MNGT 502--Exam #1

There is a systematic set of steps for executing evidence-based management. Place the following steps into the appropriate order. Aggregating the evidence Asking key business questions Assessing whether the decision was effective Appraising the quality of the evidence Applying the evidence/making a decision Acquiring relevant evidence

1. asking key business questions 2. acquiring relevant evidence 3. appraising the quality of the evidence 4. aggregating the evidence 5. applying the evidence/making a decision 6. assessing whether the decision was effective

According to the resource-based view of competitive advantage, in order for an organization to acquire and sustain competitive advantages, it must acquire or cultivate resources that fit which of the following descriptions: A. The resource must be useful for some purpose that cannot easily be imitated by others in some form or fashion B. The organization must be organized to exploit this resource. C. The resource must have value (tangible or intangible) D. The resource must be relatively rare or difficult to acquire

All of them

Below are a series of if-then statements. Select those that are true as based on Kaplan and Norton (2004). A. If an organization can map out how investments in learning and growth cause meaningful changes in internal operations (e.g., # of new products created, # of accidents avoided) and, ultimately, customer behavior (i.e., they buy more products and services), then they will know how to create long-term shareholder value. B. If an organization is to invest in its people (i.e., human capital), then it should - in time - observe the creation of intangible assets (e.g., patents, intellectual property, new knowledge). C. If an organization focuses on how investments cause a desired change in employee behavior (i.e., employees now behave in ways that are better aligned with strategic needs) by coordinating HR activities (i.e., how employees are hired, trained, developed, compensated, etc.), then an organization has made a sound investment in intangibles. D. If an organization aligns its intangible capital (e.g., human, information, and organizational) with the business strategy, then long-term shareholder value should follow.

All of them

Consider the ability-motivation model of performance. When diagnosing employee performance (or trying to understand why employees are performing at the level they are performing at), what three broad questions does this model call us to answer? A. What sort of opportunities are given to employees? B. How capable are the employees? C. How motivated are the employees?

All of them

What are the sources of evidence that inform evidence-based management? A. Organizational data B. Scientific literature C. Stakeholders D. Practitioners

All of them

Which of the following are characteristics of effective human resource management? A. HR decisions are made on the basis of adhering to employment law, ethics, and fairness B. The concerns of stakeholders (managers and employees, society at large) are considered systematically C. Decisions are made in ways that respect workers (employee and managers') time as well as with concerns for being cost effective D. HR decisions are made with regard to relevant organizational evidence E. Healthy employee-employer relationships are a focus on making HR decisions

All of them

Which of the following are practices that human resource management is concerned with? A. How people are compensated for their performance and what benefits job holders receive B. How jobs are described and performance within those jobs is evaluated C. How talent is acquired and retained D. How employees within the organization are trained and developed E. How performance is managed

All of them

Which of the following are theoretically true regarding applying the following concepts discussed in module 1? A. In an HR context, understanding a businesses competitive strategy needs to come first and informs strategic human resource management, which informs specific HR strategies B. Activities that cultivate firm-specific human capital will help firms outcompete those who focus more on generic human capital. C. Understanding how a businesses creates value is crucial to strategically managing human resource.

All of them

Which of the following are true of the concept "value chain"? A. It clarifies which organizational processes are important for addressing customer values B. A strategy map partly depicts the value chain C. It can help communicate organizational priorities (e.g., which internal process is most important to creating value). D. It describes how different parts of the organization (e.g., internal processes, such as operations and customer management) work together to create long-term value.

All of them

Which of the following broad questions should you attempt answering in order to identify the strategy that a business is using or intends to use? A. How will we differentiate our product/services from similar rivals within this market? B. Where will we be active or play a role in the marketplace? C. How quickly will we enter this market and in what sequence of moves? D. How will we obtain returns above and beyond our costs? E. How will we enter into a new market (i.e., what product or service will we offer)?

All of them

Which of the following can help explain how managing human capital can affect bottom-line profits for a business? A. Compensation and benefits practices affect the quality of individuals who are acquired and retained by an organization. When these practices effectively address strategically relevant needs, they will have a financial impact. B. Training and development practices affect the number of individuals treated, the quality of their competencies, and the timeliness of these capabilities that an organization has access to at any given moment. When these practices effectively address strategically relevant needs, they will have a financial impact. C. Talent acquisition (e.g., recruiting and staffing) procedures can affect the quantity, quality, and timeliness of talent an organization has access to at any given moment in any given position. When these practices effectively address strategically relevant needs, they will have a financial impact.

