Chapter 11 for Management Test 2
Defensive Strategies
(Retrenchment—Sticking to core competencies)- companies pursue this strategy in the face of challenges. If a company is struggling, it may decide to shrink its operations to reduce costs in order to survive (example: if a company faces new competition it may have to radically rethink its product offerings)
Growth Strategy
(involves expansion) involved developing plans to increase the size of the firm in terms of revenue, market share, or geographic reach (often a combination of these, as they can overlap significantly)
Stability Strategy-
(involves little or no significant change) strategy for a company to maintain its current income, market share, or geographic reach. A firm usually works to maintain a stable position when the alternative is to lose ground in one of these categories
Strategic Human Resource Planning (to determine the staffing a company needs)
(to determine the staffing a company needs): current census- estimates transfers & promotions - predicted turner over rate+ budgeted growth in employees+ anticipated skill, knowledge, and expertise needed
Steps in a positive discipline procedure
1. Confrontation, Discussion, Coaching 2. Oral Warning 3. Written Warning (written plan for corrective action) 4. Day off with pay 5. Counseling and Contracting 6. Week off with or without pay 7. Discharge
Steps in a progressive discipline procedure
1. Confrontation, Discussion, Coaching, Counseling 2. Oral Warning 3. Written Warning 4. Suspension or Disciplinary Layoff 5. Discharge
Hot Stove Rules
1st rule: (touch-get burned)- Discipline should be immediate 2nd rule: (the closer you get, the warmer it is)- employee should receive warnings 3rd rule: (everyone gets burned if they touch the stove)- punishment should be consistent
Deloitte Services survey
58% of executives surveyed (public survey sent out by Deloitte Services) believed that their current performance management approach drives neither employee engagement nor high performance and they need something more real-time, and individualized - and focused on fueling performance in the future rather than assessing it in the past. Because of this study Deloitte has sought to redesign their performance process. In their "radical redesign program" they seek to see performance at the individual level, and thus they ask team leaders about their own future actions and decisions with respect to each individual. They ask leaders what they'd do with their team members, not what they think of them. The four questions that Deloitte asks of its managers are as follows: 1. Given what I know of this person's performance, and if it were my money, I would award this person the highest possible compensation increases and bonus? 2. Given what I know of this person's performance, I would always want him or her on my team? 3. This person is at risk for low performance? 4. This person is ready for a promotion today?
Semi-Structures Interviews:
80% or so consists of structured questions with the remainder being unstructured time to obtain additional, missing, or to clarify vague points
Minimum Job Requirements (BFOQ- Bonafide Occupational Qualifications)
Absolute minimum physical, educational, and knowledge skills. Used to comply with the Americans with Disabilities Act
Steps for Hiring
Anticipate Specify the Job Develop a Pool Assess the Candidates Hire the choice Integrate the new hire Review the Process (see chart for details)
Task or Assigned Responsibilities
Clearly identifies job functions, communicates performance requirements, and evaluated performance during reviews
1. Recognize and reward high performers (46.9%) 2. Increase the likelihood of achieving corporate goals (32.5%) 3. Improve Productivity (7.8%) 4. Move away from an entitlement culture (7.8%) ** study showed that the drivers differed depending on whether the company was high performing or low performing. High performers indicated that 'recognize and reward' was the main driver for their switch to a pay-for-performance strategy and low performers were not sure about the drivers behind their strategy**
Companies Top Four Drivers for Moving to a Pay-for-Performance Strategy
to acquire, bond, comprehend, and defend
Drivers that underlie motivation:
Subjective Management
Focus on qualitative factors such as employee attitude, ability to work in teams, leadership skills
1. Define the organization's pay philosophy. Leadership needs to agree what will promote a culture that rewards employees for strong performance 2. Review the financial impacts of creating a pay-to-performance changes. How much differentiation of performance will we have? What is the cost of doing this? 3. Identify any gaps that exist in the current processes. Do any of the HR & Compensation policies conflict with pay for performance? If so, they should be reviewed and changed. If the performance management process has gaps, these should be corrected before pay for performance is implemented; otherwise it will generate more distrust. Salary structure should also be benchmarked with market data to ensure that the organization is compensating according to where it wished to be in the marketplace. 4. Update compensation processes with new pay-for-performance elements. Includes the design of ta merit matrix that ties employee annual pay increases to performance. Other areas of focus should be the design of a short-term bonus matrix and a long-term bonus pay-for-performance strategy. How does performance drive and bonus payouts? What is the differential (multiplier) for each level? 5. Communicate and train managers and employees on the pay-for-performance philosophy and process changes. Explain the changes in context of the overall culture of the organization. This is a long-term investment in talent and performance.
