Considering Human Resource Planning from Different Perspectives Two Olympic Gold Medalist in skiing married in 2014, Jason and LeAnn Benson opened Adventurers and Explorers (A&E) outdoor sporting store that sales gear and clothing. The couple’s concept is

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C H

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Information Human

FOR MAKING

HumanHuman

Decisions RESOURCE

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Information plays a vital role in all organizational activities.

Marketing managers need information about customer prefer-

ences and competitors’ products. Operations managers need

information about inventories and product demand. Financial

managers need information about interest rates and cash flows.

And human resource managers need information about all of

these areas so they can ensure they have the right employees with

the right skills in the right place at the right time.

Consider, for example, three recent news announcements

related to employment in the United States. In one, major employ-

ers in the U.S. pharmaceutical and financial services sectors

announced over 45,000 job cuts. These cuts largely were due to

industry slowdowns and corporate restructurings. But, surpris-

ingly, some cuts were related to improvements in the economy.

Banks, for example, had hired extra loan officers to help process a

surge in home refinancing, but an improving economy was push-

ing interest rates up; higher rates, in turn, led to a drop in home

refinancing and a reduced need for extra loan officers.

At about the same time, in an annual ritual, major U.S. retailers

announced that they were planning to hire hundreds of thousands

of temporary workers for the holiday season. For example, in 2013,

Kohl’s added 52,700 seasonal workers, Macy’s added 80,000, and

Target almost 90,000. As the holiday season ended, some of these

workers were offered permanent employment, some were extended

(temporarily), but most saw their temporary jobs come to an end.

Finally, late in 2013, Starbucks announced a long-term plan

to increase its global workforce from around 200,000 to 500,000.

Within this total the firm will

seek to hire at least 10,000 vet-

erans and active-duty spouses. LEARNING OBJECTIVES

After studying this chapter you should be able to:

5-1 Describe human resource planning as a source of information for decision making

5-2 Discuss strategy as a source of information for making human resource decisions

5-3 Discuss economic conditions as a source of information for making human resource decisions

5-4 Describe job analysis as a source of information for making human resource decisions

5-5 Discuss the job-analysis process and identify and summarize common job-analysis methods

“ The banking sector is cutting workforce levels

as a direct result of an improving economy.

”—John Challenger, senior human resource consultant1

FORECASTING THE FUTURE

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98 Part 2: Decision Making in Human Resource Management

Similarly, Walmart indicated that it intended to hire around 100,000

new, permanent employees within the next 5 years. These exam-

ples all illustrate that human resource managers must rely on a

variety of information sources as they plan to hire new employees,

either temporarily or permanently.2

THINK IT OVER

1. What industry sectors are most likely to add jobs during a

down economy? During an improving economy?

2. Are there employment sectors that are essentially unaffected

by economic fluctuations?

Human resource planning is the process of forecasting the supply and

demand for human resources within an organization and developing action plans for

aligning the two.

Human resource planning is the process of forecasting the supply and

demand for human resources within an organization and developing action plans for

aligning the two.

Walmart executives face a continuous challenge of hir- ing and retaining workers in a low-wage environment. But as with most things, Walmart does an outstanding job of forecasting its needs for employees. These forecasts come from a logical and systematic analysis of the firm’s current and projected human resource (HR) needs. And as the ongoing hiring process continues, it will be critical that company officials monitor the environment and the firm itself and make any required midcourse adjustments. Both current hiring goals and their implementation have one major thing in common: information. Indeed, it is critical that firms have the information they need to make informed human resource management (HRM) decisions.

With an understanding of the nature of HRM and the HR environment as a foundation (as provided in Chapters  through ), it is now possible to begin a more focused and detailed analysis of the kinds of decisions that HR managers must make and the information they need to make those decisions. This chapter opens this section with a discussion of the critical information needs of the human resource manager. Chapter  begins dealing with the decisions themselves and addresses decisions concerning size and structure of the organizational form, including who to let go, who to retain, and how we make sure that the right people are retained and separated. Finally, Chapter  deals with staffing by discussing issues involved in recruiting and selecting employees. These are critical decisions for the HR manager because they will determine the nature of the workforce available to try to meet strategic objectives.

We begin, then, with the information that human resource managers need to make the decisions required. The most basic type of information deals with the supply and demand for labor in the marketplace, and so we first look at human resource planning and forecasting as input for decision making.

5-1 HUMAN RESOURCE

PLANNING AS A SOURCE

OF INFORMATION

Probably the most impor- tant factor that affects the human resource manage- ment function is the labor force (also referred to as the workforce). An organiza- tion may pursue a growth

strategy, and the HR manager may attempt to recruit and hire new employees, but if there are not enough people in the labor force with the required skills or background, then efforts to recruit and hire will fail and so will the overall growth strategy. Thus, the composition of the labor force is a major limiting factor in pursuing strategic goals. The successful management of this component requires what is called human resource planning, and this planning can often make the difference between organizational success and failure. Human resource planning, illustrated in Figure ., can be defined as the process of forecasting the supply and demand for human resources within an organization and developing action plans for aligning the two. This section examines that process in more detail.

5-1a Forecasting the Supply of Human Resources An important first step in HR planning is forecasting the future supply of human resources—predicting the avail- ability of current or potential employees with the skills, abilities, and motivation to perform jobs that the organi- zation expects to have available. Several mechanisms can help managers forecast the supply of human resources in regard to current employees. By looking internally at its own records, the organization is likely to be able to draw on considerable historical data about its own abilities to hire and retain employees. In addition, the organization can glean information about the extent to which people leave their jobs voluntarily or involuntarily. All of this information is then useful in predicting the internal supply of human resources in the future.

FIG 5.1 The Human Resource Planning Process Forecasting the supply of human resources

Forecasting the demand for human resources

Comparing forecasted supply and forecasted demand

Taking appropriate actions

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Chapter 5: Information for Making Human Resource Decisions 9999

A human resource information system is an integrated and increasingly automated system for maintaining a database regarding the employees in an organization.

Suppose, for example, that Moyer Industries, a regional manufacturing and supply business serving the aviation industry, has averaged  percent turnover for each of the last  years, with little variation from year to year. When Moyer’s HR manager attempts to predict the future supply of existing workers, at least initially it seems reasonable to predict a relatively similar level of turnover for the forthcom- ing year. Thus, the internal supply of the human resources at Moyer will likely decline by about  percent during the next year. Assuming the firm plans to maintain its current operations and will need a workforce comparable to what it has today, the organization needs to plan to replace those individuals who will depart by recruiting and hiring new employees.

An increasingly important element in this part of the HR planning process for most organizations is the effective use of the organization’s human resource information system. We discuss the concepts associated with human resource information systems more com- pletely in Appendix , but it is relevant here to introduce and briefly discuss them, particularly as they pertain to HR planning. A human resource information system is an integrated and increasingly automated system for maintaining a database regarding the employees in an organization. For example, a properly developed HR information system should have details on each and every employee regarding date of hire, job history within the organization, education, performance ratings, compensation history, training and develop- ment profile, and various special skills and abili- ties. Of course, the HR manager also needs to look carefully at impending retirements and the firm’s experiences with involuntary turnover. We will discuss these issues more fully in Chapter .

Because a firm often expects to need new employees in the future, it is also important to fore- cast the supply of human resources outside the firm that will be poten- tially available for it to recruit and hire. Here it is important to consider both general trends in the population and the workforce while simultaneously generating specific data about availability as it relates to the specific firm. Specifically, these trends and issues serve as valuable information related to forecasting the supply of human resources.

5-1b Labor Force Trends and Issues Several changes in the labor force continue to emerge and affect human resource management. Decades ago, the labor force in the United States was primarily male and white. Now, however, the workforce is much more diverse in numerous ways. For example, most people once fol- lowed a fairly predictable pattern of entering the workforce at a young age, maintaining a stable employment relation- ship for the period of their work lives, and then retiring at the fairly predictable age of sixty-five. But today, these pat- terns and trends have all changed. For example, the average age of the U.S. workforce is gradually increasing and will continue to do so. Several reasons have contributed to this pattern:

. The baby boom generation continues to age. . Declining birthrates for the post–baby boom genera-

tion are simultaneously accounting for a smaller per- centage of new entrants into the labor force.

. Improved health and medical care also contribute to an aging workforce. People are now simply able to be productive at work for longer periods of their lives.

