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What Is Human Resource Management?
Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers.
Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. Is also a strategic and comprehensive approach to managing people and the workplace
and environment. Effective HRM enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and
objectives. HRM represents, in few words, the process of managing human talent to achieve an organization's targets.
HRM can be seen as a life-cycle, where there are many step to achieve his goals. They're the following:
1° STEP: HR needing assesment
2° STEP: Search
3° STEP: Select
4° STEP: Hire/Test/Assign
5° STEP: Compensation
6° STEP: Performance/Evaluation
7° STEP: Competences evaluetion
8° STEP: Career management
9° STEP: Potential evaluation
(Note: other important steps could be "Training" and "Fire")
These step are the core of Human Resource Organization.
In class we have seen 2 different examples on how was used HRM in different contests and time periods.
: famous for his
to such an extent that it could produce its own steel.
Ford was a pioneer of "
", designed to improve the lot of his workers and especially to reduce the heavy
that had many departments hiring 300 men per year to fill 100 slots.
Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers. The Labor Force was generic and the division of labor was really low. This was possible because in that time (I think) the market was able to absorb all the production without the need of differentiate the product ( at the beginning of 1900 Ford T model was the only car produced in U.S.), so specialized labor force was not required.
Automobile’s sector is changed a lot from early ‘900, the market is fulfilled and differentiation is
preponderant. Nowadays there hundreds of cars producer, so TOYOTA became leader in this sector thanks to their Idea of differentiation an high quality of product. This idea is compose by 14 principles.
The 14 principles are known as the "
" and are listed in this web page:
. To achieve the goals deducible from the principles Toyota needs a very specialized Labor Force. The need of specialized L.F. changes all the dynamic a structure of HRM’s functions that is the opposite of the Ford’s one.
Porter's Generic Competitive Strategies
A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.
1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.
The focus strategy has two variants.
In cost focus a firm seeks a cost advantage in its target segment, while in
differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.
Chandler’s Strategy-Structure paradigm
Chandler studied almost 100 of America’s largest firms from 1909 to 1959. He concluded that changes in corporate strategy preceded and led to changes in an organization’s structure
This theory can be applied only on static environments, in dynamic ones we have to consider External factors that can reshape the structure or reorganize the strategy, and the possibility that strategy and structure are able to make mutual adjustments as a consequence of changes in the environment.
David Ulrich defined the most common HR Roles model, which commonly used on the market. The model is well known for introducing mainly the aspects of Human Resources with the highest value added.
The main contribution of the David Ulrich’s HR Model was the start of the movement from the functional HR orientation to the more partnership organization in HRM Function. Business Partnering is not possible to implement without a major shift in the HR Organization. The benefit was a more responsible and flexible organization of Human Resources, which allowed to many HR Professionals to become real respected business partners.
The 4 HR Roles defined by Ulrich:
The HR Model defined by Ulrich brings for main criteria:
is about alignment of HR activities and initiatives with the global business strategy and it is the task of the HR Management and HR Business Partners. Sometimes, it sounds easy to implement Strategic Partnership, but it needs a lot of effort from Human Resources.
is a very important area of the Ulrich’s HR Model. Change agent is about supporting the change and transition of the business in the area of the human capital in the organization. The role of Human Resources is the support for change activities in the change effort area and ensuring the capacity for the changes.
changes over the period of time. In the beginning, it was just about ensuring the maximum possible quality of delivered services, but nowadays the stress is put on the possibility to provide quality service at the lowest possible costs to the organization.
is a very important role of Human Resources. The employee advocate knows what employees need and HRM should know it. The employee advocate is able to take care about the interest of employees and to protect them them during the process of the change in the organization.
ratio between input and output.
: the capability of producing a desired result
measure of variety.
In Hrm is important the ability to forecast every possible situation in order to manage, for example, a sudden need of new workers.
For every new position available in the firm, HR manager has two possibilities:
- Search in the market for a new subject to fulfil the vacant position.
- Replace the outgoing with and employee of the company with adequate characteristics.
