personalities out of the discussion.

 Listen with empathy and see the conflict from the other person’s point of view
 Identify issues clearly and concisely
 Use “I” statements
 Remain flexible
 Clarify feelings

Step Three: Agree the Problem

This sounds like an obvious step, but often different underlying needs, interests and goals
can cause people to perceive problems very differently. You'll need to agree the problems
that you are trying to solve before you'll find a mutually acceptable solution.
Sometimes different people will see different but interlocking problems - if you can't
reach a common perception of the problem, then at the very least, you need to understand
what the other person sees as the problem.

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Step Four: Brainstorm Possible Solutions
If everyone is going to feel satisfied with the resolution, it will help if everyone has had
fair input in generating solutions. Brainstorm possible solutions, and be open to all ideas,
including ones you never considered before.

Step Five: Negotiate a Solution

By this stage, the conflict may be resolved: Both sides may better understand the position
of the other, and a mutually satisfactory solution may be clear to all.
However you may also have uncovered real differences between your positions. This is
where a technique like win-win negotiation can be useful to find a solution that, at least
to some extent, satisfies everyone.

12. Stress
This refers to the physical and mental response of the body to demands made upon it. It is
the result of our reaction to outside events, not necessarily the events themselves.

Not all stress is bad. We each function best and feel best at our own optimal level of
physiological arousal. We need some stress to get everyday things done. Too little can
lead to boredom and "rust out" - but too much can produce "burn out".

Adaptive stress helps us rise to life's challenges. Adrenaline, nor-adrenaline and glucose
flow into our blood: we get a buzz of energy and feel alert, focused, and creative.
Negative stress occurs when our ability to cope with life's demands crumbles. If we don't
break down the stress chemicals (e.g. through physical activity) they stay in the blood,
preventing us from relaxing. Eventually this results in a permanent state of stress. That
initial buzz turns to worry, irritability or panic. Challenges become threats; we doubt our
ability to do even simple things and problems appear insurmountable.

13. Managing stress

The key to success is to think positively; take control of your stress and anxiety by
learning effective techniques to combat it. Relaxing bodily tension in order to reduce the
physical sensations of stress is a good place to start. If your body is free of tension your
mind tends to be relaxed. This helps you concentrate and study, take decisions and solve
problems. When you are relaxed, you can view each task as a positive challenge, and use
stress as a stimulus to help you to carry it out giving you a relaxing glow of achievement
afterwards.

13.1. Looking after you

Be kind to yourself. Give yourself "me time" in which you can choose what you want to
do: Rest; do nothing; try a relaxation technique, massage or yoga; have a long hot bath;
spend time with friends; treat yourself to something special. Taking proper breaks and
eating well do help to combat stress.

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13.2. Confronting the problem
Try to stand back and look at the problem carefully. Break it down into manageable parts.
Talk it through with someone else, brainstorm solutions, or get help if you need it. Try to
manage your time effectively and learn to say "NO". Avoidance won't make the problem
go away and can often make it worse. Leaving everything to the last minute is a major
source of stress for students. Think about why you are finding it hard to get started:
uncertainty about how to do the assignment, fear of being judged or failing? Starting a
piece of work effectively reduces stress levels as it frees your mind, putting the thoughts
of failure back into perspective. If you've had a row or a misunderstanding with someone,
it rarely helps to avoid the issue. Talking it through with the other person or with
someone outside the situation, often helps you express your feelings, regain a sense of
proportion, and identify a way of resolving the differences.

13.3. Find some distractions

Sport and physical activity helps you to relax physically and also releases endorphins in the
body which produce a real feeling of well-being. Walk, cycle, swim, and join a gym or a
sports team. Joining a club or society, maintaining an existing hobby or learning something
new, talking to other people... can all help you to take a mental and physical break.

13.4. Express yourself

Talk about it, write about it, shout or moan about it: expressing your feelings can help to
relieve stress. Acknowledging a problem to you and to others can be the first step in
dealing with it. Sometimes having a good cry or bashing a pillow can release emotional
pressure and calm your feelings of anxiety.

13.5. Tackling anxiety

Anxiety is a normal response to danger or stress: it prepares us for coping with stress.
Anxiety is only a problem when it is out of proportion to a situation or goes on for too
long. Then our thoughts may become muddled and we may experience physical
symptoms such as rapid breathing, racing heart, sweaty palms, and tense muscles.
Anxiety can lead to panic attacks. Learn how to breathe efficiently and practice it in order
to prevent over breathing (too much oxygen in the blood). This causes a series of
unpleasant physical symptoms i.e. tingling hands and face, muscle cramps and tremors,
dizziness, breathing difficulties and feelings of fatigue. These sensations can be
controlled by breathing slowly and smoothly through the nose, filling the lungs
completely.

13.6. Breathing exercise

Place one hand on your chest and one on your stomach. As you breathe in through your
nose allow your stomach to swell. This means that you are using the diaphragm to
breathe in and allowing air right down into your lungs. Try to keep the movement in your
upper chest to a minimum and keep the movement gentle. Slowly and evenly breathe out
through your nose. Repeat and get a rhythm going . You are aiming to take 8-12 breaths a
minute: breathing in and breathing out again counts as one breath. Practice until it
becomes a habit and switch to regular breathing when you next become anxious. Learn

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how to really relax and develop a skill which will enable you to reduce unnecessary
physical tension whenever you need to. Information sheets and relaxation tapes are
available from the Medical Centre. Learn how to combat worrying thoughts because
worrying thoughts keep the anxiety going then the symptoms of anxiety maintains the
worrying thoughts. Try simple distraction techniques such as physical exercise or
refocusing your mind by concentrating hard on one thing to absorb all your attention.

13.7. Panic Attacks

A panic attack is the body's natural "fight or flight" reaction to a sudden threat. If there is
no real external threat, the adrenaline pumping around the body is experienced as a panic
attack: the heart beats fast and hard, we may sweat, feel faint or nauseous. All these
symptoms can be very frightening. If you experience a panic attack, it is important to
remind yourself that none of these feelings can harm you - you are not going to have a
heart attack, faint, or be sick. Although you may feel very strange, no-one else is likely to
notice anything wrong. Try to deepen your breathing and relax. Distract yourself by
thinking about something else or focusing on an item in the room. Block any panicky or
worrying thoughts. As you manage the panic in this way, your brain and body begins to
recognize that there is no real danger, the supply of adrenaline to the blood is cut off, and
the symptoms will subside. Follow the breathing exercises above to help you manage
your panic attack.

