553EyematrixiStockThinkstockJob Analysis and Job.docx

55
3
Eyematrix/iStock/Thinkstock
Job Analysis and Job Design
Learning Outcomes
After reading this chapter, you should be able to do the
following:
• Conduct a quality job analysis.
• Write job descriptions and job specifications that can be
conducive to effective recruitment, selection,
training, performance appraisals, and compensation design and
implementation.
• Design jobs that can enhance employee motivation, morale,
productivity, and retention.
• Link job analysis and job design to the strategic HRM process.
• Discuss emerging trends, opportunities, and challenges in job
analysis and job design.
mor82551_03_c03_055-082.indd 55 11/19/15 12:37 PM
© 2015 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.

Introduction
Introduction
In Chapter 2, you had the opportunity to learn about strategic
HR planning and the impor-
tance of analyzing an organization’s external and internal
environments. This analysis makes
it possible to set and achieve HR goals and objectives that are
relevant, aligned to those of the
organization, and therefore conducive to its success and
effectiveness. However, those plans
should be translated into specific tasks to be performed before
HR can implement its strategic
plans through recruitment, selection, compensation, training,
and performance management.
These tasks can then be grouped into jobs for which people can
be recruited, selected, and
trained.
Job analysis and job design are critical for the success of
subsequent HRM stages. In job design,
HR managers identify organizational goals and objectives and
translate them into relevant
tasks and responsibilities, which are then grouped into roles and
job positions. These job
positions are subsequently integrated into departments or
business units to create the orga-
nizational structure, which becomes the vehicle or system
through which the organization
operates. This system helps the organization achieve its
strategic, tactical, and operational
goals and objectives.
HR managers need to establish a formal and powerful data

gathering system both to collect
information about different jobs and to utilize the gathered
information in creating job
descriptions and specifications. This system makes it possible to
effectively design and struc-
ture jobs, departments, business units, and the organization as a
whole. These are the
processes involved in job analysis, which is discussed in the
next section. Figure 3.1 summa-
rizes job analysis and job design as components of the strategic
HRM process and provides a
framework for this chapter.
Opening Case Study
When and Why Should Teamwork Be Part of the Job?
Access the following links:
http://www.youtube.com/watch?v=U-iyBsaehn8
http://www.blueangels.navy.mil/team/
http://www.forbes.com/sites/quora/2013/01/23
/why-and-where-is-teamwork-important/
http://www.forbes.com/sites/hbsworkingknowledge/2012/12/28
/why-leaders-need-to-rethink-teamwork/
Work teams have become the norm in many organizations.
However, as you probably realized
from the above resources, not everyone is cut out for teamwork,
and not all jobs lend them-
selves to collaboration. In order to determine whether a job is
more effectively performed indi-
vidually or in a team, it is necessary to perform a thorough job
analysis. Jobs to be performed

in teams should then be designed as such, and the employees
who fill these jobs should be
selected, trained, evaluated, and rewarded accordingly.
mor82551_03_c03_055-082.indd 56 11/19/15 12:37 PM
http://www.youtube.com/watch?v=U-iyBsaehn8
http://www.blueangels.navy.mil/team/
http://www.forbes.com/sites/quora/2013/01/23/why-and-where-
is-teamwork-important/
http://www.forbes.com/sites/quora/2013/01/23/why-and-where-
is-teamwork-important/
http://www.forbes.com/sites/hbsworkingknowledge/2012/12/28/
why-leaders-need-to-rethink-teamwork/
http://www.forbes.com/sites/hbsworkingknowledge/2012/12/28/
why-leaders-need-to-rethink-teamwork/
Job
specifications
Designing
job
dimensions
Data
analysis
Job
descriptions
Data

collection
Strategic HR
planning
Job
analysis
and job
design
Attraction and
recruitment of
talent
Selection and
job fit
Performance
appraisal/
management
Training and
development
Compensation
Benefits and
benefit
administration
Section 3.1 Job Analysis
3.1 Job Analysis

Job analysis can be defined as the methodology through which
HR collects and evaluates
information pertaining to a particular job’s content and human
requirements. Job analysis
is considered to be at the heart of all human resource practices,
thus making it critically
Figure 3.1: Job analysis and job design
Job
specifications
Designing
job
dimensions
Data
analysis
Job
descriptions
Data
collection
Strategic HR
planning
Job
analysis
and job
design
Attraction and
recruitment of

talent
Selection and
job fit
Performance
appraisal/
management
Training and
development
Compensation
Benefits and
benefit
administration
mor82551_03_c03_055-082.indd 57 11/19/15 12:37 PM
important to all management activities (Singh, 2008). Although
not a law, but clearly identi-
fied by the courts as a source of standards, the Uniform
Guidelines on Employee Selection
Procedures of 1978 clearly state that legal justification of any
employee selection procedure

should be grounded in a thorough job analysis. Toward this end,
Professor of Psychology
Robert J. Harvey (1991) established guidelines for conducting a
job analysis that have stood
the test of time. First, job analysis should have as a goal the
description of observable work
behaviors. Second, job analysis should involve the description
of work behaviors independent
of the personal characteristics or attributes of the employees
who perform the job. Third, and
of critical importance, job analysis data must be verifiable and
replicable.
Job analysis serves many purposes. Its main purpose is to create
a standard or a benchmark
that can be used in various HR activities, such as:
• Job planning
• Recruiting
• Compensation and performance evaluation
• Assessing human capabilities
• Determining disciplinary decisions in case of employee
misconduct (Minton-
Eversole, 2006)
Job analysis also provides a clear understanding of the duties,
skills, and capabilities neces-
sary to deliver the desired job outcomes. This understanding is
important for matching the
right people to jobs and enhancing organizational performance.
Job analysis is also extremely
important in making it possible to recognize job aspects related
to health and safety, potential
personnel injury, and other relevant physical job demands
(Keyserling, Ulin, Lincoln, & Baker,

2003). Furthermore, job analysis enhances employee interaction
and labor relations, which
can eliminate many personnel challenges.
The passage of the Americans with Disabilities Act (ADA) in
1990 elevated the importance
of job analysis. ADA mandates that an individual who would be
otherwise qualified except
for some impediment hindering job performance cannot be
excluded from employment con-
sideration if the individual can perform the “essential functions
of the job”, with or without
reasonable accommodations. A function is considered
“essential” if the position exists to per-
form the function, there are a limited number of other
employees available to perform the
function, and the person is hired for special expertise or ability
to perform the function.
As an example, in one case a deaf employee was considered
qualified for a customer service
job where the majority of customers were online, with only
occasional instances of custom-
ers calling for help. In this case, the deaf employee was
considered capable of performing the
essential functions of the job, which primarily involved
responding to customers’ online inqui-
ries. Answering customers’ phone calls was considered a
marginal job function because it only
occurred occasionally, there were many other customer service
employees who could perform
that function, and there was never a designated customer service
position with this function as
its primary or essential role. Shifting the workload of answering
the occasional calls to other
employees would not have caused any major disruption to the

workflow, and this minor accom-
modation would have rendered the disabled employee otherwise
qualified to perform the job.
As a result of ADA, managers began writing job descriptions
and job specifications that
focused on delineation of essential functions in hopes of
reducing the risk of being found
mor82551_03_c03_055-082.indd 58 11/19/15 12:37 PM
in violation of the act. Unfortunately, the
act gives little guidance regarding how
to go about justifying what is defined
as an essential. While the ADA does not
require a job analysis to determine such
essential functions, it quickly became
apparent that essential functions could
not be determined without conducting
a job analysis (Brannick, Brannick, &
Levine, 1997). Thus, evidence of a thor-
ough job analysis is now recognized as
a potential legal justification for hir-
ing decisions that might be challenged
under ADA.
Job analysis is critical to the successful
completion of tasks and responsibilities
and, ultimately, to the success of the entire organization. HR

managers, as well as executives
and line managers, must therefore actively work hand in hand to
ensure that job analysis is
performed successfully. In most large organizations, HR carries
out the roles of job analy-
sis—creating, periodically reviewing, and updating job
descriptions and job specifications
based on internal feedback from executives and line managers.
HR also performs external
benchmarking and additional research on comparable jobs in
other organizations, even seek-
ing expertise from specialized organizations, if necessary.
Executives and line managers then
review the outcomes of the job analysis process, especially the
job descriptions and job spec-
ifications created by HR, validating their accuracy and
providing further feedback. Several
iterations of the process may ensue until the most accurate job
descriptions and job specifica-
tions are formulated.
Types of Job Analysis
There are two overarching classifications of job analysis:
deductive and inductive. The deduc-
tive perspective emphasizes the use of existing taxonomies of
job information to arrive at
rational decisions about a focal job (Peterson & Jeanneret,
1997). One or more duties per-
formed by a given individual in a given position are grouped
with positions that are similar in
their significant duties into a job grouping. Jobs that either call
for similar worker character-
istics or contain parallel work tasks are grouped into a job
family. Similar jobs found in differ-
ent organizations at different times are grouped into
occupations (Cascio & Aguinis, 2011).