When the HR manager looks for a new employee in the market, he has to take in consideration 3 main characteristics of the candidate (They are similar to the characteristic of material for production processes) :
- the new worker has to create new value for the company
- his competences must be difficult to imitate
- his skill must be rare.
Is responsibility of the HR manager to find the right candidate with this characteristics.
For what concerns the replacement with an internal employee, there is a specific tool called
Markov tables or
Replacement charts are a human resource forecasting technique that describe a firm's organization structure in terms of individuals who occupy various managerial and professional positions. For each position the incumbent and potential replacements are identified along with information such as potential for advancement, experience or skills needed to qualify for next position.
Characteristics of Human Resource:
Categorization of skills: difference between distinctive competencies and boundary
Distinctive compentecies: those that are needed to over perform the Task.
Boundary: minimum level of skill that youmust have furfill the position.
Each of us is motivated by needs. Our most basic needs are inborn, having evolved over tens of thousands of years. Abraham Maslow's Hierarchy of Needs helps to explain how these needs motivate us all.
Maslow's Hierarchy of Needs states that we must satisfy each need in turn, starting with the first, which deals with the most obvious needs for survival itself.
Only when the lower order needs of physical and emotional well-being are satisfied are we concerned with the higher order needs of influence and personal development.
Conversely, if the things that satisfy our lower order needs are swept away, we are no longer concerned about the maintenance of our higher order needs.
Maslow's original Hierarchy of Needs model was developed between 1943-1954, and first widely published in Motivation and Personality in 1954. At this time the Hierarchy of Needs model comprised five needs. This original version remains for most people the definitive Hierarchy of Needs.
Biological and Physiological needs
- air, food, drink, shelter, warmth, sex, sleep, etc.
- protection from elements, security, order, law, limits, stability, etc.
Belongingness and Love needs
- work group, family, affection, relationships, etc.
- self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.
- realising personal potential, self-fulfillment, seeking personal growth and peak experiences.
This is the definitive and original Maslow's Hierarchy of Needs.
While Maslow referred to various additional aspects of motivation, he expressed the Hierarchy of Needs in these five clear stages.
Variables of HRM
We know that the variables of HRM are 4 : PEOPLE, RELATIONSHIPS, PERFORMANCE AND VALUE, and are cyclial related one to another.
Variable through which we can analize the HR are 2: Potencial and Performance:
people potential performance model
Bear in mind that the descriptive terminology can be adapted to suit the situation and it is likely that the terms below have been adapted from those used when the model was first defined. The notes in each quadrant are just a few examples of the sort of different responses and actions appropriate for each type.
high performance low potential
Acknowledge effort and contribution.
Utilize as coaches and mentors.
Look for each person's hidden high potential, undiscovered passions, etc., and offer new challenges and responsibilities as appropriate, so these people too can be stars, to any extent they are comfortable.
high performance high potential
Agree challenging stretching work, projects, career development, responsibilities, or these people are likely to leave.
Give appropriately stretching coaching, mentoring, training.
Explore and encourage leadership and role-model opportunities, to set and raise standards of other staff.
icebergs ^ or >
low performance low potential
Counsel, build trust, understand issues.
Identify hidden potential.
Facilitate more fitting roles, direction, purpose, opportunities, etc., linked with and perhaps dependent on performance improvement.
Failing this, assist or enable move out of organization if best for all concerned.
problem children ^
low performance high potential
Confirm and acknowledge potential.
Counsel, build trust, understand issues.
Explore and agree ways to utilize and develop identified potential via fitting tasks and responsibilities, linked with and perhaps dependent on performance improvement.
Explore attachment to backbone or star mentors and coaches.
We studied a matrix through which we can study what are the relationships between employees and the company, and how the company build this relationship.
The 2 characteristics use to build this matrix are: COMMITMENT AND RESPECT:
INTEGRATION:high commitment and high respect, so employee and company are perfectly integrated and work together for mutual benefits.
TECHNOCRATIOC: high commitment and low respect. This happens when the employee doesn't respect his superior but is so committed with the company that gives his best only for the company improvement.
PATERNALISTIC BEHAVIOUR: low commitment and high respect. Like father-son relationship, even if aand employee does'nt not agree with his supervisor decisions has to respect them because there is a hierarchy to follow.
