Sample only. human resource. management in practice. Noe / Hollenbeck / Gerhart / Wright / Steel / McGill / Dein

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management in practice

human

resource

noe / hollenbeck / gerhart / Wright / steel / mcgill / Dein

For certiFicate iV bsb41013

anD Diploma bsb50613

mana

gement in pra

ctice

NOE HOLLENbECk GERHART WRIGHT STEEL MCGILL DEIN

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PART

1

The Human Resource Environment

……… 1

1 Managing Human Resources ……… 2

2 Trends in Human Resource Management ……… 26

3 Monitor and Contribute to a Safe Workplace ……… 56

PART

2

Acquiring and Preparing Human Resources

……… 89

4 Analysing Work and Designing Jobs ……… 90

5 Planning for and Recruiting Human Resources ……… 116

6 Selecting Employees and Placing them in Jobs ……… 147

7 Training Employees ……… 176

PART

3

Assessing Performance and Developing Employees

……… 207

8 Managing Employees’ Performance ……… 208

9 Developing Employees for Future Success ……… 240

10 Manage Separation or Termination ……… 271

PART

4

Compensating Human Resources

……… 301

11 Establishing a Pay Structure ……… 302

12 Recognising Employee Contributions with Pay ……… 325

13 Providing Employee Benefits ……… 349

PART

5

Meeting Other Human Resource Goals

……… 365

14 Employee Relations ……… 366

15 Managing Human Resources Globally ……… 388

16 Creating and Maintaining High-Performance Organizations ……… 421

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Preface ……… xiii

About the Authors ……… xv

Acknowledgements ……… xvii

PART

1

The Human Resource Environment

... 1

1 Managing Human Resources ... 2

Introduction ... 2

Human Resources and Company Performance ... 3

Functions of Human Resource Departments ... 5

Analysing and Designing Jobs ... 6

Recruiting and Hiring Employees ... 6

Training and Developing Employees ... 7

BesT PRAcTices Cooking Up a Service Strategy at Pret a Manger ... 8

Managing Performance ... 8

Planning and Administering Pay and Benefits ... 9

Maintaining Positive Employee Relations ... 9

Establishing and Administering Personnel Policies ... 9

Managing and Using Human Resource Data ... 10

Ensuring Compliance with Employment Laws ... 10

Supporting the Organisation’s Strategy ... 11

HR How To Aligning HR with the Organisation’s Strategy... 12

Skills of HRM Professionals ... 12

Service Level Agreements (SLA) ... 14

Monitoring and Evaluating HR Service Delivery ... 15

HR Responsibilities of Supervisors ... 16

Ethics in Human Resource Management ... 16

Employee Rights ... 17

Standards for Ethical Behaviour ... 17

Careers in Human Resource Management ... 18

Thinking Ethically: Are Smoking Breaks an Ethical Hr Policy? ... 20

Summary ... 20

Key Terms ... 21

Review and Discussion Questions ... 21

Experiencing HR ... 22

Taking Responsibility: Heroes of the Taj Mahal Palace Hotel ... 22

Managing Talent: Are Employees Golden at Gilt Groupe? ... 23

Twitter Focus: Managing HR at a Services Firm ... 24

Endnotes ... 24

2 Trends in Human Resource Management ... 26

Introduction ... 26

Change in the Labour Force ... 27

An Ageing Workforce ... 27

A Diverse Workforce ... 29

Skill Shortages in the Workforce ... 30

High-Performance Work Systems ... 31

Knowledge Workers ... 31

DiD You Know? Top 10 Occupations for Job Growth ... 32

Employee Empowerment ... 33

HR How To Empowering Employees to Innovate ... 34

Teamwork ... 34

Focus on Strategy ... 35

High Quality Standards ... 36

BesT PRAcTices Office Depot Learns to Put Customer Service First ... 37

Mergers and Acquisitions ... 37

Downsizing ... 38

Re-engineering ... 39

Outsourcing ... 39

Expanding into Global Markets ... 40

HR ooPs! We Thought Everyone Liked Group Projects ... 41

Technological Change in HRM ... 42

Electronic Human Resource Management (e-HRM) ... 42

Sharing of Human Resource Information ... 44

HRM sociAl MillerCoors Uses Social Media to Support Diversity ... 44

Change in the Employment Relationship ... 45

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A New Psychological Contract ... 45

Flexibility... 46

Thinking Ethically: What Boundaries Should Employers Set for Social Media? ... 48

Summary ... 49

Key Terms ... 50

Taking Responsibility: Procter & Gamble’s Purposeful Growth ... 51

Managing Talent: How HR Helps Newell Rubbermaid Navigate Change ... 52

Twitter Focus: Radio Flyer Rolls Forward ... 53

Endnotes ... 53

3 Monitor and Contribute to a Safe Workplace ... 56

Introduction ... 56

BesT PRAcTices Creating a Culture of Health and Safety Awareness: the Bechtel Experience ... 58

Legal Framework of WHS in the Workplace ... 58

Commonwealth Legislation ... 59

Role of the HSR ... 61

Health and Safety Committees ... 61

Duty of Care ... 62

HR ooPs! Occupational Health and Safety Viewpoints ... 65

Purpose of a WHSMS ... 66

Develop Policies and Procedures ... 67

Develop a WHS Plan ... 67

WHS Participative Arrangements ... 68

Evaluate Participative Arrangements ... 71

HRM sociAl What the National Institute for Occupational Safety and Health (NIOSH) Wants the Police to Watch on YouTube ... 71

DiD You Know? Causes of Workplace Injuries ... 72

Identify Hazards, Assess and Control Risk ...72

A Process Approach ... 73

Identify Hazards And Treat Risk ... 74

Types of Hazards ... 74

Purpose of Safety Inspections ... 75

Rank the Risk Associated with a Hazard ... 76

Investigate Incidents and Take Corrective Actions ... 80

WHS Records and Reporting ... 80

Incident Reporting ... 80

Audits and Compliance ... 82

Thinking Ethically: Workplace responsibilities ... 83

Summary ... 83

Key Terms ... 84

Taking Responsibility: Keeping IHOP Workers Safe ... 86

Managing Talent: Creating a Culture of Health and Safety Awareness ... 86

Twitter Focus: Harmonisation of WHS and its Impact on HRM ... 88

Bibliography ... 88

PART 2

Acquiring and Preparing Human

Resources

... 89

4 Analyzing Work and Designing Jobs ... 90

Introduction ... 90

Work Flow in Organisations ... 91

Work Flow Analysis ... 91

Work Flow Design and an Organisation’s Structure ... 92

BesT PRAcTices SeaMicro Designs Work to Stay Onshore ... 93

Job Analysis ... 93

Job Descriptions ... 93

Job Specifications ... 95

DiD You Know? About One in Three High School Grads Hold Middle-Class Jobs ... 96

Sources of Job Information ... 97

Position Analysis Questionnaire ... 97

Fleishman Job Analysis System ... 97

Importance of Job Analysis ... 98

Competency Models ... 99

Trends in Job Analysis ... 100

Job Design ... 101

Designing Efficient Jobs ... 102

Designing Jobs That Motivate ... 102

HR ooPs! Jobs that Literally Make People Sick ... 103

HR How To Job Flexibility Makes Work Motivational ... 106

Designing Ergonomic Jobs ... 107

Designing Jobs that Meet Mental Capabilities and Limitations ... 108

HRM sociAl Status Updates Help West Wing Writers Stay on the Same Page ... 108

Thinking Ethically:Should Employers Fret about Making Employees Happy? ... 109

Summary ... 110

Key Terms ... 111

Taking Responsibility: Job Design for Drivers Keeps UPS on the Road to Energy Efficiency ... 112