13.8. Workplace Stress

This is the time of year when we all may feel a little more stress due to the demands of
the holidays. Unfortunately, stress at work can be a year-round issue further exacerbated
during these months.

Work organization and job stress are topics of growing concern in the occupational safety
and health field and at NIOSH. The expressions "work organization" or "organization of
work" refer to the nature of the work process (the way jobs are designed and performed)
and to the organizational practices (e.g., management and production methods and
accompanying human resource policies) that influence the design of jobs.

Job stress results when there is a poor match between job demands and the capabilities,
resources, or needs of workers. Stress-related disorders encompass a broad array of
conditions, including psychological disorders (e.g., depression, anxiety, post-traumatic
stress disorder) and other types of emotional strain (e.g., dissatisfaction, fatigue, tension),
maladaptive behaviors (e.g., aggression, substance abuse), and cognitive impairment
(e.g., concentration and memory problems). In turn, these conditions may lead to poor
work performance or even injury. Job stress is also associated with various biological
reactions that may lead ultimately to compromised health, such as cardiovascular disease.

Stress is a prevalent and costly problem in today's workplace. About one-third of workers
report high levels of stress, and high levels of stress are associated with substantial
increases in health service utilization. Additionally, periods of disability due to job stress
tend to be much longer than disability periods for other occupational injuries and

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illnesses. Evidence also suggests that stress is the major cause of turnover in
organizations.

Attention to stress at work has intensified in the wake of sweeping changes in the
organization of work. Organizational downsizing and restructuring, dependence on
temporary and contractor-supplied labor, and adoption of lean production practices are
examples of recent trends that may adversely influence aspects of job design (e.g., work
schedules, work load demands, job security) that are associated with the risk of job stress.

There is also growing appreciation that work organization can have broader implications
for the safety and health of workers—not just for stress-related outcomes. For example,
long hours of work may increase exposures to chemical and physical hazards in the
workplace, or night shifts may expose workers to heightened risk of violence.

14. Managing Personal Stress

i. Self help
 If you are feeling under pressure, acknowledge it and try to identify the
causes.
 Talk to colleagues, friends or family about how you are feeling. They may be
able to give you a different perspective on how to tackle your problems
 Seek professional help if you feel out of control
 Manage your time effectively. Try to prioritize work. Make time to think
about this.
 Be assertive and learn to say no if you cannot cope.
 Take advantage of training opportunities to extend your knowledge and skills
for personal and professional development
 Take a proper break at lunchtime.
 Learn to delegate. Try not to control every aspect of work processes. This
can be stressful to both you and other work colleagues
 Celebrate your successes
 Take care of your physical health. Exercise even for half an hour each day
can have significant benefits to both physical and mental health. You do not
have to join a gym. Walking, cycling or swimming is all very effective and
convenient ways of taking regular exercise.
 Avoid depending on caffeine, alcohol, cigarettes or other stimulants to get
you through the day. They can often make stress symptoms much worse.
 Enjoy your time away from work. Make time for activities you enjoy and
which you find relaxing. Plan regular treats to give yourself something to
look forward to.

ii. Sources of support at work

 If you are experiencing stress or a mental health problem you should
consider discussing the matter with your manager or Human Resources.

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  If the problem is work related or exacerbated by work you have a legal
obligation to declare the problem to your line manager or to a member of the
human resources team.
 There may be circumstances when you may prefer to seek confidential
advice before following a more formal route.
 The Staff Counseling Service offers a free and confidential support.
Alternatively the Occupational Health nurse is able to advise on strategies for
combating work related stress.
 Trade Unions are able to offer support advice and information on work
related stress.
 If the problem is related to harassment, the Organization has a number of
harassment advisers who can offer confidential support and advice if you do
not feel able to discuss the matter with your manager or the Human
Resources Department.

15. Employee Assistance Programs (EAPs)

EAR refers to employee benefit programs offered by many employers, typically in
conjunction with a health insurance plan. EAPs are intended to help employees deal with
personal problems that might adversely impact their work performance, health, and well-
being. EAPs generally include assessment, short-term counseling and referral services for
employees and their household members.

Note: For details study unit 7 of allied materials please.

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 REFERENCES

Gomez-Mejia, L.R. at el. (2005). Management. McGraw Hill New York: Boston,
London.

Weeratunga, L. (2003). Managing Human Resource-5563. Islamabad: AIOU.

Whetten, D.A. and Cameron, K.S. (1995). Developing Management Skills. Harper
Collins College Publishers.

http://adam.about.com/reports/Stress.htm
http://gbr.pepperdine.edu/052/change.html
http://home.snu.edu/~hculbert/conflict.htm
http://www.freebizplan.org/business_strategies/management/conflict.htm
http://www2.ctic.purdue.edu/KYW/Brochures/ManageConflict.html

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Unit–8

EMPLOYEE MOTIVATIONS

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84
1. Introduction
People in organizations typically spend over 75% of their time in an interpersonal
situation; thus it is no surprise to find out the root of problem of a large number of
organizational is poor communications. Effective communication is an essential
component of organizational success whether it is at the interpersonal; inter group, intra
group, organizational, or external levels.

In this Unit we will cover the basic process of communication and then we will cover
some of the most difficult communication issues managers face-providing constructive
and effective feedback and performance appraisal.

2. Objectives
After going through this unit you will be able to:
i. Understand the different types of communication process
ii. Identify barriers to effective communication and suggest steps to overcome these
problems
iii. Understand the concept of different types of control
iv. Designing effective control systems for effective communication

3. Communication Process
Although all of us have been communicating with others since our infancy, the process of
transmitting information from an individual (or group) to another is a very complex
process with many sources of potential error.

Consider the simple example:

 Terry: "I won't make it to work again tomorrow; this pregnancy keeps me nauseous
and my doctor says I should probably be reduced to part time.
 Boss: Terry, this is the third day you've missed and your appointments keep
backing up; we have to cover for you and this is messing all of us up.

