Bangladesh university of professionals by sohel rana

1. CHAPTER-1 Introduction to Human Resource Management
1. What is human resource management and why is it important?
L.L.Bean is an organization. An organization consists of people with formally assigned Roles
who work together to achieve the organizations goals.
A manager is the person responsible for accomplishing the organizations goals, who does so by
managing the efforts of the organizations people.
Most experts agree that managing involves five functions: planning, organizing, staffing,
leading, and controlling. In total, these functions represent the Management process. Some of
the specific activities involved in each function include:
* Planning. Establishing goals and standards; developing rules and procedures; developing plans
and forecasting.
* Organizing. Giving each subordinate a specific task; establishing departments; delegating
authority to subordinates; establishing channels of authority and communication; coordinating
subordinates work.
* Staffing. Determining what type of people you should hire; recruiting prospective employees;
selecting employees; training and developing employees; setting performance standards;
evaluating performance; counseling employees; compensating employees.
* Leading. Getting others to get the job done; maintaining morale; motivating subordinates.
* Controlling. Setting standards such as sales quotas, quality standards, or production levels;
checking to see how actual performance compares with these standards; taking corrective action,
as needed.
Human resource management is the process of acquiring, training, appraising, and
compensating employees, and of attending to their labor relations, health and safety, and fairness
concerns. The topics we ll discuss should therefore provide you with the concepts and techniques
you need to perform the people or personnel aspects of your management job. These include:
* Conducting job analyses (determining the nature of each employee s job)
* Planning labor needs and recruiting job candidates
* Selecting job candidates
* Orienting and training new employees
* Managing wages and salaries (compensating employees)
* Providing incentives and benefits
* Appraising performance
* Communicating (interviewing, counseling, disciplining)
* Training and developing managers
* Building employee commitment.

2. 2. Why Is Human Resource Management Important to All Managers?
These concepts and techniques important to all managers for several reasons.
AVOID PERSONNEL MISTAKES First, having a command of this knowledge will help you
avoid the sorts of personnel mistakes you don t want to make while managing. For example, no
manager wants to:
* Hire the wrong person for the job
* Experience high turnover
* Have your people not doing their best
* Waste time with useless interviews
* Have your company taken to court because of your discriminatory actions
* Have your company cited under federal occupational safety laws for unsafe practices
* Have some employees think their salaries are unfair relative to others in the organization
* Allow a lack of training to undermine your department s effectiveness
* Commit any unfair labor practices
IMPROVE PROFITS AND PERFORMANCE similarly, effective human resource management
can help ensure that you get results through people. Remember that you can do everything else
right as a manager lay brilliant plans, draw clear organization charts, set up world-class assembly
lines, and use sophisticated accounting controls but still fail, by hiring the wrong people or by
not motivating subordinates.
HR FOR ENTREPRENEURS: Especially if you are managing your own small firm with no
human resource manager, you ll have to understand the nuts and bolts of human resource
management.
3. Line and Staff Aspects of Human Resource Management?
All managers are, in a sense, human resource managers, because they all get involved in
recruiting, interviewing, selecting, and training their employee.
Authority is the right to make decisions, to direct the work of others, and to give orders.
Managers usually distinguish between line authority and staff authority.
Line authority traditionally gives managers the right to issue orders to other managers or
employees. Line authority therefore creates a superior (order giver) subordinate (order receiver)
relationship. When the vice president of sales tells her sales director to get the sales presentation
ready by Tuesday, she is exercising her line authority.
Staff authority gives a manager the right to advise other managers or employees. It creates an
advisory relationship.

3. When the human resource manager suggests that the plant manager use a particular selection
test, he or she is exercising staff authority.
Line Managers Human Resource Duties
However, line managers still have many human resource duties. This is because the direct
handling of people has always been part of every line manager s duties, from president down to
first-line supervisors. For example, one major company outlines its line supervisor’s
responsibilities for effective human resource management under these general headings:
1. Placing the right person in the right job
2. Starting new employees in the organization (orientation)
3. Training employees for jobs that are new to them
4. Improving the job performance of each person
5. Gaining cooperation and developing smooth working relationships
6. Interpreting the company s policies and procedures
7. Controlling labor costs
8. Developing the abilities of each person
9. Creating and maintaining department morale
10. Protecting employees health and physical condition
Human Resource Manager s Duties
In providing this specialized assistance, the human resource manager carries out three distinct
functions:
1. A line function. The human resource manager directs the activities of the people in his or her
own department, and perhaps in related areas (like the plant cafeteria).
2. A coordinative function. The human resource manager also coordinates personnel activities,
a duty often referred to as functional authority (or functional control). Here he or she ensures
that line managers are implementing the firm’s human resource policies and practices (for
example, adhering to its sexual harassment policies).
3. Staff (assist and advice) functions. Assisting and advising line managers is the heart of the
human resource manager s job. He or she advises the CEO so the CEO can better understand the
personnel aspects of the company s strategic options. HR assists in hiring, training, evaluating,
rewarding, counseling, promoting, and firing employees.

4. 4. New Approaches to Organizing HR
Employers are also offering human resource services in new ways. For example, some organize
their HR services around four groups: transactional, corporate, embedded, and centers of
expertise.
* The transactional HR group uses centralized call centers and outsourcing arrangements (such
as with benefits advisors) to provide support for day-to-day transactional activities (such as
changing benefits plans and employee assistance and counseling).
The corporate HR group focuses on assisting top management in top level big picture issues
such as developing and explaining the personnel aspects of the company s long-term strategic
plan.
* The embedded HR unit assigns HR generalists (also known as relationship managers or HR
business partners) directly to departments like sales and production. They provide the localized
human resource management assistance the departments need.
* The centers of expertise are like specialized HR consulting firms within the company for
instance, they provide specialized assistance in areas such as organizational change.
5. Briefly discuss and illustrate each of the important trends influencing human resource
management.
Globalization and Competition Trends
Globalization refers to the tendency of firms to extend their sales, ownership, and/or
manufacturing to new markets abroad. Examples surround us. Toyota produces the Camry in
Kentucky, while Dell produces PCs in China. Free trade areas agreements that reduce tariffs and
barriers among trading partners further encourage international trade. NAFTA (the North
American Free Trade Agreement) and the EU (European Union) are examples.
Companies expand abroad for several reasons. Sales expansion is one.Walmart is opening stores
in South America. Dell, knowing that China will soon be the world’s biggest market for PCs, is
aggressively selling there.
Firms go abroad for other reasons. Some manufacturers seek new foreign products and services
to sell, and to cut labor costs.
For businesspeople, globalization means more competition, and more competition means more
pressure to be world-class to lower costs, to make employees more productive, and to do things
better and less expensively.

