Professional Master in Business Administration

Semester 1

Session Academic 2024/2025

Module:

Human Resource Management

 Study Notes Human Resource Management

Strategic Human Resource Management (SHRM)

Strategic Human Resource Management (SHRM)

Strategic Human Resource Management is the proactive management of

people within an organization to align human resource strategies with overall

business goals. It emphasizes the integration of HR practices with strategic

management.

Key Perspectives on Strategy:

1. Lester Dignam: Defines strategy as problem-solving in unstructured

situations, emphasizing adaptability.

2. Lynda Grattan: Highlights the gap between SHRM's rhetoric and its

implementation, pointing out inconsistencies in practice.

3. John Purcell: Suggests strategy can often be illusory, conceived in the

boardroom without practical grounding.

4. Sean Tyson: Views strategy as emergent and flexible, underscoring the

need for adaptability.

5. Henry Mintzberg: Defines strategy as a pattern in a stream of activities,

signifying that strategic actions form recognizable trends over time.

6. James Quinn: Describes strategy as intuitive, evolutionary, and

fragmentary, suggesting its development is often reactive and iterative.

Definition of SHRM:

Strategic HRM is the systematic approach to managing human resources,

focusing on achieving organizational objectives through the alignment of HR

policies and practices with business strategies.

Model of Strategic HRM

This model emphasizes the interconnected components essential for effective

SHRM:

1. Strategic Management – Aligning HR roles with organizational strategy.

2. HR Strategies – Developing specific policies, such as talent management

and employee engagement.

3. Strategic Choice and Analysis – Making decisions based on thorough

evaluations of organizational goals and resources.

Strategic Roles of HR

1. Formulating Integrated HR Strategies: Align HR initiatives with

business goals.

2. Partnering with Line Managers: Support managers in achieving

organizational objectives.

3. Developing Business Strategies: Actively contribute to crafting

strategies that leverage human capital.

Seven Steps to Being Strategic

1. Understand Business Context: Analyze the external and internal

environments.

2. Appreciate HR's Value: Recognize how HR contributes to organizational

success.

3. See the Big Picture: Maintain a macro perspective on business

objectives.

4. Act as a Change Agent: Drive and manage organizational

transformation.

5. Build a Convincing Business Case for Innovation: Advocate for HR

initiatives based on evidence.

6. Practice Evidence-Based Management: Use data and analytics to

guide decisions.

HR Strategy Areas

 Overall Strategies:

 Performance and engagement enhancement.

 Building human capital advantage.

 Creating a seamless HRM process.

 Specific Strategies:

 Talent management.

 Corporate social responsibility.

 Employee relations and well-being.

Examples of Overall Strategies

 GlaxoSmithKline: Foster a workplace where the best people do their

best work.

 Lands’ End: Ensure employee satisfaction to deliver exceptional

customer service.

Balanced Scorecard

A framework to measure organizational performance through:

1. Organizational Effectiveness: Focus on program development, delivery,

and cost-efficiency.

2. Stakeholder Perspective: Build strong relationships with clients and

stakeholders.

3. Financial Perspective: Drive income growth and manage cost-

effectiveness.

4. People Perspective: Prioritize talent management and employee

satisfaction.
Criteria for Effective HR Strategies

1. Alignment with Corporate Goals: Integrate HR initiatives with

overarching business objectives.

2. Clear Aims and Practical Plans: Ensure HR strategies are realistic and

achievable.

3. Account for Business and Individual Needs: Address both

organizational goals and employee aspirations.

The Role of the HR Function

1. Guidance and Support: Facilitate HR-related processes to meet

business objectives.

2. Creating an Enabling Environment: Empower employees to maximize

their potential.

The Ulrich Model:

1. Centers of Expertise: Specialized HR services like recruitment and

training.

2. Strategic Business Partners: Collaborate with line managers to align

HR with business needs.

3. Shared Service Centers: Manage transactional tasks like payroll and

compliance.
Evaluating HR Effectiveness

 Quantitative Metrics: Use indicators like employee retention rates and

cost per employee.

 Qualitative Metrics: Assess HR’s strategic alignment and ability to

deliver services effectively.

HR Scorecard Components (Beatty et al., 2003):

1. HR Competencies: Administrative and strategic execution.

2. HR Practices: Methods for communication, selection, and rewards.

3. HR Systems: Integration and alignment of HR policies.

4. HR Deliverables: Employee behavior, mindset, and knowledge.

The HR Role of Line Managers

 Key Responsibilities:

 Implement HR practices effectively.

 Align practices with organizational benefits.

 Avoid overly bureaucratic and complex solutions.

 Engage in development and training initiatives.

 Study Notes Human Resource Management

Job Analysis, Human Resource Planning, Recruitment, and

Selection

Strategic Human Resource Management (SHRM)

What is Strategy?

Different perspectives on strategy help frame its complex and evolving nature:

1. Lester Dignam: Strategy involves solving unstructured problems.

2. Henry Mintzberg: Views strategy as a pattern in activities, emphasizing

consistent trends.

3. James Quinn: Considers strategy evolutionary and intuitive, focusing on

adaptability.

Defining SHRM

Strategic HRM aligns HR strategies with organizational goals. It integrates HR

practices into strategic management to enhance performance and

competitiveness.