. Mandatory retirement ages have been increased or dropped altogether, allowing people to remain in the labor force for longer periods.

Gender differences in the workforce also play an important role. More and more women have

entered the workforce, and their presence is felt in more and more occupational groupings that were traditionally dominated by men.

In , the composition of the workforce in the United States was almost  percent female, although some critics claim that a glass ceiling— an invisible barrier that keeps women from pro- gressing to higher levels in a firm—still exists in

some organizations. Changing ethnicity is also reflected in the workforce

today. The percentage of whites in the workforce is gradually dropping, while the percentage of Hispanics is climbing at an almost comparable rate. The percentage of African Americans and Asians in the workforce is also growing but at a much smaller rate. In addition to age,

gender, and ethnicity, other diversity forces are also affecting the labor force. For example, country of

national origin is an important diversity dimension. Physically challenged employees and employees

with other disabilities are also an important part of workforce trends. Many other d i m e n s i o n s of diversity,

such as single- parent status, dual-

career couples, gays and lesbians, people with

special dietary preferences, and people with different ©

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political ideologies and viewpoints also are each playing an important role in organizations today. We cover diversity more fully in Chapter .

In addition, external data can also be used to predict the supply of labor in specific regions. Over the last several years, for example, there has been a gradual population shift away from the northern and northeastern parts of the United States and toward the southern, southeastern, and southwestern parts of the country. Thus, the supply of labor in the north and northeast is gradually declin- ing, and the supply of labor in the southern parts of the United States is gradually increasing. In other parts of the world, wherever immigration rules permit, workers are gradually shifting away from developing parts of the world and toward industrialized and economically prosperous regions. For instance, many workers in eastern regions of Europe continue to move into western areas in anticipa- tion of better employment prospects, even given recent problems with Western European financial systems.

In any case, immigration patterns are important inputs for forecasting the supply of labor. But borders are not as open as they once were, even in the United States. Concerns over homeland security have made it much more difficult for individuals from certain parts of the world to even visit the United States. Young males from predominantly Arab countries have had an especially hard time coming to the United States to work, or even study, and some business

leaders have become concerned about this and argue that security concerns are taking precedence over the need for qualified people to fill jobs. Furthermore, several critics, including Robert Gates (Secretary of Defense for George W. Bush and for President Obama for the first two years of his first term), have warned that these policies can hurt the long- term productivity of the United States and cut the country off from an important pool of talent.

Future labor supplies are typically forecast by devel- oping mathematical trend models using data from the past, with appropriate adjustments for migratory trends and predictions. These models, which essentially assume that trends will continue in a linear (i.e., straight-line) fashion, are usually reasonably accurate. But they can be far less accurate when some unforeseen event or trend disrupts expectations. An example was the unexpected increase in the labor force participation rates for women during the s. Although women’s participation rates had been climbing for years, statistical predictions based on simple trend lines substantially underestimated the growth rates in the s. In retrospect, observers real- ized that new (i.e., first-time) entries by women into the labor force were being substantially supplemented by other women already in the labor force but who were previously underemployed.

But major economic upheavals, such as those expe- rienced in the United States and much of the rest of the world in , can present major challenges to predictive models. Many organizations actively cut the size of their workforces, which dramatically increased the supply of labor in the market. Because stock prices initially tum- bled, many employees who had planned to retire found that they could no longer afford to do so, further increas- ing the supply of labor in the market. These forces, of course, also lowered the “price” of labor (i.e., what a firm had to pay), but many firms were too busy dealing with the new financial realities to be able to take advantage of lower labor costs. In any case, events such as this cannot be predicted by any linear model, which makes planning much more difficult.

Finally, we should also note the special forecasting situation generally known as executive succession. Executive succession involves systematically planning for future

100

Executive succession involves systematically

planning for future promotions into top

management positions.

Immigration patterns are important inputs for forecasting the supply of labor.

Chapter 5: Information for Making Human Resource Decisions 101

promotions into top management positions. This process is far more complicated because it is often critical that exactly the right type of person is selected for a top posi- tion, the development costs to groom this person are very high, and the actual decision may have major effects on the firm’s future. Thus, many organizations try to bring as much order and logic to the process as possible. For example, senior executives usually indicate well in advance when they expect to retire—sometimes several years in advance. The firm can then draw on its cadre of up-and- coming managers for replacement candidates. Sometimes a specific set of individuals may be moved into special high- profile jobs, with the expectation that whoever does the best job will receive the promotion when the senior per- son steps down. In other cases, the most likely successor is moved into the second spot to eliminate all uncertainties and allow this person to concentrate on learning as much as possible about the senior position. For example, a few years ago, Apple’s board of directors and CEO Steven Jobs realized that continued concerns about Jobs’ health might weaken confidence in the firm and could lead to confusion if he needed to step down from his leadership position. So, working together, they identified Tim Cook as Jobs’ heir apparent. When Jobs did find it necessary to step down a few months before his death in , Cook was well pre- pared to take over, and the transition was seamless.

5-1c Forecasting the Demand for Human Resources In addition to supply, strategic planning requires that HR managers must also develop forecasts about future demand. In other words, they need to ascertain the num- bers and types of people the organization will actually need to employ in the future. One important ingredient in this assessment is the organization’s own strategic plans regarding anticipated growth, stability, or decline, which are described later in the chapter.

It is also necessary to consider larger, broader trends in the economy when forecasting the demand for human resources. For example, the chart illustrated in HR in the Twenty-First Century shows how some jobs, such as retail sales, have remained in high demand since . But other jobs, such as tailors, masons, tobacco factory work- ers, and butchers, have dropped sharply. Still others, such as nurses, waiters and waitresses, and customer service representatives, have seen demand increase significantly. These general demand trends influence the availability of human resources for two reasons. First, employees for jobs in high demand will be more difficult to hire and will be more expensive to hire. In addition, students and future employees who track these demand trends often make decisions about what majors to pursue in college based on their anticipated employability. Thus, general trends such as the ones described here must be part of the planning process.

Clearly, the planning process, and the associated forecasting of supply and demand relative to labor, is an important source of information for the HR manager. Information about what kinds of people will generally be in demand, as well as information about what kinds of people will be available, is critical as the HR manager begins thinking about staffing decisions, downsizing or rightsizing decisions, and how to develop a diverse orga- nization. This information not only will serve as a set of constraints on what the manager can accomplish but also help the manager identify ways to meet the organi- zation’s strategic goals. A related source of information for the HR manager comes out of the strategic-planning process itself.

5-2 STRATEGY AS A SOURCE

OF INFORMATION

We discussed the relationship between strategic planning and effective human resource management in Chapter , but clearly the need for human resources in an organiza- tion depends to a large extent on the organization’s overall strategy. As noted in Chapter , if an organization intends to grow, then it will most likely need to hire additional human resources in the future. Likewise, if the organiza- tion expects to enter a period of stability, its HR demand is also likely to be relatively stable. Finally, if a period of decline or retrenchment is anticipated, then the organiza- tion may be confronting a decreased demand for human resources. In each case, it is up to the human resource manager to implement the chosen strategy. Therefore, we will discuss the implications of each strategy for HRM decisions.

5-2a Implications of a Growth Strategy A strategy of growth indicates growing sales, increasing demand, and expanding operations for the organization. When the organization is growing and expanding, it most likely needs to hire new employees in the future. In some cases, the organization may be able to hire employ- ees readily without additional work. If, for example, a firm is currently receiving  qualified applicants per month but has only been hiring , the firm may be able to meet any targeted growth by simply hiring  people per month.

In other situations, implementing a growth strategy may be more difficult. Market conditions may be such that qualified employees are hard to find. For example, a firm receiving  qualified applications per year and hiring as many as  of them is not likely to hire dramatically larger numbers of them without taking additional actions. The organization may have to increase its recruiting efforts to attract more job applicants and even perhaps begin to pro- vide additional support to apprentice or training programs. Support of various college and university programs might

102 Part 2: Decision Making in Human Resource Management

Managers attempting to forecast

the future supply of and demand

for jobs, and employees face numerous uncertainties. One major

uncertainty for long-term planning is the extent to which any given

job may become more or less popular in the future. This graph,

which rank orders the top thirty jobs (by millions of workers) for

the years 1900, 1960, 1995, and 2010, clearly illustrates the point.