OPPORTUNISTIC BEHAVIOUR:low commitment an low respect. In these cases employees and companies doesn't care each other toomuch and they use each other to reach personal goal, using the other as a temporay tool.
Performance evaluation is a necessary and beneficial process, which provides annual feedback to staff members about job effectiveness and career guidance. The performance review is intended to be a fair and balanced assessment of an employee’s performance.
Is stricly related to the standardization of work, becuase is simplier to evaluate a routine work ther a non standardized one.
Values form the foundation for everything that happens in your workplace. If you are the founder of an organization, your values permeate the workplace. You naturally hire people who share your values. Whatever you value, will largely govern the actions of your workforce.
For what concerns value added by HR functions to the company, can be evaluated only by the customers, because they are the real shareholders and the company has to build its strategy taking into account their nedds an tastes.
VROOM's Expectancy Theory.
Expectancy Theory states that, individuals make decisions, which they believe will lead to reward or reduce the likelihood of pain. The ultimate goal does not matter, the important factor is the impact that achieving the goal will have on the individual. An individual’s opinionis formed by a combination of three factors which Vroom categorised as follows:
1. Expectancy – Does the individual believe that they can achievethe task
2. Valence – Does the individual believe that completing the task will benefit them or cause detriment.
3. Instrumentality – What is the probability of completing the task leading to an outcome desired by the individual
1. Expectancy (Subjective Probability)
Expectancy is the individual’s belief about whether they can achieve the task. This view will be influenced by a number of things including
- The type of skills needed for the task,
- Support expectations of co-workers and line managers,
- Type of equipment/materials and
- Availability of pertinent information.
Another factor influencing expectancy is previous experience.
If the task has been successfully completed in the past then expectancy will be high but if the task has failed in the past or was difficult to perform then expectancy will be low.
There is a positive correlation between efforts and performance,
Favourable performance will result in a desirable reward,
The reward will satisfy an important need,
The desire to satisfy the need is strong enough to make the effort worthwhile
If an individual feels that they can achieve the task then expectancy is measured as 1. On the other hand if they feel that the task can not be completed then expectancy is measured a 0. If the individual feels that the task may be achievable then it will be categorised between 0 and 1. Eg. A task measured as 0.75 is believed to be more achievable than one measured as 0.45.
Simon's Bounded rationality
He pointed out that people decide rationally only in a limited number of situations. They make choices according to their interpretation of the situation which is often a simplification. Rationality is "bounded", e.g. managers seldom have access to all relevant information and must rely on a 'strategy of satisfying', that is to make the best decision on limited information. They choose the first opportunity that seems satisfactory rather than seek the best solution.
Human rationality is limited:
1.information is incomplete, imperfect or even misleading;
2.problems are complex;
3.human information processing is limited;
4.time spent on decision making is limited;
5.decision makers often have conflicting preferences for certain organisational goals.
In addition, organisations, themselves, act as "boundaries". Organisational boundaries allow organisation members to focus and act without the need to (re)think through each action. Information in an organisation is of two kinds:
1.facts that can be verified with data;
2.values that come from the mindsets embedded in the organisation's culture and common approaches.
Simon saw humans as information processing entities wherein uncertainty comes from a lack of information. A fast changing and complex environment creates more complex problems that, in turn, require organisations and its members to expend greater search efforts.
Depending on the circumstances, i.e. the complexity of the problem, the ambiguity of the decision making process and the number of decision makers, decision makers need to adopt a more behavioural decision making process versus the more rational.
A job analysis is the process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job. You need as much data as possible to put together a
, which is the frequent outcome of the job analysis. Additional outcomes include recruiting plans,
position postings and advertisements
performance development planning
performance management system
The job analysis may include these activities:
reviewing the job responsibilities of current employees,
doing Internet research and viewing sample job descriptions online or offline highlighting similar jobs,
analyzing the work duties, tasks, and responsibilities that need to be accomplished by the employee filling the position,
researching and sharing with other companies that have similar jobs, and
articulation of the most important outcomes or contributions needed from the position.
