Human Resource Management Interventions

This chapter explains how Human Resource Management (HRM) interventions are used to improve how
individuals and teams perform at work. These interventions often involve performance management,
which includes setting goals, evaluating employee performance, and offering rewards. These processes
are meant to guide employee behavior in a way that supports the company's goals and strategies. For
instance, if a company wants to improve customer service, managers and employees can work together
to set specific goals related to customer satisfaction. A popular method used is Management by
Objectives (MBO), where employees and supervisors collaboratively set goals to ensure their work
supports the company’s overall mission.

Performance Appraisal

Performance appraisal is a structured process where a person’s or group’s work is regularly evaluated.
This evaluation helps identify strengths and areas for improvement. It can also support promotions,
training needs, and salary decisions. For example, at Intel, employees might receive quarterly feedback
from their supervisors, which is then used to determine eligibility for bonuses or advancement
opportunities. Feedback allows employees to improve and grow in their roles, ultimately helping the
organization succeed.

Reward Systems

Reward systems are tools used to recognize and encourage the right behaviors among employees. These
can include bonuses, promotions, praise, and other forms of recognition. For example, a sales team at a
company like Coca-Cola may receive a bonus for exceeding quarterly targets. This not only motivates
employees to perform better but also aligns their efforts with company goals, such as increasing sales or
improving efficiency.

Performance Management Intervention

HR professionals usually lead performance management interventions because they have the training to
design and apply these systems effectively. For example, an HR expert at a company like Procter &
Gamble might specialize in designing a compensation plan that rewards employees for meeting
sustainability goals. Their expertise ensures that systems are fair and contribute to long-term success.

Coaching

Coaching is a one-on-one process aimed at improving leadership and interpersonal skills, often targeted
at managers. For instance, a new team leader at Google may work with a coach to improve
communication and team management. This helps leaders develop clearer goals, build stronger
relationships, and overcome work challenges.

Career Planning and Development

Management and Leadership Development

These interventions include training programs to develop leadership skills throughout the company. For
example, IBM might offer a 6-month leadership training course that includes workshops, mentoring, and
real-life problem-solving projects. This ensures that employees are ready for higher-level responsibilities
and can effectively lead others.

A Model of Performance Management

Performance management is a process where organizations define, assess, and reward employee
behaviors and results. This system works best when it fits the company’s business strategy, work
technology, and level of employee involvement. For instance, a software company like Microsoft might
use team-based goals and rewards because their projects require close collaboration. This approach
ensures that individual and group efforts support company goals.

Goal Setting

Goal setting involves both managers and employees working together to decide what work should be
done and what results are expected. For example, using the balanced scorecard approach, a retail
company like Target might set goals related to customer satisfaction, employee development, and
financial performance. Employees then know what’s important and can focus their efforts accordingly.

Management by Objectives (MBO)

MBO is a goal-setting method that ensures employee goals align with company strategy. For example, in
a hospital setting, doctors and administrators may use MBO to improve patient care by setting specific
treatment and service targets. Regular check-ins ensure everyone stays focused and adjusts if needed.
This prevents misunderstandings and promotes team collaboration.

Performance Appraisal

Appraisals are essential for giving feedback, supporting career development, and determining rewards.
At companies like Goldman Sachs, employees are evaluated by multiple people (peers, supervisors,
subordinates) to get a more accurate picture of performance. This 360-degree feedback system helps
reduce bias and provides more meaningful evaluations.

Reward Systems

Rewards are used to motivate performance and enhance job satisfaction. For example, a company like
Apple may offer both financial rewards (bonuses, stock options) and non-financial rewards
(opportunities for creative work). Combining both types helps employees feel valued and drives high
performance.

Modern OD and Reward Systems

Modern Organizational Development (OD) stresses that reward systems should match a company’s
culture, leadership style, and goals. For example, a company with a flat structure like Zappos focuses on
team rewards and peer recognition rather than traditional promotions. This fits their culture of
openness and collaboration.

Structural and Motivational Features of Reward Systems

Reward systems can be job-based (pay for the position), person-based (pay for skills/knowledge), or
performance-based (pay for results). For example, a manufacturing firm may pay technicians more as
they gain certifications (skill-based pay), encouraging employees to improve their capabilities.

Table 9.1 - This table outlines key design features of a reward system and their definitions. Each
feature describes a different aspect of how rewards are structured and managed within an organization.

- Person/Job Based vs. Performance Based: This refers to whether rewards are determined by an
individual's inherent characteristics (person-based), the nature of their job (job-based), or their
performance (performance-based). A purely performance-based system would reward only high
achievers, while a person-based system might reward seniority or specific skills regardless of
performance. A job-based system compensates for the inherent difficulty or responsibility of a role.

- External Equity: This describes the relationship between what an organization pays its employees and
what similar organizations pay for comparable roles. Maintaining external equity means ensuring that
salaries and benefits are competitive within the industry to attract and retain talent.

- Internal Equity: This focuses on fairness within the organization. It measures the extent to which
employees doing similar work receive similar rewards. Internal equity aims to avoid situations where
employees with similar responsibilities and performance levels receive vastly different compensation.