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Secours Health System ... 113

Twitter Focus: Inclusivity Defines BraunAbility’s Products and Its Jobs ... 114

Endnotes ... 114

5 Planning for and Recruiting Human Resources ... 116

Introduction ... 116

The Process of Human Resource Planning ... 117

Forecasting ... 117

Goal Setting and Strategic Planning ... 120

HR ooPs! Trimming More than the Fat ... 122

Implementing and Evaluating the HR Plan ... 126

Applying HR Planning to Affirmative Action ... 126

Recruiting Human Resources ... 127

Personnel Policies ... 128

Recruitment Sources ... 129

Internal Sources ... 129

DiD You Know? Four in Ten Positions are Filled with Insiders... 130

External Sources ... 130

HRM sociAl Social Networks can also be Career Networks ... 133

Evaluating the Quality of a Source ... 135

Recruiter Traits and Behaviours ... 136

BesT PRAcTices How Teach for America Aces the Recruiting Project ... 137

Characteristics of the Recruiter ... 137

Behaviour of the Recruiter ... 138

Enhancing the Recruiter’s Impact ... 138

Thinking Ethically: Is Socialscore Mixing Business and Pleasure? ... 139

Summary ... 140

Key Terms ... 141

Taking Responsibility: Can Chipotle Source Employees as Ethically as It Sources Food? ... 142

Managing Talent: Can Yahoo Still Attract Tech Workers? ... 143

Twitter Focus: For Personal Financial Advisors, a Small Staffing Plan with a Big Impact ... 144

Endnotes ... 144

6 Selecting Employees and Placing them in Jobs ... 147

Recruitment and Selection Process ... 148

Reliability ... 149

How Associated Bank Selects the Best, Even in Lean Times ... 150

Validity ... 151

Criterion-Related Validity ... 151

HR ooPs! Hiring Clones ... 151

Content and Construct Validity ... 152

Ability to Generalise ... 153

Practical Value ... 153

Legal Standards for Selection ... 153

Job Applications and Résumés ... 154

Application Forms ... 155

Résumés ... 157

References ... 157

HRM sociAl Will LinkedIn Make the Résumé Obsolete? ... 158

Background Checks ... 159

Employment Tests and Work Samples ... 159

Physical Ability Tests ... 160

Cognitive Ability Tests ... 160

Job Performance Tests and Work Samples ... 160

Personality Inventories ... 161

Honesty Tests and Drug Tests ... 162

DiD You Know? Drug Tests Are Becoming the Norm ... 162

Medical Examinations ... 163

Interviews ... 163

Interviewing Techniques ... 163

Advantages and Disadvantages of Interviewing ... 164

HR How To Interviewing Effectively ... 165

Preparing to Interview... 166

Selection Decisions ... 166

How Organisations Select Employees ... 166

Communicating the Decision ... 167

Thinking Ethically: Selecting Ethical Employees ... 168

Summary ... 168

Key Terms ... 170

Taking Responsibility: Customer-First Values Shape Hiring Decisions at Zappos ... 171

Managing Talent: Cutting Hiring Red Tape at the Office of Personnel Management ... 172

Twitter Focus: Kinaxis Chooses Sales Reps with Personality ... 173

Endnotes ... 173

7 Training Employees ... 176

Training Linked to Organisational Needs ... 177

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BesT PRAcTices

Development is Not the Same as Training ... 178

Needs Assessment ... 178

Organisation Analysis ... 179

Person Analysis ... 180

Task Analysis ... 180

Readiness for Training ... 181

Employee Readiness Characteristics ... 181

Work Environment ... 181

Planning the Training Program ... 182

Objectives of the Program ... 182

DiD You Know? Many Companies Outsource Training Tasks ... 183

In-House or Contracted Out? ... 183

Choice of Training Methods ... 183

Training Methods ... 184

Lecture Style Instruction ... 184

Audiovisual Training ... 184

Computer-Based Training ... 185

HR How To Developing Training Content for Mobile Devices ... 186

On-the-Job Training ... 186 Simulations ... 187 Case Studies ... 188 Behaviour Modelling ... 188 Experiential Programs ... 188 Team Training ... 189 Action Learning ... 190

Implementing the Training Program ... 190

Principles of Learning ... 190

Transfer of Training ... 192

HRM sociAl Social Learning ... 193

Measuring Results of Training ... 194

Evaluation Methods ... 194

Applying the Evaluation ... 195

Applications of Training ... 195

Orientation of New Employees ... 195

HR ooPs! A Revolving Door for Returning Vets ... 197

Diversity Training ... 197

Thinking Ethically: Can Employers Teach Ethics? ... 199

Summary ... 199

Key Terms ... 201

Taking Responsibility: Group learning and development ... 202

Managing Talent: SunTrust Takes Training to the Bank ... 202

Twitter Focus: How Nick’s Pizza Delivers Training Results ... 203

Endnotes ... 204

PART 3

Assessing Performance and

Developing Employees

...207

8 Managing Employees’ Performance ... 208

The Process of Performance Management ... 209

Purposes of Performance Management ... 210

Criteria for Effective Performance Management ... 211

Methods for Measuring Performance ... 212

Making Comparisons ... 212

BesT PRAcTices Best Practice in Performance Management ... 213

Rating Individuals ……… 215

Measuring Results ……… 220

Total Quality Management ……… 221

Sources of Performance Information ... 222

Managers ... 222

DiD You Know? Employees Want More Feedback ... 223

Peers ……… 223

Subordinates ……… 223

Self ………224

Customers ... 224

HRM sociAl Crowdsourcing: The Future of Appraisals? ... 225

Errors in Performance Measurement ... 225

Types of Rating Errors ……… 226

Ways to Reduce Errors ……… 226

Political Behaviour in Performance Appraisals ……… 226

Giving Performance Feedback ... 227

Scheduling Performance Feedback ……… 227

Preparing for a Feedback Session ……… 228

Conducting the Feedback Session ……… 228

Finding Solutions to Performance Problems ... 228

HR How To Discussing Employee Performance ... 229

Legal and Ethical Issues in Performance Management ... 230

Legal Requirements for Performance Management ……… 230

Electronic Monitoring and Employee Privacy ... 231

Thinking Ethically: Are Forced Rankings Fair? ... 232

Summary ... 232

Key Terms ... 234

Taking Responsibility: Performance Measurement for Public School Teachers ... 236

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Performance Measures ... 237