In any communication at least some of the "meaning" lost in simple transmission of a

message from the sender to the receiver. In many situations a lot of the true message is
lost and the message that is heard is often far different than the one intended. This is most
obvious in cross-cultural situations where language is an issue. But it is also common
among people of the same culture.

Look at the example. Terry has what appears to be a simple message to convey-she won't
make it to work today because of nausea. But she had to translate the thoughts into words
and this is the first potential source of error. Was she just trying to convey that she would
be late; was she trying to convey anything else. She was upset because she perceived that
her co-workers weren't as sympathetic to her situation as they should be. Her co-workers,
however, were really being pressured by Terry's continued absences, and her late calls.
They wished she would just take a leave of absence, but Terry refuses because she would
have to take it without pay.

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Thus what appears to be a simple communication in reality is quite complex. Terry is
communicating far more than that she would miss work; she is conveying a number of complex
emotions, complicated by her own complex feelings about pregnancy, work, and her future.

She sent a message but the message is more than the words; it includes the tone, the
timing of the call, and the way she expressed herself.

Similarly, the boss goes through a complex communication process in "hearing" the
message. The message that Terry sent had to be decoded and given meaning. There are
many ways to decode the simple message that Terry gave and the way the message is
heard will influence the response to Terry.

In this case the boss heard far more than a simple message that Terry won't be at work
today. The boss "heard" hostility from Terry, indifference, lack of consideration, among
other emotions. Terry may not have meant this, but this is what the boss heard.

Communications is so difficult because at each step in the process there major potential for
error. By the time a message gets from a sender to a receiver there are four basic places where
transmission errors can take place and at each place, there are a multitude of potential sources
of error. Thus it is no surprise that social psychologists estimate that there is usually a 40-60%
loss of meaning in the transmission of messages from sender to receiver.

It is critical to understand this process, understand and be aware of the potential sources
of errors and constantly counteract these tendencies by making a conscientious effort to
make sure there is a minimal loss of meaning in your conversation.

It is also very important to understand that a majoring of communication is non-verbal.

This means that when we attribute meaning to what someone else is saying, the verbal
part of the message actually means less than the non-verbal part. The non-verbal part
includes such things as body language and tone.

4. Barriers to Effective Communication

There are a wide number of sources of noise or interference that can enter into the
communication process. This can occur when people now each other very well and
should understand the sources of error. In a work setting, it is even more common since
interactions involve people who not only don't have years of experience with each other,
but communication is complicated by the complex and often conflicted relationships that
exist at work. In a work setting, the following suggests a number of sources of noise:

 Language: The choice of words or language in which a sender encodes a message

will influence the quality of communication. Because language is a symbolic
representation of a phenomenon, room for interpretation and distortion of the
meaning exists. In the above example, the Boss uses language (this is the third day
you've missed) that is likely to convey far more than objective information. To
Terry it conveys indifference to her medical problems. Note that the same words

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 will be interpreted different by each different person. Meaning has to be given to
words and many factors affect how an individual will attribute meaning to
particular words. It is important to note that no two people will attribute the exact
same meaning to the same words.
 defensiveness, distorted perceptions, guilt, project, transference, distortions
from the past
 misreading of body language, tone and other non-verbal forms of
communication (see section below)
 noisy transmission (unreliable messages, inconsistency)
 receiver distortion: selective hearing, ignoring non-verbal cues
 power struggles
 self-fulfilling assumptions
 language-different levels of meaning
 managers hesitation to be candid
 assumptions -e.g. assuming others to see situation same as you feel
 distrusted source, erroneous translation, value judgment, state of mind of two
people
 Perceptual Biases: People attend to stimuli in the environment in very
different ways. We each have shortcuts that we use to organize data.
Invariably, these shortcuts introduce some biases into communication. Some
of these shortcuts include stereotyping, projection, and self-fulfilling
prophecies. Stereotyping is one of the most common. This is when we
assume that the other person has certain characteristics based on the group to
which they belong without validating that they in fact have these
characteristics.
 Interpersonal Relationships: How we perceive communication is affected by
the past experience with the individual. Perception is also affected by the
organizational relationship two people have. For example, communication
from a superior may be perceived differently than that from a subordinate or
peer
 Cultural Differences: Effective communication requires deciphering the basic
values, motives, aspirations, and assumptions that operate across
geographical lines. Given some dramatic differences across cultures in
approaches to such areas as time, space, and privacy, the opportunities for
miscommunication while we are in cross-cultural situations are plentiful.

5. Reading Nonverbal Communication Cues

A large percentage (studies suggest over 90%) of the meaning we derive from
communication, we derive from the non-verbal cues that the other person gives. Often a
person says one thing but communicates something totally different through vocal
intonation and body language. These mixed signals force the receiver to choose between
the verbal and nonverbal parts of the message. Most often, the receiver chooses the
nonverbal aspects. Mixed messages create tension and distrust because the receiver
senses that the communicator is hiding something or is being less than candid.

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Nonverbal communication is made up of the following parts:
1. Visual
2. Tactile
3. Vocal
4. Use of time, space, and image

5.1. Visual
This often called body language and includes facial expression, eye movement, posture,
and gestures. The face is the biggest part of this. All of us "read" people's faces for ways
to interpret what they say and feel. This fact becomes very apparent when we deal with
someone with dark sunglasses. Of course we can easily misread these cues especially
when communicating across cultures where gestures can mean something very different
in another culture. For example, in American culture agreement might be indicated by the
head going up and down while in Iran showing this gesture mean negative.

We also look to posture to provide cues about the communicator; posture can indicate
self-confidence, aggressiveness, fear, guilt, or anxiety. Similarly, we look at gestures
such as how we hold our hands, or a handshake. Many gestures are culture bound and
susceptible to misinterpretation.

5.2. Tactile
This involves the use of touch to impart meaning as in a handshake, a pat on the back, an
arm around the shoulder, a kiss, or a hug.

