Richard L. Daft - Management. 9th ed., 2010

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PART 4 ORGANIZING320

E-cruiting Today, much recruiting is done via the Internet.

E-cruiting, or recruiting

job applicants online, dramatically extends the organization’s recruiting reach, offer-

ing access to a wider pool of applicants and saving time and money. Besides posting

job openings on company Web sites, many organizations use commercial recruiting

sites where job seekers can post their résumés and companies can search for quali ed

applicants. In addition, in industries where competition for highly skilled employees

is stiff, new online services emerge to help managers search for “passive candidates,”

people who aren’t looking for jobs but might be the best  t for a company’s opening.

Red 5 Studios Inc. took a highly creative approach to recruit passive candidates in the

hot market for videogame producers.

Several members of the team behind the popular online game “World of Warcraft” decided

to start their own company, and Red 5 Studios was born. But the start-up quickly ran into a

problem—how to attract good employees in an industry where competition for talent is stiff.

The team decided to make a list of their “dream hires” and then set about recruiting them.

They learned everything they could about each dream developer to personalize the pitch—

searching on Google, playing the developer’s games, tracking down the prospects’ blogs and

posts in industry forums, and so forth.

When the research was complete, Red 5 sent each prospect a package of boxes, nested

like a Russian doll. In the ﬁ nal box was an iPod Shufﬂ e engraved with the prospect’s name

and containing a recorded recruiting message from CEO Mark Kern. The recruiting strategy

worked. Four months later, three of the passive candidates had joined Red 5 Studios, with

another considering making the move.

Innovations in Recruiting As the previous exam-

ple shows, managers sometimes have to  nd innovative

approaches to recruit the right people. Organizations look

for ways to enhance their recruiting success. One highly

effective method is getting referrals from current employ-

ees. Many organizations offer cash awards to employees

who submits names of people who subsequently accept

employment because referral by current employees is

one of the cheapest and most reliable methods of exter-

nal recruiting.

Companies also are increasingly search-

ing among the membership of relevant trade groups, such

as at trade shows, meetings, and on the associations’ Web

sites. “All the good candidates seem to belong to a particu-

lar association and the ones who aren’t as skilled usually

don’t,” explains one recruiter.

Some organizations also turn to nontraditional sources

to  nd dedicated employees, particularly in a tight labor

market. For example, when Walker Harris couldn’t  nd

workers for his ice company on the west side of Chicago,

Harris Ice, he began hiring former prison inmates, many

of whom have turned out to be reliable, loyal employees.

In Louisville, Kentucky, where the traditional labor force

is shrinking, companies such as UPS, Allied Van Lines,

and General Electric are  nding a source of hard-work-

ing employees among Asian, African, and Eastern Euro-

pean immigrants  eeing persecution.

Since 1998, Bank

of America has hired and trained more than 3,000 former

welfare recipients in positions that offer the potential for

promotions and long-term careers. Numerous companies

recruit older workers, who typically have lower turnover

rates, especially for part-time jobs. The Home Depot offers

“snowbird specials”—winter work in Florida and summers

Red 5 Studios Inc.

Innovative Way

This ad from Black Enterprise maga-

zine enhances external recruiting by giving potential applicants a

realistic job preview. The applicant must possess critical skills such

as speaking a foreign language, have a four-year college degree

plus three years of professional work experience, be willing to live

anywhere on assignment, be between the ages of 23 and 36, and

be able to pass “a rigorous physical ﬁ tness test.” If you possess

these requirements, you can even apply online at http://www

.fbijobs.com.

U.S. FEDERAL GOVERNMENT, U.S. DEPARTMENT OF JUS

TICE

CHAPTER 11 MANAGING HUMAN RESOURCES 321

Organizing

in Maine. Border’s Bookstores entices retired teachers with book discounts and read-

ing and discussion groups.

Recruiting on a global basis is on the rise as well. Public

schools are recruiting teachers from overseas. High-tech companies are looking for

quali ed workers in foreign countries because they cannot  nd people with the right

skills in the United States.

Refer back to the opening questionnaire to test your own preparation as a new

manager for recruiting and selecting the right people for your team. Do you have

what it takes?