Key Elements of SHRM:

 Strategic Management: HR's role in organizational strategy.

 HR Strategies: Policies for talent management, employee well-being, and

engagement.
 Strategic Analysis: Assessing workforce needs and aligning them with

goals.

Job Analysis

Definition: A systematic process to identify:

 Tasks: Specific duties associated with a job.

 Responsibilities: The outcomes expected from the role.

 Skills and Knowledge: Requirements to perform the job effectively.

Purpose:

 Develop job descriptions and specifications.

 Inform recruitment, training, performance appraisal, and compensation.

 Improve organizational performance.

Steps in Job Analysis:

1. Select jobs to study.

2. Determine data to collect (tasks, responsibilities, skills).

3. Identify sources (employees, supervisors).

4. Use methods like interviews, questionnaires, and observation.

5. Evaluate and validate findings.

6. Write a job analysis report.

Common Methods:

1. Position Analysis Questionnaire (PAQ): Evaluates job characteristics

via 195 work elements.

2. Critical Incident Method: Documents specific behaviors impacting job

performance.

3. Functional Job Analysis (FJA): Breaks down roles into seven

categories (e.g., data, reasoning).

Job Design and Enrichment

Job Design:

Combines human and technological considerations to:

 Improve efficiency.

 Enhance job satisfaction.

Job Enrichment:

Adds meaningful tasks to:

 Increase responsibility.

 Provide growth opportunities.

 Recognize achievements.
Human Resource Planning (HRP)

What is HRP?

Determining current and future workforce needs to achieve business

objectives.

Key Components:

1. Personnel Planning: Identifying which roles need filling and when.

2. Succession Planning: Preparing employees for key leadership roles.

3. Forecasting: Using tools like trend and ratio analysis to predict staffing

needs.

Recruitment and Selection

Steps in the Recruitment Process:

1. Identify positions to fill.

2. Build a talent pool via internal or external recruitment.

3. Screen candidates through applications and initial interviews.

4. Use selection tools (tests, assessments).

5. Make hiring decisions based on interviews and evaluations.

Recruitment Sources:

 Internal: Promotions, transfers, employee referrals.

 External: Advertising, employment agencies, online job boards, college

recruiting.

Advantages of Online Recruitment:

 Cost-effective.

 Broad reach.

 Immediate responses.

 Applicant tracking automation.

Challenges of Online Recruitment:

 System overload with unqualified candidates.

 Exclusion of minority groups.

 Privacy concerns.

Key Considerations for Effective HRM:

Developing Effective Recruitment Strategies:

 Align with business goals.

 Use realistic job previews to reduce turnover.

 Emphasize the employer brand to attract top talent.

HR's Role in Organizational Success:

 Provide guidance on employee engagement.

 Support training and career development.

 Foster a culture of continuous improvement.

Measuring HR Effectiveness:

Quantitative metrics include turnover rates, time-to-hire, and cost-per-hire.

Qualitative assessments focus on strategic alignment and employee

satisfaction.

Job Analysis

Definition and Purpose

Job analysis is a structured process of gathering and interpreting information

about a job's tasks, responsibilities, and required knowledge, skills, and

abilities (KSAs). It forms the basis for:

 Job Descriptions: Outlines duties, tasks, and responsibilities.

 Job Specifications: Lists the qualifications, skills, and attributes needed

to perform a job.

 HR Functions: Recruitment, training, appraisal, compensation, and legal

compliance.

Steps in Job Analysis

1. Select Jobs to Study: Focus on critical roles that significantly impact the

organization.

2. Determine Data to Collect: Gather information on tasks, responsibilities,

and required KSAs.

1. Identify Data Sources: Consult employees, supervisors, and industry

benchmarks.

2. Methods of Data Collection:

 Interviews: Direct discussions with employees and managers.

 Observation: Watching job incumbents perform their duties.

 Questionnaires: Structured forms to collect standardized job data.

 Diaries and Logs: Employees record daily tasks and time spent.

3. Evaluate and Validate Data: Cross-verify data with other employees and

supervisors.

4. Prepare the Job Analysis Report: Summarize findings in an actionable

format.

Common Approaches to Job Analysis

 Position Analysis Questionnaire (PAQ): Uses a standardized

questionnaire to evaluate job-related behaviors.

 Critical Incident Method: Focuses on recording specific, impactful

employee actions.

 Functional Job Analysis (FJA): Breaks job roles into detailed functions

like data, reasoning, and interactions with people.

Job Design and Enrichment

Job Design

Enhancing jobs by integrating human and technical considerations to:

 Boost efficiency.

 Improve employee satisfaction.

Job Enrichment

Adding meaningful tasks and responsibilities to a job to:

 Increase motivation and job satisfaction.

 Foster personal growth and achievement.

Key strategies include:

1. Increasing job complexity.

2. Providing authority over work outcomes.

3. Sharing performance feedback directly with employees.

4. Assigning tasks that encourage skill development.

Human Resource Planning (HRP)

Definition

HRP is the process of forecasting future staffing needs and aligning them with

organizational goals. It involves:

1. Personnel Planning: Deciding which roles to fill and when.

2. Succession Planning: Preparing internal candidates for leadership

positions.