5. Technological Trends
Everyone knows that technology changed almost everything we do. We use smartphones and
iPod’s to communicate with the office, and to plan trips, manage money, and look for local
eateries. We also increasingly use technology for many human resource management type
applications, such as looking for jobs. Facebook recruiting is one example.21 According to
Facebook s Facebook recruiting site; employers start the process by installing the Careers Tab
on their Facebook page.
Trends in the Nature of Work
Technology has also had a huge impact on how people work, and therefore on the skills and
training today s workers need.
HIGH-TECH JOBS: Today, Chad and his team spend much of their time keying commands into
computerized machines that create precision parts for products, including water pumps.23 As the
U.S. government s Occupational Outlook Quarterly put it, knowledge-intensive high-tech
manufacturing in such industries as aerospace, computers, telecommunications, home
electronics, pharmaceuticals, and medical instruments is replacing factory jobs in steel, auto,
rubber, and textiles
SERVICE JOBS Technology is not the only trend driving the change from brawn to brains.
Today over two-thirds of the U.S. workforce is producing and delivering services, not products.
Between 2004 and 2014, almost all of the 19 million new jobs added in the United States will be
in services, not in goods producing industries.
KNOWLEDGE WORK AND HUMAN CAPITAL
In general, the best jobs that remain require more education and more skills. For example, we
saw that automation and just-in-time manufacturing mean that even manufacturing jobs require
more reading, math, and communication skills.
Workforce and Demographic Trends
All of this is occurring along with big changes in workforce and demographic trends.
At the same time, demographic trends are making finding and hiring employees more
challenging. In the United States, labor force growth is not expected to keep pace with job
growth, with an estimated shortfall of about 14 million college educated workers by 2020.36 One
study of 35 large global companies senior human resource officers said talent management in
particular, the acquisition, development, and retention of talent to fill the companies employment
needs ranked as their top concern.

6. GENERATION Y Also called Millennial, Gen Y employees are roughly those born 1977 2002.
They are both high-performance and high-maintenance. 38 As a result:
1. They want fair and direct supervisors who are highly engaged in their professional
development.
2. They seek out creative challenges and view colleagues as vast resources from whom to gain
knowledge.
3. They want to make an important impact on Day 1.
4. They want small goals with tight deadlines so they can build up ownership of tasks.
5. They aim to work faster and better than other workers. Fortune Magazine says that today s
Generation Y employees will bring challenges and strengths. It says they may be the most high-
maintenance workforce in the history of the world.
RETIREES Many human resource professionals call the aging workforce the biggest
demographic trend affecting employers. The basic problem is that there aren’t enough younger
workers to replace the projected number of baby boom era older-worker retirees.
NONTRADITIONAL WORKERS At the same time, there has been a shift to nontraditional
workers. Nontraditional workers include those who hold multiple jobs, or who are contingent or
part-time workers, or who are working in alternative work arrangements (such as a mother
daughter team sharing one clerical job).
WORKERS FROM ABROAD With retirements triggering projected workforce shortfalls, many
employers are hiring foreign workers for U.S. jobs. The country s H-1B visa program allows
U.S. employers to recruit skilled foreign professionals to work in the United States when they
can’t find qualified U.S. workers. U.S.
6. List and briefly describe important traits of today's human resource managers.
They Focus More on Strategic, Big Picture Issues
Today s human resource managers are more involved in longer term, strategic big picture issues.
We ll see in Chapter 3 (Strategy) that strategic human resource management means formulating
and executing human resource policies and practices that produce the employee competencies
and behaviors the company needs to achieve its strategic aims.
They Use New Ways to Provide Transactional Services
But then, how do employers perform these day-to-day transactional tasks? The answer is that
today s human resource managers must be skilled at offering these transactional HR services in
innovative ways. For example, they outsource more benefits administration and safety training to

7. outside vendors.54 They use technology, for instance, company portals that allow employees to
self-administer benefits plans, Facebook recruiting to recruit job applicants, online testing to
prescreen job applicants, and centralized call centers to answer HR-related inquiries from
supervisors.
They Take an Integrated, Talent Management Approach to Managing Human Resources
Next, with employers competing for talent, no one wants to lose any high-potential employees,
or to fail to attract or fully utilize top-caliber ones.57 One survey of human resource executives
found that talent management issues were among the most pressing ones they faced. Human
resource managers are therefore emphasizing talent management.
WHAT IS TALENT MANAGEMENT? Talent management is the goal-oriented and integrated
process of planning, recruiting, developing, managing, and compensating employees. It involves
instituting a coordinated process for identifying, recruiting, hiring, and developing high-potential
employees.
They Manage Ethics: Ethics means the standards someone uses to decide what his or her conduct
should be. For example, prosecutors filed criminal charges against several Iowa meatpacking
plant human resource managers who allegedly violated employment law by hiring children
younger than 16.61 every human resource manager (and line manager) needs to understand the
ethical implications of his or her employee-related decisions.
They Manage Employee Engagement: The Institute for Corporate Productivity defines engaged
employees as those who are mentally and emotionally invested in their work and in contributing
to an employer s success. Today s human resource managers need the skills to foster and manage
employee engagement.
They Measure HR Performance and Results
In today s performance-based environment, employers expect their human resource managers to
take action based on measurable performance-based criteria.
7. The human resource manager s competencies
Professor Dave Ulrich and his colleagues say that today's human resource managers need the
knowledge, skills, and competencies to be:
* Talent Managers/Organization Designers, with a mastery of traditional human resource
management tasks such as acquiring, training, and compensating employees.
* Culture and Change Stewards, able to create human resource practices that support the
firm’s cultural values.
* Strategy Architects, with the skills to help establish the company s overall strategic plan, and
to put in place the human resource practices required to support accomplishing that plan.

8. * Operational Executors, able to anticipate, draft, and implement the human resource practices
(for instance in testing and appraising) the company needs to implement its strategy.
* Business Allies, competent to apply business knowledge (for instance in finance, sales, and
production) that enable them to help functional and general managers to achieve their
departmental goals.
* Credible Activists, with the leadership and other competencies that make them both credible
(respected, admired, listened to) and active (offers a point of view, takes a position, challenges
assumptions.)
DRAW FIG…………………………………………………………………………………

9. CHAPTER -6 Employees Testing and Selection
1. Explain what is meant by reliability and validity.
BASIC TESTING CONCEPTS
A test is one popular selection tool. A test is basically a sample of a person’s behavior. Using a
test (or any selection tool) assumes the tool is both reliable and valid. Few things illustrate
evidence-based HR the deliberate use of the best-available evidence in making decisions about
the human resource management practices you are focusing on as do checking for reliability and
validity.
Reliability
Reliability is a test s first requirement and refers to its consistency: A reliable test is one that
yields consistent scores when a person takes two alternate forms of the test or when he or she
takes the same test on two or more different occasions. Reliability is very important. If a person
scores 90 on an intelligence test on a Monday and 130 when retested on Tuesday, you probably
wouldn’t t have much faith in the test. You can measure reliability in several ways. One is to
administer a test to a group of people one day, re-administer the same test several days later to
the same group, and then correlate the first set of scores with the second (test-retest reliability
estimates.)
Because measuring reliability generally involves comparing two measures that assess the same
thing, it is typical to judge test s reliability in terms of a reliability coefficient. This basically
shows the degree to which the two measures (say, test score one day and test score the next day)
are correlated.
Validity
Reliability, while indispensable, only tells you that the test is measuring something consistently.
It does not prove that you are measuring what you intend to measure. A mismanufactured 33-
inch yardstick will consistently tell you that 33-inch boards are 33 inches long. Unfortunately, if
what you’re looking for is a board that is 1 yard long, then your 33-inch yardstick, though
reliable, is misleading you by 3 inches.
Test validity
The accuracy with which a test, interview, and so on measures what it purports to measure or
fulfills the function it was designed to fill.
Criterion validity
A type of validity based on showing that scores on the test (predictors) are related to job
performance (criterion).