Framework for a Pay-to-Performance Plan-
Jack Welch at General Electric
Jack, CEO of general electric in 1981, championed the forced-ranking system (military creation). He implemented this to deal with the long-standing concern that supervisors failed to label real differences in performance. GE utilized this system to shed the people at the bottom. They equated their performance with people's inherent capabilities and ignored their potential to grow. People were categorized at A players (to be rewarded), B players (to be accommodated), and C players (those to be dismissed). In this system the development opportunities were reserved for A players—and only those with high potential were chosen to advance to senior positions. Since the days of GE's forced ranking system, many companies have implemented a similar practice, but many have backed away from the practice. After Jack retired, GE also dropped the forced ranking from their performance management process because, like other companies, GE saw how it negatively fostered internal competition and undermined collaboration and teamwork.
Job Summary
One paragraph description of the position, reporting structure, and responsibilities. Used to advertise internally and externally
potential situation that a firm is equipped to take advantage of, they offer positive potential, however sometimes a firm is not equipped to take advantage of the opportunity which is why considering SWOT is important before deciding what to do (find source of why a firm cannot take advantage of an opportunity... need to find the weaknesses of the firm
Opportunities (SWOT)
1. Industry Rivalry 2. Threat of new entrants 3. Threat of substitutes 4. Supplier Power 5. Buyer Power
Porters Five Forces *Help to understand the marketplace or the industry as a whole, often mistakenly applied to individual businesses*
what a company is good at, capabilities and assets, knowing exactly what it is good at allows a firm to make plans to exploit those strengths. Examples: cash, skilled employees
Strengths (SWOT)
Pay-for-Performance continues to thrive with 7/10 (72%) of companies saying that they directly tie pay increases to job performance, and 2/3 (67%) indicating increases for top performers are at least 1.5 times the increase for average performers. The survey also indicated that employees understanding of the organization's compensation plan improves when there is higher differentiation in increases between average and top performers. The greeted differentiation of increases is more visible and drives home the point that the company is serious about pay-to-performance
Successfulness of Pay-to-Performance:
Competitive Advantage:
The characteristics of an organization's products and services that distinguish it from competitors and provide an advantage in the market place. When a firm successfully attracts more customers, earns more profit, or returns more value to its shareholders than rival firms do
CEB Global survey
This survey reported that more than 9,000 managers and employees think that not having performance evaluations is worse than having them. Their findings indicate that even though every organization has people who are unhappy with their bonuses or disappointed that they weren't promoted, research shows that employees are more willing to accept an undesirable outcome when the process is fair. Key Question: How can HR help the business create a process to fairly evaluate performance and enhance employee development, while not burdening the business with undue bureaucracy and non-value-added activities?
something that can hinder a firm from being successful
Threats (SWOT)
BCG Matrix
Tool that corporate strategists use to understand how each of their businesses contributes to the corporation as a whole Exhibit 9.7 page 286: Question Mark: these business units are not doing well in a high-growth market and the CEO will need to decide to invest or scrap the business Star: these business units have a high market share in a high-growth market. They are generating revenue, but the CEO should invest to keep growing market share Dog: these business units are doing poorly in a low-growth market and should be disinvested Cash Cos: these business units have high market share in a market that isn't growing. CEOs should use the money they earn to invest in the Stars
Recruiting and Hiring Process
Verify Job Taks recruitment Screening Information Job Interview Reference checking and resume verification Testing Hiring Orientation Probation (see chart for details)
what a company is not good at, things that it does not have capabilities to perform well, when a firm understands its weaknesses, it will avoid trying to do those things it does not have the skills or assets to succeed in, or it will find a way to improve its weaknesses before undertaking something new, a firms weaknesses are simply a gap in capabilities, and those gaps do not always have to be filled within the firm
Weaknesses (SWOT)
1. Unwelcome verbal or physical conduct of a sexual nature 2. Person harmed clearly states that the behavior is not acceptable 3. The behavior is repeated
What are the general requirements for sexual harassment in the workplace to be claimed?
Progressive and Positive Discipline
What are the two different ways to discipline employees?
strengths, weaknesses, opportunities, threats
What does SWOT stand for?