Twitter Focus: Appraisals Matter at Meadow Hills Veterinary Center ... 237

Endnotes ... 238

9 Developing Employees for Future Success ... 240

Training, Development and Career Management ... 241

Development and Training ... 241

Development for Careers ... 242

HR ooPs! Ignoring Middle Management ... 242

Approaches to Employee Development ... 243

Formal Education ... 243

Job Experiences ... 248

BesT PRAcTices Leadership Development Gets Better at Brooks Rehabilitation ... 249

Interpersonal Relationships ... 252

HRM sociAl Change Anything: Can a Website Make You Great?... 253

Systems for Career Management ... 254

Data Gathering ... 254

Feedback ... 255

Goal Setting ... 256

Action Planning and Follow-Up ... 256

Development-Related Challenges ... 258

The Glass Ceiling ... 258

DiD You Know? Women in Senior Executive Positions ... 258

Succession Planning ... 259

Dysfunctional Managers ... 260

HR How To Identifying High-Potential Employees... 261

Thinking Ethically: Who Gains from Employee Development? ... 261

Summary ... 262

Key Terms ... 263

Taking Responsibility: Linfox Logistics ... 265

Managing Talent: How GE Australia Develops the Best ... 266

Twitter Focus: Employee Sabbatical Benefits Others at Little Tokyo Service Center ... 267

Endnotes ... 267

Termination ... 271

Organisation Issues in Relation to Termination/Separation ... 272

HR ooPs! Embarrassed by an Executive Exodus... 272

Conciliation Results ... 275

Policies and Procedures Relating to Separation ... 275

Principles of Rairness and Justice ... 275

Summary Dismissal ... 276

Progressive Discipline ... 276

Alternative Dispute Resolution ... 278

Employee Assistance Programs ... 279

HR How To Responding to Employee Misconduct ... 279

Outplacement Counselling ... 280

Employee Engagement ... 281

Job Withdrawal ... 281

Job Dissatisfaction ... 282

Behaviour Change... 284

Physical Job Withdrawal ... 284

Psychological Withdrawal... 285

HRM sociAl Staying Connected to Former Employees ... 285

Job Satisfaction ... 286

Personal Dispositions ... 287

Tasks and Roles ... 287

DiD You Know? Office Workers Appreciate Help Balancing Roles and Learning New Skills... 288

Supervisors and Co-Workers ... 289

Pay and Benefits ... 290

BesT PRAcTices How NuStar Energy Keeps Employee Engagement Burning ... 290

Monitoring Job Satisfaction ... 291

Thinking Ethically: How Can Ethics Promote Job Satisfaction? ... 293

Summary ... 293

Key Terms ... 294

Taking Responsibility: Stryker’s Striking Commitment to Employee Engagement ... 295

Managing Talent: A Termination Controversy at Jet Propulsion Laboratory ... 296

Twitter Focus: Learning to Show Appreciation at Datotel ... 297

Endnotes ... 297

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PART 4

Compensating Human Resources

... 301

11 Establishing a Pay Structure ... 302

Decisions about Pay ... 303

Legal Requirements for Pay ... 304

Equal Employment Opportunity ... 304

HR ooPs! Minimum Wage ... 305

Overtime Pay ... 305

Economic Influences on Pay ... 305

Product Markets ... 306

Labour Markets ... 306

Pay Level: Deciding What to Pay ... 307

Gathering Information about Market Pay ... 307

DiD You Know? The Highest Pay Goes to Managers ... 308

Employee Judgments about Pay Fairness ... 309

Judging Fairness ... 309

HR How To Gathering Wage Data ... 309

Communicating Fairness ... 310

BesT PRAcTices How Google Gets a Good Return on Payroll ... 310

Job Structure: Relative Value of Jobs... 311

Pay Structure: Putting It All Together ... 312

Pay Rates ... 312

HRM sociAl Pay Me Less if You Must—Just Don’t Cut Me Off from Twitter ... 313

Pay Grades ... 314

Pay Ranges ... 314

Pay Differentials ... 315

Alternatives to Job-Based Pay ... 315

Pay Structure and Actual Pay ... 317

Current Issues Involving Pay Structure ... 318

Pay for Executives ... 318

Intrinsic and Extrinsic Motivators ... 319

Thinking Ethically: How Does Compensation Fairness Affect Employees’ Motivation? ... 319

Summary ... 320

Key Terms ... 321

Taking Responsibility: Harris County Housing Authority’s Unsustainable Pay ... 322

Managing Talent: Why Pay is Growing Slowly at ProLawnPlus ... 323

Twitter Focus: Changing the Pay Level at Eight Crossings ... 323

12 Recognizing Employee Contributions with Pay ... 325

Incentive Pay ... 326

HR How To Aligning Incentive Programs with Company Strategy .... 327

Pay for Individual Performance ... 328

Piecework Rates ... 328

Standard Hour Plans ... 328

Merit Pay ... 329

Performance Bonuses ... 330

Sales Commissions ... 331

DiD You Know? Fewer Companies Awarding Spot Bonuses ... 331

Pay for Group Performance ... 332

Gainsharing ... 332

Group Bonuses and Team Awards ... 333

Pay for Organisational Performance ... 334

Profit Sharing ... 334

Stock Ownership ... 335

BesT PRAcTices Employee Ownership Promotes Efficiency at Rable Machine ... 337

Balanced Scorecard ... 337

Processes that Make Incentives Work ... 338

Participation in Decisions ... 338

Communication ... 339

Incentive Pay for Executives ... 339

HRM sociAl Broadcasting Bonuses ... 340

Performance Measures for Executives ... 340

Ethical Issues ... 341

Thinking Ethically: Can Incentives Promote Ethics? ... 341

Summary ... 342

Key Terms ... 343

Taking Responsibility: Continuum Health Partners Link Pay to Costs, Quality of Care ... 344

Managing Talent: How Wal-Mart Is Setting Pay at the Top . . . and Bottom ... 345

Twitter Focus: Employees Own Bob’s Red Mill ... 346

Endnotes ... 346

13 Providing Employee Benefits ... 370

The Role of Employee Benefits... 350

Benefits Required by Law ... 351

Social Security ... 351 Workers’ Compensation ... 351 Paid Leave ... 352 HRM sociAl

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Optional Benefits Programs ... 354

‘Family-Friendly’ Benefits ... 355

Other Benefits ... 355

BesT PRAcTices Selecting Employee Benefits ... 356

The Organisation’s Objectives ... 356

Employees’ Expectations and Values ... 357

Costs of Benefits ... 358

Legal Requirements for Employee Benefits ... 358

Tax Treatment of Benefits ... 358

Anti-discrimination Laws ... 358

Communicating Benefits to Employees ... 359

HR How To Using the Internet to Communicate Benefits ... 359

Thinking Ethically: The Ethics of Sick Leave ... 360

Summary ... 360

Key Terms ... 361

Taking Responsibility: Are Phoenix Workers Overpaid? ... 362

Managing Talent: Airbus Benefits Aim for Topflight Performance ... 363

Twitter Focus: Babies Welcomed at T3 ... 364

Endnotes ... 364

PART 5

Meeting Other Human Resource

Goals

... 365

14 Employee Relations ... 366

Australian Industrial Relations and the Parties Involved ... 367

Unions... 367

DiD You Know? Sketch of a Union Worker ... 368

Employer Associations ... 369

Government ... 369

Minimising Industrial Relations Conflict ... 373

Industrial Disputes ... 373

Employee and Industrial Relations Policies and Plans ... 377

Enhancing Employee Relations ... 378

HR ooPs! Culture of Consultation ... 379

Negotiation and resolving conflict ... 380

HR How To Building a Better Relationship Between Management National Labor Relations Board Protects Some Online Rants—But Not All ... 382