Job descriptions are very important for both employee and employer so it should be written keeping in mind the right skilled and high performing employee for the organisation a job description must be clearly written as not just in present but it will be considered in the future any confusion in the document will create a misunderstanding and misinterpretation that will cause damage to both the company and the applicant therefore a job description should be carefully written by a group of professionals consulting the human resource department
A standard job description must contain the following details
Job title :
This is the name of the position which is vacant in the company and the company wishes to invite and appoint applicant for the job
Job profile and description
This part contains in full depth the nature of the job the functions to be performed in the particular position expected tasks to be completed and the other details relating to it
Duties and responsibilities
The expected duties that has to be performed the responsibilities that the employee has to fulfil and any mismanagement in this the employee will be held accountable
Skills and specialisations
Required for the particular job any kind of difficulty arises the employee has to overcome it and sort it out on its own without effecting the other employees or organisation.
Required for the particular job in the company, it Cleary assigns the eligibility and degrees needed for the job category and other details like training, experience required for the job vacancy are also specified in this part.
The amount of
that the company offers to its employee for the particular position is specified in this part of the job description.
Some steps for creating an effective job description are Gathering the appropriate professionals for the task, like the human resource manager or the e other employees performing similar job duties who can contribute a lot of information about the requirements of the job, then analyse the jobdetermine the job duties and responsibilities of existing employees do some research, or looking out for sample job descriptions as it simplifies the job, start writing the job descriptionalmost every company has a standardized format for the job descriptions just prepare a list of job responsibilities and create the final format appropriate with job descriptions throughout the company, evaluate the job description from time to time and make appropriate changes as it effects the functioning of the organisation.
A unified data model provides a single, accurate view of HR activities ranging from recruitment, employment, training, performance management, compensation management and real time management. Oracle human resource leverage workflow and internet-based processes optimize various HRM activities. The system maintains global HR data in case of Trans-national companies and total organizational human resource data in case of national companies in a single location for accurate and easy availability.
Taking for example the distribution of employees divided for the age, we can gain a lot of informations only looking at this configuration of the company:
Ex.1: Age: 60> -------------------------------------------
For companies with this type of age distribution, we can say that are companies in which is very important the seniority aspect, so in kind of company is possible to grow and gives the possibility to advance in the hierarchies of the com
Ex.2: Age: 60> -----
This kind of distribution, (Football ball) ,is common for the most part of companies and is the most balanced structure.
Ex.3: Age: 60> -----
This is the opposite of the first structure, is distinctive of start-up companies, where there is an high turnover and the competition is very high, so is difficult to advance in hierarchies.
Labour turnover refers to the movement (the flow) of employees in and out of a business.
High turnover causes problems for business. It is costly, lowers productivity and morale and tends to get worse if not dealt with.
The simplest measure involves calculating the number of leavers in a period (usually a year) as a percentage of the number employed during the same period. This is known as the turnover index and is calculated as follows:
Number of leavers + number of hired / average no employed x 100
For example, if a business has 150 leavers and hires 200 during the year and, on average, it employed 2,000 people during the year, the labour turnover figure would be 17.5%
This index can be calculated even only for leavers or hired employees.
Patterns of labour turnover
The highest rate of labour turnover tends to be among those who have recently joined an business.
Longer-serving employees are more likely to stay, mainly because they become used to the work and the business and have an established relationship with those around them.
Causes of labour turnover
A high level of labour turnover could be caused by many factors:
• Inadequate wage levels leading to employees moving to competitors
• Poor morale and low levels of motivation within the workforce
• Recruiting and selecting the wrong employees in the first place, meaning they leave to seek more suitable employment
• A buoyant local labour market offering more (and perhaps more attractive) opportunities to employees
Costs of labour turnover
High rates of labour turnover are expensive in terms of:
- Additional recruitment costs
- Lost production costs
- Increased costs of training replacement employees
- Loss of know-how and customer goodwill
- Potential loss of sales (e.g. if there is high turnover amongst the sales force)
- Damage that may be done to morale and productivity (an intangible cost)
Benefits of labour turnover
Labour turnover does not just create costs. Some level of labour turnover is important to bring new ideas, skills and enthusiasm to the labour force.