Only a few job categories among the most popular in 1900 are still

on the list by 2010. Some jobs, like carpenter, have consistently

dropped further down the list, whereas others, such as police

officer and guard, have steadily risen. But most striking is simply

the array of jobs on the 2010 list that did not appear previously

such as customer service representative, general operations

manager, and home health aide. Over the course of the

twentieth century, the structure of U.S. employment clearly

changed enormously, and this change continued (and perhaps

even accelerated) in the first decade of the twenty-first century.11

THINK IT OVER

1. What are some very new kinds of jobs of which you are aware?

2. What jobs on the 2010 list may be in danger of disappearing in

the near future?

Coming and Going

TOP 30 JOBS (millions of workers)

* Requires education. 1Servants and housekeepers in 1900. 2Merchants and salespeople in 1900. 3Clerks in 1900. 4Teamsters and coachmen in 1900. 5Launderers and dry cleaners in 1960.

Over the century, the structure of U.S. employment has changed enormously. Only eight top job categories have survived throughout. And many more top job categories now require substantial education.

1900 1960 1995

1 Farmers and farm laborers 10.1 Retail salespersons 6.6Retail salespersons 4.4

2 General laborers 2.6 Teachers* 4.5Farmers and farm laborers 3.8

3 Private household workers1 1.6 Secretaries 3.4Teachers* 1.7

4 Retail salespersons2 1.4 Truck drivers 2.9Truck drivers 1.7

5 Secretaries3 0.6 Farmers and farm laborers 2.3Secretaries 1.5

6 Carpenters 0.6 Janitors and cleaners 2.1Private household workers 1.3

7 Railroad workers 0.6 Cooks 2.0Manufacturing laborers 1.0

8 Miners 0.6 Nurses* 2.0Bookkeepers 0.9

9 Truck drivers4 0.5 Engineers* 1.9Carpenters 0.9

10 Teachers* 0.4 Freight and stock handlers 1.9Waiters and waitresses 0.9

11 Launderers 0.4 Policemen and guards 1.8Engineers* 0.9

12 Dressmakers 0.3 Bookkeepers 1.8Vehicle mechanics and repairers 0.9

13 Iron and steel workers 0.3 Nursing aides, orderlies, etc. 1.8Apparel and textile workers 0.8

14 Machinists 0.3 Vehicle mechanics and repairers 1.7Construction workers 0.8

15 Painters 0.3 Financial salespersons* 1.7Assemblers 0.7

16 Bookkeepers 0.3 Health technicians* 1.6Janitors and cleaners 0.6

17 Cotton mill workers 0.2 Wholesale commodities brokers* 1.5Sewers and stitchers 0.6

18 Tailors 0.2 Accountants and auditors* 1.5Cooks 0.6

19 Blacksmiths 0.2 Waiters and waitresses 1.4Typists 0.5

20 Fire!ghters 0.2 Hotel and restaurant managers 1.3Machinists 0.5

21 Shoemakers 0.2 Carpenters 1.3Mfg. checkers, examiners, etc. 0.5

22 Sawyers 0.2 Precision production supervisors* 1.2Policemen and guards 0.5

23 Masons 0.2 Math and computer scientists* 1.2Packers and wrappers 0.5

24 Printers 0.2 Moving equipment operators 1.1Cashiers 0.5

25 Seamstresses 0.2 Computer programmers* 1.0Accountants and auditors* 0.5

26 Physicians* 0.1 Postmen, clerks, messengers 1.0Deliverymen and routemen 0.4

27 Tobacco factory workers 0.1 Receptionists 0.9Painters 0.4

28 Barbers and hairdressers 0.1 Lawyers and judges* 0.9Launderers5 0.4

29 Policemen and guards 0.1 Child care workers 0.9Attendants (hospital, etc.) 0.4

30 Butchers 0.1 Professors* 0.8

2010

Teachers* 5.3

Retail salespersons 4.2

Secretaries 3.7

Cashiers 3.4

Of!ce clerks 2.8

Food preparers 2.7

Nurses* 2.7

Waiters and waitresses 2.2

Customer service representatives* 2.1

Engineers* 2.1

Janitors and cleaners 2.1

Freight and stock handlers 2.0

Cooks 2.0

Truck drivers 1.8

Stock clerks 1.8

General operations managers* 1.7

Bookkeepers 1.7

Nursing aides, orderlies, etc. 1.5

Sales representatives 1.4

Administrative supervisors* 1.4

Teachers assistants 1.2

Maintenance workers 1.2

Retail supervisors 1.2

Accountants and auditors* 1.1

Security guards 1.0

Receptionists 1.0

Operations specialists* 1.0

Home health aides 1.0

Team assemblers 0.9

Housekeeping cleaners 0.9Welders and frame cutters 0.4

Sources: http://www.bls.gov/news.release/pdf/ocwage.pdf; http://www.nycareerzone.org/cz/pro!le.jsp?onetsoc=35-3021.00 (both accessed on April 18, 2012); “Top 30 Jobs” Forbes, May 6, 1996, p. 17.

Chapter 5: Information for Making Human Resource Decisions 103

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m also be a way of increas- ing the future supply of available labor talent.

A related incident recently involved United Parcel Service (UPS), the giant delivery busi- ness. UPS is based in Louisville, Kentucky, and maintains a huge operation there. The firm recently wanted to launch a major expan- sion but was concerned a b o u t i t s a b i l i t y t o a t t r a c t e n o u g h n e w workers, especially those who might be interested in working the night shift. The firm threat- ened to build its expan- sion in another state unless Kentucky would help. Facing the threat of losing such a big employer, the state passed and funded major job-training legisla- tion and programs to help it attract and develop capable workers of the type that UPS needed.

5-2b Implications of a Stability Strategy In many ways, a stability strategy may be the easiest for the HR manager to implement because the organization presumably must do what it has been doing all along. But, even here, specific and subtle planning nuances must be considered. For example, the organization will naturally experience a certain amount of attrition in its employee ranks each year. As noted earlier, some people will leave for better jobs, some people will retire, some will leave because of poor performance, and others will leave for reasons such as career relocation on the part of a spouse or significant other. Thus, even an organization that is projecting a period of stability is likely to need to aug- ment its labor force to replace those individuals who leave the organization for various reasons. In such cases, the organization can implement programs such as training to upgrade the skills of current employees, making them more valuable to the organization. Alternatively, the organization might implement programs that help reduce turnover among current employees, making stability eas- ier to maintain.

5-2c Implications of a Reduction Strategy In some cases, an organization may find itself facing reduc- tions. Perhaps an organization is experiencing cutbacks, such as many organizations in the United States have faced

over the last several years. Organizations such as IBM, General Motors, Chrysler, and others reduced their workforce by the thousands. Levi Strauss, Merck & Co., and American Airlines have also reduced their workforce. And in the wake of the – recession, many Wall Street investment firms have laid off stockbrokers and analysts.

S o m e t i m e s t h e s e reductions can be han- dled through normal attrition processes as described earlier. For example, if the organiza- tion currently has , employees and it knows

from experience that approximately  of those indi- viduals will retire, resign, or be fired next year, and if it forecasts that it will need only  employees following next year, then it may need to do little. But if the actual forecast calls for only  employees, the organization must figure out how to eliminate the other  jobs in addition to the  that will disappear automatically. This sort of situation may call for laying people off, and we will discuss some important issues associated with this downsizing process in Chapter .

A popular alternative to terminations and layoffs, especially for managers, is early retirement. The idea is to make offers to employees to enhance their retirement benefits so that people might consider retiring at an ear- lier age than they would have done otherwise. Of course, this process involves costs to the organization. The orga- nization may be forced to pay additional benefits to those employees above and beyond what they would have ordi- narily expected to pay. It is also possible that the orga- nization might lose people that it would have preferred to keep; that is, its highest-performing employees may be those who opt for early retirement. In fact, they may see early retirement as an opportunity for increasing their income by taking retirement benefits from their current employer but using their high-performance credentials to gain new employment with another organization. On the other hand, lower-performing employees are less likely to have this option and thus may be more likely to remain with the current organization.

Clearly, the actual strategy chosen is an important source of information for decision making because it determines what kinds of decisions will need to be made. It will determine whether the HR manager needs to be

104 Part 2: Decision Making in Human Resource Management

The rate of unemployment is calculated by the Bureau

of Labor Statistics as the percentage of individuals

looking for and available for work who are not currently

employed.

