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ChernsCaseStudy.pdf

APPENDIX

Strategic Staffing at Chern's: A Case Study

CHERN'S COMPANY HISTORY AND ORGANIZATION

Siblings Ryan and Ann Chern founded Chern's, an upscale men' s and women's department store, 20 years ago after they graduated with their MBAs. The pair had planned to launch their own company for years, and refined their business model after each spent a great deal of time learning about the retail industry by working in different retail organizations. The product mix and high-quality products Chern's sells made it rapidly successful, and the company developed a loyal following. The firm quickly expanded its product line and began opening additional loca- tions 15 years ago. Ryan and Ann have turned their basic idea of providing customers with the best service, selection, quality, and value into a thriving business. The two are now co-presidents of Chern's: Ryan serves as the company's chief executive officer; Ann serves as the company's chief operating officer.

Chern's pursues an aggressive growth strategy. Currently the company has 140 stores in 28 states on the East Coast and in the Midwest. Chern' s employs an average of 19,000 full- and part-time employees. Providing superior customer service has been the company' s main business strategy and has successfully differentiated it from its competitors. Although the company's prod- ucts are expensive, the high product quality and excellent customer service have made the company successful. Because customers' tastes can differ from one store to the next, the company tries to be as decentralized as possible. Therefore, it gives its store managers a considerable amount of discre- tion in terms of bow they run their stores. Likewise, each manager runs his or her own department as a small business and is rewarded according to the department' s and the store's overall success.

Because customer service lies at the heart of the company's business strategy, it is a core part of the corporate culture of Chern' s. Ann and Ryan believe that customer service is the essence of selling and that because the firm's sales associates are in direct contact with customers, they are the core drivers of the company's performance. Both department managers and assistant depart- ment managers support the sales associates. Besides giving the sales staff their full support, the department managers at Chern's are, in tum, supported by their store managers, assistant depart- ment managers, buyers, and merchandising managers. Figure A- 1 illustrates these relationships.

Core values are an essential part of the Chern's brand and are the foundation of its culture. The company' s family ownership contributes to its desire to make every employee and customer feel valued and cared for. The firm is known for its strong and unique culture, which it feels is due to its belief that the best approach to business is to hire good people. As such, Chern's tries to iden- tify and select the right people, train them, and give them the tools and autonomy they need to suc- ceed. Successful employees are rewarded with above-market base salaries and generous bonuses.

Store Manager

Assistant Department

Managers

Buyers

Department Managers

Sales Associates

Merchandising Managers

FIGURE A-1 The Sales Support Relationships among Chern's Staff Members 383

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The management philosophy at Chem's is based on empowerment. Chern 's believes that by hiring well it can trust its employees to use their own judgment. Consequently, the firm gives them a considerable amount of freedom in terms of how they do their jobs. By striving to create a fair and positive environment and giving each employee the tools and autonomy he or she needs to succeed, the company feels it has created an environment in which its sales asso- ciates can truly excel. In fact, last year, 42 Chern's sales associates sold at least $1,000,000 in merchandise-a company record.

Because Chern's has a strong reputation for customer service, quality, and selection, it enjoys very positive brand recognition among its targeted customers. It is consistently named one of the top three retailers in regional customer surveys and has been listed among Fortune magazine's top 100 best companies to work for. Last year the company ranked number 72 on Fortune's list, down from 44 the previous year. It was the second-highest retailer on the list, behind Nordstrom's. It also ranked as having the best customer service among retailers for the past three years in customer surveys developed by the National Retail Federation.

In addition to focusing on customer service, selection, quality, and value, Chem's has invested heavily in information-technology tools to improve its inventory management and help its sales associates make efficient transactions with customers. The company recently imple- mented a Perpetual Inventory System to help its buyers react more quickly to the feedback given to them by its sales associates and to track inventory to quickly adjust each store's product mix and clothing sizes available. The technology has helped the company increase its efficiency and lower its costs as well as add value for its customers.

CHERN'S FINANCIAL PERFORMANCE

Chern's has enjoyed a strong financial performance over the last few years. Over the past five years, the company's share price has increased 134 percent and the company's revenues have grown at an annualized rate of 9 percent. Revenues and net income have grown as all of the firm's stores have reported sales increases every year over the past three years. Growing rev- enues and income have provided the company with the financial base and stability it needs for further expansion. The five-year growth strategy at Chern' s is to open 15 new stores a year and to continue to grow at an annual rate of 9 percent. Figure A-2 shows the company's revenue, gross profit, and net income trends for the last three years.