10. Content validity
A test that is content valid is one that contains a fair sample of the tasks and skills actually
needed for the job in question.
Construct validity
A test that is constructing valid is one that demonstrates that a selection procedure measures a
construct and that construct is important for successful job performance
2. Explain how you would go about validating a test
The validation process consists of five steps:
STEP 1: ANALYZE THE JOB The first step is to analyze the job and write job descriptions and
job specifications. The point is to specify the human traits and skills you believe are required for
job performance.
STEP 2: CHOOSE THE TESTS the next step is to decide how to test for them. Employers
usually base this choice on experience, previous research, and best guesses. They usually don’t
start with just one test. Instead, they choose several tests and combine them into a test battery.
STEP 3: ADMINISTER THE TEST Next, administer the selected test(s). One option is to
administer the tests to employees currently on the job. You then compare their test scores with
their current performance; this is concurrent (at the same time) validation. Its main advantage is
that data on performance are readily available. The disadvantage is that current employees may
not be representative of new applicants.
STEP 4: RELATE YOUR TEST SCORES AND CRITERIA The next step is to ascertain if there
is a significant relationship between test scores (the predictor) and performance (the criterion).
The usual way to do this is to determine the statistical relationship between (1) scores on the test
and (2) job performance using correlation analysis, which shows the degree of statistical
relationship.
STEP 5: CROSS-VALIDATE AND REVALIDATE Before using the test, you may want to
check it by cross-validating in other words, by again performing steps 3 and 4 on a new sample
of employees. At a minimum, have someone revalidate the test periodically.

11. 3. WHY CAREFUL SELECTION IS IMPORTANT
It is important for three main reasons: performance, costs, and legal obligations.
PERFORMANCE First, your own performance always depends on your subordinates.
Employees with the right skills will do a better job for you and the company. Employees without
these skills or who are abrasive or obstructionist won’t perform effectively, and your own
performance and the firms will suffer. The time to screen out undesirables is before they are in
the door, not after.
COST Second, it is important because it s costly to recruit and hire employees. Hiring and
training even a clerk can cost $5,000 or more in fees and supervisory time. The total cost of
hiring a manager could easily be 10 times as high once you add search fees, interviewing time,
reference checking, and travel and moving expenses.
LEGAL OBLIGATIONS Third, it’s important because mismanaging hiring has legal
consequences. Furthermore, someone can sue an employer for negligent hiring. Negligent hiring
means hiring employees with criminal records or other problems who then use access to
customers’ homes (or similar opportunities) to commit crimes.
Person and Job/Organization Fit The main aim of employee selection is to achieve person-job fit.
Person-job fit refers to matching (1) the knowledge, skills, abilities (KSAs), and competencies
that are central to performing the job (as determined by job analysis) with (2) the prospective
employee s knowledge, skills, abilities, and competencies. The aim is to achieve a match.
However, a candidate might be right for a job, but wrong for the organization.7
…………………………………………………………………………………………….

12. Chapter -5 Personnel Planning and Recruiting
1. List the steps in the recruitment and selection process.
Job analysis identifies the duties and human requirements for each of the company s jobs. The
next step is to decide which of these jobs you need to fill, and to recruit and select employees for
them.
1. Decide what positions to fill, through workforce/personnel planning and forecasting.
2. Build a pool of candidates for these jobs, by recruiting internal or external candidates.
3. Have candidates complete application forms and perhaps undergo initial screening interviews.
4. Use selection tools like tests, background investigations, and physical exams to identify viable
candidates.
5. Decide who to make an offer to, by having the supervisor and perhaps others interview the
candidates.
2. Explain the main techniques used in employment planning and forecasting.
Workforce (or employment or personnel) planning is the process of deciding what positions
the firm will have to fill, and how to fill them. It embraces all future positions, from maintenance
clerk to CEO. However, most firms call the process of deciding how to fill executive jobs
succession planning.
Strategy and Workforce Planning
In either case, as at IBM (see page 137), employment planning should reflect the firms strategic
plans. Thus plans to enter new businesses or reduce costs all influence the types of positions you
will need to fill (or eliminate). However, the managers should control their strategy. So, knowing
that the firm plans, say, to expand abroad, means making plans for ramping up hiring in the firms
international division.
Forecasting Personnel Needs (Labor Demand)
How many people will we need? Managers consider several factors.
The basic process of forecasting personnel needs is to forecast revenues first. Then estimate the
size of the staff required to support this sales volume. However, managers must also consider
other, strategic factors. These include projected turnover, decisions to upgrade (or downgrade)
products or services, productivity changes, and financial resources. There are several simple
tools for projecting personnel needs, as follows.
TREND ANALYSIS
Trend analysis means studying variations in the firm’s employment levels over the last few
years. For example, you might compute the number of employees at the end of each of the last 5
years, or perhaps the number in each subgroup (like sales, production, secretarial, and
administrative). The aim is to identify trends that might continue into the future.

13. RATIO ANALYSIS
Another simple approach, ratio analysis, means making forecasts based on the historical ratio
between (1) some causal factor (like sales volume) and (2) the number of employees required
(such as number of salespeople).
For example, suppose a salesperson traditionally generates $500,000 in sales. If the sales revenue
to salespeople ratio remains the same, you would require six new salespeople next year (each of
whom produces an extra $500,000) to produce a hoped-for extra $3 million in sales.
THE SCATTER PLOT
A scatter plot shows graphically how two variables such as sales and your firms staffing levels
are related. If they are, then if you can forecast the business activity (like sales), you should also
be able to estimate your personnel needs.
For example, suppose a 500-bed hospital expects to expand to 1,200 beds over the next 5 years.
The human resource director wants to forecast how many registered nurses they ll need. The
human resource director realizes she must determine the relationship between size of hospital (in
terms of number of beds) and number of nurses required.
MARKOV ANALYSIS
Employers also use a mathematical process known as Markov analysis (or transition analysis) to
forecast availability of internal job candidates. Markov analysis involves creating a matrix that
shows the probabilities that employees in the chain of feeder positions for a key job (such as
from junior engineer, to engineer, to senior engineer, to engineering supervisor, to director of
engineering) will move from position to position and therefore be available to fill the key
position.
3. Explain and give examples for the need for effective recruiting.
Assuming the company authorizes you to fill a position, the next step is to build up, through
recruiting, an applicant pool. Employee recruiting means finding and/or attracting applicants
for the employer s open positions.
Why Recruiting Is Important
It’s hard to overemphasize the importance of effective recruiting. If only two candidates apply
for two openings, you may have little choice but to hire them. But if 10 or 20 applicants appear,
you can use techniques like interviews and tests to screen out all but the best.
What Makes Recruiting a Challenge?
It’s easy to assume that recruiting is easy that all you need do is place a few ads on the Web.
However, several things make it more complex.
* First, some recruiting methods are superior to others, depending on the type of job for which
you are recruiting.

14. * Second, the success you have recruiting depends on non-recruitment issues and policies.
* Third, employment law prescribes what you can and cannot do when recruiting.
4. Name and describe the main internal sources of candidates.
Recruiting typically brings to mind LinkedIn, employment agencies, and classified ads, but
internal sources in other words, current employees or hiring from within are often the best source
of candidates.
Using Internal Sources: Pros and Cons
Filling open positions with inside candidates has several advantages. First, there is really no
substitute for knowing a candidate s strengths and weaknesses, as you should after working with
them for some time. Current employees may also be more committed to the company. Morale
may rise if employees see promotions as rewards for loyalty and competence. And inside
candidates should require less orientation and (perhaps) training than outsiders.
Inbreeding is another potential drawback. When all managers come up through the ranks, they
may have a tendency to maintain the status quo, when a new direction is required.
Finding Internal Candidates
Hiring from within ideally relies on job posting and the firm’s skills inventories. Job posting
means publicizing the open job to employees (usually by literally posting it on company intranets
or bulletin boards). These postings list the job s attributes, like qualifications, supervisor, work
schedule, and pay rate.
Rehiring
Should you rehire someone who left your employ? It depends. On the plus side, former
employees are known quantities (more or less) and are already familiar with how you do things.
Succession Planning
The ongoing process of systematically identifying, assessing, and developing organizational
leadership to enhance performance.
Succession planning entails three steps: identify key needs, develop inside candidates, and assess
and choose those who will fill the key positions.
IDENTIFY KEY NEEDS First, based on the company s strategic and business plans, top
management and the HR director identify what the company s future key position needs will be.
Matters to address in this early stage include defining key positions, defining high potentials,
enlisting top management support, and reviewing the company s current talent. (Thus, plans to
expand abroad may suggest bulking up the international division.