The market wage rate is the prevailing wage rate for a given job in a given labor

market.

concerned with recruiting new talent or finding ways to reduce the workforce. Strategy will also determine whether the HR manager needs to worry about reduc- ing turnover or encouraging it. Another source of infor- mation operates at this macro level: the general state of the economy. We discussed this briefly earlier, but we now need to consider more seriously how the state of the economy is an important source of information for HR decision making.

5-3 ECONOMIC CONDITIONS

AS A SOURCE OF INFORMATION

We noted above how the economy influenced the supply of and demand for different types of employees, but the economy also has a more general effect on the workforce that the HR manager must consider. To understand this, think about an employee as having a valued asset (his or her effort at work) and as having to make some decision about how to use that asset. The employee could decide to keep the asset for himself and not work for anyone else. The employee may start her own business or find some other way to support herself. On the other hand, the employee may decide to enter the marketplace and see how much her effort is worth and so decide for whom to go to work. Although this example is oversimplified, it illustrates the importance of economic-based decisions by potential employees and how these might affect HRM decisions. Many factors could affect a person’s decision to enter the labor market and seek employment. We will discuss some of these next.

5-3a Unemployment Rates The rate of unemployment (or the rate of employment) is an important determinant of an individual’s employment choices. The national unemployment rate is, of course, relevant, but the local unemployment rate is more closely linked to an individual’s choices. Most people who live in, say, Denver cannot just pack up and move to Miami just because there are more jobs available there. This lack of mobility means that people respond more to local labor market conditions. There is considerable evidence that turnover rates are better predicted by unemploy- ment statistics than by any other variable (see Chapter 

for a discussion of these other variables).

Therefore, if unem- ployment is relatively high, then individuals are less likely to leave their current jobs to look for alternatives. As a result, firms may be able to find many willing a p p l i c a n t s a m o n g t h e unemployed but are unlikely

to be able to lure desirable employees from a different company. Also, during times of high unemployment individuals who are contemplating entering the labor market would be less likely to do so because they would see their chances of finding a job lower than they would prefer. Finally, some people might decide to move to a more attractive location from an employment perspective. Such options had been limited in the United States for a few years, so retention was not really a problem, but things have been changing. After several years of relatively high unemployment in the United States (as high as  percent in ), the unemployment rate began to fall in , and has hovered around . percent since then. But the unemployment rate rose a bit in the summer of  (to around . per cent) as people became more optimistic about the economy and reentered the job market seeking employment. Throughout these fluctuations, the picture differs from state to state. By July , the states with the highest unemployment rates were Nevada (. percent), Illinois (. percent), and Mississippi (. percent). The states with the lowest unemployment rates, on the other hand, were North Dakota (. percent), South Dakota (. percent), and Nebraska (. percent).

On the other hand, when there are few attractive jobs available there may be a short-term shortage of qualified workers if people get discouraged and stop looking for work. It is interesting to note that, if a person stops looking for work, he or she is considered to have withdrawn from the labor market and is no longer considered “unemployed.” But, as noted above, as things in the U.S. economy have started to improve, more people reenter the labor force, which means that there are more qualified workers available, but also that new jobs must be created as least as fast as new people enter the labor market or else the unemployment rate will actually rise. In any case, it is clear that employment rates can affect not only the size of the labor pool but also its makeup, and so it is an important factor to consider in the planning process.

5-3b Market Wage Rates A related factor that will influence decisions about join- ing the labor force is the market wage rate. Most people are aware that wages are generally higher in a place such as New York City than in a place such as Houston. The dif- ferences in salaries and wage rates partly result from dif- ferences in the cost of living, but they also are caused by different levels of competitiveness for talent in the market. Thus, teachers in university towns are often paid poorly because there is a surplus of qualified teachers looking for jobs in those locations. On the other hand, civil service jobs pay almost no premium for cost of living, so a mail carrier in New York City makes almost exactly what a mail carrier makes in Houston or in West Lafayette, Indiana. Figure . illustrates the range of salaries paid for different jobs in different parts of the United States.

104

The rate of unemployment is calculated by the Bureau

of Labor Statistics as the percentage of individuals

looking for and available for work who are not currently

employed.

The market wage rate is the prevailing wage rate for a given job in a given labor

market.

Chapter 5: Information for Making Human Resource Decisions 105

FIG 5.2 Wages and Salaries Across the United States (Hourly Basis)

New YorkIllinois

Florida

Texas California

All Occupations: $25.17 Financial Managers: $65.94 Substitute Teacher: $19.40 Fire!ghter: $34.87 Travel Agent: $18.98

All Occupations: $22.68 Financial Managers: $58.16 Substitute Teacher: $15.52 Fire!ghter: $22.87 Travel Agent: $18.28

All Occupations: $25.76 Financial Managers: $81.91 Substitute Teacher: $16.44 Fire!ghter: $33.72 Travel Agent: $17.96

North Dakota

All Occupations: $19.64 Financial Managers: $47.65 Substitute Teacher: $9.75 Fire!ghter: $18.87 Travel Agent: $13.56

All Occupations: $20.97 Financial Managers: $58.78 Substitute Teacher: $10.00 Fire!ghter: $22.50 Travel Agent: $18.95

All Occupations: $19.68 Financial Managers: $59.65 Substitute Teacher: $10.91 Fire!ghter: $24.61 Travel Agent: $16.48

Source: Bureau of Labor Statistics, May 2012 State Occupational Employment and Wage Estimates.

An individual is more likely to decide to enter the labor force when the higher relative wage rate is available to him or her. Again, limited mobility makes it difficult for individuals to find the optimal wage rate for their skills, but some movement is possible. Thus, it is important to understand some determinants of local wage rates.

The simplest explanation relies on supply and demand. Given a certain level of demand for firefighters, for exam- ple, in any area, the average wage paid will be higher if the supply is lower; likewise, if the supply for firefighters remains the same, the wage rate will go up as the demand for firefighters increases. But some firms try to attract the best employees they can. These organizations seek to be

“the employer of choice” in their market and will pay more than the going market rate to attract the best employ- ees. These “efficiency wages” are believed to be justified by the fact that the best employees are assumed to be more productive and that the higher wages will bind the employee more tightly to the firm, thus reducing turnover. Of course, these benefits will need to offset the higher labor costs associated with the higher wages in order for the firm to remain competitive. Thus, although local wage rates can affect an individual’s decision to enter the labor market,

efficiency wages can influence which firm the individual decides to join.

5-3c Human Capital Investments Just as a firm can differentiate itself by paying higher wages, individuals can differentiate themselves as well by making human capital investments. In other words, indi- viduals can invest in themselves, through training and education, to increase their value to employers. These investments must be made in areas that an employer considers valuable enough to pay more for, but general education is usually a worthwhile investment and will yield a higher wage. This happened in  and ;

as unemployment rose to historic levels, many universities saw an increase in the number of applications. But by  and , although unem- ployment levels remained high, applications generally returned to more tradi- tional levels, as some poten- tial students apparently began to question the value of additional education.

Human capital investments are investments people make in themselves to increase their value in the workplace. These investments might take the form of additional education or training.

105

Human capital investments are investments people make in themselves to increase their value in the workplace. These investments might take the form of additional education or training.

Employers often make decisions about where to locate a facility based on the human capital available in a market.

106 Part 2: Decision Making in Human Resource Management

In fact, employers often make decisions about where to locate a facility based on the human capital available in a market. For example, in the s the Boston area was suffering through a minor regional recession as traditional employers shifted operations elsewhere or went out of business. But the population of the Boston area was highly educated and considered to have a strong work ethic. As a result, it made sense for the early computer and technology firms to locate in the area and take advantage of the availability of a highly educated workforce, and so Boston enjoyed a real boom in the early s as it became the hub of the new computer industry. Thus, human capital investments can increase wages for an individual and so influence decisions to enter the labor market, and the availability of persons who have already made human capital investments can affect a firm’s location strategies.

Thus, the state of the economy (both local and national) is an important source of information for the HR manager. Economic variables will influence how many potential employees will be available and what kinds of employees those will be. Such variables will also influence the wages that will need to be paid to attract employees to the labor force or to a specific firm. Decisions about what kinds of activities should be conducted in an area should depend on what kinds of people will be willing to enter the labor force and what kinds of people a given firm will be able to attract. Only by understanding the economic forces operating can the human resource manager make the decisions that need to be made.