A deductive approach is appropriate when a large-scale
employee selection or promotion
system is being designed for a variety of jobs (Peterson &
Jeanneret, 1997).
The Occupational Information Network (O*NET), an online
database developed by the U.S.
Department of Labor, is one example of a deductive approach to
job analysis. The O*NET
contains meaningful and reliable job information for a vast
array of jobs (Jeanneret & Strong,
2003). It focuses on job information that is applicable across
occupations rather than on
occupationally specific information (Sackett & Laczo, 2003).
Further, O*NET also contains
numerous links to information associated with the workplace
(“O*NET,” 2011). Reference
to the information within O*NET enables appropriate
identification and classification of a
focal job.
M. Eric Honeycutt/iStock/Thinkstock
Job analysis includes evaluating the criteria,
including physical requirements, that are
necessary to perform a job.
mor82551_03_c03_055-082.indd 59 11/19/15 12:37 PM

In contrast, an inductive approach to job analysis emphasizes
the collection of new and detailed
information about a focal job in order to create a coherent
description. Inductive approaches
begin by gathering detailed information about a job in terms of
what workers do and what they
need to know to perform their jobs. The data are then organized
into categories, and a higher
order structure is inferred, thus leading to a list of job tasks and
other information that constitute
an inventory of the job (Williams & Crafts, 1997). This
approach is most appropriate when a single
job or a small set of highly similar jobs constitute the focal
point (Peterson & Jeanneret, 1997).
Within the inductive perspective, there are two distinct types of
job analysis. The first approach
is task-based job analysis. This approach mostly focuses on the
duties and responsibilities
that a job includes. The second approach is competency-based
job analysis. It emphasizes
the qualities and requirements needed to carry out a job
effectively.
The task-based job approach is used more widely. It relies on
defining and clearly establish-
ing all the tasks, duties, and responsibilities associated with the
performance of a job. Several
terms that are utilized in the task-based job approach are worth
highlighting:
• A task is any particular job activity that comprises actions,
motions, or movements.
• A duty reflects a broader set of activities, composed of
multiple tasks that an indi-

vidual carries out.
• Responsibility is an individual’s commitment to execute
particular tasks and duties
relevant to his or her job.
However, it is often difficult to separate tasks, duties, and
responsibilities. Task-based job
analyses can vary widely in their complexity and detail. For
example, the California State Per-
sonnel Board offers elaborate guidelines for conducting job
analyses. In the first Web link
below, a sample is provided for a “staff services analyst”
position. As you can see, multiple
approaches and data sources are utilized to yield an accurate
and comprehensive perspec-
tive on what the job entails. These approaches and data sources
are discussed in more detail
throughout this chapter.
Also critical to job analysis is the analysis of a job’s health and
safety hazards. The Occupa-
tional Safety and Health Administration (OSHA) provides
detailed guidelines for analyzing
those hazards. The second link below gives you access to these
guidelines, which also include
examples of hazard analyses on pages 9 through 11. The
appendices also include a compre-
hensive list of common hazards and their descriptions, as well
as hazard control measures.
Web Links
California State Personnel Board:
Sample Job Analysis Report
http://spb.ca.gov/content/laws/selection_manual_appendixh.pdf

Occupational Safety and Health Administration:
Job Hazard Analysis Booklet
http://www.osha.gov/Publications/osha3071.pdf
mor82551_03_c03_055-082.indd 60 11/19/15 12:37 PM
http://spb.ca.gov/content/laws/selection_manual_appendixh.pdf
http://www.osha.gov/Publications/osha3071.pdf
In contrast to task-based job analyses, a competency-based job
analysis focuses on individ-
ual or team capabilities in terms of required skill sets, technical
expertise, and the extent
of knowledge that can be applied to improve performance. HR
uses competency-based job
analysis for three major reasons:
1. To communicate desirable values and create a favorable,
positive culture within the
organization
2. To motivate employees to raise their performance levels by
enhancing their
competencies
3. To highlight the need for individuals to continuously strive to
develop their capabili-
ties and skills in ways that translate into and are aligned with

giving the organization
a competitive edge in the market
Two types of competencies are observed in competency-based
analysis:
1. Technical competency focuses on specific technical
expertise, knowledge, special-
ization, and skills that an employee possesses and that
differentiate him or her from
others.
2. Behavioral competency includes such aspects of an individual
as personality
traits, interpersonal skills, and character dimensions. Some of
these human aspects
are the ability to work within a group, leadership and
managerial capabilities,
dispute resolution skills, multitasking capacity, decision-making
ability, communi-
cation skills, adaptability and responsiveness to change in the
work environment,
creativity and innovation, and the ability to identify and pursue
goals in a system-
atic manner.
A competency-based analysis also uses a myriad of tools that
facilitate disclosing other per-
sonal aspects that are critical for job performance, but not
obvious, such as work attitudes.
In most cases, choosing a particular job analysis approach is
directly related to the type of job
being analyzed and to potential trends and variations in the job.
For instance, a project-based
job will require unique technical and personal skill sets if teams

and tasks are constantly
changing. The capacity to adapt swiftly
to job changes will be more important
in this situation than in a traditional
job. As an example, the U.S. Office of
Personnel Management adopts both
task-based and competency-based job
analyses. The first link below provides
access to a handbook that describes the
U.S. Office of Personnel Management’s
elaborate job analysis process, along
with numerous examples of the tasks,
duties, responsibilities, and technical
and behavioral competencies of a wide
range of jobs. The other two links pro-
vide additional information, examples,
and forms that can be used to conduct
high-quality job analyses.
monkeybusinessimages/iStock/Thinkstock
Technical competency analysis focuses on
the specific expertise and skills an employee
possesses.
mor82551_03_c03_055-082.indd 61 11/19/15 12:37 PM
Data Sources for Job Analysis
Various sources of data can be used for the job analysis process,

such as:
• Existing documentation
• Observation
• Interviews
• Questionnaires
• Computerized systems
• U.S. Department of Labor (DOL) information
• Critical incidents
Frequently overlooked as a source of valuable data is existing
documentation. These mate-
rials include existing position descriptions, training guides,
self-paced instructional manuals,
and broad position descriptions available from O*NET. The
objective of reviewing written
material is to develop an understanding of the variety of tasks
involved in the job, the knowl-
edge, skills, abilities and other characteristics (KSAOs) that
may be required to perform the
variety of tasks, and how the task or KSAOs have been
organized into categories or hierar-
chies. It is useful to construct a preliminary task and KSAO list
before proceeding with other
data collection methods (Williams & Crafts, 1997).
The observation method requires observing a worker while he or
she is performing the job to
obtain firsthand knowledge about the job’s tasks and duties. The
observation method is more
beneficial for jobs that are observable, and repetitive and
inappropriate for jobs that require a
great deal of mental activity and concentration, or what has
recently been referred to as “knowl-
edge work”; nevertheless, it is always better to use a
combination of different methods.

There are two types of observation:
1. Work sampling is a quick analysis that helps managers
ascertain the tasks involved
in a job, as well as the time spent on each of them. This
statistical technique focuses
on specific activities, and numerous observations are made at
different times
throughout an entire work cycle.
2. The employee diary or log does not require any analyst
observation of the worker.
Instead, employees are asked to record all job related duties
they perform on the job.
Web Links
U.S. Office of Personnel Management Handbook
http://www.opm.gov/hiringtoolkit/docs/jobanalysis.pdf
State of Delaware: Job Analysis Questionnaire
https://view.officeapps.live.com/op/view.aspx?src=http%3A%2
F%2Fwww
.delawarepersonnel.com%2Fclass%2Fforms%2Fjaq%2Fjaq_ans
wersheet_form.doc
Department of the Navy: Overview of Job Analysis
http://cmc.ihmc.us/papers/cmc2004-093.pdf
mor82551_03_c03_055-082.indd 62 11/19/15 12:37 PM

http://www.opm.gov/hiringtoolkit/docs/jobanalysis.pdf
F%2Fwww.delawarepersonnel.com%2Fclass%2Fforms%2Fjaq%
2Fjaq_answersheet_form.doc
F%2Fwww.delawarepersonnel.com%2Fclass%2Fforms%2Fjaq%
2Fjaq_answersheet_form.doc
http://cmc.ihmc.us/papers/cmc2004-093.pdf
The drawback of this method is that an accurate log requires a
great deal of time and
effort, which divert workers’ efforts, and thus negatively affect
their performance.
The interview method gathers information by interviewing
workers, and sometimes their
supervisors. Interviews are an excellent source of information
since they provide a firsthand
account of the job from its incumbents or their managers.
Nevertheless, the downside of the
interview method is that interviews also require a great deal of
time, especially if the jobs
being analyzed are managerial or professional, and therefore
quite complex.
Interviews can also be conducted for groups of participants
called subject matter experts (SMEs),
who have extensive knowledge of a job. Examples of SMEs
include previous job holders, private
consultants, and customers/clients (Heneman III & Judge,
2009). SMEs can provide beneficial
input for job analysis, especially for highly technical jobs.
Group interviews, however, tend to be

even more time consuming. If not carefully designed and
managed, group interviews can also
result in inaccurate information if some SMEs are allowed to
dominate the conversation while
others are unable to adequately share their expertise regarding
the job in question.
The questionnaire method is another
technique to analyze jobs. Analysts
obtain information by preparing sur-
veys with questions on such areas as the
physical aspects of the jobs; its required
characteristics; the types of duties per-
formed and time spent on each; the
degree of supervision, whether given or
received; job responsibilities; decision
making; equipment used; and types of
people dealt with on the job.
The questionnaire method has strengths
and limitations. It does not require the
time and resources other methods do;
however, for it to yield accurate results,
employees must be able to analyze and
convey precise information about the
job. Many employees lack these abilities. People’s perceptions
and their analytical, communi-
cation, and writing skills vary widely. This variation can yield
significant discrepancies in the
quality of the information employees provide in response to a
questionnaire.
There are two kinds of questionnaires:
• The position analysis questionnaire (PAQ) records details
about a certain posi-

tion. It tends to be oriented more toward workers by
emphasizing the behavioral
characteristics a given position requires.
• In contrast, managerial job analysis questionnaires are
specialized for manage-
rial positions and focus on such areas as decision making and
leadership.
With the help of technology, it is now possible to have
computerized job analysis systems.
These computerized systems are similar to paper questionnaires,
except for their electronic,
shironosov/iStock/Thinkstock
Analysts may use the questionnaire method to
obtain information about jobs through the use of
surveys.
mor82551_03_c03_055-082.indd 63 11/19/15 12:37 PM
paperless nature. Each of the documents contains a set of
generalized duty statements so that
it can apply to a variety of jobs. The documents’ data is then
stored in a job analysis database
for the purpose of studying, analyzing, and conveying
significant information regarding jobs.
Needless to say, technology has made the process of job