Selecting

The next step for managers is to select desired employees from the pool of recruited

applicants. In the selection process, employers assess applicants’ characteristics in an

attempt to determine the “ t” between the job and applicant characteristics. Several

selection devices are used for assessing applicant quali cations. The most frequently

used are the application form, interview, employment test, and assessment center.

Studies indicate that the greater the skill requirements and work demands of an open

position, the greater the number and variety of selection tools the organization will

use.

Human resource professionals may use a combination of devices to get an idea

of a candidate’s potential performance.

Application Form The application form is used to collect information about the

applicant’s education, previous job experience, and other background characteristics.

Research in the life insurance industry shows that biographical information invento-

ries can validly predict future job success.

One pitfall to be avoided is the inclusion of questions that are irrelevant to job suc-

cess. In line with af rmative action, the application form should not ask questions

that will create an adverse impact on protected groups unless the questions are clearly

related to the job.

For example, employers should not ask whether the applicant rents

or owns his or her own home because (1) an applicant’s response might adversely affect

his or her chances at the job, (2) minorities and women may be less likely to own a home,

and (3) home ownership is probably unrelated to job performance. By contrast, the CPA

exam is relevant to job performance in a CPA  rm; thus, it is appropriate to ask whether

an applicant for employment has passed the CPA exam, even if only one-half of all

female or minority applicants have done so versus nine-tenths of male applicants.

Interview The interview serves as a two-way communication channel that allows

both the organization and the applicant to collect information that otherwise might

be dif cult to obtain. This selection technique is used in almost every job category in

nearly every organization. It is another area where the organization can get into legal

trouble if the interviewer asks questions that violate EEO guidelines. Exhibit 11.9 lists

some examples of appropriate and inappropriate interview questions.

However, the interview is not generally a good predictor of job performance. One

estimate is that conventional interviews have a .2 correlation with predicting a suc-

cessful hire.

People can improve their chances of having a successful interview by

understanding some common pet peeves that trigger a negative response from inter-

viewers, as outlined in the Manager’s Shoptalk on page 323.

Today’s managers are trying different approaches to overcome the limitations of

the interview. Some put candidates through a series of interviews, each one conducted

by a different person and each one probing a different aspect of the candidate. Others

use panel interviews, in which the candidate meets with several interviewers who take

turns asking questions.

Some organizations also supplement traditional interviewing

information with computer-based interviews. This type of interview typically requires a

candidate to answer a series of multiple-choice questions tailored to the speci c job.

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PART 4 ORGANIZING322

The answers are compared to an ideal pro le or to a pro le developed on the basis of

other candidates. Companies such as Pinkerton Security, Coopers & Lybrand, and Pic

n’ Pay Shoe Stores have found computer-based interviews to be valuable for search-

ing out information regarding the applicant’s honesty, work attitude, drug history,

candor, dependability, and self-motivation.

As a new manager, get the right people in the right jobs by assessing your team’s or

department’s needs, offering realistic job previews, using a variety of recruiting and

selecting methods, and striving to match the needs and interests of the individual to

those of the organization.

Employment Test Employment tests may include intelligence tests, aptitude and

ability tests, and personality inventories. Many companies today are particularly

interested in personality inventories that measure such characteristics as openness

to learning, initiative, responsibility, creativity, and emotional stability. Companies

that put a premium on innovativeness and problem solving are also challenging

applicants with brain teasers, having them ponder questions such as how many golf

balls will  t inside a school bus. The answers aren’t as important as how the appli-

cant goes about solving the problem. See how you do answering the brain teasers in

Exhibit 11.10 on page 324.

Assessment Center First developed by psychologists at AT&T, assessment cen-

ters are used to select individuals with high potential for managerial careers by

such organizations as IBM, General Electric, and JCPenney.

Assessment centers

TakeaMoment

Category Okay to Ask Inappropriate or Illegal to Ask

National origin • The applicant’s name

• If applicant has ever worked under a

different name

• The origin of applicant’s name

• Applicant’s ancestry/ethnicity

Race • Nothing • Race or color of skin

Disabilities • Whether applicant has any disabilities

that might inhibit performance of job

• If applicant has any physical or mental defects

• If applicant has ever ﬁ led workers’

compensation claim

Age • If applicant is over 18 • Applicant’s age

• When applicant graduated from high school

Religion • Nothing • Applicant’s religious afﬁ liation

• What religious holidays applicant observes

Criminal record • If applicant has ever been convicted of

a crime

• If applicant has ever been arrested

Marital/family status • Nothing • Marital status, number of children or planned

children

• Childcare arrangements

Education and experience

• Where applicant went to school

• Prior work experience

• When applicant graduated

• Hobbies

Citizenship

• If applicant has a legal right to work in

the United States

• If applicant is a citizen of another country

SOURCES: Based on “Appropriate and Inappropriate Interview Questions,”in George Bohlander, Scott Snell, and Arthur Sherman, Managing Human Resources, 12th ed.