The types of information we have discussed thus far operate at the level of the organization, or even the region

of the country. Each type of information is important for the HR manager who will need to make critical decisions. But the HR man- ager also needs informa- tion at a much more basic level—information about what is required on each of

the jobs that will be staffed, evaluated, compensated, and so on. That information comes from job analysis.

5-4 JOB ANALYSIS AS A SOURCE

OF INFORMATION

Job analysis is the process of gathering and organizing detailed information about various jobs within the orga- nization so that managers can better understand the processes through which the jobs are performed most effectively. Generally, job analysis is an effort to study and understand specific jobs in the organization so that managers can have a full sense of the nature of those jobs and the kinds of skills and abilities needed to perform them. As we already noted, job analysis is a fundamen- tal input and building block of the planning process, but, as illustrated in Figure ., it also relates to other HRM processes.

As shown in the figure, job analysis affects selec- tion or hiring decisions because the job-analysis pro- cess indicates the tasks to be performed by the person to be hired. Job analysis results in assessments about the underlying skills and abilities needed to perform the job, and it leads to logical and appropriate plans to recruit individuals who are most likely to have these skills and abilities. Selection techniques, for instance, can be designed and administered to determine which of the applicants recruited have the necessary skill and ability levels.

Under the Americans with Disabilities Act (ADA), job analysis has taken on an even more important role in the selection of new employees in many companies. As we noted in Chapter , the ADA outlaws discrimination based on disabilities. The ADA does not require an orga- nization to hire someone who cannot perform the job in question, of course, but it does require an organization to hire a “qualified individual with a disability,” specified as “an individual with a disability who, with or without a reasonable accommodation, can perform the essential

The Americans with Disabilities Act prohibits

discrimination based on disability and all aspects

of the employment relationship such as job-

application procedures, hiring, !ring, promotion,

compensation, and training, as well as other

employment activities such as advertising, recruiting,

tenure, layoffs, and leave and fringe bene!ts.

106

Job analysis is the process of gathering and organizing

detailed information about various jobs within

an organization so that managers can better

understand the processes through which they are

performed most e!ectively.

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functions of the employmentposition that such an indi- vidual holds or desires” (Americans with Disabilities Act, Title , section ).

Further, imagine the implications of an organiza- tion refusing to hire a disabled applicant because a man- ager assumes that the individual cannot perform the job. The individual might have grounds for a discrimina- tion claim if ambiguity exists about exactly which job elements are essential to the organization and which are less essential or optional and if the applicant can demonstrate a capacity for performing the job. Thus, it becomes more important than ever for managers to determine the essential functions of the jobs within the organization because they must identify those parts of jobs (e.g., tasks, duties) that must be carried out effec- tively for the person to be successful in performing the job. This information can best be obtained through job analysis.

Figure . also indicates that job analysis relates to performance appraisal. This relationship stems from the understanding of what an employee should be capable of doing in a job before one can assess how well that employee is actually performing. Job analysis similarly affects training and development because it provides information that helps managers better understand the kind of training and development programs that are nec- essary to enhance employee competencies and capabilities so the employees can achieve ideal levels of performance. Job-analysis information is also important for compensa- tion (job-analysis methods used for establishing compen- sation rates are often referred to as job evaluation) because work behaviors have traditionally been a primary basis for compensation. (As we will see later, however, com- pensation based on knowledge or competencies, rather than behaviors, is becoming more common.)

In addition to its fundamental role in HR planning and other aspects of the HR function, job analysis is also

important to line managers for various general reasons. First, they must thoroughly understand the work-flow processes that characterize their particular work units. They must understand how work flows from employee to employee, from job station to job station, and from work group to work group. To develop this understand- ing, of course, they must also have a fundamental insight into the basic mechanics, character, and nature of each job. Job analysis provides this. Also, because line managers are often involved in hiring and appraisal decisions, they must rely on the information provided by job analysis to help determine who should be hired and how well employees are doing their jobs.

Job analysis provides fundamental input to the human resource manager by defining the kinds of both general work and specific jobs that the organization currently relies on and will be relying on in the future. Whereas the focus of job analysis is typically an individual job, in many organizations the tasks and responsibilities on some jobs may be similar to those on other jobs. Likewise, the knowledge, skills, and abilities (KSA) requirements may be similar for a set of jobs. As a result, for planning purposes, organizations often try to form job families—groups of jobs that have task and KSA requirements that are quite similar.

These job families can be quite useful in several

Chapter 5: Information for Making Human Resource Decisions 107

FIG 5.3 Job Analysis and Other Human Resource Functions

Job analysis

Selection processHuman resource planning

Performance appraisal

Training and development

Compensation Basic line

management functions

Knowledge, skills, and abilities (KSA) are the fundamental requirements necessary to perform a job.

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Knowledge, skills, and abilities (KSA) are the fundamental requirements necessary to perform a job.

The knowledge, skills, and abilities (KSA)

requirements may be similar for a set of jobs.

108 Part 2: Decision Making in Human Resource Management

FIG 5.4 Steps in Job Analysis Determining information needs

Determining methods for obtaining information

Determining who will collect information

108

Job analysts are individuals who perform job analysis in

an organization.

ways. First, if the jobs within a job family have similar KSA requirements, then it might be possible to train employees so that they can apply what they have learned to the entire family of jobs, making them much more flex- ible resources for the organization. In addition, this train- ing for job families rather than for specific jobs can help employees remain useful to the organization even if their current jobs become obsolete.

Well-conceived job families can also be used to help organizations in career planning. The jobs within a family represent jobs that have similar patterns of requirements. If they occur at different levels within an organization, then those jobs can represent a typical career path for an employee. Thus, managers can plan where an employee might go as his or her career builds, and they might also discover where to find replacements when a job opening occurs.

Finally, job families can be used in selection deci- sions. For instance, once an organization has established the selection requirements for one job within a family, managers may be able to use this information to predict requirements in other jobs within the family. In fact, if it is reasonable to believe that an employee will progress through all the jobs in a job family, then the organization might well choose to select individuals based on the needs of the highest-level job within the family rather than on those of the specific job for which an individual is apply- ing. For example, suppose Microsoft needs to hire techni- cians for customer support teams. The HR manager in charge of this hiring might determine that each technician will rotate across several groups over a -year period, per- forming different functions for each. The astute manager might therefore set as the performance requirements for all such support roles as the hiring standard for all techni- cians, even though some technicians may start out in less- demanding roles.

5-5 THE JOB-ANALYSIS

PROCESS

The job-analysis process itself is generally clear and straightforward. As a starting point in this process, it is helpful to understand the steps involved, including who is responsible for job analysis. As illustrated in Figure ., the job-analysis process generally follows three steps: () determining information needs, () determining meth- ods for obtaining information, and () determining who will collect information.

The first step is determining the organization’s pre- cise information needs. A wide range of information on various jobs may be obtained during the course of job analysis. The exact type and nature of the information

obtained, however, depend on both the intended pur- poses of the job-analysis information and various

constraints imposed by the organization such as time and budget limitations. Regardless of constraints, the job analysis must provide enough information about what someone does on a job to allow a determination of the knowledge, skills, and abilities necessary to perform the job. Job-analysis information might include general work activities (such as a description of the specific tasks that are carried out, how the job interfaces with other jobs and equipment, the procedures used in the job, behav- iors required on the job, and the physical movements and demands of the job) and the machines, tools, equipment, and work aids used to perform the job.

Other useful information that may be collected includes details regarding the job context (physical work- ing conditions such as exposure to dust, heat, and toxic substances; the indoor environment versus outdoor envi- ronment; and so forth). Information may also be collected regarding the organizational context and social context of the job. In addition, details regarding work schedule, various financial and nonfinancial incentives, and personal requirements (job-related attributes such as specific skills, education, and training; work experience and related jobs; physical characteristics and aptitudes) are usually desirable pieces of information.

The next step in the job-analysis process is to deter- mine how that information will be collected. The most common methods of collecting job-analysis informa- tion include the observations of task and job behaviors, interviews with job incumbents, and the use of question- naires and checklists. For example, the individuals who perform the job analysis—job analysts—can sometimes gather the desired information on jobs simply by observ- ing people performing them. This method is especially useful for unskilled manual jobs but is less relevant for jobs involving creative thought and analytic skills. In many cases, it is also beneficial to interview individu- als who are performing the jobs being analyzed. These individuals are in a position to explain both the nature of the work they are performing and the qualifications and credentials they believe are necessary for the successful performance of those jobs. Of course, these individuals may overstate the skills and qualifications needed to per- form the job and the complexities and sophistication of

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Chapter 5: Information for Making Human Resource Decisions 109

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A subject matter expert (SME) is an individual presumed to be highly knowledgeable about a particular job and who provides data for job analysis. An SME may be an existing job incumbent, a supervisor, or another knowledgeable employee.