Knowledge skills and abilities *at the end of the recruiting process, you should end up with a pool of high qualified candidates with the needed KSAs**
What is a KSA?
Strengths ~ Employees ~ Patents ~ Cash ~ Brand Weaknesses ~Unique Capabilities ~ Outdated technology ~ Employee skill gaps ~ High operating costs
What part of the SWOT Analysis is "inside the firm"?
Opportunities ~ Underserved markets ~ New social trends ~ Technological advances Threats ~ Competitor actions ~ Economic downturns ~ Government regulations
What part of the SWOT analysis is "outside the firm"?
Race, Religion, gender, handicap, medical records, criminal records, marital status, # and ages of children *you can always ask if a candidate has been convicted of a felony. You can also ask if they have been convicted of a misdemeanor if it directly relates to the job they will be doing*
What things cannot be asked on an application/job interview?
Sustainable Competitive Advantage
a company's assets, attributes, or abilities that are difficult to duplicate or exceed; and provide a superior or favorable long-term position over competitors
Strategic Management Process
a set of activities that a firm manager undertakes in order to try to put their firms in the best possible position to compete successfully in the marketplace (even when challenged by competitors)
Work-life effectiveness
a specific set of organizational practices, policies, and programs, plus a philosophy that actively supports efforts to help employees achieve success at both work and home.
Threat of Substitutes
a. Substitutes- any other product or service that can satisfy the same need for a customer as an industry's offerings, product or service that consumers would be willing to use instead of the product they currently use b. Fast food vs Grocery Stores c. Don't get substitutes confused with Rivals. Example: McDonalds, Burger King, Wendy's, Taco Bell, Hardees are rivals
Vision Statement
an expression of what a business's founders want that business to accomplish; usually a very broad, and does not even have to mention a product or service; does not describe the strategy a firm will use to follow its vision—is it simply a sentence or two that states why the business exists
Legal Issues-
avoiding legal issues is an ongoing problem for organizations and is another reason for real-time communication and documentation for performance issues. Sometimes performance management causes issues because as Human Resources deals with employee relation issues and lack of formal, numerical ratings system causes those to worry about defending themselves against litigation. Another problem is that even formal performance reviews can be biased/subjective, and may reveal ratings biased, neither the traditional formal processes or the radial new processes can guarantee that legal troubles will never develop.
Pregnancy Discrimination Act of 1978:
broadens the definition of sex discrimination to cover pregnancy, childbirth, and related medical conditions. Made pregnancy an illness instead of a national condition.
Pay-for -Performance-
compensation program that offers competitive pay in the marketplace and allows differentiation of compensation based on employee performance
Pay-for-performance
compensation program that offers competitive pay in the marketplace and allows differentiation of compensation based on employee performance. Begins with a philosophy that an organization adopts that states that they seek to reward the best-performing employees to enhance business performance and take care of those who can have the greatest impact
Drive to Comprehend
concept of all of us wanting to make sense of the world around us and producing different theories and accounts to explain things. The primary lever of this drive is job design.
Bora banding
consolidate and reduce the number of pay grades based on similar skills
Barriers to entry
depending on the industry, these are factors that prevent new firms from successfully competing in the industry. Common barriers include cost, brand loyalty, and industry growth. Airline industry has a high barrier to entry because there are a lot of costs involved with starting up including very expensive equipment, airport landing rights, and expertise to start up a new airline
Drive to Acquire
describes the notion that we are all driven to acquire scarce goods that bolster our sense of well-being. It is also relative (we compare ourselves to others in what we have) and insatiable (we always want more). Within an organization, the primary lever to address this drive is the reward system, and the actions are to differentiate levels of performance, link performance to rewards, and pay competitively
Job Analysis (review of all jobs)
determining the basic elements of a job, a formal evaluation of a specific job, the components examined are the job tasks, the equipment needed to accomplish the task, the working conditions and setting in which the work takes place, and the KSAOs needed to successfully accomplish the task.