All of them

Which of the following is/are TRUE regarding the simulation? A. The employee turnover rate at the beginning of the simulation is 9.8% B. Promotion from within increases morale C. The cost to lay off an employee is 50% of the hiring cost for that level. D. In a company with 500 employees, 30 resigned last quarter. Employee turnover for the quarter was 6%

All of them

Use measures, analytics, dashboards, scorecards, and cost-benefit assessments to track the performance of HR programs and activities.

Effectiveness

Measure cost-savings of HR operations (e.g., cost per hire, time to fill, training costs), the costs of HR programs and services; benchmark analytics and measures against rivals

Efficiency

Works directly with line managers to clarify strategy, audit specific practices to determine if they are effective, and provide feedback to corporate HR regarding how practices work on a day-to-day basis

Embedded HR

A phone application is made more useful for customers who already have it. They are informed of this new feature in a subsequent software update.

Enhance customer value

Management identifies ways in which organizational capabilities could be reconfigured to help the business enter a new market.

Expand revenue opportunities

The extent to which internal practices address strategic priorities (e.g., skill gaps)

External congruence

Suppose your business's hurdle rate (WACC) is 10%. All things being equal if human resource management activities generate returns that are 9%, then HRM has created value for your business. True or False.

False

You are preparing for the first round of interviews which are coming up in a few weeks, so you have some time to prepare. Below are several actions you could take. Knowing that your task is to build a strategic HRM function, what is the order in which you should take these actions? --Conduct an analysis of the industry in which this organization operates (i.e., determine whether the industry growing, plateauing, or declining; are new competitors entering and how are they competing; how are customers behaving). Ask your friends if your industry assessment aligns with theirs. --Develop HR strategies to address business needs. --Develop an understanding of how the organization tries to compete in the market (i.e., understand how the business creates value in the market; which areas of the business are mission-critical and who does that work). Ask your friends to assess your understanding.

First Third Second

A broad category that describes how well two or more entities cohere or are thematically or logically consistent with one another.

Fit

Which of the following best describes how human resource management practices impact financial outcomes for the firm (e.g., operating profits, net profits)? In other words, what mediates the impact of HRM on firm performance?

HRM improves operational outcomes (e.g., turnover) and customer outcomes (e.g., satisfaction)

For employee groups that are both strategically valuable and make unique contributions to your organization, which HR system/strategies should you apply to manage these workers?

High Commitment (e.g., invest heavily in unique training opportunities to create firm-specific human capital, offer long-term stock options to retain them, grant lots of autonomy in decision making)

We discussed different kinds of generic HR strategy frameworks that could be useful for formulating a specific HR strategy. Below are illustrations of these different strategies. Match them to the appropriate description. These systems are a suite of evidence-based practices that, when bundled together, attain specific outcomes, such as helping employees feel like autonomous agents who desire to work hard and grow their talents.

High performance work systems

Collecting metrics that allow for an assessment of how well HR programs and practices facilitate strategy execution.

Impact

There is a key segment of roles in an organization that must be staffed by best-in-class workers in the industry for your organization to win in the marketplace. To acquire such talent, you have devised a plan to attract these workers to your firm by designing attractive compensation and benefits plans and then marketing your offerings publicly. After several months, you are able to acquire these workers from a rival, both enhancing your organization's capability while damaging your rivals.

Impact

A manager identifies cost-savings associated with retaining employees worth 50% of leaver salary.

Improving cost structure

Considering future talent gaps, reporting key ways to resolve these gaps for managers to use (e.g., promoting from within).

Prescriptive Analytics

In the context of the simulation, which aspect of the strategy diamond is most crucial for you to be able to apply?

Staging

Match the details from this case to the appropriate portion of the strategy diamond. First came strong and reliable returns. iTunes allowed Apple to build a core userbase (which could become iPhone users) while also allowing it to build the financial resources needed to grow. Then came the acquisition of telecommunications expertise that allowed Apple to build the iPhone.

Staging

The extent to which employees are treated congruently over time

Temporal consistency or continuity

All employees in an organization receive a particular benefit: access to a wellness center. This practice is one of many that aims to encourage employees to adopt healthier lifestyles, thereby reducing health insurance costs. However, management has decided that it could generate significant cost savings by removing this particular benefit across all employees because few employees actually visit the facility.

Temporal-employee consistency

We discussed different kinds of generic HR strategy frameworks that could be useful for formulating a specific HR strategy. Below are illustrations of these different strategies. Match them to the appropriate description. HR investments (via practices) are tailored to different segments of the workforce. These differences reflect differences in the potential for value creation with each category of jobs.