Occupational Information Network (O*NET) is technically not a job-analysis procedure but a database that provides both basic and advanced job-analysis information; as such, IT can be viewed as an alternative to conducting job analysis.

the job, especially if the employee believes (correctly or not) that the job analysis is being conducted to deter- mine compensation rates.

Someone other than the incumbent who is also knowl- edgeable about the job can also be interviewed. Any such person, whether the incumbent or someone like the super- visor, is referred to as a subject matter expert (SME). SMEs are the individuals from whom job analysts obtain data for the job analysis; they may be existing job incumbents, supervisors, or other knowledgeable employees such as higher-level managers, or industrial engineers. For the job analysis to be successful, the employees selected to provide the job-analysis information must be intimately familiar with the nature of the jobs themselves. Thus, participants in job analysis tend to be experienced and high-performing individuals who thoroughly understand the job. Of course, if critical job-analysis information must be collected through the interview process, then it is best to interview multiple individuals who have different perspectives on the actual job and then integrate or average the information collected.

The job analyst could be a specialist within the human resource management function or a consultant hired from the outside. Many times, however, firms (especially smaller ones) do not actually collect their own job-analysis informa- tion at all. Instead, when they need to obtain information about jobs, they may instead refer to available reference materials. The major source of such information is a sys- tem known as the Occupational Information Network (O*NET), a computerized job classification system that contains con- tinually updated information regarding the KSAs required for virtually every job in the U.S. economy. O*NET is technically not a job-analysis procedure; it is a data- base that provides both basic and advanced job-analysis information. As such, it can be viewed as an alterna- tive to conducting job analysis. O*NET currently has

information for more than , occupations and is orga- nized according to a system known as the standard occupa- tional classification.

For each occupation, information is provided about the relative importance of worker characteristics, includ- ing fifty-two separate abilities for effective job performance. These abilities are classified as representing () cognitive abilities such as oral comprehension, deductive reason- ing, and spatial orientation; () psychometric abilities such as manual dexterity and reaction time; () physical abili- ties such as explosive and static strength and stamina; and () sensory abilities such as peripheral vision, heat sensi- tivity, and speech clarity. Also classified are occupational interests (such as interests in artistic occupations, realis- tic occupations, and social occupations), values (such as achievement, status, and comfort), and work styles (such as achievement orientation, conscientiousness, and practical intelligence). Information is also included regarding gen- eral occupational characteristics and occupation-specific requirements.

In addition, information is provided about appropri- ate worker requirements such as knowledge (fifty-two cross-occupation knowledge areas), skills (including ten basic skills such as writing and speaking, and thirty-six cross-functional skills such as negotiating, persuading, and time management), and education. There is also infor- mation about the experience requirements (including requirements re-gard ing training and licensure), as well as occupational requirements, including general work activi- ties (such as getting information needed to do the job and thinking creatively), work context (such as environmen- tal conditions), and organizational context (such as type of industry, organizational structure, and organizational culture). Links to other resources are provided, and they yield information about legal requirements, job hazards, and environmental conditions.

Although this is quite an array of information, and, in fact, new information is being added all the time, it is still

110 Part 2: Decision Making in Human Resource Management

The Fleishman job-analysis system is

a job-analysis procedure that de!nes abilities as

the enduring attributes of individuals that account for di"erences in performance; it relies on the taxonomy of

abilities that presumably represents all the dimensions

relevant to work.

The task-analysis inventory is a family of job-analysis

methods, each with unique characteristics; each focuses

on analyzing all the tasks performed in the focal job.

possible that the O*NET does not have information that an organization needs about a specific job. Also, the match between the job as it exists in a given firm and the job as it is classified in the O*NET may not be perfect. Nonetheless, the O*NET provides a valuable resource for anyone interested in doing job analysis, and it is likely to become even more impor- tant as various branches of the U.S. government move toward implementing the system. But there are still many cases where more traditional job-analysis methods are needed because more detailed information is desired. Many such methods are available.

5-5a Job-Analysis Techniques Several job-analysis techniques are used in organiza- tions, although the trend is away from these more tradi- tional methods and toward competency modeling, which we will discuss later. The most commonly used methods are the straight narrative, the Fleishman job-analysis sys- tem, task-analysis inventory, functional job analysis, the Position Analysis Questionnaire, the Managerial Position Description Questionnaire, and the critical incidents approach.

. Narrative Job Analysis. The most common approach to job analysis is simply to have one or more SMEs prepare a written narrative or text descrip- tion of the job. These narratives can vary in terms of length and detail. To some extent, the quality of the information depends on the writing skills of the job analyst. Although it is pos- sible to specify the format and structure of these nar- ratives, they are typically individualistic, making it difficult to compare the tasks on one job with the tasks on another. They are relatively inexpensive, however, and it generally does not require a great deal of training for someone to

complete a narrative job analysis.

. Fleishman Job-Analysis System. Another popu- lar method of job analysis is the Fleishman job-analysis system. This approach defines abilities as endur- ing attributes of individu- als that account for differ- ences in performance. The system itself relies on the taxonomy of abilities that presumably represents all the dimensions

relevant to work. The taxonomy includes a total of fifty-two abilities. In general, these fifty-two spe- cific abilities are presumed to reflect cognitive, psy- chomotor, and sensory abilities. Examples of the specific abilities included in the Fleishman system include oral comprehension, written comprehen- sion, oral expression, written expression, fluency of ideas, night vision, depth perception, auditory attention, and speech clarity. The actual Fleishman scales consist of descriptions of each ability fol- lowed by a behavioral benchmark example of the different levels of the ability along a seven-point scale. An organization using this job-analysis technique relies on a panel of SMEs (again, incumbent workers or supervisors are most commonly used) to indicate how important the ability is for the job, and the actual level of ability required for a particular job. Because of its complexity, job analysts who use this method require training, but it is also much closer in operation to the notion of competency modeling, which we will discuss below.

. Task-Analysis Inventory. Another method of job analysis is the task-analysis inventory. The task-analysis inventory method actually refers to a family of job-analy- sis methods, each with unique characteristics. However, each one focuses on analyzing all the tasks performed in the focal job. Any given job may have dozens of tasks, for example. Again relying on SMEs, this method requires the generation of a list of tasks performed

in a job. Once the list has been developed, a job analyst— frequently the job incum- bent—evaluates each task on dimensions such as the relative amount of time spent on the task, the frequency with which the task is performed, the rela- tive importance of the task, the relative difficulty of the task,

and the time necessary to learn the task. Task inven- tories require a fair amount of effort to develop. Once they are developed, however, they are relatively easy to use. This approach to job analysis is often used in municipal and county governments and is also the most common form of job analysis used in the U.S. military. The information generated by this approach to job analysis is often detailed, and it is useful for establishing KSAs and training needs. The military has used these inventories to establish career paths and job families where the jobs clustered together have a large amount of overlap in terms of the important tasks. Managers then use a single task inventory to analyze all the jobs in the family. It is more difficult, though, to make comparisons across job families, and this drawback reduces the usefulness of task invento- ries to some degree. ©

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The Fleishman job-analysis system is

a job-analysis procedure that de!nes abilities as

the enduring attributes of individuals that account for di"erences in performance; it relies on the taxonomy of

abilities that presumably represents all the dimensions

relevant to work.

The task-analysis inventory is a family of job-analysis

methods, each with unique characteristics; each focuses

on analyzing all the tasks performed in the focal job.

Chapter 5: Information for Making Human Resource Decisions 111

The Position Analysis Questionnaire (PAQ) is a standardized job-analysis instrument consisting of 194 items that re!ect work behavior, working conditions, and job characteristics that are assumed to be generalizable across a wide variety of jobs.