analysis and writing job descriptions
easier and more efficient. However, as is the case with any
computerized system, the value
of computerized job analysis systems depends on the accuracy
and timeliness of the data
entered into them, as well as the effective utilization of that
data to create meaningful infor-
mation to facilitate decision making.
The U.S. Department of Labor (DOL) is another useful source
for job analysis. Functional
job analysis (FJA) is a tool available from the DOL and can be
seen as a methodology for
gathering information about jobs. The FJA was mainly
developed for the Dictionary of
Occupational Titles (DOT), another tool to classify jobs. The
FJA portrays what is done in
a job through three scales: data, people, and things. The DOL
also developed the database
O*Net OnLine, which replaced the DOT. It provides detailed
descriptions of jobs. O*Net
also contains numerous links to information associated with the
workplace (“O*NET,”
2011).
The critical incident approach involves the collection of a series
of anecdotes of job behav-
ior by asking SMEs to recall examples of particularly effective
or ineffective job behavior they
have observed. A critical incident analysis is composed of three
parts:
• a description of the setting in which the behavior occurred
(i.e., what led up to the
incident and the context in which it occurred),

• a description of the behavior itself (i.e., exactly what the
individual did), and
• a description of the positive or negative consequences that
occurred as a result of
the behavior (i.e., the perceived consequences) (Harvey, 1991),
and whether or not
such consequences were actually within the control of the
individual (Cascio &
Aguinis, 2011). These incidents are then categorized according
to the dimensions of
the job they represent, providing a composite picture of the
behavioral requirements
of the job.
As we can see, there are different methods for job analysis, each
with its own advantages
and disadvantages. It is therefore better and more effective to
use a combination of methods
rather than just one. However, for any method it is very
important that each step be docu-
mented thoroughly to provide continuity, inform future job
analysis cycles, and avoid legal
problems. The most important tangible “products” of the job
analysis cycles are job descrip-
tions and job specifications.
Job Descriptions
A job description identifies characteristics of the job to be
performed in terms of the tasks,
duties, and responsibilities to be fulfilled. Job descriptions
serve as a standard or a bench-
mark for many HR matters such as compensation, performance
evaluations, training needs
assessments, and promotions. HR must provide each newly
hired employee within the orga-

nization with a job description to highlight and stress the
organization’s expectations for him
or her. In return, employees are expected to fully abide by and
satisfy all the job requirements
stated in the job description, and sometimes even exceed them.
mor82551_03_c03_055-082.indd 64 11/19/15 12:37 PM
It is essential that an organization’s job descriptions be created
and maintained using a con-
sistent and systematic approach. This approach can facilitate
valid, reliable, and consistent
decisions pertaining to HR matters. It is also critical that job
descriptions undergo periodic
evaluation and careful revisions to ensure that they are up to
date and truly reflect the nature
of the job, especially in light of today’s continuously changing
business environment.
A job description has three main parts:
1. The identification section gives various introductory pieces
of information, including
job title, job department, chain of command and reporting, job
location, job number,
job grade, and the employee’s exempt or nonexempt status. It is
also important that
this section state any information that may assist HR in tracking
employees and jobs

through an HR database system.
2. The second main part of a job description is the general
summary. This section pro-
vides a clear, concise statement that summarizes the particular
job and differentiates
it from others. It is highly recommended that this section be
created after the suc-
cessful completion of all other sections of the job description so
that it can establish
a broader view of the job.
3. A detailed list should also be included of all important and
influential functions, tasks,
duties, assignments, commitments, and responsibilities
associated with the job.
Because this section requires a great amount of detail, HR often
spends the major-
ity of the job analysis process on this section. In addition,
poorly described jobs can
result in potential legal implications.
It is common for the last item on this detailed list to be “other
duties as required” or “additional
tasks as assigned by direct supervisor.” These open-ended
statements recognize the volatility
of the business environment, and they communicate the need for
flexibility and adaptability
in the employee’s being willing to do whatever it takes to get
the job done. These statements
also protect the organization from potential legal action should
additional tasks become nec-
essary to fulfill a role beyond the tasks yielded during job
analysis, until job descriptions can
be updated at a subsequent cycle to reflect those additional
tasks. Figure 3.2 shows a sample

job description for a grocery store manager.
Job Specifications
The terms job descriptions and job specifications are often used
to refer to the same thing—
probably because, as shown in Figure 3.2, they are often
combined into one document. How-
ever, job descriptions and job specifications are different. A job
description refers to the
details of the roles, duties, and responsibilities associated with
a certain job. In contrast, a job
specification describes the ideal person for the job. It is more
oriented towards the type and
level of knowledge, skills, abilities, and other characteristics
(KSAOs) required to perform the
job or relevant to its performance:
• Knowledge refers to an individual’s familiarity and experience
with the proce-
dural details of the job; this is a key element in performing the
job tasks and
responsibilities.
• Skill highlights, reflects, and ranks the individual’s degree or
ability to success-
fully perform the job. In other words, skill is a combination of
knowledge and
mor82551_03_c03_055-082.indd 65 11/19/15 12:37 PM
Groceries for Less

Job Description
Job Identification
Job title:
Job Grade:
Status:
Department:
Reports to:
Supervises::
Job Summary
Planning, organizing, leading, and controlling all store staff,
resources, and operations
to ensure efficiency, safety, and quality customer service
Tasks, Duties, and Responsibilities
• Supervises shift supervisors, customer service managers and
representatives, cashiers, cleaning crew, and other
personnel
• Performs inventory controls, including working closely with
suppliers and stocking
staff to ensure timely restocking and replacement of
perishables, and maintaining
physical controls to minimize spoilage and shrinkage
• Designs, coordinates, and communicates schedules on a
weekly basis to ensure
adequate staffing of all shifts
• Works with head office personnel to plan and implement
marketing strategies,
advertising campaigns, weekly sales, seasonal specials,

and other store functions
• Leads the process of staffing and training all store personnel
• Conducts annual performance reviews for all store personnel,
and makes salary
and promotion recommendations
• Investigates and resolves customer complaints brought to his
or her attention
• Enforces sanitary practices for food handling and general store
cleanliness
• Complies with all health and safety regulations
• Reports accurate and timely store-level financial statements
• Performs other duties as assigned by management
Job Specification
Minimum Qualifications
• Bachelor’s degree in Business Administration or related field
• Three years of managerial experience, preferably in retail
• Excellent communication, organization, leadership, time- and
conflict
management skills
• Ability to multitask, work independently, and operate under
pressure
Store Manager
5

Exempt
Operations
Operations Manager
Grades 6–8
experience that an individual acquires over time through
performing one job or a
similar job.
• Ability is more general than skill. It refers to an individual’s
general aptitudes and com-
petencies, rather than job-specific skills.
• Adding Other personal characteristics allows a broader range
of attributes to be
included in the picture of the job that emerges from the job
analysis (Sackett & Laczo,
2003). Such attributes might include motivation, personal
satisfaction, persistence, and
the ability to maintain focus on targets and goals.
Figure 3.2: Sample job description and job specification
Groceries for Less
Job Description
Job Identification
Job title:
Job Grade:
Status:
Department:
Reports to:
Supervises::

Job Summary
Planning, organizing, leading, and controlling all store staff,
resources, and operations
to ensure efficiency, safety, and quality customer service
Tasks, Duties, and Responsibilities
• Supervises shift supervisors, customer service managers and
representatives, cashiers, cleaning crew, and other
personnel
• Performs inventory controls, including working closely with
suppliers and stocking
staff to ensure timely restocking and replacement of
perishables, and maintaining
physical controls to minimize spoilage and shrinkage
• Designs, coordinates, and communicates schedules on a
weekly basis to ensure
adequate staffing of all shifts
• Works with head office personnel to plan and implement
marketing strategies,
advertising campaigns, weekly sales, seasonal specials,
and other store functions
• Leads the process of staffing and training all store personnel
• Conducts annual performance reviews for all store personnel,
and makes salary
and promotion recommendations
• Investigates and resolves customer complaints brought to his
or her attention

• Enforces sanitary practices for food handling and general store
cleanliness
• Complies with all health and safety regulations
• Reports accurate and timely store-level financial statements
• Performs other duties as assigned by management
Job Specification
Minimum Qualifications
• Bachelor’s degree in Business Administration or related field
• Three years of managerial experience, preferably in retail
• Excellent communication, organization, leadership, time- and
conflict
management skills
• Ability to multitask, work independently, and operate under
pressure
Store Manager
5
Exempt
Operations
Operations Manager
Grades 6–8
mor82551_03_c03_055-082.indd 66 11/19/15 12:37 PM