A "natural" level of labour turnover can be a way in which a business can slowly reduce its workforce without having to resort to redundancies.
Absenteeism is a growing concern in many organizations and can cost an organization thousands, if not millions in operational losses.
There is an
where we can compute:
the frequency of absenteeism (how often employees don't go at work)
Duration (how many days they are not present)
avarege absenteism index (computeted not for a single employee but for all)
Costs of absenteeism
(ex. payment for a substitute) or
( loss in productivity; reset of the organization)
When there is a need to fulfill a vacant position, HR managers can address their researches in the internal labor market or in the exernal one.
We already have analyzed the methodologlies of applying at the
(replace the vacant position with internal employee).
of the internal market are that the company knows the employee and viceversa, so they know each others' way of working and thinking.
are, the absence of new information inflow in the company and the decrease in capacity to react to dinamic environments.
the nominal market in which workers find paying work, emloyers find willing workers and wage rates are determined.
Labor markets may be local or national (even international) in thier scope and are made up of smaller, interacting labor markets for different qualifications, skills, and geographical locations. They depend on exchange of information between employers and job seekers about wage rates, conditions of employement, level of competition and job location.
Suorces of external market:
head hunting companies
public employements office
In management, economics and HR (human resources) the term 'the Psychological Contract' commonly and somewhat loosely refers to the actual - but unwritten - expectations of an employee or workforce towards the employer. The Psychological Contract represents, in a basic sense, the obligations, rights, rewards, etc., that an employee believes he/she is 'owed' by his/her employer, in return for the employee's work and loyalty.
This notion applies to a group of employees or a workforce, just as it may be seen applying to a single employee.
The concept of the Psychological Contract within business, work and employment is extremely flexible and very difficult (if not practically impossible) to measure in usual ways, as we might for example benchmark salaries and pay against market rates, or responsibilities with qualifications, etc.
It is rare for the plural form 'Psychological Contracts' to be used in relation to a single organization, even when applied to several employees, because the notion is of an understanding held by an individual or a group or people, unlike the existence of physical documents, as in the pluralized 'employment contracts' of several employees.
The Psychological Contract is quite different to a physical contract or document - it represents the notion of 'relationship' or 'trust' or 'understanding' which can exist for one or a number of employees, instead of a tangible piece of paper or legal document which might be different from one employee to another.
The singular 'Psychological Contract' also embodies very well the sense of collective or systemic feelings which apply strongly in workforces. While each individual almost certainly holds his or her own view of what the Psychological Contract means at a personal level, in organizational terms the collective view and actions of a whole workgroup or workforce are usually far more significant, and in practice the main focus of leadership is towards a collective or group situation. This is particularly necessary in large organizations where scale effectively prevents consideration of the full complexities and implications of the Psychological Contract on a person-by-person basis.
That said, it is usual for the Psychological Contract to refer to one employee's relationship with an employer, or to an entire workforce's relationship with the employer.
The ability of the human resource manager and the staff are immeasurable for they can clearly say from the start of the interview process who is the qualified applicant for the position. There are many instances that the skill of the human resource is not in that; there comes the duty that the newly-hired employees should be trained first before they can go on solo in the job. The duty of the human resource personnel is to monitor the progress and train them more to achieve the development that the boss is expecting. The job of human resource personnel doesn’t stay in the four walls of the office; they also take the duty of being a baby sitter to keep the employee give their best.
Is no more that measuring the gap between the standard (task assigned for that job) and what the employee actualy do.
Is usefull in burocratic and high standardized company, but is risky at the same time because doesn't go into the content, so doesn't take in consideration the quality of the work done.
Hay Evaluation Method
The Hay System is a job performance evaluation method that is widely used in North America and Europe. Training in the use of the system takes several days, followed by several months organizational experience to become proficient in its evaluation style. All jobs are evaluated not only by the interpretation of the factor descriptions but within the context of all other jobs in the organization.