(Cincinnati, OH: South-Western, 2001): 207; and “Guidelines to Lawful and Unlawful Preemployment Inquiries,”Appendix E, in Robert L. Mathis and John H. Jackson,

Human Resource Management, 2nd ed. (Cincinnati, OH: South-Western, 2002), 189–190.

EXHIBIT 11.9 Employment Applications and Interviews: What Can You Ask?

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CHAPTER 11 MANAGING HUMAN RESOURCES 323

Organizing

present a series of managerial situations to groups of applicants over a two- or three-

day period, for example. One technique is the in-basket simulation, which requires

the applicant to play the role of a manager who must decide how to respond to

ten memos in his or her in-basket within a two-hour period. Panels of two or three

trained judges observe the applicant’s decisions and assess the extent to which they

re ect interpersonal, communication, and problem-solving skills. At a Michigan

auto parts plant that makes a joint-venture engine from Daimler-Chrysler, Mitsubi-

shi, and Hyundai, applicants for plant manager go through four-hour “day-in-the-

life” simulations in which they have to juggle memos, phone calls, and employee

or job problems.

Some organizations now use this technique for hiring front-line workers as well.

Mercury Communications in England uses an assessment center to select customer

assistants. Applicants participate in simulated exercises with customers and in vari-

ous other exercises designed to assess their listening skills, customer sensitivity, and

ability to cope under pressure.

Have you ever had a job interview where everything

seems to be going well but then takes a drastic turn

for the worse? Understanding common blunders that

tick off interviewers can make you more successful as

both a job candidate and an interviewer. Here’s one

expert’s list of the top seven:

1. Not communicating enough. People who won’t

talk drive interviewers crazy. These folks offer

short answers to open-ended questions and

don’t follow up when the interviewer prods for

more information.

2. Not making eye contact. Candidates who look

around everywhere except at the interviewer

provoke distrust. One expert advises extremely

shy people to look at the interviewer’s “third

eye,” just above and between the person’s two

eyes, to avoid this blunder.

3. Talking too much. Answering questions fully is

important, but a candidate who babbles on and

on puts most interviewers off.

4. Using street slang or unprofessional language.

Street-speak doesn’t  t most corporate domains.

In addition, saying like, uh, or um every other

word quickly loses an interviewer’s attention.

5. Stretching the truth. People want to present

themselves in the best light, but many candi-

dates go too far, embellishing their skills, hiding

past job failures, or outright lying about edu-

cational quali cations. Interviewers can often

sense this, which destroys trust.

6. Making a fashion statement. In most cases, peo-

ple should wear traditional professional dress

for an interview.

7. Failing to effectively close. Interviewers like a

candidate who closes the interview by stating

their interest or asking about the next step in the

process, rather than just letting the interview

fade away.

There are even more outlandish blunders that

occasionally occur. Here are some of the unusual

things that have happened during job interviews,

based on surveys of vice presidents and human

resource directors at major U.S. corporations:

▪ The applicant announced she hadn’t had lunch

and proceeded to eat a hamburger and french

fries in the interviewer’s of ce.

▪ When asked if he had any questions about

the job, the candidate answered, “Can I get an

advance on my paycheck?”

▪ The applicant chewed bubble gum and con-

stantly blew bubbles.

▪ The job candidate said the main thing he was

looking for in a job was a quiet place where no

one would bother him.

▪ The job applicant challenged the interviewer to

arm wrestle.

SOURCES: Indira Dharchaudhuri, “Interviewers Pet Peeves,”

Hindustan Times, February 24, 2004; and Martha H. Peak,

“What Color Is Your Bumbershoot?” Management Review

(October 1989): 63.

What Makes a Good Interview Go Bad?