. Functional Job Analysis. One attempt to have a single job- analysis instrument that can be used with a wide vari- ety of jobs resulted in the development of functional

job analysis. According to this approach, all jobs can be described in terms of the level of involvement with people, data, and things. For exam- ple, employees on a job at a General Motors manufac- turing site might be said to set up machines (things), mentor people, and synthesize data. All are high levels of i n v o l v e m e n t a n d w o u l d i n d i c a t e a complex job. The exact definition of each term is provided to the job analyst. The U.S. Department of Labor relies on functional job analysis for some of its classifications of jobs, but it is not used widely in private industry. Nonetheless, this approach is important because it represents the first attempt to develop a single instrument that can describe all jobs in common terms.

. Position Analysis Questionnaire. One of the most popular and widely used job-analysis meth- ods is the Position Analysis Questionnaire (PAQ). The PAQ was developed by Ernest McCormick and his associates, and it is a standardized job-analysis instrument consisting of  items. These items reflect work behavior, working conditions, and job characteristics that are assumed to be generaliz- able across a wide variety of jobs. The items that make up the PAQ are organized into six sections. Information inputs include where and how a worker gets information needed to perform his or her job. Mental processes represent the reasoning, decision- making, planning, and information-processing activi- ties involved in performing the job. Work output refers to the physical activities, tools, and devices used by the worker to perform the job. Relationships with other people include the relationships with other people that are required in performing the job. Job context repre- sents the physical and social contacts where the work is performed. Finally, other characteristics include the activities, conditions, and characteristics other than those previously described that pertain to the job.

Job analysts are asked to determine whether each scale applies to the specific job being analyzed. The analyst rates the item on six scales: extent of use, amount of time, importance of the job, possi- bility of occurrence, applicability, and special code. Special code refers to unique and special rating scales that are used with a particular item. These ratings are then submitted to a centralized location indi- cated on the questionnaire where computer soft-

ware compiles a report regarding the job scores on the job dimensions.

A major advantage of the PAQ is that, like functional job analysis, its dimensions are believed to underlie all jobs. This feature allows a wide variety (although probably not all) jobs to be described in common terms. In the case of the PAQ, this feature results from the items and dimensions of the PAQ that describe what a worker does on the job rather than what gets done. So, for example, many different jobs may

obtain critical information from dials and gauges; jobs ranging from truck driver to mechanic to engi- neer. The persons doing these jobs use this informa-

tion for different reasons, and they accomplish much different outcomes, but they do obtain information in similar ways.

Unlike functional job analysis, the PAQ can provide information on  separate items, allowing a much richer picture of what happens on a job (the PAQ actually includes  items, but the remaining items deal with methods of pay). Finally, another strength of the PAQ is the fact that, because it has been widely used for many years, a considerable data- base of information exists that attests to its validity and reliability.

In general, research supports the validity and reli- ability of the instrument. Research also suggests that the PAQ measures thirty-two dimensions and thirteen overall job dimensions. A given job score on these dimensions can be useful in job analysis. Because the instrument has been so widely used, it has also been statistically related to other measures, including the scores of job applicants on standardized selection tests, compensation rates on various jobs, and even the importance of various abilities.

Even though it is widely used, however, the PAQ also has some noteworthy shortcomings. The PAQ instrument itself is relatively complex, and an employee must have the reading level of a college graduate to be able to complete it. Although the PAQ is supposed to be applica- ble to most jobs, there

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Management Position Description Questionnaire

(MPDQ) is a standardized job-analysis instrument,

similar in approach to the PAQ, that also contains 197 items.

The MPDQ’s focus, however, is on managerial jobs, and the

analysis is done in terms of 13 essential components of all

managerial jobs.

The critical incidents approach to job analysis

focuses on critical behaviors that distinguish e!ective from

ine!ective performers.

A job description lists the tasks, duties, and

responsibilities for a particular job. It speci"es the major job elements, provides examples

of job tasks, and provides some indication of their

relative importance in the e!ective conduct of the job.

A job speci!cation focuses on the individual who will

perform the job and indicates the knowledge, abilities, skills, and other characteristics that an individual must have to be

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112 Part 2: Decision Making in Human Resource Management

by teams rather than by individuals. In both cases, no widely accepted standardized job-analysis instru- ments are available. Regardless of which job-analysis technique an organization employs, however, at some point a narrative description of the job will probably be needed. Therefore, it is important to draw a dis- tinction between a job description and a job specifica- tion, which we discuss in the next section.

5-5b Job Descriptions and Job Specifications A job description lists the tasks, duties, and responsibili- ties that a particular job entails. Observable actions are necessary for the effective performance of the job. The job description specifies the major job elements, provides examples of job tasks, and provides some indication of their relative importance in the effective conduct of the job. A job specification focuses more on the individual who will perform the job. Specifically, a job specification indicates the knowledge, abilities, skills, and other characteristics that an individual must have to perform the job. Factual or procedural capabilities and levels of proficiency refer more to skills. In general, enduring capabilities that an individual possesses can be thought of as abilities. Job specifications may include general educational requirements (such as having a high school degree or a college degree) as well as the specifications of job-related skills (such as the ability to use Microsoft Word, fluency in a foreign language, or even knowledge of Facebook).

Taken together then, the job description and the job specification should provide a parallel and mutually consis- tent set of information and details that focuses on the job itself and the individual most likely to be successful per- forming that job. This information should then inform all subsequent recruiting and selection decisions. Figure . illustrates an actual job description and job specification for a particular kind of accountant at Johnson & Johnson. This description and specification were cre- ated as part of a job analysis and are used to

is reason to believe that it is less useful for higher- level managerial jobs and less useful for describing white-collar jobs. Despite these limitations, the PAQ remains the most popular standardized job- analysis instrument available and is commonly used by firms such as Exxon, Utah Power and Light, and Delta Air Lines.

. Management Position Description Question- naire. The Management Position Description Questionnaire (MPDQ) is a standardized job- analysis instrument similar in approach to the PAQ and also contain- ing  items. The focus here, however, is on mana- gerial jobs, and the analysis is done in terms of  essential components of all managerial jobs. These essential components are supervision, staff service, internal business control, complexity and stress, coordination of other units, public and customer relations, HR responsibility, autonomy of action, advanced consulting, advanced financial responsi- bility, approval of financial commitments, product and service responsibility, and product market and financial planning. The information generated by the MPDQ can be used to classify managerial posi- tions as well as estimate reasonable compensation for them.

. Critical Incidents Approach. Critical incidents are examples of particularly effective or ineffec-

tive performance. When used for job analysis, the c r i t i c a l i n c i d e n t s a p p r o a c h focuses on the critical behaviors that distinguish effective from ineffective performers. Although this approach to job analysis is most widely used in con- nection with the develop- ment of appraisal instru- ments, it is generally use- ful because it focuses the organization’s attention on aspects of the job that lead to more or less effective performance.

A l t h o u g h these techniques are the most commonly used in industry, we should note that, in many cases, the organi- zation simply develops its own job-analysis technique or instrument. This is espe- cially true for managerial jobs and for jobs performed

Chapter 5: Information for Making Human Resource Decisions 113

communicate to job applicants and managers what skills and abilities are necessary to perform the job.

5-5c Modeling Competencies and the End of the “Job” Given the rate of change in work, some scholars and other HR experts have argued that the nature of work is changing so much that the concept of a “job” is becoming obsolete. Although many people will continue to have “jobs” for some time to come, in some work settings it may well be true that the traditional view of jobs and work is no longer applica- ble. In these settings, people usually work on teams where the focus is on getting tasks accomplished rather than on specific task requirements. Thus, there is reason to suggest that we should think about roles that have to be filled within the organization and how employees will need to empha- size flexibility, teamwork, and accomplishing tasks, rather than job descriptions and sets of duties. In light of these developments, then, some critics have argued that tradi- tional methods of job analysis (including the O*NET) have little place in the modern organization, and that the information needed by human resource managers can be better provided by modeling competencies instead of by describing jobs.

In fact, a study of competency modeling published in  reported that between  and  percent of compa- nies surveyed were using some type of competency modeling. Nonetheless, there is little agreement about what exactly is meant by the term compe- tency. Some view compe- tencies as being broader than abilities, and others suggest that competencies exist at a deeper level and

really underlie abilities. Generally, however, experts view competencies as characteristics of employees (or teams of employees) that lead to success on the job. Thus, abilities such as decisiveness and adaptability are seen as compe- tencies that might underlie more specific abilities such as decision making or coping with change.