15. DEVELOP INSIDE CANDIDATES After identifying future key positions, management turns to
creating candidates for these jobs. Creating means providing the inside or outside candidates you
identify with the developmental experiences they require to be viable candidates. Employers
develop high-potential employees through internal training and cross-functional experiences, job
rotation, external training, and global/regional assignments.
ASSESS AND CHOOSE Finally, succession planning requires assessing these candidates and
selecting those who will actually fill the key positions.
5. List and discuss the main outside sources of candidates.
We ll look at the sources firms use to find outside candidates next.
Recruiting via the Internet
For most employers and for most jobs, Internet-based recruiting is by far the recruiting source of
choice. Recruiting for professionals and managers is shifting from online job boards to social
networking sites such as Facebook and LinkedIn.
McDonald s posted employee testimonials on networking sites like Second Life as a way to
attract applicants…
TEXTING Some employers use text messaging to build an applicant pool.
THE DOT-JOBS DOMAIN The dot-jobs domain gives job seekers a one-click conduit for
finding jobs at the employers who register at www.goto.jobs.
VIRTUAL JOB FAIRS Virtual (fully online) job fairs are another option. At a virtual job fair,
online visitors see a very similar setup to a regular job fair. They can listen to presentations, visit
booths, leave résumés and business cards, participate in live chats, and get contact information
from recruiters.
USING APPLICANT TRACKING Web-based ads tend to generate so many applicants that
most firms use applicant tracking systems to support their on- and offline recruiting efforts.
Applicant tracking systems (from firms such as Taleo Corporation and iTrack Solutions) are
online systems that help employers attract, gather, screen, compile, and manage applicants.
Employment Agencies
There are three main types of employment agencies: (1) public agencies operated by federal,
state, or local governments; (2) agencies associated with nonprofit organizations; and (3)
privately owned agencies.

16. Temp Agencies and Alternative Staffing
Employers increasingly supplement their permanent workforces by hiring contingent or
temporary workers, often through temporary help employment agencies. Also known as part-
time or just-in-time workers, the contingent workforce is big and growing. In 2010, about 26% of
all jobs private-sector employers added were temporary positions.
PROS AND CONS Employers have long used temps to fill in for permanent employees who
were out sick or on vacation. But today s desire for ever-higher productivity also contributes to
temp workers growing popularity. Productivity is measured in terms of output per hour paid for,
and temps are generally paid only when they’re working not for days off, in other words. Many
firms also use temporary hiring to give prospective employees a trial run before hiring them as
regular employees.79
The benefits don t come without a price. Temps may be more productive, but generally cost
employers 20% to 50% more than comparable permanent workers (per hour or per week
ALTERNATIVE STAFFING Temporary employees are examples of alternative staffing
basically, the use of nontraditional recruitment sources. Other alternative staffing arrangements
include in-house temporary employees (people employed directly by the company, but on an
explicit short-term basis) and contract technical employees (highly skilled workers like
engineers, who are supplied for long-term projects under contract from an outside technical
services firm).
Offshoring and Outsourcing Jobs
Outsourcing and offshoring are perhaps the most extreme examples of alternative staffing.
Rather than bringing people in to do the company s jobs, outsourcing and offshoring send the
jobs out. Outsourcing means having outside vendors supply services (such as benefits
management, market research, or manufacturing) that the company s own employees previously
did in-house. Offshoring is a narrower term. It means having outside vendors or employees
abroad supply services that the company s own employees previously did in-house. Outsourcing
and offshoring are both contentious.
Executive Recruiters
Executive recruiters (also known as headhunters) are special employment agencies employers
retain to seek out top-management talent for their clients. The percentage of your firm’s
positions filled by these services might be small. However, these jobs include key executive and
technical positions. For executive positions, headhunters may be your only source of candidates.
The employer always pays the fees.
On-Demand Recruiting Services
On-demand recruiting services (ODRS) provide short-term specialized recruiting assistance to
support specific projects without the expense of retaining traditional search firms. They are
recruiters who are paid by the hour or project, instead of a percentage fee.

17. College Recruiting
College recruiting sending an employer s representatives to college campuses to prescreen
applicants and create an applicant pool from the graduating class is an important source of
management trainees and professional and technical employees. The problem is that on-campus
recruiting is expensive and time-consuming.
ON-CAMPUS RECRUITING GOALS The campus recruiter has two main goals. One is to
determine if a candidate is worthy of further consideration. Usual traits to assess include
communication skills, education, experience, and interpersonal skills. The other aim is to attract
good candidates. A sincere and informal attitude, respect for the applicant, and prompt follow-up
letters can help sell the employer to the interviewee.
THE ON-SITE VISIT Employers generally invite good candidates to the office or plant for an
on-site visit. There are several ways to make this visit fruitful. The invitation should be warm
and friendly but businesslike, and should give the person a choice of dates to visit.
INTERNSHIPS Many college students get their jobs through college internships. Internships can
be win win situations. For students, it may mean being able to hone business skills, learn more
about potential employers, and discover their career likes (and dislikes). And employers can use
the interns to make useful contributions while evaluating them as possible full-time employees.
A recent study found that about 60% of internships turned into job offers.
………………………………………………………………………………………………..

18. Chapter -3 Human Resource Management Strategy and Analysis
1. Explain why strategic planning is important to all managers.
THE STRATEGIC MANAGEMENT PROCESS
As in the following Strategic Context feature, we can use the Shanghai Portman example to get
a bird's eye view of the strategic human resource management process.
Goal-Setting and the Planning Process
Whether the manager is planning to boost a hotel s profitability or something more
mundane, the basic planning process is the same. It involves setting objectives, making
basic planning forecasts, reviewing alternative courses of action, evaluating which
options are best, and then choosing and implementing your plan. A plan shows the
course of action for getting from where you are to where you want to go in other
words, to the goal. Planning is always goal-directed (in this case, to improve the
hotel s level of service significantly ).
THE HIERARCHY OF GOALS In companies, it is traditional to view the goals
from the top of the firm down to front-line employees as a chain or hierarchy of goals.
Figure 3-1 illustrates this. At the top, the president sets long term or strategic goals
(such as Double sales revenue to $16 million in fiscal year 2011 ). His or her vice
presidents then set goals, such as add one production line at plant, which flow from
and make sense in terms of accomplishing the president s goal. (In other words, What
must I as production head do to help make sure that the company accomplishes its
double sales goal? ) Then the vice presidents subordinates set their own goals, and so
on down the chain of command. The planning process thus traditionally starts with
formulating top-level, long-term strategic plans and goals.
Strategic Planning
A strategic plan is the company s plan for how it will match its internal strengths and
weaknesses with external opportunities and threats in order to maintain a competitive
advantage. The essence of strategic planning is to ask, Where are we now as a business,
where do we want to be, and how should we get there? The manager then formulates
specific (human resources and other) plans to take the company from where it is now to
where he or she wants it to be.When Yahoo! tries to figure out whether to sell its search
business to Microsoft, it s engaged in strategic planning.A strategy is a course of action.
If Yahoo! decides it must raise money and focus more on applications like Yahoo!
Finance, one strategy might be to sell Yahoo! Search. Strategic management is the
process of identifying and executing the organization s strategic plan, by matching
the company s capabilities with the demands of its environment.
Figure 3-2 sums up the strategic management process. This process includes
(1) defining the business and developing a mission, (2) evaluating the firms internal
and external strengths, weaknesses, opportunities, and threats, (3) formulating a new
business direction, (4) translating the mission into strategic goals, and (5) formulating
strategies or courses of action. Step (6) and step (7) entail implementing and then
evaluating the strategic plan.

