Quiz Chapter 12

Managing HR at Semco Mangers are responsible for acquiring, developing, protecting, and utilizing the resources an organization needs to be efficient and effective. Human resources are among the most important in organizations. It is the people who work for the company that create the products and services, create new ones, interact with customers and suppliers, and promote high performance. Organizations succeed or fail to a great degree due to the effectiveness of their human resource management policies and practices. You are about to read a case concerning an exceptionally high performing organization, Semco. You will be challenged to apply the knowledge you have gained about human resource management. Read the case below and answer the questions that follow. Ricardo Semler was 21 years old (and one of the youngest graduates from the Harvard Business School MBA program) when he took his father's place as head of the family business, Semco, based in São Paolo, Brazil, in 1984. His father, Antonio, had founded Semco in 1954 as a machine shop; the company went on to become a manufacturer of marine pumps for the shipbuilding industry, with $4 million a year in revenues when Ricardo Semler took over. Today Semco's revenues are over $200 million a year from a diverse set of businesses ranging from the development and manufacture of industrial mixing and refrigeration equipment to the provision of systems to manage communication, correspondence, and goods exchanges between an organization and its suppliers, customers, and partners. Semco prides itself on being a premier provider of goods and services in its markets and has loyal customers. Semler is the first to admit that Semco's track record of success is due to its human resources—its employees. In fact, Semler so firmly believes in Semco's employees that he and the other top managers are reluctant to tell employees what to do. Semco has no rules, regulations, or organizational charts; hierarchy is eschewed; and workplace democracy rules the day. Employees have levels of autonomy unheard of in other companies, and flexibility and trust are built into every aspect of human resource management at Semco. Human resource practices at Semco revolve around maximizing the contributions employees make to the company, and this begins by hiring individuals who want to, can, and will contribute. Semco strives to ensure that all selection decisions are based on relevant and complete information. Job candidates are first interviewed as a group; the candidates meet many employees, receive a tour of the company, and interact with potential coworkers. This gives Semco a chance to size up candidates in ways more likely to reveal their true natures, and it gives the candidates a chance to learn about Semco. When finalists are identified from the pool, multiple Semco employees interview each one five or six more times to choose the best person(s) to be hired. The result is that both Semco and new hires make informed decisions and are mutually committed to making the relationship a success. Once hired, entry-level employees participate in the Lost in Space program, in which they rotate through different positions and units of their own choosing for about a year. In this way, the new hires learn about their options and can decide where their interests lie, and the units they work in learn about the new hires. At the end of the year, the new employees may be offered a job in one of the units in which they worked, or they may seek a position elsewhere in Semco. Seasoned Semco employees are also encouraged to rotate positions and work in different parts of the company to keep them fresh, energized, and motivated and to give them the opportunity to contribute in new ways as their interests change. Performance is appraised at Semco in terms of results; all employees and managers must demonstrate that they are making valuable contributions and deserve to be "rehired." For example, each manager's performance is anonymously appraised by all the employees who report to him or her, and the appraisals are made publicly available in Semco. Employees also can choose how they are paid from a combination of 11 different compensation options, ranging from fixed salaries, bonuses, and profit sharing to royalties on sales or profits and arrangements based on meeting annual self-set goals. Flexibility in compensation promotes risk taking and innovation, according to Semler, and maximizes returns to employees in terms of their pay and to the company in terms of revenues and profitability. Flexibility, autonomy, the ability to change jobs often, and control of working hours and even compensation are some of the ways by which Semler strives to ensure that employees are loyal and involved in their work because they want to be; turnover at Semco is less than 1 percent annually. And with human resource practices geared toward maximizing contributions and performance, Semco is well poised to continue to provide value to its customers.