The company's good financial performance has translated into strong operating cash flow, giving it the option of reinvesting in its business, buying back shares, or passing some of its earn- ings to investors in the form of dividends. Figure A-3 shows the operating cash flow trend at Chern's over the past three years.

Net Income Gross Profit Total Revenue

o3 Years Ago

•2 Years Ago

Dlast Year

FIGURE A-2 Three-Year Revenue, Gross Profit, and Net Income Trends for Chern's

Three Years Ago Two Years Ago Last Year

FIGURE A-3 Three-Year Cash Flow Trend for Chern's

Chern's has funded its expansion using its earnings rather than by taking on debt. The company believes that its conservative debt policies and strong cash flow help create shareholder value by enabling it to expand into new markets.

CHERN'S HUMAN RESOURCES

Chern 's averages 1 store manager, 8 department managers, 8 assistant department managers, and approximately 100 full-time and 25 part-time sales associates per store. Full-time employees receive a generous benefits package, two weeks paid vacation, and are eligible for bonuses. Part- time employees are considered members of the core workforce and receive prorated benefits and bonuses. Because it feels that they would not reinforce its culture, Chern's does not currently utilize temporary or contingent workers of any kind. Turnover among its full-time sales associ- ates has been relatively stable, averaging 20 percent over the past three years. Turnover among the company's part-time sales associates has also been relatively low compared to similar retail operations, averaging 15 percent over the past three years. The part-time sales associates are used to increase the number of sales associates on the floor during peak periods.

The human resources department at Chern's generally does a good job supporting the company's business strategy. The company's compensation, performance management, and training are all designed to get sales associates up to speed and selling quickly. The base pay they earn is 20 percent above the market average, and Chern's matches in their 401 (k) plans up to 10 percent of their base pay. Twenty percent of a sales associate's bonus is tied to the person's customer service performance as rated by his or her department manager, 40 percent is based on individual sales performance in relation to that person's sales target, and 40 percent is based on overall store sales. New employees have a reduced sales target for their first year. Sales associ- ates can earn up to 150 percent of their base pay in bonuses based on both sales and customer satisfaction ratings. Top performers at Chern's earn well above the market average in pay.

Semiannual performance evaluations assess sales associates' initiative, customer service behaviors, coworker support behaviors, and leadership. Raises to an associate's base salary include a cost-of-living adjustment based on inflation, and from 0 to 10 percent based on the department manager's perception of the sales associate's performance, adherence to company values, and leadership contributions. Sales associates are also given 10 personal days, includ- ing sick days, and generous health and dental benefits. If a sales associate refers a candidate to Chern's, and the person is hired, the company gives the employee a $ 1,000 referral bonus after the new hire passes the six-month mark with strong performance.

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Chern's largely focuses its training and development activities on its new hires. New hires undergo a two-day orientation. Each then receives on-the-job training from his or her department manager and shadows another sales associate for one week. Employees receive additional train- ing only if they fail to reach their sales quotas two months in a row. Sales associates who fail to reach their quotas four months in a row are given a warning. Those who fail to meet their quotas five months in a row are terminated.

Sales associates can use the store's technology to identify how they are performing relative to their quotas. Chern's expects its employees to be relatively "tech savvy" and be willing and able to quickly learn its systems. Customer information, including information about their previ- ous purchases and fashion preferences, is stored in the company's computer for fast retrieval. Chern's also uses technology to give its buyers feedback about its customers' preferences and purchasing trends. The company's sales associates are also required to record information about customers' inquiries and unfilled requests for particular types of clothing. This is critical because it helps each department better track its inventory and quickly adjust its product mix and sizes to meet the changing demands of its customers. Sales associates can also use the store's computers to check inventory at other Chern's locations to better assist clients in locating desired products.

THE COMPETITION CHERN'S FACES

Chern's primary competitors include Nordstrom, Dillard' s, Barney's, Nieman Marcus, and Saks Fifth Avenue. Table A- 1 shows the previous and current year's sales, net income, and employee headcount for Chern's relative to its competitors.

At Chern's, sales associates execute the company's customer service strategy by building long-term relationships with their clientele. Sales associates feel empowered, and their business freedom is strongly supported by the corporation as long as the employees work hard and do their best. Chern's tries to hire sales associates with an entrepreneurial spirit, a drive to be suc- cessful, and a desire to make money. The sales force's accountability for results and Chern' s high expectations of them means that Chern's wants to hire only elite sales associates.