19. 2. Explain with examples each of the seven steps in the strategic planning process.
STEP 1: DEFINE THE CURRENT BUSINESS The logical place to start is by
defining one s current business. Specifically, what products do we sell, where do we
sell them, and how do our products or services differ from our competitor s. For
example, Rolex and Casio both sell watches. However, Rolex sells a limited line of
expensive watches. Casio sells a variety of relatively inexpensive but innovative
specialty watches with features like compasses and altimeters.
STEP 2: PERFORMEXTERNAL AND INTERNAL AUDITS The next step
is to ask, Are we heading in the right direction? No one is immune to competitive
pressures. Yahoo! s search tool predominated until Google. Amazon s Kindle Reader
forced even more bookstores to close. Prudent managers periodically assess what s
happening in their environments.
Managers need to audit both the firms environment, and the firms strengths
and weaknesses.
STEP 3: FORMULATE A NEW DIRECTION The question now is, based on the
environmental scan and SWOT analysis,what should our new business be, in terms of
what products we will sell, where we will sell them, and how our products or services
will differ from competitors products?
Managers sometimes formulate a vision statement to summarize how they see
the essence of their business down the road. The vision statement is a general statement
of the firms intended direction; it shows, in broad terms, what we want to become.
Whereas vision statements usually describe in broad terms what the business
should be, the company s mission statement summarizes what the company s main
tasks are now. Several years ago, Ford adapted what was for several years a powerful
mission for them making Quality Job One.
STEP 4: TRANSLATE THE MISSION INTO STRATEGIC GOALS Next,
translate the mission into strategic objectives. The company and its managers need
strategic goals. At Ford, for example, what exactly did making Quality Job One
mean for each department in terms of how they would boost quality? The answer is
that its managers had to meet strict goals such as no more than 1 initial defect per
10,000 cars.
STEP 5: FORMULATE STRATEGIES TO ACHIEVE THE STRATEGIC GOALS
Next, the manager chooses strategies courses of action that will enable the company
to achieve its strategic goals. For example, what strategies could Ford pursue to hit its
goal of no more than 1 initial defect per 10,000 cars? Perhaps open two new high-tech
plants, reduce the number of car lines to better focus on just a few, and put in place new
more rigorous employee selection, training, and performance appraisal procedures.
STEP 6: IMPLEMENT THE STRATEGIES Strategy execution means translating
the strategies into action. The company s managers do this by actually hiring (or
firing) people, building (or closing) plants, and adding (or eliminating) products and
product lines.

20. STEP 7: EVALUATE PERFORMANCE Things don t always turn out as planned.
For example, Ford bought Jaguar and Land Rover as a way to reduce reliance on
lower-profit cars. With auto competition brutal, Ford announced in 2009 it was
selling Jaguar and Land Rover (to Tata, a company in India). Ford wants to focus its
scarce resources on modernizing and turning around its North American operations.
Like all companies, Ford continually needs to assess its strategic decisions.
3. List with examples the main generic types of corporate strategies and competitive
strategies.
Types of Strategies
In practice, managers formulate three strategies. There is corporate-wide strategic planning,
business unit (or competitive) strategic planning, and functional (or departmental)
strategic planning.
CORPORATE STRATEGY The corporate strategy question is, How many and what
kind of businesses should we be in? For example, PepsiCo doesn t just make Pepsi-Cola.
Instead,PepsiCo is comprised of four main businesses: Frito-Lay North America,PepsiCo
Beverages North America, PepsiCo International, and Quaker Oats North America.5
PepsiCo therefore needs a corporate-level strategy. A company s corporate-level
strategy identifies the portfolio of businesses that, in total, comprise the company
and how these businesses relate to each other.
* For example, with a concentration (single business) corporate strategy, the
company offers one product or product line, usually in one market. WD-40
Company (which makes a spray hardware lubricant) is one example.
* A diversification corporate strategy implies that the firm will expand by adding
new product lines. PepsiCo is diversified. Over the years, PepsiCo added chips
and Quaker Oats. Such related diversification means diversifying so that a firms
lines of business still possess a logical fit. Conglomerate diversification means
diversifying into products or markets not related to the firms current businesses
or to one another.
* A vertical integration strategy means the firm expands by, perhaps, producing its
own raw materials, or selling its products direct. Thus, Apple opened its own
Apple stores.
* With consolidation strategy, the company reduces its size.
* With geographic expansion, the company grows by entering new territorial markets,
for instance, by taking the business abroad, as PepsiCo also did.
COMPETITIVE STRATEGY On what basis will each of our businesses compete?
Each of these businesses (such as Frito-Lay) needs its own business-level/competitive
strategy. A competitive strategy identifies how to build and strengthen the business s
long-term competitive position in the marketplace.6 It identifies, for instance, how

21. Pizza Hut will compete with Papa Johns or how Walmart competes with Target.
Managers endeavor to achieve competitive advantages for each of their businesses.
We can define competitive advantage as any factors that allow a company to differentiate
its product or service from those of its competitors to increase market share.
Managers use several standard competitive strategies to achieve competitive advantage:
* Cost leadership means becoming the low-cost leader in an industry .Wal-Mart is a
classic example. It maintains its competitive advantage through its satellite-based
distribution system, careful (usually suburban) site location, and expert control
of purchasing and sales costs.
* Differentiation is a second possible competitive strategy. In a differentiation strategy,
the firm seeks to be unique in its industry along dimensions that are widely valued
by buyers.7 Thus,Volvo stresses the safety of its cars, Papa Johns stresses fresh ingredients,
and Target stresses somewhat more upscale brands than Walmart. Like
Mercedes-Benz, firms can usually charge a premium if they successfully stake a claim
to being substantially different from competitors in some coveted way.
* Focusers carve out a market niche (like Ferrari). They compete by providing a
product or service that their customers cannot get from their generalist competitors
(such as Toyota.
COMPETITIVE ADVANTAGE A competitive advantage enables a company to differentiate its
product or service from those of its competitors, but the competitive advantage need not be
tangible, such as
Competitive advantage Any factors that allow an organization to differentiate its product or
service from those of its competitors to increase market share.
FUNCTIONAL STRATEGY Finally, what do our competitive choices (such as
maintaining the lowest costs) mean for each of the departments that actually must do
the work? Each individual business (like PepsiCo s Frito-Lay and Quaker Oats units)
consists of departments such as manufacturing, sales, and human resource
management. Functional strategies identify the broad guidelines that each
department will follow in order to help the business accomplish its competitive goals.
Each department s functional strategy should make sense in terms of the business/
competitive strategy.
For example, the business s competitive strategy should mold the firms human
resource management policies and practices. As an example, the Portland hotel wants
to differentiate itself with exceptional service, and so needs to select and train
employees who are exceptionally customer oriented.Walmart s low cost competitive
strategy translates into human resource management policies that many view as
low-pay and antiunion.
STRATEGIC FIT Strategic planning expert Michael Porter uses the term strategic
fit to sum up the idea that each department s functional strategy should fit and
support the company s competitive aims.
For example, Southwest Airlines is a low-cost leader. It aims to deliver
low-cost, convenient service on its routes. To accomplish this, Southwest builds its
departments activities around supporting certain core aims.