Forecasting Personnel Needs

1. Trend Analysis: Examines historical employment trends.

2. Ratio Analysis: Analyzes ratios between production levels and staffing.

3. Scatter Plotting: Graphically projects staffing needs based on variables

like sales or output.

Challenges with Traditional Forecasting

 Focuses excessively on historical data.

 Lacks flexibility for strategic shifts.

 Reinforces outdated practices.

Modern Forecasting Tools

 Computerized Models: Use algorithms to project staffing based on sales,

production, and growth scenarios.

Recruitment and Selection

Recruitment Process

1. Determine positions to fill through HRP.

2. Build a talent pool from internal and external sources.

3. Screen candidates via applications and initial interviews.

4. Employ selection tools (tests, reference checks).

5. Conduct final interviews to identify the best fit.

Sources of Recruitment

 Internal: Promotions, transfers, employee referrals.

 External: Advertising, employment agencies, online job boards, college

recruiting.

Online Recruitment: Pros and Cons

 Advantages:

 Cost-effective and time-efficient.

 Attracts a large, diverse applicant pool.

 Enables automated prescreening.

 Disadvantages:

 Risk of excluding certain demographics.

 May attract unqualified candidates.

Effective Recruitment Practices

 Align methods with strategic goals.

 Provide realistic job previews to reduce turnover.

 Ensure recruitment materials are clear and engaging.

Selection Process

Steps in Selection

1. Initial Screening: Review applications and conduct short interviews.

2. Testing and Assessment: Use psychometric tests or skills assessments.

3. Final Interviews: Deepen understanding of candidates’ qualifications.

4. Reference Checks: Verify past performance and reliability.

5. Job Offer: Extend an offer contingent on meeting final conditions.

Use of Technology in Selection

 Applicant tracking systems streamline candidate management.

 Online assessments provide standardized evaluations.

Centralized vs. Decentralized Recruitment

 Centralized:

 Ensures consistency across departments.

 Reduces duplication of efforts.

 Decentralized:

 Tailors recruitment to specific departmental needs.

Improving Recruitment Effectiveness

1. Evaluate recruiting yield pyramids to assess efficiency.

2. Measure success using metrics like time-to-fill and cost-per-hire.

3. Regularly update strategies based on results.

 Study Notes Human Resource Management

Recruitment and Placement – Employee Testing and Selection

Why Careful Selection is Important

1. Organizational Performance:

 Hiring employees with the right skills and attributes is critical for

maintaining high organizational performance. The success of an

organization heavily relies on employees possessing the right

skills and attributes.

 Misaligned hires can negatively impact productivity and morale. Poor

hiring decisions lead to high costs in training, turnover, and lost

productivity.

2. Cost of Hiring:

 Recruitment and hiring involve significant costs (job ads, interviews,

onboarding). Mistakes can double these costs if replacements are

needed.

3. Legal Implications:

 Equal Employment Opportunity (EEO) laws ensure

nondiscriminatory hiring practices.

  Negligent hiring, where employees with questionable backgrounds

cause harm, can lead to lawsuits. Employers must diligently vet

candidates to avoid such risks.

Avoiding Negligent Hiring Claims

 Scrutinize Information: Verify the details on applications.

 Reference Checks: Obtain the applicant’s written consent and cross-

verify references.

 Preserve Records: Keep all documentation related to the hiring process.

 Reject Falsehoods: Dismiss candidates with falsified information or

relevant criminal convictions.

 Balance Privacy and Risks: Protect the applicant's privacy while

ensuring the workplace’s safety.

Basic Testing Concepts

1. Reliability:

 Consistency of test results over time indicates reliability.Tests

must yield consistent results over repeated administrations to the

same person.

 Example: A test yielding similar results in repeated trials

demonstrates stability.
2. Validity:

 A valid test measures what it is designed to measure, directly

predicting job performance.

 Types of validity:

 Criterion Validity: Correlation between test scores and job

performance.

 Content Validity: Tests must sample actual job tasks and skills.

Types of Validity

1. Criterion Validity:

 Test scores are statistically correlated with job performance.

 Example: High scores in sales aptitude tests predict better sales

performance.

2. Content Validity:

 Tests include tasks representative of actual job requirements.

 Example: A typing test for a clerical position.

Steps to Validate a Test

1. Analyze the Job: Identify key Knowledge, Skills, Abilities, and Other

Characteristics (KSAOs).
2. Choose the Tests: Decide whether to use a single test or a combination

(test battery).

3. Administer the Test: Use concurrent or predictive validation to assess

reliability.

4. Relate Test Scores and Criteria: Perform correlation analysis to link

scores with performance.

5. Cross-Validate: Reassess using a different sample for reliability.

Testing Program Guidelines

 Use tests as supplementary tools, not sole decision-makers.

 Validate tests to ensure they measure job-relevant traits.

 Regularly review testing programs for fairness and effectiveness.

Equal Employment Opportunity (EEO) and Testing

 Employers must prove that their tests:

1. Are valid indicators of job performance.

2. Do not discriminate against any group (e.g., based on race, gender).

Types of Tests Used in Recruitment

1. Cognitive Ability Tests:

 Measure intelligence, reasoning, and problem-solving skills.

 Assess intelligence and aptitude in areas like reasoning, memory, and

comprehension.

2. Personality Tests:

 Assess traits like introversion or conscientiousness.

 Assess traits like extroversion, emotional stability, and

conscientiousness.