Section 3.2 Job Design
It is vital to carefully examine and con-
sider all aspects of KSAOs in formulating
job specifications. The required KSAOs
can be determined from individuals per-
forming the job, employees managing
the job or planning to execute the job, or
on-the-job trainers and mentors.
Managers involved in selecting an indi-
vidual for a particular job should pay
close attention to all elements of the
job specification to precisely determine
whether the characteristics of selected
individuals satisfy the job specification.
Just as with job descriptions, managers
must conduct regular updates and revi-
sions for job specifications to ensure their
ongoing validity and relevance to the job.
3.2 Job Design
Job analysis and job design are not the same processes. Job
analysis involves the identifica-
tion of a job’s duties and the skills a worker needs to carry them
out effectively. In contrast,
job design focuses on structuring jobs in a way that attracts
talent and enhances satisfac-
tion, both of which factors improve organizational efficiency
and effectiveness (Liu, Shah, &
Schroeder, 2006). Accordingly, the process of job design is
broadly concerned with organiza-
tional needs, but it considers employees’ needs at the same
time. Job design addresses four

main areas:
• The efficiency of the job
• Organizational reasons for the job
• Human capabilities
• Behavioral considerations (Garg & Rastogi, 2006)
The following sections address several approaches to job
design.
Hackman & Oldham’s Job Characteristics Model
The Hackman & Oldham (1976) job characteristics model
highlights the core dimensions of
a job that have a concurrent effect on both organizational
efficiency and employees’ job sat-
isfaction. Three psychological states must be in place to
enhance and improve a worker’s
performance, motivation and inspiration, and job satisfaction:
• Meaningfulness of work
• Responsibility for outcomes
• Knowledge of results
Image Source/Image Source/Superstock
Job specifications help HR managers find just the
right person for a job.
mor82551_03_c03_055-082.indd 67 11/19/15 12:37 PM

Hackman and Oldham also identified five job characteristics
that they believed to have a role
in driving those three essential psychological states. These five
job characteristics are:
• Skill variety
• Task identity
• Task significance
• Autonomy
• Feedback
Skill variety is the degree to which the job incumbent uses a
range of skills and talents. Task
identity is the degree to which the job allows the incumbent to
complete an identifiable work
product and see clearly tangible or perceivable outcomes. Task
significance refers to the extent
to which the effect and contribution of work can be seen.
Autonomy is the level of freedom and
independence a worker is given regarding work schedules and
the procedures used to complete
the job. Last but not least is feedback, or the extent to which a
worker is informed about his or
her performance (De Varo, Li, & Brookshire, 2007; Hackman &
Oldham, 1976).
According to Hackman and Oldham’s model, the more
prominently these five job character-
istics figure in a particular job, the more motivating and
satisfying the job will be, since it will
create and nurture the three desired psychological states. In
particular, the first three job char-
acteristics in Hackman and Oldham’s model (variety, identity,
and significance) cumulatively
influence the first psychological state (meaningfulness of

work). This influence allows these
three job characteristics to substitute for one another. For
example, a highly specialized job can
still be motivating and satisfying if it features high identity and
significance. On the other hand,
the fourth characteristic (autonomy) influences the second
psychological state (responsibility
for outcomes), while the fifth characteristic (feedback)
influences the third psychological state
(knowledge of results). Thus, lack of autonomy or feedback is
detrimental to a job.
Furthermore, the effect of the three psychological states is
multiplicative: deficiencies in one
state can be detrimental for the motivational potential of the
whole job because these states
cannot substitute for one another. For example, a highly
meaningful job is not motivating if
it provides no feedback to allow for knowledge of results, or if
it provides no autonomy to
facilitate perceptions of responsibility for outcomes. Hackman
and Oldham’s model can be
summarized in the following equation:
motivational potential score of a job
= (skill variety + task identity + task significance) ÷ 3
× autonomy
× feedback
Job Enlargement, Enrichment, and Rotation
In order to capture top talent, organizations must be able to
offer inspiring and satisfying
jobs. Job enlargement, enrichment, and rotation are some of the

applications that follow the
Hackman & Oldham model.
Job enlargement is the broadening of the types of tasks and
responsibilities performed on
the job; its purpose is to make a job more interesting and less
monotonous. One way to enlarge
mor82551_03_c03_055-082.indd 68 11/19/15 12:37 PM
jobs is through job rotation, or assigning employees to different
jobs to increase the variety
of activities performed. This rotation is intended to decrease the
amount of boredom and
make a job more interesting. Job enrichment differs from job
enlargement in increasing the
number of activities while also offering challenges of varying
difficulty levels— empowering
workers and making jobs more meaningful. Enrichment goes
hand in hand with Frederic
Herzberg’s two-factor theory that intrinsic factors, such as
recognition and responsibility,
directly influence employees’ job satisfaction (Herzberg,
Mausner, & Snyderman, 1993). Job
enrichment seems to have the most impact on flexible workers
who have the ability to adapt
to change (Bond, Flaxman, & Bunce, 2008).
Flexible Work Schedules

HR can motivate and satisfy employ-
ees through multiple other approaches
to job design—retaining employees
within the organization and increasing
their productivity, performance, and
efficiency. Flexible work schedules are
a prominent example of these design
approaches. Flexible work schedules can
be implemented through three methods:
1. Flextime is a scheduling system
that requires employees to work
during certain hours of the day.
The system leaves employees
free to choose their own activi-
ties during the remaining hours
of the day. This system gives employees the freedom to fulfill
personal duties and
responsibilities and pursue other personal or family interests,
which can reduce stress
and work-life conflict and increase employee satisfaction.
2. Job sharing, as the name implies, allows two or more
employees to perform the
same job, with all its associated duties and responsibilities, on a
part-time basis.
This system allows the organization to retain valuable
employees who have other
personal obligations outside of work that prevent them from
working full time. This
system is highly dependent on the personalities, attitudes,
skills, and work eth-
ics of the part-time employees. It requires proper cooperation
and coordination to
ensure that all the tasks, duties, and responsibilities are fully
covered and seamlessly

integrated. This system also requires excellent communication
skills between the
employees who share the job.
3. Telecommuting, also referred to as telework, allows
employees to work from
home or a location of their choice, rather than in a designated
office space. This
system offers great advantages for many types of employees
such as disabled
employees with special needs, employees responsible for elderly
family members,
or employees with children. In addition, telecommuting cuts
commuting time,
which boosts employees’ productivity and efficiency as a direct
result of mini-
mizing wasted time. Telecommuting also decreases overhead
costs such as office
expenses (Lister & Harnish, 2010). Most importantly, it gives
employees signifi-
cant amounts of independence and autonomy, which can be
motivating. However,
telecommuting can also have some disadvantages. For the
organization and the
Caia Images/Caia Images/Superstock
Telecommuting is a good option for employees
with young children at home.
mor82551_03_c03_055-082.indd 69 11/19/15 12:37 PM

supervisor, telecommuting makes it difficult to control what,
when, and how the
employee does the work. These difficulties can compromise
quality unless the
employee is well trained or has an excellent work ethic, or
unless other quality
control mechanisms are in place. For the employee,
telecommuting can signifi-
cantly reduce the frequency of social, professional, and even
personal interactions,
which can compromise the telecommuter’s psychological well-
being. Telecommut-
ing can also hinder communication, collaboration, and
teamwork. These draw-
backs may have motivated Yahoo CEO Marissa Mayer to ban
telecommuting, which
was a long-time, highly coveted benefit of working at Yahoo,
especially for working
mothers.
Team-Based Approaches to Job Design
The idea behind team-based approaches to job design is to
increase synergy—the collabora-
tion of two or more entities (individuals, groups, or
organizations)—resulting in bigger or
better outcomes than the combination of the entities’
independent efforts would yield. Team-
based approaches to job design can result in synergy due to
complementary skills among
group members. These approaches can also improve employee
dedication to and alignment
with organizational goals and objectives by promoting
cooperation in the workplace. In addi-

tion, employees become more accepting of decisions in team
settings (DuBrin, 2007). Fur-
thermore, teamwork provides three of the five job
characteristics identified by Hackman and
Oldham: task identity, autonomy, and skill variety. These facts
suggest that teamwork has a
significant effect on employee motivation and satisfaction, as
well as on organizational effi-
ciency and success. On the other hand, the quality of teamwork
also depends on the levels of
commitment, maturity, and work ethics of the team members;
the degree of complementarity
of their skills and abilities; and the nature of the tasks at hand.
Several team-based job design
approaches are now becoming common in the workplace:
• In self-managing work teams, members handle some of the
management issues
such as hiring members, making decisions, and scheduling
work. This process can
affect their productivity and job satisfaction through their
involvement in and direct
control over a variety of important roles. Therefore, it is very
important for organi-
zations to provide team members with the necessary training
that will help them
perform their duties in self-managing teams.
• In a virtual team, members communicate in a virtual
environment. Technology
makes it possible for geographically dispersed people to work
together toward a
common goal. Virtual teams and telecommuting are often used
in conjunction, and
they share some of the same advantages and disadvantages. For
example, virtual

teamwork gives employees added flexibility and autonomy.
However, team perfor-
mance and morale may be compromised if some team members
are not knowledge-
able, committed, and mature, or if no adequate performance
assessment and control
mechanisms are in place. Virtual interactions can also lack
some of the richness of
face-to-face interaction. Global virtual teams face some unique
challenges, such as
language and cultural barriers and time differences.
• In an employee involvement group (EI), employees meet to
discuss how to resolve
job-related problems. They also discuss ongoing job issues such
as improving
quality and production effectiveness (Ayers, 2007). These
suggestions are then
presented to management, which decides which suggestions and
proposals will be
implemented based on merit, cost, practicality, success
potential, and other strategic
mor82551_03_c03_055-082.indd 70 11/19/15 12:37 PM
criteria. Through EI groups,
employees get the opportunity
to be recognized for their con-
tributions towards achieving

organizational goals. However,
for employees to contribute
effectively, it is necessary that
they receive comprehensive
training in the areas of prob-
lem identification and analysis,
decision-making techniques,
and critical thinking. They must
also be technically knowledge-
able or well trained in their
areas of technical expertise.
A Moment in the Life of an HR Manager
This Is Not Part of My Job Description
Thorough job analyses and carefully designed jobs are
extremely important for optimal efficiency
and effectiveness, yet these formal and structured methods are
rarely the ultimate factors that
dictate what a job entails. The business environment changes
rapidly, causing many jobs to evolve
faster than can be captured by the job analysis process.
Moreover, managers ultimately determine
what, how, when, and by whom jobs get done. Employees’
strengths, weaknesses, and prefer-
ences can also have an impact on the allocation of tasks and
responsibilities within an organiza-
tion or a department—even across employees with the same job
title. The same facts apply to
teams. Roles often shift based on abilities, preferences, time
availability, organizational politics,
and who wants to work (or not work) with whom. Even job
specifications may not be useful,
because ultimately who gets hired for a job can be determined
through organizational politics,
the applicant’s presentation skills and ability to make a positive