The value matrix approach

If a business takes on more debt (e.g., selling bonds) to finance the purchase of tangible assets or the creation of intangible assets (e.g., investing in training and development), it increases its financial leverage. True or False.

True

The goal of every human resource management function is to create value for the firm or to cultivate a sustainable competitive advantage over rivals. True or False.

True

You should aim to exhaust your annual budget by the end of the year. In other words, if the budget is $1.4 million, then you should aim to spend all of your budget by the end of the year. That is because you cannot carry any residual funds over to the following year. True or False.

True

Choosing the Tier 2 health care benefit option will cost what percent of payroll?

3.27%

A small hotel has 55 rooms that need daily cleaning. Management estimates that each housekeeper can clean 12 rooms in a shift. How many cleaning staff are required to complete the work?

5

Which of the following is used to evaluate different kinds of evidence and help us to identify the best available source of evidence?

A critical appraisal

Performance in this role either directly or substantially enhances revenues or reduces costs. As such, much autonomy in decision making is given.

A position

Below are statements regarding the relationships between various concepts discussed in this module, including: Select those that are TRUE. A. If a business increases its financial leverage, this will magnify any returns (or losses) generated for every dollar tied up on assets. B. Value is created when the assets employed in a firm's operations generate returns greater than the cost of capital. C. When businesses establish a strategy (focus, differentiating, or lowest-cost), it commits to a particular combination of the profit margin (low vs. high) and asset turnover (high vs. low volume) for maximizing return on assets. D. Utilizing shareholders' equity increases financial leverage. E. If a business takes on more debt (e.g., selling bonds) to finance the purchase of tangible assets or the creation of intangible assets (e.g., investing in training and development), it increases its financial leverage.

A, B, C, E

According to the resource-based view of sustainable competitive advantage, resources must be _____ for the organization to perform at an above-average level and secure a sustainable competitive advantage? A. Rare B. Omnipotent C. Supported by the organization D. Difficult to imitate E. Valuable

A, C, D, E

Which of the following details about the simulation is/are TRUE? A. Adding a grievance program may initially increase grievances. B. In order to keep them up to date, you should revise your goals each period after reviewing the results of your decisions. C. The firm needs to be more aggressive in seeking out more minorities and female employees D. The cost associated with promoting from within are much lower than those associated with hiring from outside.

A, C, and D

Which of the following organizational activities might help a firm attain a sustainable competitive advantage? A. Strategically utilizing teams over individual contributors B. Strategically utilizing individual contributors over teams C. Adopting practices that cultivate general skills rather than firm-specific skills D. Utilizing systems of HR practices over "best in class" HR practices. E. Utilizing "best in class" HR practices over systems of HR practices F. Adopting practices that cultivate firm-specific rather than general skills

A, D, F

Which of the following can affect the number of employee positions you will need to fill? A. Employee productivity B. Projected resignations C. Required production D. All of the above

All of the above

Which of the following statements are TRUE regarding the weighted average cost of capital (WACC)? A. The WACC is often referred to as a hurdle, or hurdle rate, for investments. B. Operating profits must exceed the cost of capital for a business to stay in business. C. In terms of exceeding the hurdle rate, operating managers must aim at maximizing returns on assets. D. When investments produce are described by a rate of return that exceeds the WACC, value has been created. E. From a Human Resources standpoint, investments in people must generate returns on improved performance that exceed the WACC.

All of them

The extent to which a group of similar employees (e.g., sales professionals) are treated in a congruent manner by an HR system

Among employee consistency

All employees in an organization receive a particular benefit: access to a wellness center. This practice is one of many that aims to encourage employees to adopt healthier lifestyles, thereby reducing health insurance costs. However, management has decided that it could generate significant cost savings by removing this particular benefit from its lower-level employees; in so doing, management hopes that lower-level employees will work harder to receive a promotion into a rank where the benefit is granted.

Among-employee consistency

Of the companies listed below, which appears to have the more effective business model and why?

Apple - superior operating income

Match the details from this case to the appropriate portion of the strategy diamond. The cell-phone market.

Arena

Supports other roles whose work is more pivotal; usually involves following specific rules or procedures

B position

Which of the following statements below accurately describe what is going on in this situation? A. HR practices are not consistent with one another (i.e., HR practices lack internal consistency). B. HR practices appear to be consistent (i.e., internally consistent) with one another. C. There may be opportunities to modify training in employment law to address (i) managing employee performance and (ii) diversifying the business D. There may be opportunities to modify leadership development and coaching practices to address (i) business diversification, (ii) ensuring compliance with the legal system, and (iii) managing a diverse workforce. E. Of the HR practices evaluated, none of them address business diversification, which is the most pressing business need.