 The "Big Five" traits serve as a framework for personality evaluation.

 Disadvantage: Difficult to evaluate and sometimes unreliable.

3. Work Simulations:

 Replicate job scenarios to assess practical skills.

 Measure knowledge and simulate actual job tasks to evaluate

performance.

4. Substance Abuse Screening:

 Conducted to ensure workplace safety and productivity.

Background Investigations and Reference Checks

 Purpose:

 Verify applicant-provided information.

 Identify potential risks (e.g., criminal records).

 Legal Aspects:

 Adhere to laws like the Privacy Act and Americans with Disabilities

Act to avoid violating applicants’ rights.

 Effective Practices:

 Obtain explicit consent from applicants.

 Use open-ended questions to gather comprehensive reference

details.

 Always cross-check information with multiple sources.

Substance Abuse and Honesty Testing

1. Substance Abuse Screening:

 Conduct tests pre-employment, post-incident, or randomly to ensure

workplace safety.

 Urinalysis and hair follicle tests are common methods.

2. Honesty Tests:

 Use paper-and-pencil tests to gauge attitudes toward theft and

workplace dishonesty.

 Combine these with psychological assessments for deeper insights.

Work Simulations and Management Assessments

 Simulations replicate job tasks to evaluate decision-making, leadership,

and problem-solving skills.

 Examples include:

 Leaderless group discussions.

 Video-based situational tests with real-world scenarios.

Compliance with Immigration Laws

1. Only hire individuals authorized to work.

2. Complete and retain Form I-9 for every employee.

3. Verify documentation and comply with federal inspection requirements.

 Study Notes Human Resource Management

Interviewing Candidates

Interviewing Candidates

What is an Interview?

 Definition: A formal procedure designed to collect information from a

candidate through oral responses to questions.

 Purpose: To evaluate a candidate's qualifications, personality, and

suitability for a job.

Types of Interviews

1. Selection Interview

 Predicts future job performance based on the applicant's responses.

 Core tool in hiring decisions.

2. Appraisal Interview

 Discusses an employee’s performance and areas for improvement

after evaluations.
3. Exit Interview

 Collects feedback from departing employees to understand job

satisfaction and organizational strengths or weaknesses.

Interview Formats

1. Unstructured (Nondirective)

 Free-flowing and conversational.

 Allows flexibility but risks inconsistency.

2. Structured (Directive)

 Follows a predetermined sequence of questions.

 Ensures uniformity and comparability across candidates.

Administering Interviews

 Unstructured Sequential Interview:

 Each interviewer independently evaluates the candidate with different

questions.
 Structured Sequential Interview:

 Candidates are evaluated using standardized questions rated by

multiple interviewers.

 Panel (Board) Interview:

 A group of interviewers asks questions to assess a candidate

collectively.

 Mass Interview:

 Multiple candidates are interviewed simultaneously to observe

leadership and group dynamics.

 Technology-Assisted Interviews:

 Phone or video interviews (e.g., Skype, Zoom) reduce travel costs

and facilitate remote hiring.

 Computerized interviews provide standardized questioning, but they

may lack a personal touch.

Factors Undermining Interview Effectiveness

1. First Impressions:

 Snap judgments can cloud fair evaluations.

  Negative bias disproportionately impacts decision-making.

2. Job Misunderstanding:

 Inadequate knowledge of the job leads to poor candidate selection.

3. Candidate-Order Error:

 Comparison with prior interviewees (strong or weak) influences

assessment.

4. Nonverbal Behavior:

 Applicants’ body language and demeanor can mislead interviewers.

5. Personal Characteristics:

 Gender, race, or physical appearance may introduce bias.

6. Interviewer Behavior:

 Excessive talking or favoritism distorts evaluations.

Designing a Structured Situational Interview

1. Job Analysis:

 Identify key job duties and necessary skills.

2. Rate Job Duties:

  Assign weights to job tasks based on importance.

3. Create Questions:

 Include situational, behavioral, and job knowledge-based queries.

4. Develop Benchmark Answers:

 Define exemplary, average, and poor responses for consistency.

5. Assemble an Interview Panel:

 Diverse and trained interviewers ensure balanced assessments.

Conducting an Effective Interview

1. Preparation:

 Review the job description and candidate’s application.

 Secure a private, distraction-free location.

2. Establish Rapport:

 Begin with small talk to ease the candidate’s nerves.

3. Questioning:

 Use open-ended questions to encourage detailed answers.

 Avoid leading or yes/no questions.

4. Take Notes:
  Record observations discreetly to avoid disrupting the conversation.

5. Closing:

 Summarize the discussion and explain next steps.

6. Review:

 Reflect on responses immediately after the interview for accuracy.

Examples of Structured Questions

1. Situational Questions:

 "What would you do if a colleague ignored standard

procedures?"

2. Past Behavior Questions:

 "Describe a time you resolved a conflict with a coworker."

3. Background Questions:

 "What experience do you have working in a team setting?"

4. Job Knowledge Questions:

 "What factors would you consider when launching a new

marketing campaign?"
Improving Interview Reliability

 Use standardized evaluation forms.

 Train interviewers to reduce bias.

 Include multiple interviewers for a balanced perspective.

 Use descriptive rating scales (e.g., poor, fair, excellent).