Manager’sShoptalk

PART 4 ORGANIZING324

Online Checks One of the newest ways of gauging

whether a candidate is right for the company is by see-

ing what the person has to say about him or herself on

social networking sites such as Facebook and MySpace.

Recent college graduates looking for jobs have found

doors closed to them because of risqué or teasing photos

or vivid comments about drinking, drug use, or sexual

exploits. Recruiters from more than two dozen compa-

nies told career counselors at New York University, for

example, that if an applicant’s online presentation raises

red  ags, the person isn’t likely to even get an interview.

Companies today are not only interested in a candidate’s

educational and work quali cations, but also in personal

characteristics and values that  t with the organization’s

culture. One recruiter said the open admission of exces-

sive drinking and so forth makes managers question the

applicant’s maturity and judgment.

MANAGING TALENT

Following selection, the next goal of HRM is to develop

employees into an effective workforce. Key development

activities include training and performance appraisal.

Training and Development

Training and development represent a planned effort by an organization to facilitate

employees’ learning of job-related skills and behaviors.

Organizations spent some

$58.5 billion on training in 2007, with more than $16 billion of that spent on outside

learning products and services. Exhibit 11.11 shows some frequently used types and

methods of training in today’s organizations. One of the fastest growing methods is

the use of podcasting, which jumped from 5 percent in 2006 to 15 percent in 2007.

EXHIBIT 11.10

Try Your Hand at Some Interview Brain Teasers

How would you answer the following questions in a job interview?

1. How would you weigh a jet plane without using scales?

2. Why are manhole covers round?

3. How many golf balls can ﬁ t inside a standard school bus?

4. How much should you charge to wash all the windows in Seattle?

5. You’re shrunk and trapped in a blender that will turn on in 60 seconds. What do you do?

Answers: There might be many solutions to these questions. Here are some that interviewers con-

sider good answers:

1. Fly it onto an aircraft carrier or other ship big enough to hold it. Paint a mark on the hull of the

ship showing the water level. Then remove the jet. The ship will rise in the water. Now load the

ship with items of known weight (100 lb. bales of cotton, for instance) until it sinks to exactly

the line you painted on the hull. The total weight of the items will equal the weight of the jet.

2. A square cover might fall into its hole. If you hold a square manhole cover vertically and turn it

a little, it will fall easily into the hole. In contrast, a round cover with a slight recess in the center

can never fall in, no matter how it is held.

3. About 500,000, assuming the bus is 50 balls high, 50 balls wide, and 200 balls long.

4. Assuming 10,000 city blocks, 600 windows per block, ﬁ ve minutes per window, and a rate of

$20 per hour, about $10 million.

5. Use the measurement marks on the side of the container to climb out.

SOURCES: These questions are used at companies such as Microsoft, Google, and eBay. Reported in Michael Kaplan, “Job

Interview Brainteasers,” Business 2.0 (September 2007): 35–37; and William Poundstone, “Impossible Questions,” Across the

Board (September–October 2003): 44–48.

Employment tests range from

personality proﬁ les to proﬁ ciency testing in speciﬁ c skills required

for a position. For a 911 operator position, an applicant should

expect to take tests like data entry for speed and accuracy, 911

address checking, 911 grid map reading and direction accuracy,

911 memorization, customer service assessment, and a personal

characteristics proﬁ le. Here, Rick Bias, 911 Communications Director

for Morgan County, Missouri, oversees operations in the Public Service

Answer Point Area.

CHAPTER 11 MANAGING HUMAN RESOURCES 325

Organizing

On-the-Job Training The most common method of training is on-the-job train-

ing. In on-the-job training (OJT), an experienced employee is asked to take a new

employee “under his or her wing” and show the newcomer how to perform job

duties. OJT has many advantages, such as few out-of-pocket costs for training facili-

ties, materials, or instructor fees and easy transfer of learning back to the job. When

implemented well, OJT is considered the fastest and most effective means of facili-

tating learning in the workplace.

One type of on-the-job training involves moving

people to various types of jobs within the organization, where they work with expe-

rienced employees to learn different tasks. This cross-training may place an employee

in a new position for as short a time as a few hours or for as long as a year, enabling

the employee to develop new skills and giving the organization greater  exibility.