impression, the pool of available
applicants, and the financial resources available to hire and
compensate the person who will take
the job. Therefore, since we live in an imperfect business world,
why should HR managers spend
time on job descriptions, job specifications, and all those time-
consuming job analysis and job
design activities? Consider the following three articles for
humorous but insightful perspectives.
Web Links
This Is Not in My Job Description (Lewis, 2009):
http://workawesome.com/career/
this-is-not-in-my-job-description/
That’s NOT in My Job Description (Gerdes, 2011):
http://blogs.wsj.com/juggle/2011/
05/09/thats-not-in-my-job-description/
When ‘It’s Not My Job’ Isn’t the Answer (Dacri, 2005):
http://www.dacri.com/Dacri_not_my_job_PPH.pdf
(continued)
Jupiterimages/Stockbyte/Thinkstock
Self-managing work teams take on some
management issues such as making decisions and
scheduling work.
mor82551_03_c03_055-082.indd 71 11/19/15 12:37 PM

http://workawesome.com/career/this-is-not-in-my-job-
description/
http://workawesome.com/career/this-is-not-in-my-job-
description/
http://blogs.wsj.com/juggle/2011/ 05/09/thats-not-in-my-job-
description/
http://blogs.wsj.com/juggle/2011/ 05/09/thats-not-in-my-job-
description/
http://www.dacri.com/Dacri_not_my_job_PPH.pdf
Section 3.3 Linking Job Analysis and Job Design to the HRM
Process
3.3 Linking Job Analysis and Job Design
to the HRM Process
As you know by now, strategic HRM emphasizes enhancing
organizational productivity and
helping organizations gain and sustain human-based competitive
advantages. These advan-
tages are realized by formulating steps toward the acquisition
and effective deployment of
human capital to achieve organizational goals. In Chapter 2, you
learned about HR planning,
which ensures that an organization has an adequate supply of
qualified labor to implement its
goals and plans. In this chapter, job analysis and job design are
the processes through which HR
planning is fleshed out into the specific tasks and
responsibilities necessary for individuals and
groups to contribute toward an organization’s planned goals.
Thus, job analysis and design are
crucial to organizational success, and the way these activities

are carried out is very important.
Through job analysis, organizations become better able to match
the right people to the right
jobs through developing a clearer understanding of what jobs
entail as well as what skills and
talents employees must have to perform their duties effectively.
Job analysis also facilitates other
HRM processes, such as training and development,
compensation, and performance evaluation.
For example, the cycle of updating job descriptions and job
specifications can be used as a foun-
dation for training needs assessment. This assessment can
trigger training initiatives to better
equip current employees with new KSAOs that may have
become necessary to perform their
roles more effectively. Job specifications also provide the
means for direct comparisons across
jobs, in terms of the KSAOs required for compensation
purposes, so that the right talent can be
attracted and retained. Job descriptions also serve as the basis
for performance appraisals: they
communicate up front the expectations the employee will be
accountable for.
As discussed earlier, job design is critical for employee
satisfaction and motivation. Offering
attractive jobs that meet employees’ needs can help
organizations attract and retain top
A Moment in the Life of an HR Manager
This Is Not Part of My Job Description (continued)
Discussion Questions
1. Do you think that employers should require their employees
to go beyond their job

descriptions? Why? Why not?
2. Regardless of your answer to Question 1, why do you think
employers now expect
their employees to go above and beyond their immediate job
tasks, duties, and
responsibilities?
3. Based on these new expectations, what are some critical
KSAOs and competencies that
employees should now have in the workplace in order to become
more successful?
4. What are some ways that you can intentionally develop the
requisite KSAOs and com-
petencies that can enable you to meet these new expectations
and build a competitive
edge as an employee?
5. Optional: Share with the class the strangest or least expected
thing your manager ever
asked you to do. How did you handle the situation? What was
the outcome? What did
you learn? Also give feedback and insights to your classmates
on how you would have
taken a different approach to the situations they faced.
mor82551_03_c03_055-082.indd 72 11/19/15 12:38 PM
Section 3.3 Linking Job Analysis and Job Design to the HRM

Process
talent. When aligned with organizational goals through careful
HR planning and job analysis,
job design can be leveraged to satisfy organizational needs as
well as employees’ needs. For
example, highly knowledgeable and mature employees can be
motivated through added
autonomy and leadership responsibilities, which can satisfy
their needs for growth and self-
actualization. On the other hand, less experienced employees
can be offered more task variety
while they are trained, developed, and mentored by more
experienced employees.
Eye on the Goal
The Strategic Value of Designing Engaging Jobs
Research by Gallup, a well-known polling and business
consulting organization, shows that it
is extremely important to design jobs that are motivating,
satisfying, and engaging to employ-
ees, and that can yield significant positive organizational
outcomes. For example, a meta-
analytical study of 7,939 business units in 36 companies
examined the relationship between
employee satisfaction and engagement at the business unit level
and the organizational out-
comes of customer satisfaction, productivity, profit, employee
turnover, and accidents. The
study found those relationships to be statistically significant
and of substantial business and
practical value (Harter, Schmidt, & Hayes, 2002).
Gallup’s definition of employee engagement is unique. It is
based on 12 factors that can be

incorporated in the design of the various jobs and roles in the
organization, as well as the
selection process of the right individuals to fill these jobs and
roles. Engaged employees:
• Know what is expected of them
• Have the materials and equipment they need to do their jobs
right
• Have the opportunity to do what they do best every day
• Receive recognition or praise for doing good work on a
regular basis
• Feel that their supervisors or someone at work cares about
them personally
• Have someone at work who encourages their development
• Believe that their opinions count
• Feel that their job is important based on the mission or
purpose of their organization
• View their associates or fellow employees as committed to
doing quality work
• Have a best friend at work
• Remember that someone at work talked to them about their
progress in the last six
months
• Had opportunities at work to learn and grow in the last year
(Wagner & Harter, 2006)
Engagement can be developed in the workplace by ensuring that
jobs are designed to be rich
in these 12 factors. Gallup also uses a strengths-based approach
to selection and placement.
Employees are matched to jobs based on a combination of their
top five strengths as mea-
sured by the Gallup StrengthsFinder, a test that applicants must
take and that is now avail-
able online through a passcode provided in most Gallup

publications. This test measures
34 strengths that Gallup has found to be stable, or “hard-wired,”
personality traits or talents.
Developing employees in their areas of strengths has been found
more effective than trying
to fix their weaknesses or teach them new strengths. Therefore,
when Gallup is hired to help
an organization select the best talent, the available jobs are
analyzed based on the talents
and strengths needed to excel in each job. Current star
performers in each job are assessed
using the StrengthsFinder tool, and their combinations of
strengths become Gallup’s “gold
standard” against which applicants are compared. Selection is
then based on that strengths-
based approach to job analysis. When those employees are
matched with highly engaging jobs,
the outcomes are positive for both the organization and the
employees (Rath, 2007).
mor82551_03_c03_055-082.indd 73 11/19/15 12:38 PM
Section 3.4 Opportunities, Challenges, and Recent
Developments in Job Analysis and Job Design
3.4 Opportunities, Challenges, and Recent Developments
in Job Analysis and Job Design
Job analysis and job design can be challenging. Legal, health,
and safety aspects have to be
considered, as well as the changing demographics of the

workforce and other pertinent char-
acteristics of the competitive landscape. However, when
conducted strategically and imple-
mented effectively, job analysis and job design can lead to a
unique source of human-based
competitive advantage for the organization.
Legal Aspects of Job Analysis and Job Design: Essential Job
Functions, ADA, and FLSA
One of the most important legal uses of job analysis and job
design is to ensure that general
HR decisions are based on business necessity and that qualified
individuals are not excluded
for discriminatory reasons. A case in point is the Americans
with Disabilities Act (ADA)
of 1990. ADA applies to employers with 15 or more employees;
in hiring practices, testing,
firing, promotion, job training, or wages, the act prohibits
discrimination against a qualified
individual with a disability. ADA requires employers to provide
a reasonable accommodation
if a person with a disability needs this accommodation to apply
for or perform a job.
As discussed earlier, ADA classifies job functions into two
categories:
• Essential job functions are all basic, recurring job duties and
responsibilities.
• Marginal job functions are duties that are only supplementary
or supportive
to the job.
HR managers must identify, segregate, and clearly explain the
differences between these two

functions in job descriptions and job specifications.
Classification of essential and marginal job functions is based
on three considerations:
• The amount of time required to perform the task
• The task’s frequency
• The task’s significance, compared to other tasks
For instance, a task that is performed more often than others on
a job obviously carries more
weight and is deemed more essential than those other tasks.
Similarly, a task that is performed
on a continuous or daily basis is more essential than another
task carried out on a monthly or
occasional basis, or a task that is only a support function rather
than a core function of the job.
Finally, a task may be easily transferred, taught, or performed
by more than one person. This
task is then considered a marginal job function when it is
compared to a unique task that can
only be accomplished by a limited number of employees who
have specific experiences or tal-
ents. Careful job analysis and job design can yield accurate and
fair HRM processes by helping
HR managers and other managers differentiate essential from
marginal job functions. This
differentiation can become the basis for subsequent selection,
compensation, performance
evaluation, and training decisions.
The Fair Labor Standards Act (FLSA) should also be considered
in job analysis and job design.
FLSA distinguishes between exempt and nonexempt employees
based on the nature of their
work. For instance, FLSA states that in order to be exempt from