Thinking Ethically: Is It Fair to Favor Unionized Facilities? ... 382

Summary ... 383

Key Terms ... 383

Taking Responsibility: High-Flying Labor Relations at Southwest Airlines ... 384

Managing Talent: The SEIU Takes On the California Hospital Association ... 385

Twitter Focus: Republic Gets Serious ... 386

Endnotes ... 386

15 Managing Human Resources Globally ... 388

HRM in a Global Environment ... 389

Employees in an International Workforce... 390

Employers in the Global Marketplace ... 390

Factors Affecting HRM in International Markets ... 392

Culture ... 392

HRM sociAl Inviting Job Hunters to Virtual Career Fairs ... 393

Education and Skill Levels ... 395

BesT PRAcTices Developing Talent in India ... 395

Economic System... 396

Political–Legal System ... 396

Human Resource Planning in a Global Economy... 397

Selecting Employees in a Global Labour Market ... 397

Training and Developing a Global Workforce ... 399

Training Programs for an International Workforce ... 399

Cross-Cultural Preparation ... 400

Global Employee Development ... 401

Performance Management across National Boundaries ... 401

Compensating an International Workforce ... 401

Pay Structure ... 402

Incentive Pay ... 403

Employee Benefits ... 403

HR How To Tailoring Benefits to an International Workforce ... 404

International Labour Relations ... 404

Managing Expatriates ... 405

Selecting Expatriate Managers ... 405

HR ooPs! How to Recruit a Public Outcry ... 406

Preparing Expatriates ... 408

Managing Expatriates’ Performance ... 410

Compensating Expatriates ... 410

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DiD You Know?

Priciest Cities are Spread over Three Continents ... 412

Thinking Ethically: Can Offshoring Be Done More Ethically? ... 413

Summary ... 413

Key Terms ... 415

Taking Responsibility: BP Australasia’s Sustainable Workforce... 416

Managing Talent: Intel’s Location Decisions ... 417

Twitter Focus: Is Translating a Global Business? ... 418

Endnotes ... 418

16 Creating and Maintaining High-Performance Organizations ... 421

High-Performance Work Systems ... 422

Elements of a High-Performance Work System ... 422

Outcomes of a High-Performance Work System ... 423

Conditions That Contribute to High Performance ... 424

Teamwork and Empowerment ... 425

Knowledge Sharing ... 425

BesT PRAcTices How Dalrymple Bay Coal Terminal Promotes Learning ... 426

Job Satisfaction and Employee Engagement ... 427

DiD You Know? Appreciation Drives Effort ... 428

Ethics ... 428

HRM’s Contribution to High Performance ... 429

Job Design ... 429

Recruitment and Selection ... 430

Training and Development ... 430

Performance Management ... 430

HR How To Supporting Line Management ... 431

Compensation ... 432

HRM Technology ... 432

HR ooPs! Paying More, Getting Less ... 434

HRM sociAl Communicating with Employees via Social Media ... 435

Effectiveness of Human Resource Management ... 437

Human Resource Management Audits ... 437

Analysing the Effect of HRM Programs ... 439

Thinking Ethically: How Can HRM Help Maintain an Ethical Culture? ... 440

Summary ... 440

Key Terms ... 441

Taking Responsibility: Aon Hewitt Wants to Help Employers Manage Health Benefits ... 442

Managing Talent: How Mohawk Industries’ HR Practices Empower Employees ... 443

Twitter Focus: Employees Make a Difference at Amy’s Ice Creams ... 444 Endnotes ... 444 Glossary ... 446 Index ... 453

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Trends in Human Resource Management

2

Learning Objectives (LO)

2.1 Describe trends in the labour force composition and factors that affect human resource management.

2.2 Summarise areas in which human resource management can support the goal of creating a high-performance work system.

2.3 Define employee empowerment and explain its role in the modern organisation.

2.4 Identify ways human resources professionals can support organisational strategies for quality, growth and efficiency.

2.5 Summarise ways in which human resource management can support organisations expanding internationally.

2.6 Discuss how technological developments are affecting human resource management.

2.7 Explain how the nature of the employment relationship is changing.

2.8 Discuss how the need for flexibility affects human resource management.

Introduction

Line technicians at Duke Energy, a US electricity provider based in North Carolina, participate in a stretching program before they start their working day. The company’s senior health and safety specialist launched the program to cut down on injuries among the workers, whose average age is between 50 and 55. Duke Energy has also tried to reduce muscle strain by providing line workers with battery-powered wire clippers. It trains them in how to perform job functions such as lifting and climbing in a safe manner. A line worker, Barry Poe, told a reporter that the safety program should enable him to keep working well into his 60s.1_{That kind of expectation is a major relief to older workers, many of whom saw}

their retirement savings shrivel during the financial crisis of 2008 and the severe recession that followed. However, from the employer’s perspective, why not just replace these older workers with young employees, who might be stronger and less prone to fatigue and injury? Duke Energy appreciates the value of its experienced line technicians. Hiring someone new is not a quick fix, because a line technician typically takes eight years to become expert at the major skills required to repair power lines. In addition, experienced line technicians can serve as role models and mentors for their younger colleagues. Turnover among older workers tends to be lower, so these can be the organisation’s most loyal employees. Therefore, at companies like Duke Energy, helping older workers stay healthy until they are ready to retire is a worthwhile investment in the value of the workforce.

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Over the past few years, the business news has been dominated by stories of persistent high unemployment rates and the need to ‘create jobs’. In that environment, it might seem that employers can downplay the need for effective human resource management. After all, one might think, any employed person should be grateful to have a job, and there seems to be little need to hunt for talent when people are desperate for work. But as the Duke Energy example suggests and this chapter will show, the situation for employers is actually much more complex.2_{Although overall growth in hiring}

has been slow and is expected to remain slow in some countries, many employers report that recruiting the specific kinds of talent they need is getting harder. The skills required within industries often are changing as technology advances, so current employees need training as much as ever. Rising costs of benefits have demanded creativity in planning compensation packages. The difficult economy has made it essential for organisations to find ways for their employees to work more efficiently—getting more done faster and placing lighter demands on natural resources, all without sacrificing quality and customer service. These efficiency improvements can only come from creative thinking by highly motivated and well-trained workers. Addressing all of these challenges and other trends in today’s business climate requires more innovative human resource management than ever.