Clearly, this approach has the potential for providing critical information to the human resource manager in a more useful form because it emphasizes what a person needs to be successful. Thus, it may not be important to know whether an employee will type letters or run a lathe, but it may be critical to know that an employee needs to be adaptable.

Competencies are determined in several ways, but typi- cally teams of top managers, working with consultants, iden- tify the competencies necessary to compete in the future. These competencies are then described in clear behavioral terms, measures are designed, and each is rated according to its relative importance for future success. Employees who have these competencies are then sought through the recruiting and selection process, or current employees are provided training opportunities to acquire these competen- cies and are then rewarded when they do acquire them. (See the discussion of skill-based pay and knowledge-based pay in Chapter .) The critical difference is that the HR manager no longer focuses on what is needed to be successful at one job but instead focuses on what is needed to be successful at any and all jobs within the organization. There are also some

applications of competency modeling to selection, which we will discuss in Chapter .

5-5d Legal Issues in Job Analysis Because job analysis is a critical building block for much of the HRM process, it should not be surprising

FIG 5.5 Example Job Description and Job Speci�cation Job Title: Accounts Payable and Payroll Accountant, Johnson & Johnson Corp.

Job Description: Business partner with Accounts Payable and Payroll Departments to develop expense forecasts and commentary; prepare Accounts Payable and Payroll shared services charge-outs to af!liates; ensure Accounts Payable and Payroll inputs are posted weekly; perform account analysis/reconciliations of Cash, Liability, and Employee Loan accounts related to Accounts Payable and Payroll; submit routine reports to Corporate; identify and implement process improvements relative to all responsibilities listed above.

Job Speci!cation: BS degree in accounting or !nance; 2+ years of accounting/!nance experience; sound knowledge of Integral Accounts Payable and General Ledger Systems; working knowledge of Hyperion Software, PACT; good communication skills; able to work independently at off-site location.

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114 Part 2: Decision Making in Human Resource Management

that numerous legal issues have been raised with regard to job analysis. In fact, federal guidelines on selection include discussion of the appropriate ways to conduct job analysis and the statement that any attempt to establish the job relatedness of a selection instrument must begin with a careful analysis of the jobs in question. Most of the specific cases, in fact, have been concerned more with the failure of an organization to perform a job analysis. For example, in Albermarle v. Moody the Albermarle Paper Company argued that tests found to be job related for one set of jobs could be used to select employees for another set of jobs that they argued were similar. The Court found that, in the absence of clear job-analysis information to support such a claim (and there was no job-analysis information), it was unacceptable to assume that the jobs in question were the same.

The Americans with Disabilities Act of  (ADA), and its recent modification (the American with Disabilities Amendment Act of ) raise additional legal issues asso- ciated with job analysis. As noted in Chapter , the ADA states that an employer must offer a reasonable accom- modation to any employee who has a disability and who can perform the “essential functions” of the job. Basically, essential functions are those that take up a significant part of the employee’s time, are performed regularly, and have consequences for other parts of the job. Organizations need to rely on careful job analysis to determine exactly what those essential functions are and thus determine if the employee is entitled to an accommodation under the law.

Several issues regarding the accuracy of job-analysis information have potential legal implications. Perhaps the most troubling of these issues relates to potential gen- der discrimination in job analysis. Specifically, evidence

suggests that jobs occupied primarily by male incumbents are more likely to be rated as more complex and of a higher level than similar jobs occupied primarily by female incum- bents. One striking result that has been published relates to different job-analysis information generated for the jobs of prison guard and prison matron, which are simply the traditional titles for persons of different gender doing the same job (these different titles are no longer used, inciden- tally). Because the information from job analysis can be used for determining appraisal systems as well as compen- sation rates, this problem is potentially serious.

Finally, as discussed in Chapter , the creation of autonomous work teams has presented a new legal challenge. In the Electromation decision, the National Labor Relations Board ruled that the autonomous work teams and action committees created at the company were illegal labor organizations. In other words, they were labor organizations because they scheduled work, determined wages, and made selection and promotion decisions—and they were illegal because they were created and controlled by management.

In summary, job analysis can provide extremely important information for the HR manager because it reveals what a person does on the job. This informa- tion can be used for a variety of applications, and it can be collected using different types of job analysts using a variety of job analysis techniques. Recently, many orga- nizations have moved toward competency modeling to replace traditional job analysis, and this approach has the potential to provide even more useful information about what is required for someone to be successful on the job. Finally, because job-analysis information is a basic building block for HRM decisions, several legal issues have been raised relative to the applications of job-analysis information.

Evidence suggests that jobs occupied primarily by male incumbents are more likely to be rated as more complex and of a higher level than similar jobs occupied primarily by female incumbents.

Chapter 5: Information for Making Human Resource Decisions 115

C H

A P

T E

■ Rip out the chapter review card located at the end of the book.

■ Review the valuable study tools located online at

www.cengagebrain.com

■ Review the Key Terms flashcards.

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■ Complete practice quizzes to prepare for the test.

■ Watch the chapter video for a real-life example of key concepts.

Business magazines and newspapers regularly publish articles

about the changing nature of work in the United States and about

how many jobs are being changed. Indeed, because so much has

been made of the shift toward service-sector and professional jobs,

many people might assume that the

number of unpleasant and undesir-

able jobs has declined.

In fact, nothing could be further

from the truth. While many Americans

work in gleaming air-conditioned facili-

ties, millions of others work in dirty,

grimy, unsafe settings. For example,

many jobs in the recycling industry

require workers to sort through moving

conveyors of trash, pulling out those

items that can be recycled. The trash,

though, may contain used syringes, old

razor blades, and other sharp objects.

Other relatively unattractive jobs

include cleaning hospital restrooms,

washing dishes in a restaurant, and

handling toxic waste.

Consider the jobs in a chicken-processing facility. Much like a

manufacturing assembly line, a chicken-processing facility is organized

around a moving conveyor system. Workers call it the chain. In reality,

it’s a steel cable with large clips that carries dead chickens down what

might be called a “disassembly line.” Standing along this line are doz-

ens of workers who do, in fact, take the birds apart as they pass.

Even the titles of the jobs are unsavory. Among the first set of

jobs along the chain is the skinner. Skinners use sharp instruments

to cut and pull the skin off the dead chicken. Toward the middle of

the line are the gut pullers. These workers reach inside the chicken

carcasses and remove the intestines and other organs. At the end of

the line are the gizzard cutters, who tackle the more difficult organs

attached to the inside of the chicken’s carcass. These organs have to

be individually cut and removed for disposal.

The work is obviously distasteful, and the pace of the work is

unrelenting. On a good day the chain moves an average of ninety

chickens a minute for nine hours. And the workers are essentially held

captive by the moving chain. For example, no one can vacate a post to

use the bathroom or for other reasons without the permission of the

supervisor. In some plants, taking an unauthorized bathroom break

can result in suspension without pay. But the noise in a typical chicken-

processing plant is so loud that the supervisor often can’t hear someone

calling for relief unless the person happens to be standing close by.

B e s i d e s b e i n g u n p l e a s a n t

and dirty, many jobs in a chicken-

processing plant are dangerous and

unhealthy. Some workers, for example,

have to fight the live birds when they

are first hung on the chains. These

workers are routinely scratched and

pecked by the chickens. And the air

inside a typical chicken-processing

plant is difficult to breathe. Workers are

usually supplied with paper masks, but

most don’t use them because they are

hot and confining.

And the work space itself is

so tight that the workers often cut

themselves—and sometimes their

coworkers—with the knives, scissors,

and other instruments they use to per-

form their jobs. Indeed, poultry processing ranks third among indus-

tries in the United States for cumulative trauma injuries such as carpal

tunnel syndrome. The inevitable chicken feathers, feces, and blood

also contribute to the hazardous and unpleasant work environment.

Jobs such as these in the chicken-processing facility are actu-

ally becoming increasingly common. Fueled by Americans’ growing

appetites for lean, easy-to-cook meat, the number of poultry workers

has almost doubled since 1980, and today they constitute a workforce

of around a quarter-million people. Indeed, the chicken-processing

industry has become a major component of the state economies of

Georgia, North Carolina, Mississippi, Arkansas, and Alabama.44

CASE QUESTIONS 1. How relevant are the concepts of competencies to the jobs in a

chicken-processing plant?

2. What information sources would be of most significance

regarding jobs in a chicken-processing plant?

3. Are dirty, dangerous, and unpleasant jobs an inevitable part of

any economy?

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