22. High Pay -Highly Productive Ground Crews- Frequent Departures-
Low Costs
Top Managers Roles in Strategic Planning
Devising a strategic plan is top management s responsibility. Top management
must decide what businesses the company will be in and where, and on what basis
it will compete. Southwest Airlines top managers could never let lower-level
managers make strategic decisions (such as unilaterally deciding that instead of
emphasizing low cost, they were going to retrofit the planes with first-class cabins).
4. Define strategic human resource management and give an example of strategic human
resource management in practice.
Defining Strategic Human Resource Management
Every company needs its human resource management policies and activities to make
sense in terms of its broad strategic aims. Strategic human resource management
means formulating and executing human resource policies and practices that
produce the employee competencies and behaviors the company needs to achieve its
strategic aims.
The basic idea behind strategic human resource management is this: In formulating
human resource management policies and activities, the aim must be to
produce the employee skills and behaviors that the company needs to achieve its
strategic goals.
The Practices Behaviors Strategy Pyramid:
What are
our strategic
goals or aims?
What employee behaviors and
skills do we need to achieve
our strategic aims?
What HR policies and practices will enable us to
produce the necessary employee
behaviors and skills?
Human Resource Strategies and Policies
Managers call the specific human resource management policies and practices they use
to support their strategic aims human resource strategies.16 The Shanghai Portman s
human resource strategy aimed to produce the service-oriented employee behaviors the
hotel needed to improve significantly the hotel s level of service. Its HR policies
included installing the Ritz-Carlton Company s human resource system, having top
management personally interview each candidate, and selecting only employees who
cared for and respected others.

23. 5. Briefly describe three important strategic human resource management tools.
Strategic Human Resource Management Tools
Managers use several tools to translate the company s broad strategic goals into human
resource management policies and activities. Three important tools include the strategy
map, the HR Scorecard, and the digital dashboard.
STRATEGY MAP The strategy map provides an overview of how each department s
performance contributes to achieving the company s overall strategic goals. It helps
the manager understand the role his or her department plays in helping to execute the
company s strategic plan.
THE HR SCORECARD Many employers quantify and computerize the strategy
map s activities. The HR Scorecard helps them to do so. The HR Scorecard is not a
scorecard. It refers to a process for assigning financial and nonfinancial goals or metrics
to the human resource management related chain of activities required for achieving
the company s strategic aims.
DIGITAL DASHBOARDS The saying a picture is worth a thousand words
explains the purpose of the digital dashboard. A digital dashboard presents the
manager with desktop graphs and charts, showing a computerized picture of how
the company is doing on all the metrics from the HR Scorecard process. As in the
illustration on the next page, a top Southwest Airlines manager s dashboard might
display real-time trends for various strategy map activities. These might include fast
turnaround, attracting and keeping customers, and on-time flights. This gives the
manager time to take corrective action.
What Are HR Audits?
Human resource managers often collect data on matters such as employee turnover
and safety with the help of human resource audits. One practitioner calls an HR audit
an analysis by which an organization measures where it currently stands and determines
what it has to accomplish to improve its HR function. 37 Another calls it a
process of examining policies, procedures, documentation, systems, and practices
with respect to an organization s HR functions. 38 In sum, the HR audit generally
involves (1) reviewing the functioning of most aspects of the company s human
resource function (recruiting, testing, training, and so on), usually using a checklist,
as well as (2) ensuring that the employer is adhering to government regulations and
company policies.
HR
audits vary in scope and focus. As an example, typical broad areas to cover with the
HR audit include:39
1. Roles and head count (including job descriptions, and employees by exempt/
nonexempt and full/part-time status)
2. Legal issues (compliance with federal, state, local employment related legislation)
3. Recruitment and selection (including selection tools, background checks, and so on)
4. Compensation (policies, incentives, survey procedures, and so on)
5. Employee relations (union agreements, performance management, disciplinary
procedures, employee recognition)
6. Mandated benefits (social security, unemployment insurance, workers compensation,

24. and so on)
7. Group benefits (insurance, time off, flexible benefits, and so on)
8. Payroll (internal versus external payroll options, FLSA compliance)
9. Documentation and record keeping (HR information systems, personnel files,
I-9 and other forms, and so on)
10. Training and development (new employee orientation, workforce development,
technical and safety, career planning, and so on)
11. Employee communications (employee handbook, newsletter, recognition
programs)
12. Internal communications (policies and procedures, and so on)
13. Termination and transition policies and practices
………………………………………………………………………………………………
Chapter 10 Employee Retention, Engagement, and Careers
MANAGING EMPLOYEE TURNOVER AND RETENTION
Turnover the rate at which employees leave the firm varies markedly among industries.
For example, turnover in the accommodation and food services industry is chronically
high, with over half the industry s employees voluntarily leaving each year. In contrast,
voluntary turnover in educational services is about 12%.
Furthermore, such figures only reflect employees who leave voluntarily, such as for
better jobs or for retirement. They do not include involuntary separations, such as those
due to poor performance, disability, or corporate downsizings.3 Combining voluntary
and involuntary turnover produces some astounding statistics. For example, the turnover
in many food service organizations is around 100% per year. This means that (other
things equal) many restaurants need to replace just about all their employees every year.
Costs of Turnover
The costs to employers of turnover are high.4 The accompanying HR as a Profit Center
feature illustrates this.
Reducing turnover requires identifying and managing the reasons for both
voluntary and involuntary turnover. We address managing voluntary turnover here,
Managing Voluntary Turnover
Managing voluntary turnover requires identifying its causes and then addressing
them. Unfortunately, identifying why employees voluntarily leave is easier said
than done. People who are dissatisfied with their jobs are more likely to leave,
but the sources of dissatisfaction are many and varied.
In contrast, employers ranked the top five reasons employees
left as promotion, career development, pay, relationship with supervisor, and
work life balance. Other reasons employees voluntarily leave include unfairness, not
having their voices heard, and a lack of recognition.7 Sometimes simply asking,
All things considered, how satisfied are you with your job? can be as effective as
soliciting employees attitudes toward various facets of the job (such as supervision
and pay).8 Practical considerations affect turnover. For example, high unemployment