 Study Notes Human Resource Management

Training and Developing Employees

Purpose of Orientation

Orientation helps new employees feel:

1. Welcome and At Ease: Introduces them to the organization, reducing

anxiety and fostering a sense of belonging.

2. Begin the Socialization Process: Aligns their values and behaviors with

organizational culture.

3. Understand the Organization: Provides clarity on operations, structure,

and goals.

4. Know What is Expected: Clarifies job roles, behavioral expectations,

and performance standards.

Orientation Process

Key elements:

 Overview of company organization and operations.

 Explanation of safety measures and regulations.

 Facilities tour to familiarize employees with the workplace environment.

 Employee benefit information (health plans, leaves).

 Discussion of personnel policies (e.g., dress code, work hours).

 Introduction to the daily routine.

The Training Process

1. Definition:

 Training is the process of equipping employees with the skills required

to perform their job effectively.

 It’s critical for risk mitigation, reducing liability from negligent training.

2. Strategic Context:

 Training must align with the organization’s strategic goals to ensure it

contributes to overall performance improvement.

Four-Step Training Process

1. Needs Analysis: Identifying what training is necessary based on job

requirements and employee gaps.

2. Instructional Design: Structuring the training program to meet identified

needs.

3. Program Implementation: Delivering the training through appropriate

methods.

4. Evaluation: Assessing the effectiveness of the training in terms of

learning outcomes and job performance.

Training, Learning, and Motivation

1. Making Learning Meaningful:

 Use familiar examples, logical organization, and visual aids.

 Create a sense of relevance to encourage engagement.

2. Facilitating Skill Transfer:

 Ensure similarity between training and actual work scenarios.

 Provide ample practice and clear labeling of tasks.

3. Reinforcing Learning:

 Immediate feedback reinforces correct responses.

 Avoid overloading; shorter training sessions are more effective.

Analyzing Training Needs

1. Task Analysis:

 Focuses on new employees, breaking down tasks into teachable

components.

2. Performance Analysis:
  Identifies gaps in current employee performance using tools like

appraisals, surveys, and tests.

Training Methods

1. On-the-Job Training (OJT):

 Employees learn by doing, guided by mentors or supervisors.

 Includes job rotation, coaching, and special assignments.

2. Programmed Learning:

 A self-paced method providing immediate feedback, reducing errors.

3. Computer-Based and Internet-Based Training:

 Leverages technology for simulations, virtual reality, and e-learning.

Management Development

1. Key Focus Areas:

 Align with strategic needs.

 Foster long-term growth for managerial roles.

2. Succession Planning:
  Steps include anticipating management needs, creating replacement

charts, and starting development early.

Managing Organizational Change

1. Lewin’s Change Process:

 Unfreezing: Build urgency and commitment to change.

 Moving: Implement change through communication and employee

involvement.

 Refreezing: Reinforce and monitor new behaviors.

2. Organizational Development (OD):

 Uses behavioral science to drive structured change, improve

processes, and align with strategic objectives.

Evaluating Training Effectiveness

1. Designing Evaluation Studies:

 Use controlled experiments and time series designs to measure

training outcomes.

2. Measuring Training Impact:

  Assess reactions, knowledge gained, behavioral changes, and results

(e.g., productivity, quality improvements).

Study Notes Human Resource Management

Training and Career Development

The Basics of Career Management

1. Career:

 Refers to the series of occupational positions a person holds over

their lifetime.

2. Career Management:

 A systematic approach for helping employees understand their skills

and interests while providing pathways to develop them.

3. Career Development:

 A lifelong process encompassing career exploration, establishment,

success, and fulfillment.

Key Processes in Career Planning

 Career Planning:
  A proactive approach where individuals evaluate personal strengths

(skills, knowledge, interests) and define specific career goals.

 Modern Careers:

 No longer confined to a single company or profession.

 Employees prioritize roles offering training, learning, and growth to

remain marketable.

Roles in Career Development

1. The Individual:

 Take ownership of career growth by setting goals, leveraging

development opportunities, and seeking resources.

 Engage in discussions with managers to align personal and

organizational objectives.

2. The Manager:

 Provide constructive feedback, support developmental activities, and

participate in career planning conversations.

3. The Organization:

 Foster an environment of growth by offering training programs,

communicating career opportunities, and supporting diverse career

paths.
Career Development Strategies

1. Choosing a Mentor:

 Select someone experienced and approachable.

 Clarify expectations and respect their time.

2. Employer's Role in Career Development:

 Offer realistic job previews, challenging initial assignments, job

rotations, and mentoring programs.

 Create opportunities for networking and professional interaction.

Innovative Career Development Initiatives

Organizations can support career development through:

 Individual budgets for professional growth.

 On-site or virtual career centers.

 Career coaches, planning workshops, and success teams.

 Online tools for career assessment and guidance.

Managing Promotions and Transfers

1. Promotion Decisions:

 Based on seniority or competence.

 Formal or informal processes.

 Can be vertical, horizontal, or alternative career paths.

2. Transfer Decisions:

 Employees may seek transfers for personal growth, more convenient

locations, or advanced opportunities.

 Employers may reassign staff to meet business needs or improve role

fit.

Enhancing Diversity in Career Management

1. Challenges:

 Biases in hiring and promotion.