B, C, D, E

This role is required for the firm to function (e.g., a generic position in accounting, HR), but has little impact on the organization.

C position

Operates as a specialized consulting firm inside the organization that creates specific services (e.g., hiring practices, training programs) that can benefit the whole company

Center of expertise

HR is focused solely on ensuring compliance with federal and state employment laws. All work is transactional in nature and not tied to enhancing strategy execution.

Competitive Disadvantage

HR is able to help its business acquire talented people who are sought after by rivals, but their skillsets can either be found elsewhere or cultivated with some training.

Competitive Parity

We discussed different kinds of generic HR strategy frameworks that could be useful for formulating a specific HR strategy. Below are illustrations of these different strategies. Match them to the appropriate description. An airliner's management team decides to downsize its workforce to reduce its labor cost. They also pay minimally and often hire temporary workers. Jobs are largely boring and involve heavy supervision.

Control Systems

Focuses on creating a consistent culture, shaping HR programs and practices to implement the CEO's agenda, ensures that all work is aligned with business strategy, and ensures the succession of top HR talent

Corporate HR

This communicates the minimum return on investment required by projects initiated by a firm.

Cost of capital

This measure offers a glimpse into an organization's ability to cover any debts it must repay in the near term (i.e., liquidity).

Current ratio

This offers insight into the capital structure and health of a firm's operations.

Debt-to-equity ratio

The business is composed of narrower unrelated businesses with unique industries and needs. As such, there is little value in standardizing HR processes beyond what is necessary for efficiently conducting transactional/traditional HR work. Rather, there is more value in having HR decentralized.

Dedicated HR

Reporting changes in headcount (the number of employees in the firm) over time.

Descriptive Analytics

Relatively high profit margins, asset turnover can be low or high.

Differentiating

Match the details from this case to the appropriate portion of the strategy diamond. A superior (at the time) product that was user-friendly, reliable/intuitive, pretty, all-in-one cell-phone (i.e., it is a phone, a music player, an internet device, it has maps, etc.) that is the first iPhone.

Differentiators

This is a measure that allows us to compare rival business models and determine which is the more successful at generating profits from an operational standpoint (i.e., allows some insight into how well HR supports strategy execution).

Earnings before interest and taxes (EBIT)

Match the details from this case to the appropriate portion of the strategy diamond. Apple charged a premium price for a device that offers unmatchable service and proprietary features, which customers desire.

Economic Logic

An organization has validated employee selection procedures in use that include a cognitive ability test and a personality test. These procedures explain roughly 10% of the variance in performance across various roles. This is comparable to rivals who use similar procedures,

Effectiveness

An organization's cost per hire is $3K on average. This is relatively higher than other rival organizations.

Efficiency

To appropriately diagnose an organization, three steps must be followed in a precise order. Below are the three steps. Place them into their appropriate order --Identify the organization's strategy, priorities, and, most importantly, all the behaviors that are required to execute the strategy --Reduce the list of behaviors that are required to execute the strategy into a smaller and more manageable subset of competencies or skills --Assess the extent to which organizational practices both (i) address these competencies and (ii) support one another.

First Second Third

A new training program allows workers to double their productivity in two months.

Increase asset utilization

A private school pays its teachers 25% more than average for the community and offers teachers the opportunity to earn an annual bonus of up to 10% of their salary. In return, the school expects high performance from teachers and students. Despite the high pay, over 40% of first-year teachers do not return for a second year. That is higher than the 24% turnover for similar schools. Which of the following would be least likely to improve teacher retention in the school?

Increased benefits

The extent to which internal practices support one another (e.g., compensation and selection practices support one another)

Internal consistency

Offering insight into the effectiveness of business operations, this is a measure of how quickly an organization can sell its products.

Inventory turnover ratio

Which of the following describes the role of the weighted average cost of capital (WACC) in regard to making investments in people (e.g., enhancing staffing, training, compensation, etc.)?

Investments should produce returns that are equal to or above the cost of capital.

Relatively low profit margins but high asset turnover.

Lowest cost

Worker turnover at a mid-sized manufacturer is 10% per quarter. The human resources department estimates it costs $1,000 to hire and train each replacement. They expect to reduce turnover to 8% with a new orientation program costing $15,000 per year. Is the program worth starting?

Not enough information

Supports embedded HR professionals who become overwhelmed by operational work

Operational executors

Making projections of future headcounts available to hiring managers so to identify surpluses and shortages of talent (i.e., talent gaps)

Predictive Analytics

This offers insight into the profitability of investing in a firm.