5.3 Vocal
The meaning of words can be altered significantly by changing the intonation of one's
voice. Think of how many ways you can say "no"-you could express mild doubt, terror,
amazement, anger among other emotions. Vocal meanings vary across cultures.
Intonation in one culture can mean support; another anger

6. Nonverbal Communication
The use of gestures, movements, material things, time, and space can clarify or confuse
the meaning of verbal communication. In the above example, factors such as Terry's tone,
the time of Terry's call, will probably play a greater role in how the message is
interpreted than the actual words themselves. Similarly the tone of the boss will probably
have a greater impact on how his message is interpreted than the actual words.

A "majority" of the meaning we attribute comes not from the words themselves, but from
nonverbal factors such as gestures, facial expressions, tone, body language, etc.
Nonverbal cues can play five roles:

1. Repetition: they can repeat the message the person is making verbally
2. Contradiction: they can contradict a message the individual is trying to convey.
3. Substitution: they can substitute for a verbal message. For example, a person's eyes
can often convey a far more vivid message than words and often do.

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4. Complementing: they may add to or complement a verbal message. A boss who pats a
person on the back in addition to giving praise can increase the impact of the message.
5. Accenting: non-verbal communication may accept or underline a verbal message.
Pounding the table, e.g. can underline a message.

Skillful communicators understand the importance of nonverbal communication and use

it to increase their effectiveness, as well as use it to understand more clearly what
someone else is really saying.

7. Communication Success Tips:

Following tips will assist in successful communication:

7.1 Listen to Understand

These leadership and management tips will help you create a profitable business and
develop the talented workforce you need for progress, resiliency and agility. This
leadership and management tip about communication will speed up your progress and
profitability.

In an attempt to be rational and egalitarian, bureaucracies attempt to come up with a set

of abstract impersonal rules to cover all possible events. Crozier gives the example of the
competitive examinations, which mean that one of the examinations are passed,
promotion become simply a matter of seniority and avoiding damaging conflicts. The
result, he argues, is that hierarchical relationships decline in importance or disappear
completely which means that higher level in the bureaucracy have effectively lost the
power to govern the lower levels.

8. Controlling
Controlling is a four-step process of establishing performance standards based on the
firm's objectives, measuring and reporting actual performance, comparing the two, and
taking corrective or preventive action as necessary.

Performance standards come from the planning function. No matter how difficult,
standards should be established for every important task. Although the temptation may be
great, lowering standards to what has been attained is not a solution to performance
problems. On the other hand, a manager does need to lower standards when they are
found to be unattainable due to resource limitations and factors external to the business.

Corrective action is necessary when performance is below standards. If performance is

anticipated to be below standards, preventive action must be taken to ensure that the
problem does not reoccur. If performance is greater than or equal to standards, it is useful
to reinforce behaviors that led to the acceptable performance.

9. Bureaucratic Control
Bureaucratic control is the use of rules, policies, and hierarchy of authority, written
documentation, reward systems, and other formal mechanisms to influence employee

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behavior and assess performance. Bureaucratic control can be used when behavior can be
controlled with market or price mechanisms.

Control through a system of rules and standard operating procedures (SOPs) that shape
the behavior of divisions, functions, and individuals.

o Rules and SOPs tell the worker what to do.

o Standardized actions so outcomes are predictable.
o Still need output control to correct mistakes.

10. Problems of Bureaucratic Control:

o Rules easier to make than delete. Leads to red tape.
o Firm can become too standardized and not flexible.
o Best used for routine problems.

11. Characteristics of the Control Process

The control process is cyclical which means it is never finished. Controlling leads to
identification of new problems that in turn need to be addressed through establishment of
performance standards, measuring performance etc.

Employees often view controlling negatively. By its very nature, controlling often leads
to management expecting employee behavior to change. No matter how positive the
changes may be for the organization, employees may still view them negatively.

Control is both anticipatory and retrospective. The process anticipates problems and takes
preventive action. With corrective action, the process also follows up on problems.

Ideally, each person in the business views control as his or her responsibility. The organizational
culture should prevent a person walking away from a small, easily solvable problem because
"that isn't my responsibility." In customer driven businesses, each employee cares about each
customer. In quality driven dairy farms, for example, each employee cares about the welfare of
each animal and the wear and tear on each piece of equipment.

Controlling is related to each of the other functions of management. Controlling builds on

planning, organizing and leading.

12. Management Control Strategies

Managers can use one or a combination of three control strategies or styles: market,
bureaucracy and clan. Each serves a different purpose. External forces make up market control.
Without external forces to bring about needed control, managers can turn to internal
bureaucratic or clan control. The first relies primarily on budgets and rules. The second relies on
employees wanting to satisfy their social needs through feeling a valued part of the business.

Self-control, sometimes called adhocracy control is complementary to market, bureaucratic and

clan control. By training and encouraging individuals to take initiative in addressing problems

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on their own, there can be a resulting sense of individual empowerment. This empowerment
plays out as self-control. The self-control then benefits the organization and increases the sense
of worth to the business in the individual.

13. Designing Effective Control Systems

Effective control systems have the following characteristics:

1. Control at all levels in the business

2. Acceptability to those who will enforce decisions
3. Flexibility
4. Accuracy
5. Timeliness
6. Cost effectiveness
7. Understandability
8. Balance between objectivity and subjectivity
9. Coordinated with planning, organizing and leading

14. Dysfunctional Consequences of Control

Managers expect people in an organization to change their behavior in response to control.
However, employee resistance can easily make control efforts dysfunctional. The following
behaviors demonstrate means by which the manager's control efforts can be frustrated:
1. Game playing control is something to be beaten, a game between the "boss and me
and I want to win."
2. Resisting control a "blue flu" reaction to too much control
3. Providing inaccurate information --> a lack of understanding of why the information is
needed and important leading to "you want numbers, we will give you numbers."
4. Following rules to the letter people following dumb and unprofitable rules in
reaction to "do as I say."
5. Sabotaging, stealing, discrediting other workers, chasing customers away,
gossiping about the firm to people in the community
6. Playing one manager off against another exploiting lack of communication among
managers, asking a second manager if don't like the answer from the first manager.

15. Types of Control

Management can implement controls before an activity commences, while the activity is
going on, or after the activity has been completed. The three respective types of control
based on timing are feed forward, concurrent, and feedback.