 Limited mentorship for minorities and women.

 Glass ceiling effects and lack of role models.

2. Solutions:

 Address institutional barriers.

 Improve networking and mentoring programs.

 Provide flexible schedules and diverse career tracks.

Career Commitment in the Modern Era

1. New Psychological Contract:

 Shift from long-term loyalty to mutually beneficial short-term

commitments.

 Employers provide development opportunities; employees deliver

their best while with the organization.

2. Career-Oriented Appraisals:

 Integrate performance reviews with career goals to establish coherent

plans.

Retirement Planning

1. Definition:

 Transition from active work to a post-career phase, usually around 60-

65 years.

2. Preretirement Practices:
  Guidance on social security, leisure, financial planning, health, and

secondary careers.

Understanding Career Stages

1. Growth Stage:

 Early development of interests and skills.

2. Exploration Stage:

 Initial exposure to work and testing career paths.

3. Establishment Stage:

 Building expertise and stability.

4. Maintenance Stage:

 Consolidating skills and contributing at peak levels.

5. Decline Stage:

 Gradual reduction in career activity.

Identifying Career Anchors

 Career anchors are core values individuals prioritize when making career

decisions. Examples:

 Technical/Functional Competence: Specialization in a specific skill

area.

 Managerial Competence: Leadership roles.

 Autonomy/Independence: Freedom in work.

 Security: Stable and predictable work environments.

Finding the Right Job

1. Methods:

 Networking, personal contacts, advertisements, recruitment agencies,

and online resources.

2. Writing a Resume:

 Include clear objectives, accomplishments, and relevant personal

data.

 Ensure the document is scannable for digital systems.

3. Interview Preparation:

 Research the employer, align responses to their needs, and present

yourself professionally.
 Study Notes Human Resource Management

Establishing Strategic Pay Plans

Understanding Compensation

1. Definition:

 Employee Compensation: All forms of pay or rewards employees

receive due to their employment.

 Direct Financial Payments: Includes wages, salaries, incentives,

commissions, and bonuses.

 Indirect Financial Payments: Includes benefits like insurance,

retirement plans, and paid leave.

Key Compensation Laws

1. Davis-Bacon Act (1931):

  Establishes wage rates for laborers employed by federal government

contractors.

2. Walsh-Healey Public Contract Act (1936):

 Mandates minimum wage and proper working conditions for

employees on federal contracts exceeding $10,000.

3. Fair Labor Standards Act (1938):

 Covers minimum wages, overtime pay for nonexempt employees

working over 40 hours/week, and child labor regulations.

4. Equal Pay Act (1963):

 Ensures equal pay for men and women performing the same work.

5. Age Discrimination in Employment Act:

 Prohibits discrimination against employees aged 40 and above.

6. Americans with Disabilities Act:

 Protects qualified individuals with disabilities from discrimination.

7. Family and Medical Leave Act:

 Grants eligible employees up to 12 weeks of unpaid, job-protected

leave for family or medical reasons.

What is the Compensation Act in Malaysia?

Malaysia has multiple laws related to compensation, including:

1. Employment Act 1955 (Act 265):

 This act provides guidelines for employers to ensure they provide

their employees with their basic rights and care. The act covers

topics such as minimum wage, working hours, rest days, annual and

sick leave, and termination procedures.

2. Workmen's Compensation Act 1952 (Act 273):

 This act provides compensation to workers who are injured or

become disabled while working. The act specifies the types of

compensation that may be available, as well as the process for filing

claims.

3. National Wages Consultative Council Act 2011 (Act 723):

 This act covers a range of topics, including the protection of wage

records and other documents.

 As of January 1, 2023, the minimum wage in Malaysia is MYR 1,500

per month. This applies to employers in all sectors that employ five or

more employees.

4. Employees Provident Fund Act 1991 (Act 452):

 An act to provide for the law relating to a scheme of savings

for employees' retirement and the management of the savings for the

retirement purposes.

5. Employees' Social Security Act 1969 (Act 4):

 An act that establishes the Social Security Organization (SOCSO),

which provides social security protection for employees in the private

sector. The act aims to ensure that employees and their dependents
 are financially protected in the event of injury, disability, illness, or

death that arises from their employment.

6. Industrial Relations Act 1967 (Act 177):

 Regulates employer-employee relations, focusing on dispute

resolution and ensuring fairness in employment practices.

 Unlawful dismissal claims may result in compensation orders if the

employee is found to be unfairly dismissed.

7. Children and Young Persons. (Employment) Act 1966 (Act 350):

 Protects the rights of young employees.

 Sets restrictions on working hours, nature of work, and compensation

for children and young persons employed in non-hazardous

industries.

Strategic Compensation

1. Aligned Reward Strategy:

 Tailors compensation programs to drive behaviors that align with a

company’s competitive strategy.

 Develop reward strategies based on organizational success factors

and required employee behaviors.

2. Key Compensation Policy Issues:

 Pay for Performance: Rewards based on achievement.

 Pay for Seniority: Compensation tied to tenure.

  Geographic Pay Differences: Adjusting pay to reflect cost-of-living

variances.

Equity in Pay

1. Types of Equity:

 External Equity: How a company’s pay compares to competitors.

 Internal Equity: Fairness of pay within an organization across roles.

 Individual Equity: Fairness of an employee’s pay relative to

colleagues in similar roles.