Agile Manifesto-
developed by software developers and "emphasized principles of collaboration, self-organization, self-direction, and regular reflection on how to work more effectively, with the aim of prototyping more quickly and responding in real-time to customer feedback and changes in requirements." The impact on performance management was clear, and companies started to think about performance management processes that were less cumbersome, incorporated frequent feedback, and delivered performance impacts
Industry Rivalry
each of the other four forces have an impact because there is a two-way relationship with rivalry and all of the other forces. Each of the other forces can affect how hard firms in an industry must compete against each other to gain customers, establish favorable supplier relationships, and defend themselves against new firms entering the industry
Forces Ranking
eliminate bottom 10% performers; promote top 10% performers
The Fair Labor Standards Act of 1938 (FSLA
establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. Special rules apply to state and local government employment involving fire protection and law enforcement activities, volunteer services, and compensatory time off instead of cash overtime pay
360◦ Degree Feedback
evaluation that considers all people with whom an employee regularly interacts, such as customers, vendors, co-workers, and managers
National Labor Relations Act 1947 (NLRA):
extends rights to many private-sector employees, including the right to organize and bargain with their employer collectively. Employees covered by the act are protected from certain types of employer and union misconduct and have the right to attempt to form a union where none exists.
Training
focus on distinctive skills or abilities and can be provided to new or skilled workers (see chart on study guide"
Objective Measurements
focus on quantitative measures of an employee's performance Examples: dollar sales generated, error rate per fay, unit output per hour
Behavioral Interviews:
form of interview where candidate is asked to describe specific actions, they have taken in past job situations. 54% reliable in predicting job performance
Recognition
formal or informal programs that acknowledge or give special attention to employee actions, efforts, behavior, or performance and support business strategy by reinforcing behaviors (extraordinary accomplishments) that contribute to organizational success
The Worker Adjustment and Retraining Notification Act of 1988 (WARN):
generally covered employers with 100 or more employees, not counting those who have worked less than 6 months in the last 12 months and those who work an average of less than 20 hours a week. Regular federal, state, and local government entities that provide public services are not covered. Also protects workers, their families, and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs.
Halo Effect
high rating on one aspect of job performance influences high rating on all aspects of performance
Threat of New Entrants
if an industry has a growing market or is very profitable, it may attract new entrants. These can either be firms that are starting up in the industry as new companies, or firms from another industry that expanded their capabilities or target markets to compete in an industry that is new to them.
Total Rewards Strategy
includes the six elements of total rewards that "collectively define an organization's strategy to attract, motivate, retain, and engage employees. Including compensation, benefits, work-life effectiveness, recognition, performance management, and talent development
Quid-pro-quo
individual does something for you so you have to do something for the individual (usually in a sexual manner)
Drive to Defend
instinct to defend ourselves, our families, and our friends, and it describes our defensiveness against external threats. This drive also tells us about our level of resistance to change, and why some employees have especially guarded or emotional reactions. The primary levers are performance and resource-allocation processes, and the actions are to increase process transparency and fairness, and to build trust by being just in granting rewards, assignments, and other recognition
Hostile Work Environment
intimidating, hostile and offensive work environment. Leads to stress, turn-over, and legal issues
Mission Statement
more specific, takes the why of a vision statement and gives a broad description of how the firm will try to make its vision a reality, describes the product a firm plans to offer or the target markets it plans to serve
Differentiation
offer products or services that are unique and provide superior value
Equal Pay Act of 1963:
pay based on ability, can't discriminate in pay based on employee's sex. Permits pay for seniority, skills, ability, and geographic location
Compensation
pay provided by an employee to its employees for services rendered (i.e. time, effort, skill). This includes both fixed and variable pay tied to performance levels
Benefits
programs an employer uses to supplement the cash compensation employees receive. These health, income protection, savings, and retirement programs provide security for employees and their families
Americans with Disabilities Act of 1990 (ADA
prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities. The ADA defines an individual with disabilities as a person who: 1) has a mental or physical impairment that substantially limits one or more major life activities, 2) has a record of such impairment, 3) is regarded as having such impairment. An employer is required to make a reasonable accommodation to the known disability of a qualified applicant or employee if it would not impose an "undue hardship" on the operation of the employer's business (reasonable accommodation—about $5,000 dollars and if it costs more than that they are not legally obligated to do it)
Civil Rights Act of 1964:
prohibits the discrimination in all employment decisions based on race, sex, religion, color, or national origin
Age Discrimination in Employment Act of 1967 (ADEA):
protects individuals who are 40 and older from employment discrimination based on age. These projections apply to both employees and job applicants. It also makes it unlawful to discriminate based on age with respect to any terms of employment, such as hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training. This act ended Federal Mandatory Retirement.
Talent Development
provides the opportunity and tools for employees to advance their skills and competencies in both their short- and long-term careers.