TABLE A-1

Previous year's sales ($ millions)

Current year's sales Growth(%)

Previous year's net income($ millions)

Current year's income growth(%)

Previous year's headcount (full and part time)

Current year's headcount growth(%)

On~~Ye~r Performance of Ch~rn's Relative to Its Comf'letitors

Nieman Saks Fifth Chern's Nordstrom Dillard's Barney's Marcus Avenue

3,800 8,11 1 8,525 326 4,390 2,249

9.7 9.9 (.9) 2.3 6.9 8.2

193.4 672 .5 242.2 24.2 247 .8 164.2

9.0 6.9 .8 (.6) 6.0 6.4

19,000 56,500 54,300 1,400 17,900 11 ,750

9 2.9 (1.2) .9 4.1 3.9

The levels of customer service excellence and sales skills required by Chern's employees are not the same for most other retail ftrms. High-end retailers, such as Neiman Marcus and Nordstrom, tend to compete more directly with Chern's for hires than do competitors such as Dillard's and Federated Department Stores, which focus less on customer service. The quality of Chern's sales force has enabled it to offer employees considerable upward mobility within the company, which is unusual for a retailer. Chern' s ftlls 75 percent of its department manager and assistant department manager positions internally, whereas most of its competitors fill their man- agement positions externally; 80 percent of the current store managers at Chern's once worked as sales associates for the ftrm. Promotion from within is important to the company. Both Ryan and Ann strongly believe that internal hires reinforce the company's strong culture.

In order to provide the highest-quality customer service and capture market share, Chern's knows it needs to hire the right sales associates. Although the company's strong culture and high quality initially attracted a sufficient number of talented sales associates who shared the ftrm's values, the competition for talented sales associates has been heating up. As a result, Chern's is finding it harder to staff and retain the level of sales talent it needs. The sales associates at Chern's are usually the top performers in the retail industry, so they are never easy to find. Because of the importance of hiring the right salespeople, and their expectation that staffing this important position will become more difficult in the future, Ann and Ryan have decided to launch a strategic analysis of how Chern' s staffs its sales associate positions and have asked for your help.

STRATEGIC STAFFING AT CHERNrS: CHAPTER-BY-CHAPTER CASE ASSIGNMENTS

At the end of each of the chapters in this book, you will have an assignment for the case study that applies concepts from that particular chapter. The entire list of assignments can be found at the end of this appendix, just before the candidate resumes are presented. The assignments put you in the role of an external staffing consultant hired by Chern's. Your job is to conduct a strategic analysis of how it staffs its sales associate positions. Your final product will require you to combine each of the assigrunents into a cohesive report, including a table of contents and any necessary appendices. Format your report as a professional product that you would give to the organization. Chern's is decentralized, which means that your report will be distributed to many store managers, many of whom are unfamiliar with staffmg terminology and jargon. Write your report so that they understand and adopt your recommendations and are committed to implementing the changes you've suggested. You might want to keep a copy of the final report to show potential employers the type of strategic staffmg work you are capable of performing.

Chapter 1: Strategic Staffing In this chapter, you learned that the strategic staffing process is guided by hiring goals that are clearly linked to an organization's strategies and objectives. The goal of strategic staffing is to enable the organization to better execute its business strategy. There are two types of staffing goals: process goals and outcome goals. Process goals relate to the hiring process itself, and outcome goals apply to the product of the hiring effort. Table 1- 2 gives examples of both types of staffing goals, and Table 1-3 gives you some questions to consider in setting appropriate staffing goals.

Your consulting assignment for Chapter I is to identify realistic process and outcome goals for staffing of sales associate positions at Chern 's. Be sure to relate yom goals to the firm' s business strategy and explain why each is important and should be adopted by the company.

Chapter 2: Business and Staffing Strategies In this chapter, you learned about how a firm's business strategy and talent philosophy shape its HR strategy, which then influences the firm's staffing strategy. After Ryan and Ann learned about this process, they felt that the company needed to develop a more formal talent philosophy of its own to shape its HR and stafftng strategy. They have asked you for your recommendations.

Chapter 2 and Tables 2-4 and 2- 5 should help you identify key components of an appro- priate talent philosophy, human resource strategy, and staffing philosophy for Chern's. Be sure

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to consider the company's business strategy and competitive advantage, life stage, and the com- pany's values and culture when making your recommendations. You should also clarify how putting the right talent in the company's sales associate positions can create a competitive advan- tage for Chern's.