15.1. Feed forward Control

Feed forward control focuses on the regulation of inputs (human, material, and financial
resources that flow into the organization) to ensure that they meet the standards necessary
for the transformation process.

Feed forward controls are desirable because they allow management to prevent problems
rather than having to cure them later. Unfortunately, these controls require timely and

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accurate information that is often difficult to develop. Feed forward control also is
sometimes called preliminary control, pre-control, preventive control, or steering control.

However, some authors use term "steering control" as separate types of control. These
types of controls are designed to detect deviation some standard or goal to allow
correction to be made before a particular sequence of actions is completed.

15.2. Concurrent Control

Concurrent control takes place while an activity is in progress. It involves the regulation
of ongoing activities that are part of transformation process to ensure that they conform to
the organizational standards. Concurrent control is designed to ensure that employee
work activities produce the correct results.

Since concurrent control involves regulating ongoing tasks, it requires a thorough

understanding of the specific tasks involved and their relationship to the desired and product.

Concurrent control sometimes is called screening or yes-no control, because it often

involves checkpoints at which determinations are made about whether to continue
progress, take corrective action, or stop work altogether on products or services.

15.3. Feedback Control

This type of control focuses on the outputs of the organization after transformation is
complete. Sometimes called post action or output control, fulfils a number of important
functions. For one thing, it often is used when feed forward and concurrent controls are
not feasible or are too costly.

Sometimes, feedback is the only viable type of control available. Moreover, feedback has
two advantages over feed forward and concurrent control. First, feedback provides
managers with meaningful information on how effective its planning effort was. If
feedback indicates little variance between standard and actual performance, this is
evidence that planning was generally on target.

If the deviation is great, a manager can use this information when formulating new plans to
make them more effective. Second, feedback control can enhance employee’s motivation.

The major drawback of this type of control is that, the time the manager has the
information and if there is significant problem the damage is already done. But for many
activities, feedback control fulfils number important functions.

15.4. Multiple Controls

Feed forward, concurrent, and feedback control methods are not mutually exclusive.
Rather, they usually are combined into a multiple control systems. Managers design
control systems to define standards of performance and acquire information feedback at
strategic control points.

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15.5. Strategic Control Points are those activities that are especially important for
achieving strategic objectives. When organizations do not have multiple control systems
that focus on strategic control points, they often can experience difficulties that cause
managers to re-evaluate their control processes.

15.6. Clan Control

Clan control represents cultural values almost the opposite of bureaucratic control. Clan control
relies on values, beliefs, corporate culture, shared norms, and informal relationships to regulate
employee behaviors and facilitate the reaching of organizational goals.

Organizations that use clan control require trust among their employees. Given minimal
direction and standards, employees are assumed to perform well - indeed, they participate
in setting standards and designing the control systems.

16. The Primary Types of Organizational Control

There are three primary types of organizational control: strategic control, management
control, and operational control.

16.1. Strategic Control, the process of evaluating strategy, is practiced both after the
strategy is formulated and after it is implemented.

16.2. Management Control focuses on the accomplishment of the objectives of the various
sub strategies comprising the master strategy and the accomplishment of the objectives of the
intermediate plans (for example, "are quality control objectives being met?").

16.3. Operational Control is concerned individual and group performance as compared

with the individual and group role prescriptions required by organizational plans (for
example, "are individual sales quotes being met?").

Each of these types of control is not a separate and distinct entity and in fact may be
indistinguishable from others. Moreover, similar measurement techniques may be used
for each type of control.

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 REFERENCES

http://www.accel-team.com/motivation/

http://www.fhsu.edu/~zhrepic/Teaching/GenEducation/nonverbcom/nonverbcom.htm

humanresources.about.com/od/motivationrewardretention/...

www.managementhelp.org/guiding/motivate/basics.htm -

www.joe.org/joe/1998june/rb3.html -

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Unit–9

INTERNATIONAL HUMAN
RESOURCES MANAGEMENT

95
96
1. Introduction
International Human Resource Management explores both comparative and international
HRM, discussing leading practices and the controversies that surround them. Developed from
the authors' extensive experience in the field, it presents a comprehensive treatment of the
subject from a truly global perspective, including material from the Pacific Rim, China and
India. Units are grounded in academic research and include case studies, activities and a range
of other features to test and reinforce students' understanding. International Human Resource
Management is a critically engaging yet student-friendly text, ideal for use as a core text on
modules in International Human Resource Management, whether undergraduate or
postgraduate. It is also suitable for the CIPD's International Personnel and Development
Module and for international students studying HRM. Coverage has been expanded in this
new edition to closely match most comparative modules and the book's pedagogy improved
for ease of use. 'I am amazed how much is contained in such a relatively small book. Apart
from reading the IHRM journal and seeking out original sources a student would be able to
get a very good overview as well as an in-depth perspective on IHRM. I would say that this
critically engaging book is the best in its field.' Dr David Vickers, Lancashire Business
School, University of Central Lancashire, UK

A philosophy of people management is based on the belief that human resources are uniquely
important in sustained business success. An organization gains competitive advantage by using
its people effectively, drawing on their expertise and ingenuity to meet clearly defined
objectives. HRM is aimed at recruiting capable, flexible and committed people, managing and
rewarding their performance and developing key competencies.

2. Objectives
After going through this unit you will be able to:

i. Analyze the approaches to international human resource management reforms

ii. Compare and contrast human resource development in the Asia Pacific: issues,
challenges and responses
iii. Differentiate among different Maps and Models of HRM

3. Approaches to Human Resource Management Reforms

The introduction of New Public Management in the public services of many countries
brought with it not only changes in epistemology but new methods and techniques for
managing resources. With the advent of New Public Management, for instance,
techniques such as contracting out, divestment and the desegregation of the public
services into separate self contained units were employed by many governments to
increase output and reduce cost in the public sector. However, it was also recognized that
another resource, namely how employees are managed, needed to be reformed as well.
This concern for proper management of human resources was implicit in one of the
primary tenets of New Public Management, which stressed that managers should be "free
to manage. This "freedom to manage" principle involved more than changes in the
process of decision-making. Indeed, it led to a radical attempt on the part of various states
to replace the former systems of personnel administration with the "new" private sector

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system of human resource management. This article examines the attempts to reform
human resource management systems in the public services of two of the larger countries
in the Commonwealth Caribbean—Jamaica, Trinidad and Tobago. It argues that although
these two countries share a remarkable commonality in terms of historical backgrounds,
political and economic developments, the human resource systems that were introduced
under the wider ambit of administrative reform varied. Moreover, it was evident that
Jamaica was far more successful in the actual implementation of human resource systems
than Trinidad and Tobago. What is even more striking is the fact that reformers in both
countries took only what they wanted from the reform package and in some cases
amended them in the light of factors such as ethnicity, political culture, party dominance,
or levels of economic development.