overtime pay, an employee’s
mor82551_03_c03_055-082.indd 74 11/19/15 12:38 PM
primary duties must be geared towards
executive and administrative tasks rather
than manual or routine activities. Thus,
job analysis and job design have a direct
bearing on employees’ proper classifica-
tion and compensation.
ADA, FLSA, and several other equal
employment opportunity laws discussed
in this textbook have made HR more aware
of the necessity of attaching job require-
ments to particular job factors. This prac-
tice enables organizations to defend their
actions as being business necessities
rather than discriminatory practices. HR
has the responsibility to determine and
analyze all the tasks, duties, and respon-
sibilities associated with each job, and to
properly document all the steps and procedures pertaining to it.
Diligently conducting job anal-
yses, maintaining revised and updated job descriptions and job
specifications, and effectively
designing compliant jobs can protect an organization from legal
action and maintain its reputa-

tion as a fair employer.
Health and Safety Concerns and the Implications of Job Design
Workplace health and safety provide another example of the
legal implications of job analysis
and job design. Legal compliance with health and safety
regulations can be more effectively
achieved if relevant regulations are identified when job
descriptions and specifications are
formulated and when jobs and work environments are designed.
People are an organization’s most valuable asset. Their health,
safety, and well-being are
vital to organizational success, which goes beyond legal
compliance. Ergonomics is the
entire branch of science dedicated to physical well-being. The
purpose of ergonomics is to
design jobs and work conditions that match the capabilities of
the working population—
avoiding or reducing physical fatigue, injury risks, and health
complaints (Sonnentag &
Zijlstra, 2006).
However, not all complaints are physical; mental and
psychological well-being are also impor-
tant. To reduce errors and accidents at work, it is equally
important to design jobs that take
mental capabilities and limitations into account. This
consideration is vital and particularly
beneficial in jobs that are exceptionally challenging, or where
there is a serious cost of error.
For example, employee burnout can be prevented and employee
well-being can be enhanced
when the demands of the job are balanced with the resources,
autonomy, and control an
employee is given (Bakker & Demerouti, 2006).

Emotional well-being is another health concern. The business
world today is oriented toward
service. Many groups of employees, such as those in customer
service, entertainment, and
others, are required to express emotions that they do not
necessarily feel. For example,
telemarketers are often required to use a memorized script to
talk to customers instead
of freely expressing their emotions. Customer service
representatives are expected to be
Jupiterimages/Stockbyte/Thinkstock
Adjusting workspace to allow for a wheelchair is
an example of a reasonable accommodation an
employer may provide.
mor82551_03_c03_055-082.indd 75 11/19/15 12:38 PM
pleasant—even to rude customers. Collections agents are
expected to be assertive with non-
paying customers who might be facing serious financial
difficulties that warrant compassion
and understanding. Similarly, doctors and nurses are expected
to remain dispassionate and
objective, even under the emotional strain of the death or
terminal illnesses of their patients

and the grief of family members. These expectations are of
emotional expression that do not
match how an employee truly feels, and they can take a toll on
employee health and well-
being, and ultimately on the well-being of the organization
(Morris & Feldman, 1996, 1997).
Designing jobs that meet high physical, mental, psychological,
and emotional standards can
contribute to enhanced employee productivity and job
satisfaction. This design can also ulti-
mately enhance organizational success and competitiveness as
organizations strive to achieve
their goals by leveraging healthy employees and safe practices.
Implications of Demographics, Diversity,
and Globalization for Job Design
Globalization makes it easy for organizations to transport jobs
to other countries. This raises
an important question, however, about how jobs are designed in
developing countries and
transitional economies (Fay & Frese, 2000). Moreover, job
design represents a challenge for
multinational organizations due to a myriad of factors—
including the differences in working
hours, holidays, religious practices, and management styles.
These factors greatly affect how
jobs are designed. A variety of negative consequences can
follow a disregard of cultural differ-
ences, social expectations, and other needs for local adaptation
of job design and other HRM
processes. These consequences include job dissatisfaction, low
motivation, inadequate work
quality, social dissent, and compromising the organization’s
reputation in foreign markets
and even in the United States. For example, consider the video

in the following Web link.
Web Link
Sweatshops
http://www.bing.com/videos/search?q=20+20+sweatshops&FOR
M=VIRE1#view=detail&
mid=889BC8FA28E854879467889BC8FA28E854879467
Discussion Questions
1. What are some of the differences between job design in the
developed economies and
the developing or transitional economies?
2. Are the protesters’ concerns valid? Why? Why not?
3. If you were making outsourcing and job design decisions
abroad in a multinational
organization, how would you have handled the processes
differently?
4. Make a list of the job characteristics and HRM processes that
you would keep the same
across global operations. Explain your rationale.
5. Make a list of the job characteristics and HRM processes that
you would adapt to local
economic, political, and sociocultural conditions. Explain your
rationale for adaptation,
and suggest some specific changes you would implement to
ensure a better fit with
local conditions.
mor82551_03_c03_055-082.indd 76 11/19/15 12:38 PM

M=VIRE1#view=detail&mid=889BC8FA28E854879467889BC8
FA28E854879467
M=VIRE1#view=detail&mid=889BC8FA28E854879467889BC8
FA28E854879467
Both nationally and internationally, job design can be directly
influenced by demographic,
social, and cultural trends. Newer generations have made strides
in areas such as networking
and communication, which caused their job expectations to
escalate as well. Moreover, work-
ers’ attitudes toward work have changed. However, to benefit
from diversity, organizations
need to consider employees’ needs and meet their expectations
so that there can be mutual
exchange and alignment between organizational and employee
goals.
Alternative Work Arrangements
Alternative work arrangements are another recent development
that HR managers can use to
retain their employees and keep them motivated and productive.
HR managers can choose
from many alternative work arrangement techniques. As
discussed earlier, alternative work
methods include flextime, job sharing, and telecommuting.
Compressed workweeks are also becoming increas-

ingly popular. In the compressed workweek system,
an employee may work more hours than usual for one
day so long as he or she stays within the total number
of working hours allowed over the entire week. This
arrangement allows employees to receive an extra day
off every week or every other week, depending on the
extra daily hours worked. This system is favored by
many employees because it gives them the flexibility
to attend to personal matters, take longer weekends,
or simply avoid another day of commuting. It also
helps organizations mitigate some of the problems
caused by unscheduled or short-notice absenteeism
as employees fulfill personal needs and obligations.
Federal laws associated with overtime, such as FLSA,
represent the primary challenge that this system
poses for HR managers. Extended working hours also
increase levels of stress and fatigue for managers and
employees, posing additional challenges (Breaugh &
Frye, 2007; Gurchiek, 2006).
Organizational Change, Job Redesign,
and the Psychological Contract
Change, advancement, and growth can be exciting, yet
organizational change can have an adverse impact on
employees. For this reason, HR should
assume the critical roles of facilitating and communicating the
transition to employees, ensur-
ing that the organization passes through a successful and
healthy transition, while valuable
employees remain satisfied and motivated.
Mergers, acquisitions, and downsizing are some examples of
organizational changes associ-
ated with the current volatility in the business environment and
the new psychological con-
tract. These actions often result in organizational restructuring.

The usual, dreaded effects of
David Sacks/Photodisc/Thinkstock
Compressed workweeks and other
flexible scheduling options offer
employees greater autonomy to
attend to matters at home.
mor82551_03_c03_055-082.indd 77 11/19/15 12:38 PM
such organizational changes are possible layoffs or increased
workloads for surviving employ-
ees, which can negatively impact employee satisfaction and
motivation (Freeman & Cameron,
1993). Effective job analysis and job design can help mitigate
some of these challenges.
Job redesign is the process through which organizations
reconstruct and reconfigure the
currently existing design of a particular job’s roles, duties, and
responsibilities. Job redesign
can become necessary for a variety of reasons, including
business growth, mergers, acqui-
sitions, downsizing, restructuring, or business process
reengineering. However, sometimes
the primary purpose of job redesign is to enhance the
motivational potential of the job. The

redesign can make the job more appealing, exciting, and
inspiring for employees—thereby
promoting employee satisfaction, performance, and retention.
The job redesign process can involve the following deliberate
steps if they are deemed neces-
sary or desirable:
1. Revise the current job content to highlight any mismatches
between the employee’s
profile and the job activities
2. Thoroughly analyze job-related information to determine the
main factors that hin-
der or discourage the employee from performing as anticipated
3. Implement or execute the job change by eliminating or
adding job duties and
responsibilities that would ultimately enhance employee
satisfaction
4. Revise the job description to reflect the actual duties and
responsibilities that the
employee is expected to perform
5. Add other factors to the redesigned job that further improve
employee satisfaction—
e.g., job rotation, enrichment, and enlargement
Job redesign has many advantages, including increasing
employee satisfaction, employee
performance, and the productivity index. Job redesign also
promotes a sense of belonging
within the organizational culture, which urges employees to
continue working for the organi-
zation, which in turn supports employee retention. Finally, job

redesign brings out the best in
employees through successfully matching them with their jobs.
Organizations design and implement many programs and
initiatives for redesigning in order
to improve cost, quality, and processes involved in producing a
product or providing a ser-
vice. One purpose of redesigning is business process
reengineering, which is the analy-
sis and redesign of workflows and business processes within an
organization; its purpose
is to achieve spectacular improvements in critical areas. The
importance of strategic HRM
to business process reengineering cannot be stressed enough;
the integration of both will
help organizations achieve continuous improvement, thereby
achieving a competitive edge
(James, 2002).
The psychological contract, introduced in Chapter 2, also has a
direct bearing on job analysis
and job design. This contract is a set of unwritten commitments
and promises that are estab-
lished between employers and their employees—mostly
highlighting mutual duties,
responsibilities, and expectations. The contract has been
changing over time, and new sets of
expectations have emerged. Employees’ expectations from their
organizations are now mostly
related to meaningful jobs; a fair pay system; adequate benefits;
flexibility and autonomy; and
opportunities for learning, development, and growth. Job
analysis and job design can directly
cater to those needs and expectations. On the other hand,
employers’ new expectations of