In Ontario, consistent with Pay Equity legislation, four factors are used in job evaluation: Skill, Effort, Responsibility and Working Conditions, which Hay translates into Knowledge, Problem Solving, Accountability and Working Conditions. The system works on an integration of all the factors. A job is evaluated by looking at the knowledge required to do the job (whether practical or intellectual), the kind of thinking required to solve the problems which the job commonly faces, the responsibilities (accountabilities) assigned, and the work environment in which the work is performed.
In each of the following factors there are a series of descriptions and variables with points assigned to each.
‘Know How’ is defined as the "sum total of every kind of knowledge and skill, however, acquired, needed for acceptable job performance."
There are three dimensions in know how:
Practical procedures, specialized techniques and knowledge within occupational fields, commercial functions, and professional and scientific disciplines.
Planning, organizing, coordinating, integrating, staffing, directing and or controlling the activities and resources associated with the function of the unit, position, section, etc.
Face to face skills needed for various relationships with other people.
‘Problem Solving’ is "the amount and nature of the thinking required in the job in the form of analyzing, reasoning, evaluating, creating, using judgment, forming hypotheses, drawing inferences, arriving at conclusions, etc."
There are two dimensions in problem solving:
The environment in which the thinking takes place.
The challenge of the thinking to be done; the novelty and complexity of the thinking required.
Problem Solving is always expressed as a percentage of Know How since it directly relates to how one uses the knowledge which he or she must have in the job to solve the problems which are encountered as part of that job.
‘Accountability’ is "the answerability for action and its consequences. The measured effect of the job on end results in the organization."
There are three dimensions in accountability:
"Freedom to Act" which is the extent of personal, procedural or systematic guidance and control on the job.
"Job Impact on End Results" which is the degree to which the job affects or brings about the results expected of the unit or function being considered.
"Magnitude" is the size of the function or unit measured in the most appropriate fashion.
‘Working Conditions’ assess the environment in which the job is performed.
Working Conditions are made up of four dimensions:
"Physical Effort" - jobs, which may require levels of physical activity, which may produce physical, stress or fatigue.
"Physical Environment" - jobs which may include exposure to unavoidable physical and environmental factors which increase the risk of accident, ill health or discomfort to the employee.
"Sensory Attention" - jobs which may require concentrated levels of sensory attention (i.e. seeing, hearing, smelling, tasting, touching) during the work process.
"Mental Stress" - refers to exposure to factors inherent in the work process or environment, which increase the risk of such things as tension or anxiety.
Each of these four dimensions is measured according to duration, intensity and frequency.
All of these factors are evaluated in each job evaluation and the cumulative total is a total point factor for the position. Because jobs have so many different variables it is possible that a job without a high score in Know How but with severe Working Conditions could result in the same number of points with a job that has the opposite components.
For example, an insurance clerk and a bus driver have few job responsibilities that are similar, but might be evaluated in total at the same point level.
Please note that the following examples do not represent jobs at the University of Waterloo and are used only as an explanation of the Hay system.
Intermediate Insurance Clerk
School Bus Driver
Although these jobs have little in common and differ in the Hay Points for individual factors their total points are the same and therefore the jobs are considered to be of equal value.
Obviously the trained evaluator must consider the ratings awarded to a Senior Insurance Clerk and Junior Insurance Clerk to maintain the integrity of the rating within job families when evaluating the Intermediate Insurance Clerk.
While these jobs have been evaluated individually important concepts are consistency of application and the establishment of benchmark positions. All positions within an organization are evaluated in comparison to the benchmarks using a consistently applied evaluation tool.
An organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons:
To improve organizational performance via improving the performance of individual contributors (should be an automatic process in the case of good managers, but (about annually) two key questions should be posed:
what has been done to improve the performance of a person last year?
and what can be done to improve his or her performance in the year to come?).
To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills.
To provide an equitable method of linking payment to performance where there are no numerical criteria (often this salary performance review takes place about three months later and is kept quite separate from 1. and 2. but is based on the same assessment).
On-the-spot managers and supervisors, not HR staffs, carry out evaluations. The personnel role is usually that of:
dvising top management of the principles and objectives of an evaluation system and designing it for particular organizations and environments.
Developing systems appropriately in consultation with managers, supervisors and staff representatives. Securing the involvement and cooperation of appraisers and those to be appraised.