This article examines the attempts made in the public services of Jamaica, Trinidad and
Tobago to replace the traditional systems of personnel administration with new systems
of human resource management. The article argues that even in countries that share a
number of basic underlying values and traditions and where political and administrative
institutions are similar, the kind of systems or mechanisms that may be implemented may
vary due to factors such as ethnicity, political culture, party dominance or level of
economic development. The article accordingly offers explanations for the different
application of human resource management systems in Jamaica, Trinidad and Tobago.

Both Jamaica and the twin Island State of Trinidad and Tobago were formerly under
British rule, or what were commonly referred to as Crown Colonies. The legacy left by
the departing colonials was found not only in the political system, the Westminster
Whitehall model, but was also duplicated in the administrative systems and institutions as
well. Indeed, one of the lasting legacies of Colonial Administration was the Public
Service Commission that had been introduced in the Caribbean in the 1950s, and today is
still the most important institution with responsibility for the management of employees
in the wider public services.

In both countries, the critical impetus for reform was to a large extent due to external
pressures. Indeed, as another study pointed out, comprehensive reform of the public
services was not internally driven but rather was one of the conditions imposed by the
international lending agencies, the World Bank and the International Monetary Fund. La
Guerre also noted that while structural adjustment conditions involved economic reform,
it also included reform of the public services as well. The reforms in both countries were
comprehensive and included budgetary, financial, structural, legislative, and relational
reforms. The attempt to redefine the responsibilities of the various actors accordingly
called for changes in the personnel systems as well.

It should be noted, though, that these reforms were not confined to the Commonwealth
Caribbean. As the 1990 report of the Organization for Economic Cooperation and
Development demonstrated countries all over the world were also engaged in similar
exercises. One reason for this "global revolution" as it was termed by Osborne and
Gaebler was largely due to fiscal stresses brought about by changes in the international

98
economic system. Kaul has also suggested that the collapse of the centrally planned
economic systems not only led to a rethinking of the economic implications of managing
a big bureaucracy but it underscored the poor performance of government services
worldwide. These factors, no doubt, set the pace for the introduction of New Public
Management, which not only stressed parsimony in resource use, but also competition
and privatization as part of its policies.

However, while many countries introduced central tenets or some of the underlying
philosophies of New Public Management, it was not evenly adopted. Hood, in a more recent
article, contends that most writers have identified a set of dimensions of change. For instance,
he suggested that there have been variations in the degree of hands-on management; in the
degree to which public organizations operate with explicit and measurable standards of
performance; in the degree to which public organizations were controlled by output measures;
in the degree to which organizations were disaggregated; and in the degree to which public
sector management stressed discipline and parsimony in resource use. Indeed, the conclusion
that can be drawn from Hood's article was that no one tenet or principle of New Public
Management has been consistently applied in any two countries.

These seven dimensions, on which countries varied, however, provided Hood with a point of
entry for looking at cross-national variations in public management reform in OECD
countries. He accordingly advanced a number of explanations such as what he termed
"English awfulness," party politics, past or economic management performance, size of
government, and "other factors" including the role of the core public sector and the degree to
which there was a stress on collectivism as opposed to individualism. While no doubt, the
explanations by Hood and also the methodological issues raised by Peters are useful for
investigating variations across a spectrum, it is suggested in this article that these issues do
not sufficiently explain variations that may occur in countries with similar backgrounds and
institutions. Indeed, then, as this article suggests, while investigations at the macro-level may
provide a broad measure of analysis, it may also be useful to investigate variations from a
micro-level as well, including factors such as ethnicity and culture.

4. From Personnel Administration to Human Resource Management

Public services globally are characterized by day-to-day interactions, activities, and exchanges
in which the roles of the employer and the employee are defined. Each public service has a
number of common elements, for example, they are governed by rules and regulations, civil
service employment and tenure, rules of appointment other than direct election, and each public
service organization is arranged in a centralized, hierarchical fashion.

There were a number of advantages to be derived from this kind of arrangement,

including the prevention of mismanagement, the focus on controlling input, the
prevention of patronage, and the concern with providing equitable services. Yet, recently,
the public services have been criticized for being counterproductively, functional,
composed of slothful, inefficient and wasteful paper pushers and overshadowed by a
general sense that "something is not right. It has also been suggested that the public
services of many countries are too large and are counterproductive.

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Because of concerns and criticisms about the structure and the performance of the
systems by which public services were delivered, many countries embarked on
comprehensive reform of their public services. Possibly dictated by economic
considerations, many countries, including those in the Commonwealth Caribbean,
embraced the principles offered by the new discipline--New Public Management.
However, these principles were often in opposition to the operational procedures that
were in place. For instance, one of the central features of the New Management was that
managers should be free to manage. This of course would have a number of implications
for the way decisions and particularly policies, were to be formulated. The introduction
of New Public Management also meant the demise of a monolithic public service, but
more significantly it meant that the public service could no longer be used by the state as
an employment agency. More than this, though, New Public Management meant that the
state was retreating from its former welfare position to that of a facilitator.

Because delivery of public services was now to be more "competitive," it was believed
that the public service, or what remained of it, would now be more competitive and more
market oriented. The mechanism to achieve what the private sector so fondly referred to
as the "cutting edge" was simple--employ techniques that were successfully applied in the
private sector. One major area of change, for example, was the way by which employees
were managed in the public service.