25. reduces voluntary turnover, and some locales have fewer job opportunities (and
thus turnover) than do others.
Of course, turnover isn t necessarily bad. For example, losing low-performing
employees isn t as problematical as losing high-performing ones. Some firms, such as
the restaurant chain Applebee s, even incentivize their managers differentially, with
higher incentives for reducing turnover among top-performing employees.
1. Describe a comprehensive approach to retaining employees.
Retention Strategies for Reducing Voluntary Turnover
In any case, given the variety of things prompting employees to leave voluntarily, what
can one do to manage voluntary turnover? There is no silver bullet. The manager should
understand that retaining employees is a talent management issue, and that the best
retention strategies are therefore multifunctional. For example, employees who aren t
interested in their jobs, sense that they re not suited for their jobs, or who feel
undercompensated
are more likely to leave. Employers can only address such issues by instituting
effective and comprehensive talent management (recruitment, selection, training,
appraisal, and compensation) practices. Put another way, turnovers (both voluntary
and involuntary) often start with poor selection decisions, compounded by inadequate
training, insensitive appraisals, and inequitable pay.
A Comprehensive Approach to Retaining Employees
Experts from the consulting company Development Dimensions International (DDI)
and the employment firm Robert Half International suggest building comprehensive
retention programs around the following steps.
Selection. Retention starts up front, in the selection and hiring of the right
employees. 10 Selection refers not just to the worker but to choosing the right
supervisors as well. For example, FedEx conducts periodic employee attitude
surveys. The supervisor then meets to review the results with his or her
employees to address any problems the surveys raise.
Professional growth. Inadequate career and professional development prospects
prompt many employees to leave. Conversely, a well-thought-out training and
career development program can provide a strong incentive for staying with the
company. As one expert says, professionals who feel their company cares
about their development and progress are much more likely to stay. 11 The
accompanying Strategic Context feature illustrates this, and we also address
career development later in the chapter.
Provide career direction. Periodically discuss with employees their career
preferences and prospects at your firm, and help them lay out potential career
plans. Furthermore, don t wait until performance reviews to remind top
employees how valuable they are to your company.
Meaningful work and ownership of goals. People can t do their jobs if they
don t know what to do or what their goals are. Therefore, an important part
of retaining employees is making it clear what your expectations are regarding
their performance and what their responsibilities are.

26. Recognition and rewards.We ve seen that in addition to pay and benefits,
employees need and appreciate recognition for a job well done.
Culture and environment. For example, companies that are very tense and
political may prompt employees to leave, while companies that make them
feel comfortable encourage them to stay.
Promote work life balance. In one survey conducted by Robert Half and
careerbuilder.com, workers identified flexible work arrangements and
telecommuting as the two top benefits that would encourage them to choose one job or another.
Acknowledge achievements.When employees feel underappreciated,
they re more likely to leave. Surveys suggest that frequent recognition
of accomplishments is an effective nonmonetary reward.
…………………………………………………………………………………..
Chapter -9 Performance Management and Appraisal
1. Define performance management and discuss how it differs from performance appraisal.
BASIC CONCEPTSIN PERFORMANCE MANAGEMENT
AND APPRAISAL
Few things supervisors do are fraught with more peril than appraising subordinates
performance. Employees tend to be overly optimistic about what their ratings will be.
They also know that their raises, careers, and peace of mind may hinge on how you rate
them.As if that s not enough, few appraisal processes are as fair as employers think they are.
Hundreds of obvious and not-so-obvious problems (such as bias, and the tendency for
supervisors to rate everyone average ) distort the process. However, the perils notwithstanding,
performance appraisal plays a central role in human resource management.
2. Describe the appraisal process.
The Performance Appraisal Process
Performance appraisal means evaluating an employee s current and/or past performance
relative to his or her performance standards. You may equate appraisal forms
like Figure 9-1 with performance appraisal, but appraisal involves more than forms.
Effective appraisal also requires that the supervisor set performance standards. And it
requires that the employee receives the training, feedback, and incentives required to
eliminate performance deficiencies.
Effective appraisals begin before the actual appraisal,with the manager defining the
employee s job and performance criteria. Defining the job means making sure that you
and your subordinate agree on his or her duties and job standards and on the appraisal
method you will use. Stripped to its essentials, performance appraisal always involves
the 3-step performance appraisal process: (1) setting work standards; (2) assessing the
employee s actual performance relative to those standards (this usually involves some
rating form); and (3) providing feedback to the employee with the aim of helping him
or her to eliminate performance deficiencies or to continue to perform above par.

27. Why Appraise Performance?
There are five reasons to appraise subordinates performance.
* First, most employers still base pay, promotion, and retention decisions on the
employee s appraisal.
* Second, appraisals play a central role in the employer s performance management
process. Performance management means continuously making sure that each
employee s and teams performance makes sense in terms of the company s
overall goals. The accompanying HR as a Profit Center feature illustrates this.
* Third, the appraisal lets you and the subordinate develop a plan for correcting
any deficiencies, and to reinforce the things the subordinate does right.
* Fourth, appraisals should facilitate career planning. They provide an opportunity
to review the employee s career plans in light of his or her exhibited strengths and
weaknesses.
* Finally, supervisors use appraisals to identify employees training and development
needs. The appraisal should enable the supervisor to identify if there is a performance
gap between the employee s performance and his or her standards. And it
should help identify the cause of any such gap, and the remedial steps required.
The Importance of Continuous Feedback
For accomplishing several of these aims, traditional annual or semiannual appraisal
reviews make sense. For example, promotions and raises tend to be periodic decisions.
Similarly, you probably wouldn t want to make career decisions without at least several
months of data gathering and introspection.
However, it s usually a mistake to wait until the actual appraisal to let employees
know what they re doing wrong and doing right. Aligning the employee s efforts with
the job s standards should be a continuous process. When you see a performance
problem, the time to take action is immediately there is no substitute for nudging
your employee s performance back into line continuously and incrementally.
Similarly, when someone does something well, the best reinforcement comes
immediately, not 6 months later.
Performance Management
Recognizing this, many employers today take a more continuous approach to the
performance appraisal cycle. For example, at Toyota Motor s Lexington, Kentucky,
Camry plant, the supervisors don t sit with individual employees to fill out forms and
appraise them. Instead, teams of employees monitor their own results, even posting
individual daily performance metrics. In frequent meetings, they continuously align
those results with the work teams standards and with the plant s overall quality and
productivity needs. They do this by continuously adjusting how they and their team
members do things. Team members who need coaching and training receive it, and
procedures that need changing are changed. This is performance management in action.

28. PERFORMANCE MANAGEMENT DEFINED Performance management means
different things to different people. Some use performance management as just a new
way of saying performance appraisal. Others say performance appraisal represents just
the appraisal step of a three-step goal-setting/appraisal/feedback performance management
process. In this book,we assume that performance management is a uniquely
goal-oriented and continuous way to appraise and manage employees performance. It
is the continuous process of identifying,measuring, and developing the performance of
individuals and teams and aligning their performance with the organizations goals. 7
The difference between performance management and performance appraisal is
more than a matter of degree; it s a matter of substance. Many employers have what
they call performance management processes, but in fact still use traditional performance
appraisal. Continuous feedback and strategically related performance criteria
are the two distinguishing characteristics of performance management
3 Set effective performance appraisal standards.
Defining the Employee s Goals and Performance Standards
Most employees need and expect to know ahead of time on what basis their employer
will appraise them.10 Ideally, each employee s goals should derive from and contribute
to the company s overall aims. The manager s goals flow from the vice president s,
whose goals flow from the president s, for instance. However, setting useful goals is not
as simple as it may appear. There is an art to setting effective goals.
First, the supervisor must decide what to measure. Many employers simply use
packaged employee appraisal forms with generic scales, similar to that in Figure 9-1.
That appraisal form shows what will be measured, for instance, The instructor is
well-prepared for class. Other firms use a management by objectives approach. Thus,
the CEO may have a goal to double sales this year. Based on that, her vice president of
sales has his or her own sales goals, and each salesperson has his or her sales goal, set
in discussions with his or her supervisor.
HOW TO SET EFFECTIVE GOALS Behavioral science
research studies suggest four guidelines for setting performance goals:
1. Assign specific goals. Employees who receive specific goals usually perform
better than those who do not.
2. Assign measurable goals. Put goals in quantitative terms and include target dates
or deadlines.
3. Assign challenging but doable goals. Goals should be challenging, but not so
difficult that they appear impossible or unrealistic.
4. Encourage participation. The evidence suggests that participatively set goals do not
consistently result in higher performance than assigned goals, nor do assigned
goals consistently result in higher performance than participatively set ones. It is
only when the participatively set goals are more difficult (are set higher) than the
assigned ones that the participatively set goals produce higher performance. Because
it tends to be easier to set higher standards when your employees participate in
the process, participation tends to facilitate standards setting and performance.
TALENT MANAGEMENT: BASING APPRAISAL STANDARDS ON REQUIRED
COMPETENCIES Other firms appraise employees based on the competencies and
skills the job requires. For example, BP s exploration division appraises and rewards
employees based on a skills matrix. This matrix shows (1) the basic skills required to do
that job (such as technical expertise ) and (2) the minimum level of each skill that job requires.