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What Levels of Pay and Benefits Should You Offer? An important element of the human resource function is the determination and administration of pay and benefits. Pay includes employees' base salaries, pay raises, and bonuses, and is determined by a number of factors such as characteristics of the organization and the job and levels of performance. Employee benefits are based on membership in an organization (and not necessarily on the particular job held) and include sick days, vacation days, and medical and life insurance. It is important to link pay to behaviors or results that contribute to organizational effectiveness. You are about to read a case concerning one of the leading hotel chains in the world, the Four Seasons Hotels and Resorts. The Four Seasons has an excellent reputation for customer service and also for employee satisfaction. You are about to explore the reasons behind this reputation. Read the case below and answer the questions that follow. Four Seasons Hotels and Resorts is one of only around a dozen companies to be ranked one of the "100 Best Companies to Work For" every year since Fortune magazine started this annual ranking of companies (from 1998 to 2016). And the Four Seasons often receives other awards and recognition such as having some of its properties included on the Condé Nast Traveler Gold List, the Travel + Leisure T + L 500 list, and Robb Report's World's Top 100 Hotels. In an industry in which annual turnover rates are relatively high, the Four Seasons's turnover rate for full-time employees is 15 percent, which is among the lowest in the industry. Evidently, employees and customers alike are satisfied with how they are treated at the Four Seasons. Understanding that the two are causally linked is perhaps the key to the Four Seasons's success. As the Four Seasons's founder and chairman of the board Isadore Sharp suggested, "How you treat your employees is how you expect them to treat the customer." The Four Seasons was founded by Sharp in 1961 when he opened his first hotel called the Four Seasons Motor Hotel in a less-than-desirable area outside downtown Toronto. Whereas his first hotel had 125 inexpensively priced rooms appealing to the individual traveler, his fourth hotel was built to appeal to business travelers and conventions with 1,600 rooms, conference facilities, several restaurants, banquet halls, and shops in an arcade. Both these hotels were successful, but Sharp decided he could provide customers with a different kind of hotel experience by combining the best features of both kinds of hotel experiences—the sense of closeness and personal attention that a small hotel brings with the amenities of a big hotel to suit the needs of business travelers. Sharp sought to provide the kind of personal service that would really help business travelers on the road— giving them the amenities they have at home and in the office and miss when traveling on business. Thus the Four Seasons was the first hotel chain to provide bathrobes, shampoo, round-the-clock room service, laundry and dry cleaning services, large desks in every room, two-line phones, and round-the-clock secretarial assistance. While these are relatively concrete ways of personalizing the hotel experience, Sharp realized that how employees treat customers is just as, or perhaps even more, important. When employees view each customer as an individual with his or her own needs and desires, and empathetically try to meet these needs and desires, and help customers both overcome any problems or challenges they face and truly enjoy their hotel experience, a hotel can indeed serve the purposes of a home away from home (and an office away from office), and customers are likely to be both loyal and highly satisfied. Sharp has always realized that for employees to treat customers well, the Four Seasons needs to treat its employees well. Salaries are relatively high at the Four Seasons by industry standards (between the 75th and 90th percentiles); employees participate in a profit-sharing plan; and the company contributes to their 401(k) plans. Four Seasons pays 78 percent of employees' health insurance premiums and provides free dental insurance. All employees get free meals in the hotel cafeteria, have access to staff showers and a locker room, and receive an additional highly attractive benefit—once a new employee has worked for the Four Seasons for six months, he or she can stay for three nights free at any Four Seasons hotel or resort in the world. After a year of employment, this benefit increases to six free nights, and it continues to grow as tenure with the company increases. Employees like waitress Michelle De Rochemont love this benefit. As she indicates, "You're never treated like just an employee. You're a guest...You come back from those trips on fire. You want to do so much for the guest." The Four Seasons also tends to promote from within. For example, while recent college graduates may start out as assistant managers, those who do well and have high aspirations could potentially become general managers in less than 15 years. This helps to ensure that managers have empathy and respect for those in lower-level positions as well as the ingrained ethos of treating others (employees, subordinates, coworkers, and customers) as they would like to be treated. All in all, treating employees well leads to satisfied customers at the Four Seasons.

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In order to improve his performance and motivation, Scott's performance is evaluated not only by his direct manager, but also by his customers, subordinates, and coworkers. This is an example of a

360-degree appraisal.

_____ are used by managers to assess subordinates on what they do on the job

Behavior appraisals

In simulations, learning occurs in the work setting as employees perform their job tasks.

False

Which of the following is true about internal recruitment?

Internal recruitment consumes relatively less time than external recruitment.

________ tests measure the body strength and stamina of job applicants.

Physical ability

A subjective appraisal is based on a manager's perceptions.

True

Promising employees are required to undergo various training programs that focus on the skills required to become an effective manager in their respective fields in the future. This is called development.

True

The profit-sharing plan at the Four Seasons is considered

a benefit voluntarily offered by the company.

The high job satisfaction rate expressed by employees at the Four Seasons can be causally linked to

an extremely low voluntary turnover rate.

When recruiting for top management jobs, the Four Seasons uses

an internal recruiting source.

Which of the following is often included for employee development, but not used for training?

formal education

The pay level at the Four Seasons is

higher than the industry average.

Pay, benefits, and training at the Four Seasons are all intended to ________ in order to increase customer satisfaction.

increase employee performance and job satisfaction

You were told in the case that Semco has no rules, regulations, or organizational charts, and that hierarchy is eschewed. Performance appraisal at Semco is likely to consist of ________ appraisal.

informal

In _____, managers and their subordinates meet whenever the need to discuss ongoing progress and areas for improvement arises.

informal appraisals

Employees can stay free at any Four Seasons resort for six nights after one year of employment, and this length of stay goes up with the length of employment. This benefit

motivates workers to work even harder to satisfy customers.

Some of the metrics used at the Four Seasons to appraise employee performance include the number of customer complaints and commendations, speed of task completion, and number of hours of training per year. These would be considered

objective appraisals.

The Lost in Space program at Semco could be considered

on-the-job training.

The selection process for a school teacher's job requires the applicant to keep a class of thirty students engaged in a classroom activity for an hour. The candidate is evaluated by the interviewers during this period, and the activity plays a vital role in the selection process. This is an example of which of the following types of tests?

performance test

The routine selection process for becoming a law enforcement officer includes tests that measure an applicant's ability to perform certain job-specific tasks such as running stairs, dragging a weight, or climbing a wall. This is an example of a(n)

physical ability test.

Employees at Semco must prove they offer value to the company and deserve to be rehired each year. The managers examine what each employee has actually accomplished. Managers at Semco perform ________ appraisals.

results

Organizations that focus on the actual outcomes of work behaviors, rather than how the outcome has been achieved, are using ________ appraisals.

results

Gathering background information, performance tests, physical ability tests, and references are all examples of

selection tools.

Behaviorally anchored rating scale (BARS), behavior observation scale (BOS), and graphic rating scale are popular ________ measures used in performance evaluation.

subjective

Managers at Semco appraise performance in terms of behaviors and, in particular, results. They are conducting ________ appraisals.

subjective

The behaviorally anchored rating scale (BARS) and the behavior observation scale (BOS) that measures performance as perceived by the manager are often used in _______ appraisals.

subjective

Training at Semco enables managers to develop a deep understanding of the new organizational members. When managers assess subordinates on personal characteristics that are relevant to job performance, they are conducting

trait appraisals.

When Katrin interviews applicants, she starts an ordinary conversation and she asks questions to discover what the applicant is like. What type of interview does Katrin conduct?

unstructured interview

New managers at Semco spend their first year rotating throughout the organization. This offers them ________, which enable(s) them to determine what part of the company is the best fit with their skills, knowledge, and desires.

varied work experiences