In Britain, and in many of the ex-colonial societies such as New Zealand and Australia,
the Service Commissions have been transformed into Executive Agencies with
responsibility for formulating and monitoring human resource policies. Kaul suggested
that the establishment of Executive Agencies in the UK allowed for a clear delineation
between the functions of policy formulation and policy implementation. In this way, he
observed, areas of relative freedom from bureaucratic constraint had been created in
which a more business-like climate could be maintained.[31] In these countries, also,
many areas involved in the delivery of public service were contracted out. Within this
"contracted" public service, there were various attempts to introduce new and what are
perceived to be more and efficient systems of management including new methods of
recruitment, promotion, personnel evaluation, training, and development. In addition,
because there was a new emphasis on delivery by way of contracting out and a re-
focusing on the customer, many governments also embarked on the introduction of
regulatory frameworks. Increasingly, many governments also attempted to re-structure
the control and co-ordination agencies at the centre of their public services to provide
smaller, simplified and more effective management units. These units were expected to
represent the collective interests of government to coordinate the increasingly
autonomous ministries, agencies and departments; and to meet the corporate
requirements for more collective consultation on policy issues and setting of common
management standards. While the goals to be achieved in the Caribbean were similar to
those of more developed countries such as the UK and the US, it was clear that while
some new systems and methods were being introduced, others were not. Indeed, there
were variations in the systems that were adopted in Jamaica, Trinidad and Tobago. Thus,

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some items in the reform package were selected while others were rejected. In some
cases there were modifications of the original reform measure to suit the local needs.

5. Human Resource Development in the Asia Pacific: Issues, Challenges

and Responses
The Asia Pacific region is easily the next growth pole as it contains dynamic economies like
China, those in the newly industrializing economies (NIEs), the Association of South East
Asian Nations (ASEAN) and some major countries in the Organisation of Economic
Cooperation and Development (OECD) bordering the Pacific coast. Some of these economies
are members of the Pacific Economic Cooperation Council (PECC), a tripartite organization
involving government, business and academic representatives; the Pacific Basin Economic
Council (PBEC) representing business interests as well as the Asia Pacific Economic
Cooperation (APEC), a governmental body, but all dedicated to economic cooperation.

This paper aims to provide an overview and analysis of the human resource development
(HRD) dimensions of this growth area in terms of HRD policies and outlook as well as all
important phenomenon of human resource movement (HRM) which inevitably accompanies
economic growth and development. Both HRD and HJM are spurred by direct foreign
investment (DFI) flows which criss-cross the Asia Pacific region, as much pulled by Asian
dynamism as pushed by recessions in major Anglo-Saxon economies.2 Among the issues and
challenges, we will highlight in particular the movement of high-level manpower (Ong, Cheng
& Evans, 1991) in contrast to low-level manpower as the level of development and
industrialization in many Asia Pacific countries becomes more complex and sophisticated.3 We
will also consider other challenges to HRD and HRM posed by the changing business
environment due to regional integration and globalization of production.

Following this introduction, Section 2 will draw some important caveats and special
considerations to be noted. It is crucial that we highlight these limitations at the
beginning because any paper spanning the Asia Pacific in general, and on labour and
capital flows in particular, is a tremendous challenge. Section 3 provides the main trends
and characteristics of development in the Asia Pacific region and some broad human
resource profiles. The issues related to DFI-induced high- level manpower movement are
then discussed in Section 4. The last section summarizes the conclusions and highlights
possible policy implications related to HRD and HRM.

6. Broad Development Indicators in Asia Pacific

6.1. Macro Socio-Economic Trends

The basic indicators of development in the PECC region reflects the variation in the size,
structure and relative stages of development of the member countries noted in the caveats
above. Between 1980 and 1990, the Asian NIEs comprising Chinese Taipei, Hong Kong,
Singapore and Korea, enjoyed higher growth in GNP per capita growth with fairly tolerable
rates of growth of inflation compared to the industrial countries. On the next rung is China,
followed by Indonesia, Thailand and Malaysia while the industrialized countries languish in
growth terms, although they have absolutely higher levels of development.

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Though the ASEAN and ANIEs in the Asian Pacific region show diverse productive
structures, some convergent trends are observed as they adopt similar export-led (Klein,
1990, Gray, 1991) and foreign investment-led growth strategies. Taking the lead away
from traditional industrial countries’ sources, DFI from the NIEs is flowing rapidly into
the ASEAN and other developing economies in the region. This replicates the growth
synergy which traditionally radiated from the industrial countries to the developing ones.
It means that the ANIEs are following in Japan’s footsteps and have come of age in the
Asia Pacific region. Accompanying capital flows inevitably are labour and technology,
making HRD an appropriate conduit and mechanism for economic cooperation.

By the early 1990s, a decline in the relative importance of agricultural activities in the
ASEAN region (excluding Brunei and Singapore), China and Korea was observed with a
relative rise of industrial, especially manufacturing, activities. In the city states of Hong
Kong and Singapore, agriculture as a share of GDP had virtually disappeared by 1991.
Instead, reflecting their entrecote and urban economies, their service sectors approximate
the relative shares of those in the industrial countries. These structural changes have
repercussions on employment, sect oral and occupational labour movement as well as on
the labour market’s skill structure.

Thus, one can immediately appreciate problems of rural-urban migration as millions of

Chinese peasants are causing a social upheaval by trying to get better jobs and standards
of living in industrial areas. The same thing is happening, albeit to a lesser extent, in
Indonesia, Malaysia and elsewhere in Asia Pacific both within and across national
borders as the labour supply in one country tries to match the labour demand of another.
Thousands of Malaysian crosses the causeway to work in Singapore and many more do
so clandestinely and illegally.

For further details study pp.6-24 of unit 9 of allied materials.

7. Maps and Models of HRM

This section begins with a discussion of various approaches to HRM, including Keenoy's
hologram comparison and Sisson's 4 main features of HRM models. A key concept is that
of Hard and Soft HRM:

'Storey (1989) has distinguished between hard and soft forms of HRM, typified by the
Michigan and Harvard models respectively. 'Hard' HRM focuses on the resource side of
human resources. It emphasizes costs in the form of 'headcounts' and places control
firmly in the hands of management. Their role is to manage numbers effectively, keeping
the workforce closely matched with requirements in terms of both bodies and behaviour.
'Soft' HRM, on the other hand, stresses the 'human' aspects of HRM. Its concerns are with
communication and motivation. People are led rather than managed. They are involved in
determining and realizing strategic objectives.'