Corporate Universities Another popular approach to training and development

is the corporate university. A corporate university is an in-house training and educa-

tion facility that offers broad-based learning opportunities for employees—and fre-

quently for customers, suppliers, and strategic partners as well—throughout their

careers.

One well-known corporate university is Hamburger University, McDon-

ald’s worldwide training center, which has been in existence for more than 40 years.

Numerous other companies, including IBM, FedEx, General Electric, Intel, Harley-Da-

vidson, and Capital One, pump millions of dollars into corporate universities to con-

tinually build human capital.

Employees at Caterpillar attend courses at Caterpillar

EXHIBIT 11.11 Methods and Goals of Training

SOURCES: Methods data from Tammy Galvin, “2003 Industry Report,” Training (October 2003): 21 (Reprinted with permission from the October

Report,” Training (November–December 2007): 18.

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PART 4 ORGANIZING326

University, which combines e-training,

classroom sessions, and hands-on training

activities. The U.S. Department of Defense

runs Defense Acquisition University to pro-

vide ongoing training to 129,000 military

and civilian workers in acquisitions, tech-

nology, and logistics.

Promotion from Within Another way to

further employee development is through

promotion from within, which helps com-

panies retain and develop valuable peo-

ple. Promotions provide more challenging

assignments, prescribe new responsibilities,

and help employees grow by expanding

and developing their abilities. The Peebles

Hydro Hotel in Scotland is passionate about

promoting from within as a way to retain

good people and give them opportunities

for growth. A maid has been promoted to

head housekeeper, a wine waitress to restau-

rant head, and a student worker to deputy

manager. The hotel also provides constant

training in all areas. These techniques, combined with a commitment to job  exibility,

have helped the hotel retain high-quality workers at a time when others in the tourism

and hospitality industry are suffering from a shortage of skilled labor. Staff members

with 10, 15, or even 20 years of service aren’t uncommon at Hydro.

Mentoring and Coaching For many management and professional jobs, tradi-

tional on-the-job training is supplemented or replaced by mentoring and coaching.

With mentoring, an experienced employee guides and supports a newcomer or less-

experienced employee. Mentors typically offer counsel regarding how to network

and advance in the company in addition to guiding the employee in developing his

or her skills and abilities. Coaching is a method of directing, instructing, and train-

ing a person with the goal to develop speci c management skills. Coaching usually

applies to higher-level managers who want to develop their personal competencies.

For instance, a coach might observe a senior executive in action and provide feed-

back about how the executive can improve her interaction skills. Managers can also

discuss dif cult situations as they arise, with the coach helping them work through

various alternative scenarios for dealing with the situation.

Performance Appraisal

Performance appraisal comprises the steps of observing and assessing employee per-

formance, recording the assessment, and providing feedback to the employee. Dur-

ing performance appraisal, skillful managers give feedback and praise concerning the

acceptable elements of the employee’s performance. They also describe performance

areas that need improvement. Employees can use this information to change their job

performance. Unfortunately, only three in ten employees in a recent survey believe

their companies’ performance review system actually helps to improve performance,

indicating a need for improved methods of appraisal and feedback.

Generally, HRM professionals concentrate on two things to make performance

appraisal a positive force in their organizations: (1) the accurate assessment of perfor-

mance through the development and application of assessment systems such as rating

scales, and (2) training managers to effectively use the performance appraisal interview,

so managers can provide feedback that will reinforce good performance and motivate

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“We don’t do training,” says Equifax senior vice president

and chief learning ofﬁ cer Lynn Slavenski. “We do change.” Slavenski oversaw the establish-

ment of Equifax University for the consumer credit reporting company. What distinguishes

corporate universities from most old-style training programs is that the courses—from

classes teaching a speciﬁ c technical skill to corporate-run MBA programs—are intentionally

designed to foster the changes needed to achieve the organization’s strategy.

CHAPTER 11 MANAGING HUMAN RESOURCES 327

Organizing

employee development. Current thinking is that performance appraisal should be

ongoing, not something that is done once a year as part of a consideration of raises.