 Procedural Equity: Transparency and fairness in pay decisions.

2. Addressing Equity:

 Conduct salary surveys and job evaluations.

 Link performance appraisals with incentive pay.

Establishing Pay Rates

1. Steps:
  Conduct Salary Surveys: Gather data on prevailing wage rates for

specific roles.

 Perform Job Evaluations: Use methods like ranking, classification,

or point systems to determine job worth.

 Group Jobs into Pay Grades: Cluster jobs of similar difficulty into a

single pay range.

 Set Wage Curves: Align pay rates to job evaluation scores.

 Fine-Tune Pay Rates: Develop pay ranges and adjust rates for

underpaid/overpaid jobs.

2. Compensable Factors:

 Elements like skills, responsibility, effort, and working conditions that

determine job value.

Advanced Compensation Practices

1. Competency-Based Pay:

 Employees are compensated based on their skills, knowledge, and

behaviors rather than job titles.

 Components:

 Defined skill sets tied to pay.

 Training systems for skill acquisition.

 Testing systems to verify competency.

  Pros: Improves quality, reduces absenteeism.

 Cons: Implementation costs and complexity.

2. Broadbanding:

 Combines salary grades into broader pay bands for flexibility in role

assignments.

Quantitative Job Evaluation Methods

1. Factor Comparison Method:

 Evaluates jobs by comparing compensable factors like mental

requirements, skills, responsibilities, and working conditions.

2. Point Method:

 Assigns points to factors like complexity or problem-solving to

determine job value.

Managing Pay for Specialized Roles

1. Managerial Compensation:

 Includes base pay, short-term incentives (bonuses), and long-term

incentives (stock options).

2. CEO Compensation:
  Determined by board of directors based on strategic and

organizational factors.

3. Professional Employees:

 Compensation focuses on problem-solving abilities, technical

knowledge, and creativity.

Other Compensation Trends

1. Strategic Compensation:

 Links pay plans to the company’s strategic objectives, focusing on

performance and competitiveness.

2. Comparable Worth:

 Ensures fair pay for jobs of comparable value, addressing wage

disparities based on gender.

 Study Notes Human Resource Management
Pay for Performance and Financial Incentives

Motivation, Performance, and Pay

1. Incentives:

 Financial rewards offered to employees who exceed set performance

standards.

 Originated from Frederick Taylor’s Scientific Management,

emphasizing performance-based rewards.

2. Key Theories of Motivation:

 Herzberg’s Hygiene–Motivator Theory:

 Hygienes: External factors (e.g., salary, working conditions)

prevent dissatisfaction.

 Motivators: Intrinsic factors (e.g., job challenge, recognition)

address higher-level needs like self-actualization.

 Victor Vroom’s Expectancy Theory:

 Motivation = Expectancy × Instrumentality × Valence.

 Employees are motivated when they believe their effort will lead to

performance, which will result in a valued reward.

 B.F. Skinner’s Reinforcement Theory:

 Positive rewards encourage repeat behavior, while punishments

discourage undesired actions.

 Edward Deci's Perspective:

 Intrinsic Motivation:

 Driven by the need for competence (mastery of tasks) and

self-determination (autonomy and control).

 Extrinsic Rewards:

 Can conflict with intrinsic motivation by undermining autonomy

and responsibility.

 Must be balanced to complement rather than replace intrinsic

motivation.

 Motivation Strategies:
  Job Challenge and Recognition foster intrinsic motivation

and personal growth.

 Financial Rewards are best for tasks requiring compliance or

routine execution.

 Workplace Applications:

 Encourage intrinsic motivation through meaningful work and

recognition.

 Use extrinsic rewards strategically for tasks where intrinsic

motivation is lacking.

 Key Takeaway: Balancing intrinsic and extrinsic motivators

ensures sustainable motivation and performance.

Individual Incentive Plans

1. Piecework Plans:

 Employees are paid per unit produced.

 Types:

 Straight Piecework: Fixed pay per unit.

 Standard Hour Plan: Employees are rewarded for finishing tasks

within a set time frame.

 Pros: Simple, equitable, motivating.

 Cons: May lead to quality issues and resistance to change.

2. Merit Pay:

 Permanent salary increases based on individual performance.

 Alternatives:

 Annual lump-sum merit raises not tied to base salary.

 Awards linked to both individual and organizational performance.

3. Recognition-Based Awards:

 Non-monetary acknowledgments (e.g., certificates, verbal praise)

boost morale and performance.

4. Incentives for Professional Employees:

 Tailored rewards like bonuses, stock options, and flexible work

arrangements.

Incentives for Salespeople

1. Salary Plans:

 Fixed pay, suitable for account servicing and training tasks.

2. Commission Plans:

 Payment is proportional to sales, encouraging productivity.

 Drawbacks: Income variability and neglect of non-sales duties.

3. Combination Plans:

 Mix of salary and commission to balance stability and motivation.

4. Specialized Plans:

 Commission-plus-Drawing-Account Plan: Advances provided

during low sales periods.

 Commission-plus-Bonus Plan: Bonuses for achieving specific

targets.

Team/Group Incentive Plans

1. Structure:

 Incentives are based on collective performance rather than individual

efforts.

 Reward Methods:

 Equal pay for all team members based on highest, lowest, or

average producer.