Activity 1. To answer this activity question you should be aware that a fundamental
element of most rhetorical accounts of HRM is that one of the distinctive features of

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human resource management (as opposed to personnel management) is that it is 'holistic'.
In other words it is concerned with the 'big picture' and the way that different aspects of
people management fit together.

Activity 2. Comparing the different typologies can be difficult because they do not use
the same underlying logic. But does that mean that individual typologies are not of value?

Activity 3. Each of these commentators is a 'management guru' to some extent. They

have been particularly influential in the USA in the last decade. Fitz-Enz is, perhaps, the
least well-known but has been instrumental in developing the notion that HR initiatives
and their results can (should?) be measured.

7.1. A Harder Approach - People as Human Resources

A different view of HRM is associated with the Michigan Business School (Fombrun,
Tichy and Devanna, 1984). There are many similarities with the Harvard 'map' but the
Michigan model has a harder, less humanistic edge, holding that employees are resources
in the same way as any other business resource. People have to be managed in a similar
manner to equipment and raw materials. They must be obtained as cheaply as possible,
used sparingly and developed and exploited as much as possible.

The Michigan model is also known as the 'matching model' or 'best-fit' approach to
human resource management. In essence, it requires that human resource strategies have
a tight fit to the overall strategies of the business. As such, it limits the role of HR to a
reactive, organizational function and under-emphasizes the importance of societal and
other external factors. For example, it is difficult to see how the current concern for work
life balance could be integrated into this model.

Fombrun et al identified four common HR processes performed in every organization:

 Selection: matching people to jobs

 Appraisal of performance
 Rewards: emphasizing the real importance of pay and other forms of
compensation in achieving results
 Development of skilled individuals

These processes are linked in a human resource cycle.

The matching model has attracted criticism. At a conceptual level, it is seen to depend on a
rational, mechanical form of organizational decision-making. In reality, strategies are often
determined and operational on a more intuitive, political and subjective level. Certainly, the
decision-making is more complex than the model allows. It is also both prescriptive and
normative, implying that the fit to business strategy should determine HR strategy.

Randall Schuler and colleagues subsequently presented a more complex version of the
matching model that took into account significant wider factors such as technology,

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organizational structure and size, unionization and industry sector. These accounts were
heavily influenced by Michael Porter's writing on business strategy.
See pages 45-46 of Human Resource Management in a Business Context 2/e for more

7.2. Guest’s Model of HRM

David Guest's (1989, 1997) model of HRM has 6 dimensions of analysis:

 HRM strategy
 HRM practices
 HRM outcomes
 Behaviour outcomes
 Performance outcomes
 Financial outcomes

The model is prescriptive in the sense that it is based on the assumption that HRM is
distinctively different from traditional personnel management (rooted in strategic
management, etc.).

It is idealistic, implicitly embodying the belief that fundamental elements of the HRM
approach (essentially those of the Harvard map) such as commitment have a direct
relationship with valued business consequences.

However, Guest has acknowledged that the concept of commitment is 'messy' and that
the relationship between commitment and high performance is (or, perhaps, was - given
the age of this material) difficult to establish. It also employs a 'flow' approach, seeing
strategy underpinning practice, leading to a variety of desired outcomes.

Like its American predecessors, this UK model is unitarist (tying employee behaviour
and commitment into the goals of strategic management) and lukewarm on the value of
trade unions. The employee relationship is viewed as one between the individual and the
organization.

7.3. The Harvard Map of HRM

A large part of this section is devoted to the Harvard ‘map’ of HRM. This is probably the most
seminal model of HRM and has had a major influence on academic debate on the subject.

‘We noted that the Harvard Business School generated one of the most influential models
of HRM. The Harvard interpretation sees employees as resources. However, they are
viewed as being fundamentally different from other resources – they cannot be managed
in the same way. The stress is on people as human resources. The Harvard approach
recognizes an element of mutuality in all businesses, a concept with parallels in Japanese
people management, as we observed earlier. Employees are significant stakeholders in an
organization. They have their own needs and concerns along with other groups such as
shareholders and customers.’

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The Harvard Map or model outlines four HR policy areas:

1. Human Resource Flows – recruitment, selection, placement, promotion, appraisal

and assessment, promotion, termination, etc.
2. Reward Systems – pay systems, motivation, etc.
3. Employee Influence – delegated levels of authority, responsibility, power
4. Work Systems – definition/design of work and alignment of people.

Which in turn lead to the ‘four C’s’ or HR policies that have to be achieved:

 Commitment
 Congruence
 Competence
 Cost effectiveness

7.4. Alternative HRM Models

The terminology used in academic human resource literature is problematic because
some authors distinguish between 'the HRM model' as distinct from 'the Personnel model'
(e.g. Bratton and Gould, 1999: 17) while others identify a number of different HRM
models (including Bratton and Gould, a paragraph later).

For the purposes of this discussion, we accept that there are numerous models and at least as
many ways of classifying them - for example, 'hard and soft', 'normative and prescriptive'.
Legge has produced a four-way classification, dividing models into the following types:

 Normative
 Descriptive-Functional
 Descriptive-Behavioural
 Critical Evaluative

Tyson, on the other hand, has a three-way breakdown: normative, descriptive and
analytical. Unfortunately, even these terms have contested meanings so that the Harvard
model, for example, can be viewed as analytical or prescriptive - or a mixture of both.

Taking our analysis to its most basic level, we can consider HRM models from two
fundamental perspectives:

 What are the similarities between them?

 Conversely, how do they differ?

Bratton and Gould (1999: 17) argue that: "Many of the key elements of the HRM model
are drawn from organizational behaviour theories, such as motivation, team building and
leadership." They go on to cite Legge (1989) as a reference for the assertion that 'most
normative HRM models, whether US or British, assert that the organization's 'human
resources' are valued assets, not a variable cost, and emphasis the commitment of

105
employees as a source of competitive advantage.' They identify the classic theories of
Maslow (1954) and Herzberg (1966) as being at the root of assumptions about the nature
and exploitation of human potential while McGregor's Theory Y underpins notions of
commitment and trust.

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