In addition to developing a formal talent philosophy, HR strategy, and specific staffing strategy, you also need to explain how Chern's should address each of the nine strategic staff- ing decisions listed in Table 2-6 for the sales associate position, and justify your reasoning. For example, the first decision is whether Chern's should establish a core or flexible sales associate workforce. Describe in your report if Chern's should focus on a core or t1exible workforce and to what degree. Be sure to explain why they should follow your recommendations. Do this for the other eight strategic staffing decisions as well, taking into account the chapter material as well as the information provided about Chern's in the beginning of the appendix.

Chapter 3: The Legal Context Although Ann and Ryan have always known that it is important to comply with equal employ- ment opportunity legislation and other relevant employment laws, it has been eight years since they conducted any sott of discrimination analyses at their company. They ask you to evaluate the sales- associate position for any evidence of discrimination based on gender or ethnicity. The first level of disparate impact analyses are typically done at the establishment level, which for Chern's is a single store. Chern's asks you to focus on its flagship store- its largest- which has 140 full-time and 50 part-time sales associates. Chern's gives all department and store managers bias and diversity training, and has never been sued for disparate treatment. Because it knows that adverse impact is still a risk, the company asks you to analyze its full-time sales associate hiring data for evidence of adverse impact.

Tables A- 2, A- 3, and A-4 summarize the data you will need to use in your analyses. The data for the sales associate flow statistics are based on the previous five years of staffing at Chern's flagship store. Evaluate the stock and concentration statistics and use the four-fifths rule to analyze the flow statistics. In addition to your disparate impact analyses, be sure to recom- mend strategies that Chern's can use to alleviate any discrimination you may find.

Females

Males

Whites

Blacks

Asians

Hispanics

Sa1es Associate Statistics Compared ts the Relevant Population

Job Category: Sales Associates

Current Sales Associates(%)

55

45

20

20

32

28

Availability of Sales Associates in Relevant Population (%)

60

40

25

25

25

25

Sales Associate Flow Statistics

Men

Women

Whites

Blacks

Asians

Hispanics

# Applicants #Hired

1,000 80

1,400 160

600 55

600 48

600 67

600 50

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. ~ .~ ..... _ . TABLEA-4 Sa les Associate Concentration Statistics

"' "'J

Sales Associates (% ) Department M anagers (%) Store M anagers (%)

Female

Male

White

Black

Asian

Hispanic

55

45

20

20

32

28

30

70

20

15

30

35

Chapter 4: St rategic Job Analysis and Competency Modeling

40

60

24

40

16

20

Referring to the information presented in the chapter and case, by researching the "retail sales- person" position on O*Net (http://online.onetcenter.org), and by interviewing a sales associate in a simi lar company if possible (an associate at Saks Fifth A venue, Nieman Marcus, Nordstrom, and so fm1h), create a job requirements matrix for the sales associate position at Chern ' s. Be sure to consider the company's business strategy and corporate culture in creating job duties and identifying competencies or KSAOs. For each competency or KSAO, decide if Chern's should hire people who already possess the characteristic or if the firm should train them to develop it. Also, estimate to the best of your ability how important each characteristic is relative to the others as well as the relative time associates spend on each job duty. You may have to use some judgment to come up with the answers to these questions. You will use this information later to determine how to weight the assessment information obtained on each job candidate.

Given the information contained in the Chern 's case description and your own knowledge of this type of position, create a job rewards matrix for the sales associate position. If possible, interview a sales associate in a similar company to obtain additional job rewards information.

Chapt er 5: Forecasting and Planning Chern's has never examined its internal labor market. The company asks you to perform a transi- tion analysis for full-time sales associates. It asks you to conduct relevant analyses to describe the internal labor market for its flagship store.

Summarize the flagship store's internal labor market and highlight any trends or forecasted gaps based on the transition probability matrix in Table A-5. The probabilities are based on annual rates that are averaged over a span of three years. In other words, they are the average rate per year. If Chern's wants to keep its flagship store staffed with 140 fu ll-time sales associates, how many full-time sales associates should it expect to have to hire from outside the company annually?

Traditionally, 25 percent of the store's job applicants for sales associate positions become job candidates, and 20 percent of the job candidates receive job offers, 75 percent of which are accepted. Chern's asks you how many applicants it will need to generate each year to acquire the number of new hires you forecasted.