Assessing Performance Accurately To obtain an accurate performance rating,

managers acknowledge that jobs are multidimensional and performance thus may

be multidimensional as well. For example, a sports broadcaster might perform well

on the job-knowledge dimension; that is, she or he might be able to report facts and

 gures about the players and describe which rule applies when there is a question-

able play on the  eld. But the same broadcaster might not perform as well on another

dimension, such as communication. The person might be unable to express the infor-

mation in a colorful way that interests the audience or might interrupt the other

broadcasters. For performance to be rated accurately, the appraisal system should

require the rater to assess each relevant performance dimension. A multidimensional

form increases the usefulness of the performance appraisal and facilitates employee

growth and development.

A recent trend in performance appraisal is called 360-degree feedback, a pro-

cess that uses multiple raters, including self-rating, as a way to increase awareness

of strengths and weaknesses and guide employee development. Members of the

appraisal group may include supervisors, coworkers, and customers, as well as the

individual, thus providing appraisal of the employee from a variety of perspectives.

One study found that 26 percent of companies used some type of multirater perfor-

mance appraisal.

Another alternative performance-evaluation method is the performance review

ranking system.

This method is increasingly coming under  re because it essentially

evaluates employees by pitting them against one another. As most commonly used,

a manager evaluates his or her direct reports relative to one another and categorizes

each on a scale, such as A = outstanding performance (20 percent), B = high-middle

performance (70 percent), or C = in need of improvement (10 percent). Some com-

panies routinely  re those managers falling in the bottom 10 percent of the ranking.

Proponents say the technique provides an effective way to assess performance and

offer guidance for employee development. But critics of these systems, sometimes

called rank and yank, argue that they are based on subjective judgments, produce

skewed results, and discriminate against employees who are “different” from the

mainstream. One study found that forced rankings that include  ring the bottom 5 or

10 percent can lead to a dramatic improvement in organizational performance in the

short term, but the bene ts dissipate over several years as people become focused on

competing with one another rather than improving the business.

Many companies

are building more  exibility into the performance review ranking system, and some

are abandoning it altogether.

Despite these concerns, the appropriate use of performance ranking has been use-

ful for many companies, especially as a short-term way to improve performance.

Consider how a variation of the system helps U.S. restaurant chain Applebee’s retain

quality workers in the high-turnover restaurant business.

Most people working in fast-food and casual dining restaurants don’t stay long. Turnover

of hourly employees is a perpetual problem, averaging more than 200 percent a year in the

casual dining sector for the past 30 years. Applebee’s managers wanted to reduce their turn-

over rate, but they also wanted to focus their retention efforts on the best people.

A key aspect of the new retention strategy is the Applebee’s Performance Management

system. Twice a year, each hourly employee is rated on characteristics such as reliability,

guest service, attitude, and teamwork. Managers then look at how each employee ranks with

respect to all others in the restaurant, separating employees into the top 20 percent, the

middle 60 percent, and the bottom 20 percent. Store managers are rewarded for retaining

the top and middle performers.

The system is not the basis for  ring low-ranking employees, but they usually

leave soon enough anyway. Its value lies in helping managers focus their retention

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PART 4 ORGANIZING328

efforts on the more valuable employees. It’s paying off. The turnover rate has dropped

50 percent since Applebee’s began using the ranking system.

Performance Evaluation Errors Although we would like to believe that

every manager assesses employees’ performance in a careful and bias-free man-

ner, researchers have identi ed several rating problems.

One of the most dan-

gerous is stereotyping, which occurs when a rater places an employee into a class

or category based on one or a few traits or characteristics—for example, stereo-

typing an older worker as slower and more dif cult to train. Another rating error

is the halo effect, in which a manager gives an employee the same rating on all

dimensions even if his or her performance is good on some dimensions and poor

on others.

One approach to overcome performance evaluation errors is to use a behavior-based

rating technique, such as the behaviorally anchored rating scale. The behaviorally

anchored rating scale (BARS) is developed from critical incidents pertaining to job per-

formance. Each job performance scale is anchored with speci c behavioral statements

that describe varying degrees of performance. By relating employee performance to

speci c incidents, raters can more accurately evaluate an employee’s performance.

Exhibit 11.12 illustrates the BARS method for evaluating a production line super-

visor. The production supervisor’s job can be broken down into several dimensions,

such as equipment maintenance, employee training, or work scheduling. A behavior-

ally anchored rating scale should be developed for each dimension. The dimension

in Exhibit 11.12 is work scheduling. Good performance is represented by a 4 or 5 on

the scale and unacceptable performance as a 1 or 2. If a production supervisor’s job

has eight dimensions, the total performance evaluation will be the sum of the scores

for each of eight scales.