Assistance in the setting of objective standards of evaluation / assessment, for example:Publicizing the purposes of the exercise and explaining to staff how the system will be used.
Defining targets for achievement;
Explaining how to quantify and agree objectives;
Eliminating complexity and duplication.
Organizing and establishing the necessary training of managers and supervisors who will carry out the actual evaluations/ appraisals. Not only training in principles and procedures but also in the human relations skills necessary. (Lack of confidence in their own ability to handle situations of poor performance is the main weakness of assessors.)
Monitoring the scheme - ensuring it does not fall into disuse, following up on training/job exchange etc. recommendations, reminding managers of their responsibilities.
Full-scale periodic reviews should be a standard feature of schemes since resistance to evaluation / appraisal schemes is common and the temptation to water down or render schemes ineffectual is ever present (managers resent the time taken if nothing else).
Basically an evaluation / appraisal scheme is a formalization of what is done in a more casual manner anyway (e.g. if there is a vacancy, discussion about internal moves and internal attempts to put square pegs into 'squarer holes' are both the results of casual evaluation). Most managers approve merit payment and that too calls for evaluation. Made a standard routine task, it aids the development of talent, warns the inefficient or uncaring and can be an effective form of motivation.
Performance Evaluation is a tool you can use to help enhance the efficiency of the work unit. This tool is a means to help ensure that employees are being utilized effectively. Employees can use it as a clear indication of what is expected of them before you tell them how well they are doing, and then as feedback of how well they did.
Performance Evaluation is a multi-purpose tool used to:
Measure actual performance against expected performance
Provide an opportunity for the employee and the supervisor to exchange ideas and feelings about job performance
Identify employee training and development needs, and plan for career growth
Identify skills and abilities for purposes of promotion, transfer, and reduction in force
Support alignment of organization and employee goals
Provide the basis for determining eligibility for compensation adjustments based on merit
Provide legal protection against lawsuits for wrongful termination
The primary purpose of Performance Evaluation is to provide an opportunity for open communication about performance expectations and feedback. Most employees want feedback to understand the expectations of their employer and to improve their own performance for personal satisfaction. They prefer feedback that is timely and given in a manner that is not threatening.
Many benefits result from the Performance Evaluation process:
Control of the work that needs to be done
Enhancement of employee motivation, commitment, and productivity
Identification of goals and objectives for the employee
Satisfaction of the basic human need for recognition
Identification of process improvement opportunities
Identification of employee development opportunities
Methods of Performance Evaluation
Each of the performance evaluation methods listed below may be used to varying degrees. We recommend that agencies analyze their specific needs and choose any combination of the following that best meets those needs. Human Resource Management Services will, upon request, assist agencies in their analysis.
- Multi-source Assessment (360-Degree Feedback, Full-circle Appraisal)
This method differs significantly from the traditional supervisor/subordinate performance evaluation. Multi-source assessment involves gathering information from a number of customers who actually deal with the employee providing feedback – both internal and external. Internal customers include the immediate supervisor, other managers, co-workers, and subordinates. External customers may include clients, applicants, consultants, staff from other agencies, legislators, etc. The basis of this method is to provide a broader assessment of how an employee is doing on the job. This method is viewed as an optimal tool for identifying areas for improvement, guiding behavioral change, and generally enhancing performance management capabilities because it is not dependent on a single individual’s perceptions. It makes the employee much more accountable to the various customers because they now have input into the employee’s performance rating.
Provides the opportunity for employees to evaluate their own performance and express how they think they’ve performed without being influenced by their supervisor’s judgements. Supervisors also evaluate performance on the same factors and use that as a basis to compare responses. This can reveal areas of agreement or highlight differences of opinion. The advantage of this method is that it provides more interaction between supervisors and subordinates, greater agreement on performance expectations, and greater accountability for performance through increased employee participation in the review process. Supervisors still have the responsibility to write reviews and provide the employee with honest communication about performance. They must also be able to provide explanations for differences of opinion about performance so employees can understand what they are doing wrong and how they can do things better.