2. Advantages:

 Encourages collaboration, rapid training, and problem-solving.

3. Disadvantages:
  May demotivate high performers if rewards are not proportional to

effort.

Organizationwide Incentive Plans

1. Profit-Sharing Plans:

 Employees receive a share of company profits, either as cash or

deferred amounts.

 Deferred Profit-Sharing: Contributions are held in trust until

employees leave or retire.

2. Employee Stock Ownership Plans (ESOPs):

 Employees acquire ownership in the company through stock

contributions.

 Benefits:

 Tax deductions for the company.

 Employees gain a sense of ownership and commitment.

3. Gainsharing Plans:
  Performance improvements are shared between employees and the

organization.

 Steps:

 Establish performance metrics.

 Define the sharing formula.

 Create involvement systems for employees.

Incentives for Managers and Executives

1. Short-Term Incentives: Annual bonuses tied to company profitability and

individual contributions.

2. Long-Term Incentives: Includes stock options, performance-based stock

plans, and "golden parachutes."

3. Developing Compensation Plans: Align compensation with strategic

goals and ensure compliance with legal regulations.

Challenges in Incentive Plans

1. Why Incentive Plans Fail:

 Poor management cannot be compensated by pay systems.

 Rewards may create unintended consequences (e.g., reduced

intrinsic motivation).

2. Key Considerations for Effective Plans:

  Link rewards directly to performance.

 Make plans understandable and inclusive.

 Emphasize both short-term and long-term success.

Building Commitment Through HR Practices

1. Clarifying Goals: Clearly communicate organizational objectives.

2. Ensuring Fairness: Guarantee transparent and equitable systems.

3. Promoting Community: Foster teamwork and employee interaction.

4. Supporting Development: Offer career growth opportunities through

training and promotion from within.

 Study Notes Human Resource Management

Managing Employee Benefits

Managing Employee Benefits

What are Benefits?

 Benefits refer to indirect compensation provided to employees as part

of their organizational membership.

 They are strategic tools that:

 Absorb societal costs like healthcare and retirement.

 Influence employee decisions regarding recruitment and retention.

 Are increasingly viewed as entitlements.

Strategic Importance of Benefits

 Benefits play a vital role in determining overall job attractiveness.

 Employers allocate about 40% of total payroll costs to benefits.

Benefit Needs Analysis

To determine an effective benefits strategy, organizations should analyze:

1. Total Compensation Goals: What proportion of compensation should be

allocated to benefits?

2. Expense Management:: Acceptable cost levels for each type of benefit.

3. Employee Segmentation: Identifying who should receive specific

benefits.

4. Return on Investment: Evaluating the impact on turnover, recruitment,

and retention.

5. Flexibility: Designing adaptable benefit packages to meet diverse

employee needs.

Types of Benefits

1. Security Benefits:

 Worker’s Compensation: Coverage for workplace injuries.

 Unemployment Compensation: Financial aid during involuntary

unemployment (subject to active job seeking).

 Supplemental Unemployment Benefits (SUB): Additional payments

for laid-off workers under union agreements.

 Severance Pay: Voluntary payment upon job termination, often tied

to tenure and organizational level.

2. Retirement Benefits:

 Social Security: Federal system providing old age, survivor’s,

disability, and retirement benefits based on earnings.

 Pension Plans:

 Defined-Benefit Plans: Fixed payouts based on age and service.

 Defined-Contribution Plans: Payouts depend on the

performance of contributions over time.

 Cash Balance Plans: Hybrid plans with hypothetical account

balances.

 Key Terms:

 Vesting: Employees' right to pension benefits.

 Portability: Ability to transfer pension benefits between

employers.

3. Health Benefits:

 Co-Payment: Employee shares part of insurance costs.

 Managed Care:

 HMOs and PPOs: Prepaid plans offering comprehensive medical

services.

 Legislation:

 COBRA: Continued coverage after employment ends.

  HIPAA: Protects employees switching jobs from losing coverage

due to pre-existing conditions.

4. Other Benefits:

 Relocation expenses, life insurance, disability coverage, educational

assistance, recreational perks, family care benefits, and stock

investments.

Time-Off Benefits

Includes various paid and unpaid leave options:

 Paid Leave: Holidays, vacation, jury duty, military leave, and funerals.

 Family Medical Leave Act (FMLA):

 Provides up to 12 weeks of unpaid leave for eligible employees.

 Guarantees job security and health benefits during leave.

Benefits Administration

1. Communication Tools:

 Annual benefit statements that translate benefits into monetary value.

 Online systems (HRIS) for real-time benefits information.

2. Flexible Benefit Plans:

  Employees can customize their benefits package based on personal

needs.

 Flexible Spending Accounts (FSAs) allow pre-tax contributions for

additional benefits.

Challenges in Benefits Management

1. Cost Management:

o Rising healthcare expenses.

o Balancing comprehensive coverage with financial feasibility.

2. Employee Awareness:

o Ensuring employees understand the value of their benefits.

3. Adverse Selection:

o Higher-risk employees may disproportionately use specific

benefits.

This comprehensive approach ensures a balanced and strategic perspective

on managing employee benefits, addressing both organizational goals and

employee satisfaction. Let me know if you'd like a more tailored explanation

for any specific section!