As a new manager evaluating subordinates, remember that jobs are multidimensional

and people need to be evaluated separately on each relevant dimension so they can

be rewarded appropriately and improve their performance where needed. Be aware

of your own prejudices so you can avoid stereotyping people during evaluations.

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cs.

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ee receives the same ratin

n a

imensions re

ess

is or

er per

ormance on

ivi

ones.

ehaviorally anchored rat-

ng scale (BARS) A ratin

nique t

at re

ates an em

oyee’s per

ormance to speci

ﬁ

-re

ate

inci

ents

SOURCES: Based on J. P. Campbell, M. D. Dunnette, R. D. Arvey, and L. V. Hellervik, “The Development and Evaluation of Behaviorally Based Rating Scales,”

Journal of Applied Psychology 57 (1973): 15–22; and Francine Alexander, “Performance Appraisals,” Small Business Reports (March 1989): 20–29.

EXHIBIT 11.12 Example of a Behaviorally Anchored Rating Scale

CHAPTER 11 MANAGING HUMAN RESOURCES 329

Organizing

MAINTAINING AN EFFECTIVE WORKFORCE

Now we turn to the topic of how managers and HRM professionals maintain a

workforce that has been recruited and developed. Maintenance of the current work-

force involves compensation, wage and salary systems, bene ts, and occasional

terminations.

Compensation

The term compensation refers to: (1) all monetary payments and (2) all goods or com-

modities used in lieu of money to reward employees.

An organization’s compensa-

tion structure includes wages and/or salaries and bene ts such as health insurance,

paid vacations, or employee  tness centers. Developing an effective compensation

system is an important part of human resource management because it helps to

attract and retain talented workers. In addition, a company’s compensation system

has an impact on strategic performance.

Human resource managers design the pay

and bene ts systems to  t company strategy and to provide compensation equity.

Wage and Salary Systems Ideally, management’s strategy for the organization

should be a critical determinant of the features and operations of the pay system.

For example, managers may have the goal of maintaining or improving pro tability

or market share by stimulating employee performance. Thus, they should design

and use a merit pay system rather than a system based on other criteria such as

seniority.

The most common approach to employee compensation is job-based pay, which

means linking compensation to the speci c tasks an employee performs. However,

these systems present several problems. For one thing, job-based pay may fail to

reward the type of learning behavior needed for the organization to adapt and sur-

vive in today’s environment. In addition, these systems reinforce an emphasis on

organizational hierarchy and centralized decision making and control, which are

inconsistent with the growing emphasis on employee participation and increased

responsibility.

Skill-based pay systems are becoming increasingly popular in both large and small

companies, including Sherwin-Williams, Au Bon Pain, and Quaker Oats. Employ-

ees with higher skill levels receive higher pay than those with lower skill levels. At

Quaker Oats pet food plant in Topeka, Kansas, for example, employees might start

at something like $8.75 per hour but reach a top hourly rate of $14.50 when they

master a series of skills.

Also called competency-based pay, skill-based pay systems

encourage employees to develop their skills and competencies, thus making them

more valuable to the organization as well as more employable if they leave their

current jobs.

Compensation Equity Whether the organization uses job-based pay or skill-

based pay, good managers strive to maintain a sense of fairness and equity within

the pay structure and thereby fortify employee morale. Job evaluation refers to the

process of determining the value or worth of jobs within an organization through an

examination of job content. Job evaluation techniques enable managers to compare

similar and dissimilar jobs and to determine internally equitable pay rates—that is,

pay rates that employees believe are fair compared with those for other jobs in the

organization.

Organizations also want to make sure their pay rates are fair compared to other

companies. HRM managers may obtain wage and salary surveys that show what

other organizations pay incumbents in jobs that match a sample of “key” jobs selected

by the organization. These surveys are available from a number of sources, including

the U.S. Bureau of Labor Statistics National Compensation Survey.

com

ensation

onetary

ments (wa

es, salaries)

d nonmonetar

oods/

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ons

)

o rewar

oyees

ob evaluation The

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f determinin

the value of

ithin an or

anization throu

examination o

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age and salary surveys

urve

s that show what other

anizations pa

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obs that match a sample

“

”

s se

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rganization