Intentional Discrimination (disparate treatment)
qualified employees are not hires, promoted, or given benefits of other employees because of their race, color, sex, ethnic group, national origin, or religious beliefs
Behavioral Observation Scale (BOS)
rating the frequency of specific, job critical behaviors to determine performance
External Recruiting
recruiting that takes place outside of the business
Internal Recruiting
recruiting that takes place within the business
Buyer Power
refers to the balance of power in the relationship between a firm and its customers. IF a firm provides a unique good or service, it will have the power to charge its customers premium prices, because those customers have no choice but to buy from the firm if they need that product. In contrast, when customers have many potential sources for a product, firms will need to attract customers by offering better prices or value for the money if they want to sell their products
Supplier Power
refers to the balance of power in the relationship between firms and their suppliers in an industry, suppliers can have the upper hand in a relationship if they offer specialized products or control rare resources. a. Example: Oil, Wheat, or Aluminum b. Supplier- someone who sells parts, materials, labor, or products to another firm that creates something else out of the parts c. Commodity Suppliers- usually have low power
Human Resource Management
responsible for defining and driving the various elements of an organization's total rewards strategy and ensuring that it is engaging enough to attract and retain good employees
Termination
should always be because of poor performance that is documented, is used as the last alternative and after all other attempts to correct the behavior have failed, and should never be for arbitrary reasons. Rule: use good faith, fair dealing, and avoid implied contracts
Problems of Managing so much Performance Data-
since companies have to keep conversations, documentation, and feedback for each employee it is hard to capture the ongoing feedback and conversations that employees have had with their managers. However, there are some new technologies that have been released that allow managers to pull up notes and materials from prior conversations with their employees.
SWOT-
situational analysis to help managers determine the need for strategic change through strengths, weaknesses, opportunities, and threats
Job Description
specific to each job; a written description of the basic tasks, duties, and responsibilities required of an employee holding a particular job
Cost Leadership
success through low costs that result in low prices compared to competitors
Leniency and Strictness Errors
tendency to assign high or low standards to ALL employees regardless of their actual performance (Leniency-High Rating)
Performance Management
the alignment of organizational, team, and individual efforts towards the achievement of business goals and organizational success. It includes establishing exceptions, skill demonstration, assessment, feedback, and continuous improvement.
Distributive Justice
the amount of rewards (pay, benefits, bonuses, and honors) and employee's perception that the rewards are fair. A company's rewards are distributed unevenly (executives get higher pay for the same hours) but employees believe they are fairly distributed
Drive to Bond
the idea that humans extend connections beyond just individuals, to organizations, associations, and nations. In organizations, this drive is fulfilled when employees feel proud to be a part of the company and enjoy being a member of their team. (the primary lever is culture, and the actions are to foster mutual reliance and friendship, to value collaboration and teamwork, and to encourage best practice sharing.
Procedural Justice
the methods and terms of distribution of rewards and the perception of fairness
Switching Costs
the penalty consumers face when they choose to use a particular product made by a different company. These costs can be financial (extra price paid to choose a different product) or practical (the time/hassle required to switch to a different product).
Brand Loyalty
this can also keep new entrants out of the industry because customers who are familiar with a strong brand name may be unwilling to try a new, unknown brand
Testing:
to acquire more information about the candidate for employment. Assessments look at physical capabilities (skills, aptitude, agility, dexterity), mental capacity (memory, cognitive ability, IQ), or personality (attitude, honesty, emotional intelligence). These are often wrongly called tests, which have right or wrong answers (not very good)
Unintentional Discrimination (adverse impact)
unintentional harm from hiring, promoting, or paying at lower rates. 4/5 rule says that if the potential harmed group is less than 4/5 of the dominant group, discrimination might have occurred
Family and Medical Leave Act of 1993 (FMLA):
up to 12 weeks of unpaid, job protected leave in a 12-month period to eligible employees for certain family and medical reasons. Applies to all public agencies, including state, local, and federal employees, local education agencies (schools), and private-sector employers who employed 50+ employees in 20 or more workweeks in the current or preceding calendar year, including joint employers and successors or covered employees
Structured Interviews:
use of standardized questions that are given to all candidates. Responses are then scored by a committee of reviewers. Very useful in eliminating bias and discrimination
Types of Pay
wages and salary, skill-based pay, competency-base pay, piece-rate, commission