mor82551_03_c03_055-082.indd 78 11/19/15 12:38 PM
their employees are flexibility, adaptability to change, the
ability to work independently and
in self-managed teams, superior communication skills, and
willingness to build new KSAOs
and competencies on a regular basis.
The HR Manager’s Bookshelf
The New HR Analytics, by Jac Fitz-enz
http://www.amazon.com/The-New-Analytics-Predicting-
Investments/dp/0814416438
Jac Fitz-enz is a worldwide expert in the analysis and
measurement of human resources and
their influence on the organization’s “bottom line” (profitability
and competitive advantage).
He has authored many excellent books on these topics. This
book focuses on predicting the
financial value of HR investments through the use of
scientifically based analytics. The book
covers many HR topics beyond job analysis and design, which
makes it worth reading and
adding to your bookshelf. However, it is also one of the few
books that explicitly address job
analysis and design from a quantitative perspective, and
integrates them with other HR func-

tions to offer a strategic and evidence-based perspective of
HRM.
Best Companies to Work For
#7: Wegmans Food Markets
http://fortune.com/best-companies/wegmans-food-markets-7/
http://us.greatrated.com/wegmans-food-markets-inc
Wegmans stores across the nation are recognized for their
family-oriented culture. Respect
and caring for fellow employees and associates are established
norms of behavior, and have
become expected as part of any job at Wegmans. Wegmans
employees take pride in working
for this organization, which motivates them to stay and refer
their friends and relatives, even
across generations. This is unusual for a high-turnover industry
such as grocery retail.
Flexibility and responsiveness to employee needs are critical
components of job design at
Wegmans. Flexible work arrangements abound, including job
sharing, compressed work
weeks, and flexible scheduling in general, to accommodate
employees’ hectic life demands.
Attentiveness to employees’ need for work-life balance, along
with a culture of respect, caring,
and teamwork, creates a unique perspective to job design that
adds meaningfulness, even to
what would ordinarily be considered mundane or dead-end jobs.
At Wegmans, they are not,
because most promotions occur from within the organization,
and even without a promotion,

the sense of belonging is considered priceless for many
employees. Indeed, this culture has
been viewed as Wegmans’ primary competitive edge in a
merciless and impersonal industry
where low wages, poor working conditions, and price wars
prevail.
mor82551_03_c03_055-082.indd 79 11/19/15 12:38 PM
http://www.amazon.com/The-New-Analytics-Predicting-
Investments/dp/0814416438
http://fortune.com/best-companies/wegmans-food-markets-7/
http://us.greatrated.com/wegmans-food-markets-inc
Summary & Resources
Summary & Resources
Key Points
• Job analysis and job design are critical processes in HRM.
They provide the founda-
tion for effective recruitment, selection, training, performance
management, and
compensation.
• Job analysis information can be gathered through observation,
interviews, question-
naires, computerized systems, and government resources.
• Job analysis yields job descriptions, which identify the tasks,
duties, and responsi-

bilities to be fulfilled. Job analysis also yields job
specifications, which describe the
ideal person for the job in terms of the type and level of
knowledge, skills, and abili-
ties (KSAOs) that are required, necessary, or relevant to
perform the job.
• Quality job analysis and job design can yield meaningful,
motivating, and satisfying
jobs. They can also yield efficient and effective job
performance at the individual,
team, and organizational levels.
• Organizations are in a better position to realize a human-based
competitive
advantage when they base their job analysis and job design on
high-quality
strategic HR plans. Organizations also see this advantage when
they ensure that
their job analysis and job design are utilized to leverage the rest
of the strategic HRM
process.
Key Terms
Americans with Disabilities Act (ADA) A
federal law that requires employers of 15
or more employees to provide reasonable
accommodations for persons with disabilities
and that prohibits discrimination against a
qualified individual with a disability in hiring
practices, testing, firing, promotion, job train-
ing, or regarding wages.
autonomy The level of freedom and inde-
pendence a worker is given regarding work

schedules and the procedures used to com-
plete the job.
behavioral competency Personality traits,
interpersonal skills, and character dimen-
sions that an employee possesses and that
differentiate him or her from others.
businesses process reengineering The
analysis and redesign of workflows and
business processes within an organization
to reduce costs, enhance quality, or improve
other aspects of the processes involved in
producing a product or providing a service.
competency-based job analysis An
approach that identifies the individual or
team capabilities, qualities, skill sets, tech-
nical expertise, and knowledge needed to
effectively carry out a job.
computerized job analysis systems A job
analysis method similar to the paper question-
naire method, except that its surveys are in the
form of computer scannable documents.
critical incident approach The collection
of a series of anecdotes of job behavior by
asking subject matter experts (SMEs) to
recall examples of particularly effective or
ineffective job behavior they have observed.
essential job functions Basic, recurring job
duties and responsibilities.
existing documentation Materials includ-

ing existing position descriptions, training
guides, self-paced instructional manuals,
and broad position descriptions available
from O*NET.
mor82551_03_c03_055-082.indd 80 11/19/15 12:38 PM
Summary & Resources
Fair Labor Standards Act (FLSA): A law
that distinguishes between exempt and
nonexempt employees based on the nature
of their work.
feedback The extent to which a worker is
informed about his or her performance.
flextime A work scheduling system that
requires employees to work during certain
predefined hours of the day, leaving the
remaining hours of the day more or less
open for employees to fill as they please,
provided that they work the full day.
functional job analysis (FJA): A methodol-
ogy designed by the DOL to gather information
about jobs and create the Dictionary of Occupa-
tional Titles (DOT) job classification system.
interview method A job analysis method
that gathers information about a job through

interviews with workers, supervisors, and
subject matter experts.
job analysis The methodology or approach
through which HR collects and evaluates infor-
mation pertaining to the content and human
requirements related to a particular job.
job description A document that identifies
characteristics of the job to be performed in
terms of the tasks, duties, and responsibili-
ties an employee must fulfill.
job design Structuring jobs in a way that
attracts talent, enhances satisfaction, and
meets the needs of the employee and the
organization.
job enlargement Broadening the scope of
a job through widening the types of tasks
and responsibilities performed in it, for the
purpose of making the job more interesting
and less monotonous.
job enrichment Assigning employees more
challenging work to empower them and
make jobs more meaningful.
job redesign The process through which
organizations reconstruct and reconfigure
the currently existing design of a particular
job’s roles, duties, and responsibilities.
job rotation Assigning employees to differ-
ent jobs to increase the variety of activities
performed.

job sharing A work system that allows two
or more employees to perform the same job,
with all its associated duties and responsi-
bilities, on a part-time basis.
job specification A document that
describes the ideal person for the job
in terms of the type and level of knowl-
edge, skills, and abilities (KSAOs) that are
required, necessary, or relevant to the job
performance.
managerial job analysis questionnaire A
specialized questionnaire for managerial
positions that focuses on such areas as
decision-making and leadership.
marginal job functions Job duties that are
only supplementary or supportive to the job.
position analysis questionnaire A ques-
tionnaire used to record details about a
certain position. These questionnaires tend
to be oriented more toward workers by
emphasizing the behavioral characteristics a
given position requires.
observation method A job analysis method
that requires observing a worker while he
or she is performing the job; the method’s
purpose is to obtain first-hand knowledge of
the tasks and duties performed.
questionnaire method A job analysis
method that gathers information through

surveys that include questions about various
aspects of a job.
skill variety The degree to which the job
incumbent uses a range of skills and talents.
mor82551_03_c03_055-082.indd 81 11/19/15 12:38 PM
Summary & Resources
Critical Thinking Questions
1. What do you see as the advantages and disadvantages of
focusing on behavioral
competency-based job analysis?
2. Look at some job descriptions on O*Net. What would be the
advantages and dis-
advantages of an organizations relying on O*Net exclusively
when creating its job
descriptions?
3. Do you agree with the Hackman and Oldham motivational
potential score equation?
For example, if a job offers no autonomy or feedback, is the
motivation it imparts
automatically zero? If you disagree with the equation, what type
of equation would
you create?
4. A self-managed work team can provide a solution to many

managerial issues, but
also brings about a host of its own problems. What are the
positives and negatives
you see with utilizing self-managed work teams?
5. In Gallup’s twelve factors, how many of them cost an
organization little or noth-
ing? Why do you think many of these twelve factors aren’t
practiced by many
organizations/managers?
6. Conduct a job analysis for a job that you currently have or
that you have had in the
past. Then, based on what you have learned about job design,
redesign the job to
make it more motivating. Which aspects of this chapter have
you found most helpful
for this exercise?
task identity The degree to which the job
allows the incumbent to complete an identi-
fiable work product and see clearly tangible
or perceivable outcomes.
task significance The extent to which the
effect and contribution of work can be seen.
task-based job analysis An approach that
identifies the tasks, duties, and responsibili-
ties associated with performing a job.
technical competency Specific techni-
cal expertise, knowledge, specialization, or
skills that an employee possesses and that
differentiate him or her from others.