This chapter describes major trends that are affecting human resource management. It begins with an examination of the modern labour force, including trends that are determining who will participate in the workforce of the future. Next is an exploration of the ways HRM can support a number of trends in organisational strategy, from efforts to maintain high-performance work systems to changes in the organisation’s size and structure. Often, growth includes the use of human resources on a global scale, as more and more organisations hire immigrants or open operations overseas. The chapter then turns to major changes in technology, especially the role of the internet. As we will explain, the internet is changing organisations themselves, as well as providing new ways to carry out human resource management. Finally, we explore the changing nature of the employment relationship, in which careers and jobs are becoming more flexible.

2.1

Change in the Labour Force

The term labour force is a general way to refer to all the people willing and able to work. For an organisation, the internal labour force_{consists of the organisation’s workers—its employees and the} people who have contracts to work at the organisation. This internal labour force has been drawn from the organisation’s external labour market_{—that is, individuals who are actively seeking employment.} The number and kinds of people in the external labour market determine the kinds of human resources available to an organisation (and their cost). Human resource professionals need to be aware of trends in the composition of the external labour market because these trends affect the organisation’s options for creating a well-skilled, motivated internal labour force.

An AgeIng WOrkFOrCe

In Australia, the ABS, tracks changes in the composition of the Australian labour force and forecasts employment trends. The ABS has projected that Australia’s civilian labour force (aged 15 and over) will grow to 10.8 million by 2016. This is an increase of 1.5 million (16%) from the 1998 labour force. This is an average annual growth rate of 0.8% between 1998 and 2016 compared with an average annual growth of 1.9% from 1979 to 1998. The annual growth rate is expected to decline from 1.6% in 1998–1999 to 0.4% in 2015–2016. In addition, the overall labour force participation rate is expected to decline to 60.6%, a rate not experienced since 1984. In comparison, in 1990, the labour force participation rate was 63.7%, which is the highest since records have been kept; it is not expected reach this level again during the projection period.

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of workers by age. The labour force is projected to age quite dramatically, with over 80% of the projected labour force growth occurring in the 45-years-and-over age group. By 2020, all baby boomers will be at least 55 years old, swelling the ranks of workers nearing retirement. Human resource professionals will therefore spend much of their time on concerns related to planning retirement, retraining older workers and motivating workers whose careers have plateaued. Organisations will struggle with ways to control the rising costs of benefits, and many of tomorrow’s managers will supervise employees much older than themselves. At the same time, organisations will have to find ways to attract, retain and prepare the youth labour force.

Today’s older generation includes many people who are in no hurry to retire. They may enjoy making a contribution at work, have ambitious plans for which they want to earn money or simply be among the many who have inadequate savings for full retirement. Therefore, older workers often want to be allowed to move towards retirement gradually by working part time or taking temporary assignments. Retired employees have returned to work as consultants and contract workers, and some have telecommuting arrangements (working from home). Many of these assignments give older employees a chance to act as mentors to their younger colleagues.

With older workers continuing to hold jobs at least part time, today’s workplaces often bring together employees representing three or four generations. This creates a need for understanding the values and work habits that tend to characterise each generation.3_{For example, members of the ‘silent}

generation’ (born between 1925 and 1945) tend to value income and employment security and avoid challenging authority. Baby boomers (born between 1946 and 1964) tend to value unexpected rewards, opportunities for learning and time with management. Members of Generation X (1965–1980) tend to be pragmatic and cynical, and they have well-developed self-management skills. Those born from

Figure 2.1 As more of the workforce reaches retirement age, some companies have set up mentoring programs between older and younger workers so that knowledge is not lost but passed on 2,000 ‘000 1,500 1,000 500 0 0–4 10–14 20–24 30–34 40–44 Age group 1998 Population 2016 Population 1998 Labour Force 2016 Labour Force 50–54 60–64 70–74 80–84

Figure 2.2 Age structure of the population and the labour force

Source: Australian Bureau of Statistics, Labour Force Projections.

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1981 to 1995, often called or Generation Y, are comfortable with the latest technology, and they want to be noticed, respected and involved. Some say members of Generation Y work to live, while baby boomers live to work. Some generational differences can be addressed through effective human resource management. For example, organisations can train managers to provide frequent feedback to members of Generation Y, and show respect for older generations’ hard work and respect for authority by asking them to mentor younger workers.

A DIverse WOrkFOrCe

Another change affecting the Australian labour force is that it is growing more diverse in ethnic and gender terms. According to the ABS, in mid-2006 there were 4,956,863 residents who were born outside Australia, representing 24% of the total population. More women today, compared to the past, are in the paid labour force, while the labour force participation rate for men has been slowly declining. By 2020, the share of women in the labour force is expected to reach 47%.

One important source of ethnic diversity is immigration. The Australian government also grants temporary work visas to a limited number of skilled workers to address skill shortages in Australia.

The greater diversity of the workforce challenges employers to create HRM practices that fully use the talents, skills and values of all employees. Employers must ensure that employees and HRM systems are free of bias and value the perspectives and experience that women and minorities contribute. As we will discuss further in Chapter 7, managing cultural diversity involves many different activities. These include creating an organisational culture that values diversity, ensuring that HRM systems are bias-free, encouraging career development for women and minorities, promoting knowledge and acceptance of cultural differences, ensuring involvement in education both within and outside the organisation and dealing with employees’ resistance to diversity.4_{Figure 2.3 summarises ways in which}

HRM can support the management of diversity for organisational success.

Many companies have already committed themselves to ensuring that they recognise the diversity of their internal labour force and use it to gain a competitive advantage. In a recent US survey of executives at large global corporations, 85% said a ‘diverse and inclusive workforce’ was important for encouraging innovation. Majorities of respondents said their companies had a program to recruit a diverse group of employees (65%) and develop an inclusive workforce (53%).5

Communication: Comm unicatewith e mployees from a variety_of_ba ckg_r_o_u n_d_s . Development: Prov ide ca reer develop ment for e mployees with diff_eren_t bac_kgro un_d_s and ab iliti_e_s . Performance Appraisal: Provide feedback based onobjec_ti_v e outc_om e_s_. Employee Relations: Crea te a w orkenvironm ent t_hat_is co_mfo rta_b le for all andfosterscr_eat ivity_.

Figure 2.3 HRM practices that support diversity management

Source: Based on M. Loden and J. B. Rosener, Workforce America! (Homewood, IL: Business One Irwin, 1991)

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In New York, the Bridgeway Federal Credit Union has realised that it can best serve the groups in its community by ensuring that its employees are representative of that community. About one quarter of Bridgeway’s members are African American, and about 12% are Hispanic. Many of these members come from low-income households where access to banking services has been limited in the past. To attract and include employees from this community, Bridgeway conducts outreach events in neighbourhoods and provides diversity training programs for its employees. With ideas from its diverse employees, Bridgeway has come up with helpful products, such as its Drive Up Savings Account, which provides qualified customers with a car loan that has a payment plan in which a part of the monthly payments is directed into a savings plan. When the loan is paid off, Bridgeway rewards the borrower by giving them a discount on the interest they paid, and the customer finds that they have saved up a tidy sum.6

Throughout this book, we will show how diversity affects HRM practices. For example, from a staffing perspective, it is important to ensure that tests used to select employees are not unfairly biased against minority groups. From the perspective of work design, employees need flexible schedules that allow them to meet non-work needs. In terms of training, it is clear that employees must be made aware of the damage that stereotypes can do. With regard to compensation, organisations are providing benefits such as child care as a way to accommodate the needs of a diverse workforce. As we will see later in the chapter, successfully managing diversity is also critical for companies that compete in international markets.

skILL shOrtAges In the WOrkFOrCe

The increasing use of computers to do routine tasks has shifted the kinds of skills required by employees. Qualities such as physical strength and mastery of a particular piece of machinery are no longer important for many jobs. More employers are looking for mathematical, verbal and interpersonal skills, such as the ability to solve maths or other problems or reach decisions as part of a team. Often, when organisations are looking for technical skills, they are looking for skills related to computers and using the internet. Today’s employees must be able to handle a variety of responsibilities, interact with customers and think creatively.