- Hierarchy: This feature highlights the distribution of rewards based on an employee's position within
the organizational structure. Higher-level positions typically receive more and more varied types of
rewards (bonuses, benefits, perks) than lower-level positions.

- Centralization: This refers to the degree to which decisions related to the reward system (design,
implementation, administration) are made centrally or are delegated to different departments or
managers. A highly centralized system ensures consistency but may lack flexibility to address specific
departmental needs.

- Rewards Mix: This describes the variety of rewards offered by the organization, including salary,
bonuses, benefits, stock options, recognition programs, and other incentives. A diverse rewards mix
caters to different employee preferences and motivations.
- Security: This element refers to the stability and predictability of employment and compensation. High
security implies job protection and consistent income, reducing employee uncertainty.

- Seniority: This indicates the extent to which rewards are tied to length of service. Organizations using
seniority-based rewards systems recognize longevity and experience.

Individual vs. Group-Based Rewards

In settings where employees work independently (e.g., freelance writers), individual rewards are more
effective. In contrast, at companies like Toyota, where teamwork is essential, group rewards such as
team bonuses promote cooperation and shared responsibility.

Equity

Equity means fairness in pay. Internal equity ensures fairness within the company; external equity
compares salaries to the market. For example, if Google pays its engineers well above the industry
average, it helps attract top talent and reduces turnover. Fair compensation builds trust and loyalty.

Hierarchical

Higher-level jobs often come with extra perks, like a company car or special bonuses. For instance,
executives at Amazon may receive stock options not available to lower-level staff. However, companies
must ensure that this doesn’t create resentment by maintaining transparency and fairness.

Rewards Mix

A rewards mix includes salary, bonuses, health benefits, and perks like gym memberships or childcare.
For example, Netflix offers flexible vacation policies, which appeal to employees seeking work-life
balance. A thoughtful mix attracts different types of employees and supports long-term retention.

Job Security

While lifetime job security is rare today, companies can still create a stable work environment. For
example, Costco is known for low turnover and stable jobs because it values internal promotion and
invests in employee development, even without lifetime guarantees.

Seniority

Some organizations reward employees based on how long they’ve worked there. For instance, in
unionized companies like Ford Motors, pay and promotion may be based on seniority. This system builds
loyalty and gives employees confidence in long-term employment.

Developing Talent
Talent development is critical for both individual and organizational success. It includes coaching,
mentoring, and structured learning. For example, Unilever offers leadership development programs that
prepare employees for senior roles, helping the company build a future-ready workforce.

Coaching and Mentoring

Coaching focuses on helping employees set goals and improve through guided conversation. For
example, a manager at Facebook might receive executive coaching to become a better leader.
Mentoring is more instructional and often involves a senior employee guiding a junior. At Starbucks,
mentoring helps baristas grow into store managers by learning from experienced leaders.

Career Planning and Development

Career development interventions help employees grow within the company. At Quaker Oats, such
programs are used to support diversity and reduce turnover. By offering career paths, the company
keeps talented employees who might otherwise leave for better opportunities.

Table 9.2 - this presents a framework for career planning, categorizing key questions based on four
distinct career stages: Establishment, Advancement, Maintenance, and Withdrawal. Each stage presents
unique challenges and considerations.

1. Establishment: This initial stage focuses on entering the workforce and building a foundation. The
questions highlight the need for self-assessment (interests, capabilities), exploration of options
(alternative occupations, organizations), and performance evaluation against expectations. The crucial
aspect is developing skills needed for career advancement.

- Key Questions: What are my interests and capabilities? What jobs are available? How do I get the work
accomplished? Am I performing as expected? Am I developing the necessary skills for advancement?

2. Advancement: This stage centers on career progression and growth. Individuals seek to improve their
performance, explore long-term options, increase visibility, and build relationships to further their
career. Balancing career ambitions with personal life also becomes more important.

- Key Questions: Am I advancing as expected? How can I advance more effectively? What long-term
options are available? How do I get more exposure and visibility? How do I develop more effective peer
relationships? How do I better integrate career choices with my personal life?

3. Maintenance: This stage involves sustaining career success and potentially mentoring others.
Individuals may consider reassessing their career path and making adjustments to maintain their
position and contribute to the organization's success. It involves considering whether to continue on
the current path or make significant changes.

- Key Questions: How do I help others become established and advance? Should I reassess myself and
my career? Should I redirect my actions?
4. Withdrawal: This final stage focuses on preparing for retirement and transitioning out of the
workforce. It involves exploring personal interests outside of work, planning for financial security, and
determining how to continue contributing after retirement.

- Key Questions: What are my interests outside of work? What post-retirement work options are
available to me? How can I be financially secure? How can I continue to help others?

Management and Leadership Development

These programs aim to build the leadership skills needed to manage teams and execute strategies.
Microsoft invests in developing future leaders through courses and mentoring. However, even though
many companies offer such programs, some still struggle to apply them effectively—highlighting the
need for follow-through, not just good intentions.