29. THE ROLE OF JOB DESCRIPTIONS Ideally,what to appraise and how to appraise
it will be obvious from the job description. In terms of what criteria to appraise, the job
description should list the job s duties or tasks, including how critical each is to the
job, and how often it s performed. For example, a nurse s job description may include
safely administer patient medication as a task. You might then appraise the nurse on
how well he or she safely administers patient medication, for instance using data from
periodic hospital safety inspections.13 The job description may also include strategically
important behaviors such as building patient trust and satisfaction.
Who Should Do the Appraising?
Appraisals by the immediate supervisor are still the heart of most appraisal processes.
Getting a supervisor s appraisal is relatively straightforward and makes sense. The
supervisor is usually in the best position to observe and evaluate his or her subordinate s
performance. The supervisor is also responsible for that persons performance.
The human resources department serves a policy-making and advisory role.
Generally, human resource managers provide the advice and the appraisal tool to use,
but leave final decisions on procedures to operating division heads. The human
resource team should also be responsible for training supervisors to improve their
appraisal skills, for monitoring the appraisal systems effectiveness, and for ensuring
that it complies with EEO laws.
Yet, although widely used, relying only on supervisors appraisals isn’t always advisable.
For example, an employee s supervisor may not understand or appreciate how customers
and colleagues see the employee s performance. Furthermore, there is always some
danger of bias for or against the employee. If so, managers have several options.
PEER APPRAISALS With more firms using self-managing teams, appraisal of
an employee by his or her peers peer appraisal is popular. Typically, an
employee due for an annual appraisal chooses an appraisal chairperson.
The latter then selects one supervisor and three peers to evaluate the employee s work.
Research indicates that peer appraisals can be effective. One study involved undergraduates
placed into self-managing work groups. The researchers found that peer appraisals had an
immediate positive impact on [improving] perception of open communication, task motivation,
social loafing, group viability, cohesion, and satisfaction. 14 Employees, in other words, seem to
be motivated to meet their colleague’s expectations.
RATING COMMITTEES A rating committee is usually
composed of the employee s immediate supervisor and three
or four other supervisors.15
Using multiple raters is advantageous. It can help cancel
out problems such as bias on the part of individual raters.16 It can also provide a way to
include in the appraisal the different facets of an employee s performance observed by
different appraisers. Multiple raters often see different facets of an employee s performance.
Studies often find that the ratings obtained from different sources rarely match.17
It s therefore advisable to obtain ratings from the supervisor, his or her boss, and at least
one other manager who is familiar with the employee s work
SELF-RATINGS Some employers obtain employees self-ratings, usually in conjunction
with supervisors ratings. The basic problem, of course, is that employees usually
rate themselves higher than do their supervisors or peers.19 One study found that, when
asked to rate their own job performances, 40% of employees in jobs of all types placed
themselves in the top 10%, and virtually all remaining employees rated themselves at

30. least in the top 50%.20 In another study, subjects self-ratings correlated negatively with
their subsequent performance in an assessment center the higher they appraised themselves,
the worse they did in the center. In contrast, an average of the persons supervisor,
peer, and subordinate ratings predicted the subjects assessment center performance.21
APPRAISAL BY SUBORDINATES Many employers have subordinates rate their
managers, usually for developmental rather than for pay purposes. Anonymity affects
the feedback. Managers who receive feedback from subordinates who identify
themselves view the upward feedback process more positively. However, subordinates
prefer giving anonymous responses (not surprisingly), and those who must identify
themselves tend to give inflated ratings.22
360-DEGREE FEEDBACK With 360-degree feedback, the employer collects performance
information all around an employee from his or her supervisors, subordinates,
peers, and internal or external customers generally for developmental
rather than pay purposes.25 The usual process is to have the raters complete online
appraisal surveys on the rate.
There are several ways to improve 360-degree appraisals.
* Anchor the 360-degree rating dimensions (such as conflict management ) with
specific behavioral examples (such as effectively deals with conflicts ).27
* Carefully train the people who are giving and receiving the feedback.28
* With so many appraisers involved, each potentially with his or her own ax to
grind, make sure that the feedback the person receives is productive, unbiased,
and development oriented.29
* Reduce the administrative costs associated with collecting multisource feedback by
using a Web-based system such as the one in Figure 9-2. This lets the rater log in,
open a screen with a rating scale, and rate the person along a series of competencies
with ratings such as capable and effective. 30
TECHNIQUES FOR APPRAISING PERFORMANCE
The manager generally conducts the actual appraisal using a formal tool or
method like one or more of those described next. The two basic questions in
designing the actual appraisal tool are what performance dimensions to measure,
and how to measure them. For example, in terms of what dimensions to
measure, we might measure the employee s performance in terms of generic
dimensions such as quality and timeliness, or with respect to achieving specific
goals. In terms of how to measure it, you can use one or more of various
tools or methods, such as graphic rating scales or forced distribution
( grading on a curve ).We ll start with the most popular, graphic rating scales.
Graphic Rating Scale Method
The graphic rating scale is the simplest and most popular method for
appraising performance. A scale that lists a number of traits and arrange of performance for each.
The employee is then rated by identifying the score that best describes his or her level of
performance for each trait.

31. Alternation Ranking Method
Ranking employees from best to worst on a trait or traits is another option. Since it is
usually easier to distinguish between the worst and best employees, an alternation
ranking method is most popular. First, list all subordinates to be rated, and then
cross out the names of any not known well enough to rank. Then, on a form like that
in Figure 9-6, indicate the employee who is the highest on the performance dimension
being measured and the one who is the lowest.Then choose the next highest and the next
lowest, alternating between highest and lowest until all employees have been ranked.
Paired Comparison Method
The paired comparison method helps make the ranking method more precise. For
every trait (quantity of work, quality of work, and so on), you pair and compare every
subordinate with every other subordinate.
Forced Distribution Method
The forced distribution method is similar to grading on a curve. With this method,
you place predetermined percentages of rates into several performance categories.
Critical Incident Method
With the critical incident method, the supervisor keeps a log of positive and negative
examples (critical incidents) of a subordinate s work-related behavior. Every 6 months
or so, supervisor and subordinate meet to discuss the latter s performance, using the
incidents as examples.
Compiling incidents is useful. It provides examples of good and poor performance
the supervisor can use to explain the person s rating. It makes the supervisor
think about the subordinate s appraisal all during the year (so the rating does not
just reflect the employee s most recent performance).
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