To find such employees, most organisations are looking for educational achievements. Year 12 completion is a basic requirement for many jobs today. Competition for qualified graduates in many fields is intense. At the other extreme, workers with less education often have to settle for low-paying jobs. Some companies are unable to find qualified employees and instead rely on training to correct skill deficiencies.7_{Other companies team up with universities, TAFE colleges and high schools to design}

and teach courses ranging from basic literacy to engineering.

Not all the skills employers want require a tertiary education. The National Association of Manufacturers in the United States year after year has reported that manufacturing companies have difficulty finding enough people who can operate sophisticated computer-controlled machinery. These jobs rely at least as much on intelligence and teamwork as on physical strength. In some areas, companies and communities have set up apprenticeship and training programs to fix the worker shortage. Some US companies are turning to veterans of the wars in Iraq and Afghanistan. These workers have already demonstrated high levels of commitment and teamwork, as well as the ability to make creative use of the resources at hand in difficult situations. Many of them have been trained already by the military in a variety of technical skills. The challenge for employers has been to support these employees in other areas, such as helping them weather the emotional strain of the transition back to civilian life, as well as training them in the technical requirements of their new jobs.8

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2.2

high-Performance Work systems

Human resource management is playing an important role in helping organisations gain and keep an advantage over competitors by creating high-performance work systems_{. These are organisations that} have the best possible fit between their social system (people and how they interact) and technical system (equipment and processes).9_{As the nature of the workforce and the technology available to}

organisations has changed, so have the requirements for creating a high-performance work system. Customers are demanding high-quality and customised products, employees are seeking flexible work arrangements, and employers are looking for ways to tap people’s creativity and interpersonal skills. Such demands require that organisations make full use of their people’s knowledge and skill, and skilled human resource management can help organisations do this.

Among the trends that are occurring in today’s high-performance work systems are reliance on knowledge workers, empowerment of employees to make decisions and use of teamwork. The following sections describe those three trends, and Chapter 16 will explore the ways HRM can support the creation and maintenance of a high-performance work system. HR professionals who keep up with change are well positioned to help create high-performance work systems.

knOWLeDge WOrkers

The growth in e-commerce, plus the shift from a manufacturing to a service and information economy, has changed the nature of what employees are most in demand. The Australian Bureau of Statistics forecasts that between 2013 and 2016, most new jobs will be in service occupations, especially food preparation, education and health services.

The number of service jobs has important implications for human resource management. Research shows that if employees have a favourable view of HRM practices—career opportunities, training, pay and feedback on performance—they are more likely to provide good service to customers. Therefore, quality HRM for service employees can translate into customer satisfaction.

Besides differences among industries, job growth varies according to the type of job. The ‘Did You Know?’ box on page 32 lists the 10 occupations expected to gain the most jobs in Western Australia between 2013 and 2016. Of the jobs expected to have the greatest percentage increases, most are related to healthcare. The fastest-growing occupations are expected to be personal care aides and home health aides; biomedical engineers; helpers for brick masons, stonemasons and tile and marble setters; helpers for carpenters; and veterinary technologists and technicians.10_{These and}

other fast-growing occupations reflect the steadily growing demand for healthcare and an expected rebound in the construction industry. While some of these jobs and other fast-growing occupations require a tertiary degree, many of the fast-growing occupations require only on-the-job training. (Exceptions are Registered Nurses and postsecondary teachers.) This means that many companies’ HRM departments will need to provide excellent training as well as hiring.

These high-growth jobs are evidence of another trend: the future labour market will be both a knowledge economy and a service economy.11_{Along with low-education jobs in services such as}

healthcare and food preparation, there will be many high-education professional and managerial jobs. To meet these human capital needs, companies are increasingly trying to attract, develop and retain knowledge workers. Knowledge workers_{are employees whose main contribution to the organisation is} specialised knowledge, such as knowledge of customers, a process or a profession. Further complicating that challenge, many of these knowledge workers will have to be ‘technoservice’ workers who not only know a specialised field such as computer programming or engineering, but also must be able to work directly with customers.

Knowledge workers are in a position of power because they own the knowledge that the company needs in order to produce its products and services, and they must share their knowledge and collaborate

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DID YOu knOW?

top 10 Occupations for Job growth This graph shows the occupations that

are expected to add the most new jobs in Western Australia between 2013 and 2016. These jobs require widely different levels of training and responsibility, and pay levels vary considerably. As can be seen in the graph, the growth in these occupations is relatively consistent with the strong industry growth expected in construction and healthcare and social assistance. Question

Which of the positions in this graph would you describe as ‘knowledge workers’? Why?

0 500 1,000 1,500 2,000 2,500 3,000 3,500 Number of jobs Education aid Truck drivers Registered Nurses Electricians Receptionists General clerks Other building and engineering technicians Primary school teachers Carpenters and joiners

Occupations with highest expected growth between 2013 and 2016 (accounting for 20% of total growth)

Source: The Department of Training and Workforce Development, Western Australian Employment Trends and

Prospects, December 2012.

with others in order for their employer to succeed. An employer cannot simply order these employees to perform tasks. Managers depend on the employees’ willingness to share information. Furthermore, skilled knowledge workers have many job opportunities, even in a slow economy. If they choose, they can leave a company and take their knowledge to another employer. Replacing them may be difficult and time consuming.

Recently, the idea that only some of an organisation’s workers are knowledge workers has come under criticism.12_{To the critics, this definition is no longer realistic in a day of computerised information}

systems and computer-controlled production processes. For the company to excel, everyone must know how their work contributes to the organisation’s success. At the same time, employees—especially younger generations, which grew up with the internet—will expect to have wide access to information. From this perspective, successful organisations treat all their workers as knowledge workers. They let employees know how well the organisation is performing, and they invite ideas about how the organisation can do better.