telecommuting A work system that allows
employees to work from home or a location
of their choice, rather than in a designated
office space.
mor82551_03_c03_055-082.indd 82 11/19/15 12:38 PM
Overview of Financial
Statements
2
©Ingram Publishing/Thinkstock
Learning Outcomes
By the end of this chapter, you will be able to:
• Describe the role of financial accounting in healthcare
organizations
• Discuss financial accounting principles
• Explain the information contained in a balance sheet
• Discuss the components of an income statement
• Identify the information contained in a statement of cash flows
• Explain the purpose of activity measures and community

benefit statements
smi81240_02_c02_025-058.indd 25 3/7/14 9:25 AM
26
Section 2.1The Role of Financial Accounting
Introduction
Chamberlin Skilled Nursing, Inc. is a 54-bed nursing home
providing skilled nursing care,
mostly to persons with Medicare coverage. Most residents
receive care for two to three weeks
after a hospitalization or other major medical event. With
Medicare as its major payer, Cham-
berlin is subject to the government’s annual process of payment
determination. More than
half of their expenses are associated with payroll and benefits
of its nursing staff. Substantial
revenues and expenses are also attributable to physical therapy,
occupational therapy, and
medications provided to recovering residents. To maintain even
a slim amount of profit, the
financial accountant at Chamberlin tracks the dollars coming in
and the dollars going out very
closely.
The process of tracking the dollars at Chamberlin Skilled
Nursing, and all organizations, is the
responsibility of financial accounting. Their formal reports are
financial statements, which
provide information on the current status of the organization
and its recent financial perfor-
mance. With a good understanding of the process that leads to

the preparation of financial
statements, and a good understanding of the content of the
statements, managers can use
the information to lead the organization. Financial statements
also permit persons outside of
the organization to understand its financial position and
performance and to make their own
assessments of the organization.
2.1 The Role of Financial Accounting
Financial accounting is responsible for recording and compiling
business and financial trans-
actions, assuring the accuracy of transactions, and preparing
reports of the results. To com-
prehensively record all transactions, financial accounting must
be involved in almost every
aspect of managing an organization. Its role is highly visible
when it is actively involved in the
recording of large transactions, such as the purchase of a new
building or medical equipment.
Financial accounting is less visible, but no less important, as it
passively captures each service
that is provided to patients through the billing system.
Cycle of Activity
Financial accounting follows a cycle of activity that continues
throughout the year. A view of
this cycle is presented in Figure 2.1. It all starts with a system
to record transactions. All orga-
nizations maintain a chart of accounts, or a listing of accounts
that they envision using to
record transactions. Organizations maintain a chart of accounts
as a means of standardizing
the classification of entries and permitting computerization of
accounting.

smi81240_02_c02_025-058.indd 26 3/7/14 9:25 AM
27
Figure 2.1: The accounting cycle
Prepare/Assess
Chart of Accounts
Document
Transaction
Prepare Financial
Statements/Close
Books
Journal Entry
Adjusting
Entries
Post to a
Ledger
Pre-Adjusted
Trial Balance
The Office of Statewide Health Planning and Development,
State of California (2012) provides
a sample chart of accounts for use by California hospitals, a
small portion of which is pre-

sented in Exhibit 2.1. In the complete version of this chart of
accounts, there are more than 200
accounts of assets, liabilities, and fund balances and nearly 600
accounts for revenues and
expenses. Beyond the general categories there are details for
specific purposes. For example,
under category 1001 “General Checking Accounts,” there might
be an account 1001.01 for a
checking account at Bank of America and an account 1001.02
for a checking account at Wells
Fargo. Thus, a full hospital chart of accounts can include
thousands of specific accounts.
Exhibit 2.1 A portion of a hospital chart of accounts
Assets
Current Assets
1000–1009 CASH
1001 General Checking Accounts
1002 Payroll Checking Accounts
1003 Other Checking Accounts
1004 Minor Expense Cash Funds
1005 Savings Accounts
1006 Certificates of Deposit
1007 Treasury Bills and Treasury Notes
1009 Other Cash Accounts
Source: Office of Statewide Health Planning and Development,
State of California (2012)
smi81240_02_c02_025-058.indd 27 3/7/14 9:25 AM
28

The active aspect of financial accounting starts with initial data
capture. Based upon formal
documents or substantial evidence that a financial transaction
has occurred, it is the role of
financial accounting to analyze and record the transaction in a
consistent manner. For routine
transactions, documentation may be standardized and already
prepared by the accounting
information system. Records of the number of hours worked by
nurses and other staff are
an example of routine transactions. For nonroutine transactions,
such as the purchase of a
new piece of equipment, the receipt and other documentation of
the purchase and installa-
tion may be required. Each transaction is analyzed to assure that
its inclusion in the financial
accounting system is appropriate and to determine which
accounts are involved.
The initial recording is called a journal entry—as accountants
often use the term journal to
reflect the transactions involving an account. Again, for many
routine transactions, documen-
tation may be presented and directly entered through the
information systems of the orga-
nization. Recording of the hours worked by a nurse may be
routinely performed by a clerk
who enters the hours into the information system. In larger
organizations, recording of hours
worked may require approval by a supervisor. The direct
payment of employees’ paychecks
into their bank accounts represents a routine transaction that
may be performed automati-
cally by the accounting information system. Nonroutine
transactions, such as the purchase of
a new piece of equipment, may be manually entered into the

accounting system, with refer-
ences to the equipment and the method of payment.
An important aspect of accounting practice is the double-entry
nature of recording trans-
actions. Every transaction involves two entries into the
accounting system, affecting one or
more journals or accounts. For example, a hospital might
redeem certificates of deposit at
a bank if it needs more funds in payroll checking accounts.
Thus, the transaction involves
decreasing the account of certificates of deposit and increasing
the payroll checking account
by the same amount. The general process of increasing and
decreasing amounts in accounts
is termed crediting and debiting, terminology that we will not
belabor in this textbook, but
which are commonly used in accounting practice.
After transactions have been initially recorded, they are also
recorded in a summary listing
of accounts. This second step of recording is termed posting to
a ledger. A ledger is a sum-
mary of the transactions for a particular account. In the case of
account 1001.01 for a check-
ing account at Bank of America, the ledger would provide a
listing of all deposits and checks
written on this account. All organizations maintain a general
ledger that includes all accounts.
Further, many organizations maintain subsidiary ledgers that
maintain the accounts of indi-
viduals and companies with which they conduct business.
Hospitals regularly maintain a sub-
sidiary ledger for every patient and insurance company. The
general ledger for amounts owed
by patients is termed the control account for all of the

individual patients’ accounts. With
the control account, the hospital knows at every point in time
how much it is owed from all
patients, without having to look at each individual patient.
Periodically, a preadjusted trial balance of all accounts is
prepared to assure that all
transactions have been properly reported. Since every
transaction involves two entries in
the accounting system, the preadjusted trial balance serves as a
check that the sum of all
increases and decreases are balanced. It is still possible that
errors were made in the entries
of particular accounts, but it provides some assurance that there
were not simple math errors
smi81240_02_c02_025-058.indd 28 3/7/14 9:25 AM
29
or failures to properly record transactions. For example, if
$10,000 were transferred from a
savings account to a checking account, the dollar amount of the
entries should be the same
for both accounts. If there was a $10 fee by the bank for this
transfer, and it was not recorded,
then the $10,000 decrease in the savings account would not
balance the $9,990 addition to
the checking account. The preadjusted trial balance permits
periodic checking of transac-
tions. With good information technology, the need for
preadjusted trial balances has been

reduced. Still, because entries can be done manually, there is
always the chance of an error.
Analyze This
If financial accounting made a journal entry of an increase in a
checking account without report-
ing on another account, what information would be missing
from the accounting system?
At the end of accounting periods (monthly, quarterly, or
annually), a series of adjusting entries
are recorded. Adjusting entries are required to acknowledge that
the values in a number of
meaningful accounts have changed, even when an explicit
transaction has not occurred at
the same time. For example, at the beginning of a year, an
organization may make a payment
for the purchase of property insurance. This purchase would be
recorded as a decrease in a
general checking account and an increase in a prepaid expense:
insurance account. As each
month passes, the value of the protection made available
through the insurance coverage is
recognized as an expense, and this recognition comes in the
form of an adjusting entry. Finan-
cial accounting is responsible for noting when transactions,
such as the purchase of insur-
ance, will involve future adjusting entries and for reporting
those adjusting entries.
Financial statements can be prepared after trial balances have
been verified as being correct
and all adjusting entries have been made. The key financial
statements include the balance
sheet, the income statement, and the statement of cash flows,
which will be detailed later in

this chapter. Each of these statements summarizes selected
accounts from the accounting sys-
tem. The balance sheet summarizes the amounts in asset,
liability, and net asset accounts. The
income statement summarizes the revenue and expense
accounts, as well as gains and losses
from changes in asset and liability accounts. The statement of
cash flows provides details on
the cash account from the balance sheet and highlights
transactions that yield changes in cash
balances associated with operating, investing, and financing
activities.
Finally, after the financial statements have been prepared,
organizations close the books,
meaning that they stop making changes to accounts for the time
period covered by the finan-
cial statements and make entries that mark the end of the time
period. The closing process
also involves preparation of a closing balance, which, like the
trial balance, provides some
assurance of no math errors. This closing balance then becomes
the opening balance for the
next time period. Before the first transactions are made in the
next period, there may be a
review of the chart of accounts and changes made if new
accounts are required or if unused
accounts can be deleted.
smi81240_02_c02_025-058.indd 29 3/7/14 9:25 AM
30

553EyematrixiStockThinkstockJob Analysis and Job.docx

553EyematrixiStockThinkstockJob Analysis and Job.docx

Recommended

Recommended

More Related Content

Similar to 553EyematrixiStockThinkstockJob Analysis and Job.docx

Similar to 553EyematrixiStockThinkstockJob Analysis and Job.docx (20)

More from alinainglis

More from alinainglis (20)

Recently uploaded

Recently uploaded (20)

553EyematrixiStockThinkstockJob Analysis and Job.docx