Return on equity

This includes all of the costs of operating a business (e.g., wages and benefits, payroll taxes, etc.) and is one of the largest expenses for an organization to cover.

Selling, General, & Administrative (SG&A)

Makes doing the traditional transactional HR work (e.g., enrolling employees in programs, filing benefits claims) a lot easier to do

Service Centers

The business is structured according to the multiple related markets and market segments that are served. As such, there is value in standardizing HR processes across the firm. There is also utility in communicating meaningful innovations that create value across the firm.

Shared Services

The business is arranged via various divisions (e.g., marketing, HR, finance, customer service). While each division has an executive figure (i.e., director), the integration of work in these areas is overseen by a single chief executive officer.

Simple HR structure

The extent to which an employee is treated in a congruent manner by all practices that describe an HR system

Single employee consistency

All employees in an organization receive a particular benefit: access to a wellness center. This practice is one of many that aims to encourage employees to adopt healthier lifestyles, thereby reducing health insurance costs. Unfortunately, employees are not particularly aware of this benefit, as HR has relied on front-line managers to communicate this benefit. One manager has decided not to communicate this benefit to a particular subordinate - a poor performer - because the manager feels as though this individual does not deserve the benefit.

Single-employee consistency

HR helps a business craft a unique team-based culture that helps employees collaborate openly. Such work leads to new products and services or innovations for current products in services. This culture is unique and difficult to imitate in the industry. HR is diligent in its work with leaders to ensure that the culture is supported as well as given opportunities to be grown and stretched.

Sustained Competitive Advantage

Below are different kinds of studies that could be used to inform HR decision-making (e.g., how to acquire talent, training employees or managers). Examples are given: Case study Cross-sectional study Longitudinal study Randomized controlled experiment or field experiment Systematic review or meta-analysis of experiments From an evidence-based management perspective, which kind of study provides the strongest possible evidence for supporting organizational decision-making?

Systematic review or meta-analysis of randomized controlled trials and field experiments

This group of workers holds skillsets that are highly unique (e.g., state of the art expertise in employee selection systems). They are not, however, strategically valuable to your firm.

Systems aim at building good relationships while maintaining external employment.

This group of workers is the source of your organization's ability to differentiate itself from rivals (i.e., research and development, new product development). The workers you have are the best your money can buy and you wish to keep these workers for a long time.

Systems of practice are devoted to helping workers maximize their long-term potential.

Sales professionals help your organization to promote and ultimately sell its products and services. Lots of people can do this kind of work, but in-depth knowledge about your product and services makes your particular sales professionals particularly valuable.

Systems of practices focus on managing performance.

The practice of promoting from within to fill management positions has not always worked well in the past because of

The lack of formal training

This group of workers performs traditional HR work that is focused generally on adherence to employment law (federal and state). Anyone with a background in HR can do this work.

This work is outsourced, contracted out, or generally externalized and high transactional.

Creating long-term value partly involves combining practices with one another in order to generate a benefit. For example, in the human resource management context, rarely can you only rely upon simply hiring brilliant people into an organization as a talent management strategy. Rather, you must consider how valuable brilliant people are in the marketplace (i.e., unless they are satisfied, they will leave) and leverage other practices (e.g., pay above average market compensation, offering lavish benefits) in order to acquire and retain brilliant people. This does not mean they will be motivated to perform, so other practices (e.g., granting autonomy in work) will be needed.

Value creations requires bundling practices to create specific outcomes

Whether or not an investment in human resource management (for instance) ultimately creates long-term shareholder value depends on how well that investment is aligned with the broader organizational strategy. For instance, for investments in training programs that help managers to identify ways to reduce expenses (e.g., Lean Six Sigma, Total Quality Management) to pay off for an organization, these investments must be implemented to facilitate the execution of a lowest-cost (as opposed to differentiation) strategy.

Value is created when practices are aligned with a broader strategic imperative

This means that, in order to create long-term shareholder value as an outcome, an investment in human resource management (for instance) must impact a mediating process (cause employee and or business performance to improve).

Values in created indirectly

Match the details from this case to the appropriate portion of the strategy diamond. Combining internal resources (i.e., iTunes, MacOs ecosystem) with others that were acquired (i.e., expertise in cell telecommunications) in order to create the all-in-one device that is the iPhone.

Vehicle

When you enhance compensation (e.g., increase wages across-the-board raise of 5%, enhance benefits by offering a day of paid time off), the cost of the increase is:

charged against your budget in the first quarter of the increases