- Subordinate Appraisal of Managers (Upward appraisal)
Supervisors are reviewed by those they supervise. This method serves to provide feedback on the qualitative aspects of management performance – how well they communicate, provide direction, delegate responsibility, etc. Employees’ fear of reprisal may inhibit them from honestly providing feedback on their supervisor’s performance. However, providing anonymity and working with supervisors to handle constructive criticism may guard against that.
This method involves coworkers evaluating an employee. It is based on the premise that individuals can relate to an employee as their equal and are in the best position to judge the employee’s performance because they understand the nature of the job and are familiar with the activities of the employee. This method is particularly useful in organizations having self-directed work teams, but could be used in other settings as well. An advantage is that peer appraisal relates more to results than efforts. Disadvantages perceived are that peers are too lenient and tend to give high ratings to friends and low ratings to those they dislike.
- Management by Objectives (MBO)
MBO is a form of results-oriented appraisal. It is commonly used for supervisors, but may be used for other employees as well. It requires that both the supervisor and the subordinate agree upon specific objectives in the form of measurable results. The objectives are the standards of performance. MBO is intended to motivate stronger performance on the part of managers and employees. It is assumed that if employees meet their goals, supervisors will meet their goals, and organizations will then meet their goals. MBO has the following components: (1) major objectives to be accomplished within specified dates, (2) action plans and milestones for accomplishing the objectives, (3) periodic meetings with the manager and employee to review progress and make corrections if necessary, and (4) an assessment of employee performance at the end of the MBO cycle. An advantage of MBO is that it is a participative approach in which employees have input in setting their own objectives, as well as being involved in decisions that affect the objectives of the organization. MBO has been criticized as being based on numerical quotas rather than continuous improvement process, and that it focuses on the performance of individuals at the expense of teamwork. It is also very time consuming, requiring a considerable amount of administrative work.
- Continuous Improvement Review
Concentrates on current day-to-day results that can be linked directly to organization-wide improvements in quality and productivity. However, the formal evaluation must accurately reflect the entire review period, i.e. probationary, annual, etc.
- Behaviorally-anchored Rating Scale
This is a method where standards are described in the form of behavior expected of an employee. The descriptions are based on critical incidents determined to be characteristic of the various levels of performance. The descriptions help to provide objectivity in rating. This tends to focus on activity rather than results.
- Trait Format
This format describes traits of an individual. Some examples are initiative, dependability, cooperation. Be aware that while those traits may be factors affecting an individual’s performance, to evaluate traits alone becomes subjective and is, therefore, difficult to defend.
- Critical Incident Method
This involves observing and recording information about unusually good or unusually poor behavior. It is usually used in conjunction with another rating technique to support the evaluation and provides specific examples to discuss with the employee. Documentation should be factual, objective, and job-related.
- Essay or Narrative Format
This format is a simple approach that requires evaluators to write or answer questions about past performance, strengths and weaknesses, training and development needs, etc.. This format is very suitable to jobs in which there are few quantifiable results, and it provides opportunity for considerable detail about performance issues. The format, however, is difficult to use for comparing performance with other employees.
Douglas Mcgregor - Theory
Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The Human Side Of Enterprise'. Theory x and theory y are still referred to commonly in the field of management and motivation, and whilst more recent studies have questioned the rigidity of the model, Mcgregor's X-Y Theory remains a valid basic principle from which to develop positive management style and techniques. McGregor's XY Theory remains central to organizational development, and to improving organizational culture.
McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under the pressure of day-to-day business are all too easily forgotten.
McGregor's ideas suggest that there are two fundamental approaches to managing people. Many managers tend towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and results, and allows people to grow and develop.
McGregor's ideas significantly relate to modern understanding of
the Psychological Contract
, which provides many ways to appreciate the unhelpful nature of X-Theory leadership, and the useful constructive beneficial nature of Y-Theory leadership.
Theory X('authoritarian management' style)
The average person dislikes work and will avoid it he/she can.
Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security above all else.
theory Y ('participative management' style)
Effort in work is as natural as work and play.
People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment.
Commitment to objectives is a function of rewards associated with their achievement.
People usually accept and often seek responsibility.
The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population.
In industry the intellectual potential of the average person is only partly utilised.
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