Can the ‘knowledge worker’ label really fit everywhere? Think of the expectations organisations have of the typical computer programmer. These high-in-demand employees expect to be valued for their skills, not the hours they put in or the way they dress. Organisations that successfully recruit and retain computer programmers give them plenty of freedom to set up their work space and their own schedule. They motivate by assigning tasks that are interesting and challenging and by encouraging friendly collaboration. To some degree, these kinds of measures apply to many employees and many work situations. US company W. W. Grainger, for example, is not a glamorous company, but it is one

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that many companies depend on. Grainger distributes an enormous variety of supplies and parts needed by its business customers. It creates an attractive environment for the modern-day version of the knowledge worker by helping to match them up with jobs in which they matter and can excel, even if that means trying out jobs in a variety of departments. Linda Kolbe, manager of Grainger’s e-commerce, started as an administrative assistant and worked her way up, with help from the company’s mentoring program. And branch manager Roger Lubert has found that the company is eager to try out his ideas for managing inventory and store operations. The company treats these and other employees as individuals who can both expand their knowledge and apply it to benefit the entire organisation.13

emPLOYee emPOWerment

To benefit from employees’ knowledge, organisations need a management style that focuses on developing and empowering employees. Employee empowerment means giving employees responsibility and authority to make decisions regarding all aspects of product development or customer service.14_{Employees are}

then held accountable for products and services. In return, they share the resulting losses and rewards. Employee empowerment can also extend to innovation: employees at all levels are encouraged to share their ideas for satisfying customers better and operating more efficiently and safely. This is empowering if management actually listens to the ideas, implements valuable ones and rewards employees for their innovations. The ‘HR

How To’ box on page 34 provides ideas for this type of employee empowerment.

HRM practices such as performance management, training, work design and compensation are important for ensuring the success of employee empowerment. Jobs must be designed to give employees the necessary latitude for making a variety of decisions. Employees must be properly trained to exert their wider authority and use information resources such as the internet as well as tools for communicating information. Employees also need feedback to help them evaluate their success. Pay and other rewards should reflect employees’ authority and be related to successful handling of their responsibility. In addition, for empowerment to succeed, managers must be trained to link employees to resources within and outside the organisation, such as customers, co-workers in other departments and websites containing information that they need. Managers must also encourage employees to interact with staff throughout the organisation, must ensure that employees receive the information they need and must reward cooperation. Finally, empowered employees deliver the best results if they are fully engaged in their work. Employee engagement—full involvement in one’s work and commitment to one’s job and company—is associated with higher productivity, better customer service and lower turnover.15

As with the need for knowledge workers, use of employee empowerment shifts the recruiting focus away from technical skills and towards general cognitive and interpersonal skills. Employees who have

Figure 2.4 Knowledge workers are employees whose value to their employers stems primarily from what they know

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hr hOW tO

empowering employees to Innovate In most organisations, the employees who

work directly with customers, who carry out the organisation’s operations and who process its paperwork are in an excellent position to notice when quality, service and efficiency could be improved. Therefore, many organisations try to empower their employees to come forward with ideas. Human resource departments can help to make these efforts work.

• Listen with an open mind. A middle

manager at a US company called Meddius once asked the company founder and chief executive, Jeff Gunther, why Meddius kept detailed records of employees’ time off but not their late nights of extra work. To some managers, this might sound like mere grumbling, but Gunther considered the manager’s main point: employees wanted to be rewarded for their accomplishments, not for their schedules. Meddius now lets

employees set their own schedules and focus on their goals.

• Get employees fully engaged.

Communicate with them about how their jobs support the organisation’s mission, make sure they have the skills and resources they need to succeed and be sure reward programs are in place to recognise accomplishments. These efforts create the conditions for employee engagement, and research has shown that fully engaged employees come up with more valuable innovations. • Invite all employees to contribute

ideas. Be sure all employees are invited to contribute ideas and that ideas are considered without regard for the employee’s status in the organisation. At the average company, only one-fifth of employees believe their ideas are valued. If the other four-fifths are holding back their ideas, then the company is missing out on many opportunities to innovate.

• Set up programs to reward innovation.

Typical rewards are public recognition, gifts and cash. Some companies reward creative ideas with a convenient parking space or a day off with pay. Cash rewards can be tied to the value of the innovation—say, 1% of the savings that comes from implementing the idea. • Train managers. Provide managers with

training on how to get employees fully engaged and how to listen respectfully to ideas. Many organisations offer management training; be sure these topics are included in the training program. • Be sure the innovation program has

a process for responding. Managers

should be evaluated and rewarded for implementing good ideas. Responding quickly to ideas is essential for demonstrating that the organisation is serious about innovation.

Source: Based on Tamara Lytle, ‘Give Employees a Say’, HR Magazine, October 2011, pp. 68–72.

responsibility for a final product or service must be able to listen to customers, adapt to changing needs and creatively solve a variety of problems.

teAmWOrk

Modern technology places the information that employees need for improving quality and providing customer service right at the point of sale or production. As a result, the employees engaging in selling and producing must also be able to make decisions about how to do their work. Organisations need to set up work in a way that gives employees the authority and ability to make those decisions. One of the most popular ways to increase employee responsibility and control is to assign work to teams. Teamwork_{is when groups of employees with various skills interact to assemble a product or provide a} service. Work teams often assume many activities traditionally reserved for managers, such as selecting new team members, scheduling work and coordinating work with customers and other units of the organisation. Work teams also contribute to total quality by performing inspection and quality-control activities while the product or service is being completed.

In some organisations, technology is enabling teamwork even when workers are at different locations or work at different times. These organisations use virtual teams—teams that rely on communications technology such as videoconferences, email and mobile phones to keep in touch and coordinate activities.

Teamwork can motivate employees by making work more interesting and significant. At organisations that rely on teamwork, labour costs may be lower as well. Spurred by such advantages,

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a number of companies are reorganising assembly operations—abandoning the assembly line in favour of operations that combine mass production with jobs in which employees perform multiple tasks, use many skills, control the pace of work and assemble the entire final product.

Witnessing the resulting improvements, companies in the service sector also have moved towards greater use of teamwork. Teamwork is a necessary component of more and more computer programming tasks. Companies that develop software are increasingly using an approach they call agile, which involves weaving the development process more tightly into the organisation’s activities and strategies. In agile software development, self-directed teams of developers and programmers work directly with the business users of the software, using as much face-to-face communication as possible. Rather than devoting endless hours to negotiate contracts and document processes, the teams focus on frequently delivering usable components of the software. Throughout the development process the team is open to changing requirements and computer code as a result of their communication with users. Users of agile software development say it increases customer satisfaction and speeds up the time from concept to usable software.16

2.3

Focus on strategy

As we saw in Chapter 1, traditional management thinking treated human resource management primarily as an administrative function, but managers today are beginning to see a more central role for HRM. They are looking at HRM as a means to support a company’s strategy—its plan for meeting broad goals such as profitability, quality and market share. This strategic role for HRM has evolved gradually.

At many organisations, managers still treat HR professionals primarily as experts in designing and delivering HR systems. But at a growing number of organisations, HR professionals are strategic partners with other managers. This means they use their knowledge of the business and of human resources to help the organisation to develop strategies and to align HRM policies and practices with those strategies. To do this, human resource managers must focus on the future as well as the present, and on company goals as well as human resource activities. They may, for example, become experts at analysing the business impact of HR decisions or at developing and keeping the best talent to support business strategy. Organisations do this when they integrate all the activities involved in talent management with each other and with the organisation’s other processes to provide the skills the organisation needs to pursue its strategy. An integrated approach to talent management includes acquiring talent (recruitment and selection), providing the right opportunities for training and development, measuring performance, and creating compensation plans that reward the needed behaviours. To choose the right talent, provide the right training and so on, HR professionals need to be in close, ongoing contact with the members of the organisation who need the talent. And when the organisation modifies its strategy, HR professionals are part of the planning process so they can modify talent management efforts to support the revised strategy. One US organisation that does all this is Universal Weather and Aviation, which provides services and support to the owners of private jets. In this market niche, the company does not expect to find people with the precise set of skills it needs; rather, its talent management program emphasises finding individuals who are a good fit with the organisation’s culture and then training them in the areas where their skills are weak. Executives are rewarded for achieving talent management objectives that include retaining the best-performing employees and identifying potential successors to fill key positions.17

The specific ways in which human resource professionals support the organisation’s strategy vary according to their level of involvement and the nature of the strategy. Strategic issues include emphasis on quality and decisions about growth and efficiency. Human resource management can support these strategies, including efforts such as quality improvement programs, mergers and acquisitions,

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Total Quality

Management Mergersand

Acquisitions Re-engineering International Expansion Downsizing Outsourcing Human Resource Management

Figure 2.5 Business strategy: issues affecting HRM

and restructuring. Decisions to use re-engineering and outsourcing can make an organisation more efficient and also give rise to many human resource challenges. International expansion presents a wide variety of HRM challenges and opportunities. Figure 2.5 summarises these strategic issues facing human resource management.

hIgh QuALItY stAnDArDs

To compete in today’s economy, companies need to provide high-quality products and services. If companies do not adhere to quality standards, they will have difficulty selling their product or service to vendors, suppliers or customers. Therefore, many organisations have adopted some form of total quality management (TQM)_{—a company-wide effort to improve continually the ways people, machines and} systems accomplish work.18_{TQM has several core values:}19

•

Methods and processes are designed to meet the needs of internal and external customers (that is, whomever the process is intended to serve).

•

Every employee in the organisation receives training in quality management.

•

Quality is designed into a product or service so that errors are prevented from occurring, rather than being detected and corrected in an error-prone product or service.

•

The organisation promotes cooperation with vendors, suppliers and customers to improve quality and hold down costs.

•

Managers measure progress with feedback based on data.

Based on these values, the TQM approach provides guidelines for all the organisation’s activities, including human resource management. To promote quality, organisations need an environment that supports innovation, creativity and risk taking to meet customer demands. Problem solving should bring together managers, employees and customers. Employees should communicate with managers about customer needs. For an example of a company that has been learning to engage in such practices, see the ‘Best Practices’ box.

Human resource management also has supported efforts to improve quality of customer service at US retailer J.C. Penney. The retailer learned from surveys that fewer than half of its customers were highly satisfied with their shopping experience. Penney’s responded with a combination of new

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Best PrACtICes

Office Depot Learns to Put Customer service First When Kevin Peters became president of

Office Depot’s North American stores, he knew something had to change, but he wasn’t sure what. Office supply stores—and, in fact, most retailers—were suffering from declining sales in a poor economy, but Office Depot’s sales were falling faster than its competitors’ sales. Yet the company had other data showing it was excelling at customer service: Office Depot had a contract with a company that sent ‘mystery shoppers’ into its stores to grade it on various quality measures, and those measures were soaring.

Peters decided to hunt down the problem in the stores themselves. He dressed casually and began visiting dozens of Office Depots around the country. He wandered through the aisles and chatted with customers, especially those who left the store without buying anything. He soon began to see the source of the company’s problem. Employees were doing what the company’s evaluation system was measuring, but the system wasn’t measuring what customers cared about the most. The mystery shoppers were rating the stores for cleanliness and well-stocked shelves. Customers wanted to find merchandise quickly and obtain helpful answers to their questions. Employees were

focused on floors and shelves, and the shoppers were being ignored.

Office Depot’s management began instituting changes aimed at high-quality customer service. They redesigned jobs and work areas to make the process of receiving merchandise and stocking shelves more efficient. This freed up time for employees to focus on customers. They also divided stores into zones and placed employees in charge of a particular zone. This made employees experts in a particular part of the store, so they could be more helpful in that area.

Office Depot also changed the training of store employees. The new training presents a three-step selling process aimed at meeting customers’ needs: ask, recommend and close. Employees practise using this process and focus on asking open-ended questions, such as ‘What brings you in today?’ and ‘How are you planning to use that?’. The training also teaches employees about the products sold in their zones, so they can offer valuable information that leads to purchase decisions. Finally, management learned that Office Depot needed to modify aspects of its hiring process. The company gave its employees a test of their skills, behaviours and personal qualities. Management learned that, with the past emphasis on store appearance, the

company had hired a significant number of store employees who preferred stocking merchandise over talking to customers. Office Depot has tried to help these employees develop people skills or move to non-selling positions in the company. In the future, to maintain its drive for quality service, the company must make communication skills a priority in hiring decisions.

Office Depot has rolled out these changes gradually, store by store. At the same time, the company has made marketing changes, such as shrinking the size of stores, placing often-purchased merchandise in more convenient locations, and introducing services such as copying and shipping. The initial results have been an encouraging rise in sales and positive comments from customers and employees alike. Peters hopes these changes are just the beginning of a full-scale, quality-driven turnaround. Sources: Based on Kevin Peters, ‘Office Depot’s President on How “Mystery Shopping” Helped

Spark a Turnaround’, Harvard Business Review,

November 2011, pp. 47–50; Harley Manning, ‘The Real ‘Undercover Boss’—Office Depot’s Kevin Peters’, July 6, 2011, http://blogs.forrester.com/; and Joan Verdon, ‘Office Depot’s store strategy:

Think shrink’, The Record, January 24, 2012, www.

northjersey.com.

performance standards and training for employees and their supervisors. The stores had been rewarding salespeople based mainly on how much merchandise they moved onto the floor and then sold. To shift their focus to customers, Penney’s added performance standards for helping customers, and they gave the salespeople authority to put aside stocking activities whenever a customer wanted assistance, even if the supervisor had assigned the tasks. To prepare salespeople to meet these new requirements, Penney’s trained them in how to greet and help customers effectively. The supervisors were nervous about a change that seemed to give them less control over day-to-day activities, so the company also trained them in how to lead a team of empowered workers. Soon the supervisors found that empowered employees and happier customers actually made their own work easier. And within months of making the changes, the customer satisfaction scores were climbing at Penney’s.20

mergers AnD ACQuIsItIOns

Often, organisations join forces through mergers (two companies becoming one) and acquisitions (one company buying another). Some mergers and acquisitions result in consolidation within an industry, meaning that two firms in one industry join to hold a greater share of the industry. For example, the

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the number of companies in the oil industry. Other mergers and acquisitions cross industry lines. In a merger to form Citigroup, Citicorp combined its banking business with Traveller’s Group’s insurance business. Furthermore, these deals more frequently take the form of global megamergers, or mergers of