The Tra nsition Probability Matrix for Chern's Flagship Store

Transition Pro babilities Based on t he Past Three Years

Job FTSA PTSA DEP BUY MER Exit Current # of Job Cat egory Level (%) (%) (%) (% ) (%) (% ) Employees

Full-time sales associat es (FTSA) 50 15 5 5 5 20 140

Part-time sales associat es (PTSA) 30 50 0 5 0 15 30

Department manager (DEP) 2 6 0 75 6 12 20 16

Buyers (BUY) 2 0 0 0 65 7 30 15

Merchandising managers (MER) 2 12 0 0 0 80 20 8

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Chern' s asks you to research the external labor market for sales associates because the company is concerned about their availability in the future. Using O*Net, choose a state in the United States and research the expected demand for sales associates in that state over the next 10 years. To do this

1. Visit www.online.onetcenter.org. 2. Search for job 41-2031.00-Retail Salespersons. 3. Scroll to the bottom and find "Wages and Employment Trends." 4. Select a state from the "State and National" drop-down menu and hit "go." 5. Compare the forecasted employment trends in your chosen state with those of the entire

United States for the retail salesperson position. 6. Print out the results of your state search and include it with your report. 7. There is also a "Career Video" available on the state results page of your search that you

can view for additional information about the work sales associates do.

Now research the employment trends of retail sales workers using the U.S. Department of Labor Bureau of Labor Statistics Web site at www.bls.gov and other resources you identify. Consider this information when forecasting future gaps or surpluses. You might also consider targeted skill sets or demographics and determine if you can obtain information about skill or demographic trends in your targeted area.

If you forecast a gap between the anticipated supply of qualified sales associates and Chern's anticipated demand for them, determine whether the gap is temporary or permanent. Then, make some recommendations about how Chern's can best address the gap. Be sure to reread the relevant section of Chapter 5 before you do so.

Chapter 6: Sourcing: Identifying Recruits Chern's currently uses six different sources for sales associate applicants: colleges, employee refer- rals, Cherns.com, a search firm, walk-ins, and local newspaper ads. The company just fmished analyzing the effectiveness of each of these sources, and the results are summarized in Table A-6.

Chern's asks you to prioritize its recruiting sources to maximize the effectiveness of the company's future hiring initiatives. Based on what you have read in this case, prioritize the staffing outcomes and rank order the recruiting sources based on their ability to maximize the company's staffing goals for the sales associate position.

Ryan and Ann have heard a lot lately about using the Internet to source passive job candi- dates. The two are wondering how well this technique would work for its sales associate positions. Referring to the Develop Your Skills feature in Chapter 6, choose an area of the country. First, pro- vide some suggestions on how the Internet might be more effectively used to source and recruit applicants. Second, conduct a Boolean search to source two promising sales associate applicants using the Internet. You may need to try different search engines and different syntax, as highlighted in the chapter. You can also try x-raying and flipping. For example, on Y ahoo.com you could try "linkdomain:ffany.org shoes blog" to pull up blogs linked to the Fashion Footwear Association of New York with the word "shoes" in the blog. You should experiment with searches based on your own ideas. Include the various search engines and search terms you used for your fmal search and provide information about your two leads in an appendix to your final report. Justify each recommendation.

:~TABLE X~6> , ~ t t • -~ • r

·~~!>J: . '~ '"'"~!ot".._,·>

College hiring

The Effectiveness of the Sources Used to Recruit Chern's Sales Associates

Average First Hiring Speed Cost per Year Financial

(months) Hire($) Culture Fit Return($)

5 4,000 Good 30,000

Employee referrals 2 2,600 Very good 38,000

Cherns.com 2 1,500 Good 38,000

Search firm 3 5,200 Average 20,000

Walk-ins 1 1,500 Poor 5,000

Newspaper ads 2 2,000 Poor 4,000

First Year Turnover Rate(%)

20

10

20

15

30

25

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To best serve its diverse clientele and to establish the most positive employer image pos- sible, Chern's wants to hire diverse sales associates. The company also asks you how it can improve the diversity of its applicant pool.

Chapter 7: Recruiting Develop an outline for a recruiting guide for the sales associate position based on the mate- rial you read in this case and what you learned in Chapter 7. The outline should include the company's policies and procedures, budgets, activities, timelines, responsible staff, legal issues, and steps to be taken in recruiting for the position. You do not have time to write an entire recruiting guide. However, Chern's has asked for your help in identifying what it should include in one. Chern's also asks you to make recommendations about what the company can do to increase applicants' fairness perceptions of the process and reduce any negative spillover effects related to it.

Chern's would also like to reinforce its employer brand among potential applicants. Ryan and Ann would like to create a stronger employer brand, and ask you for advice on what the company's employer brand should be and bow to effectively and consistently market and rein- force it throughout the staffing process. Make some recommendations and explain why your approach would be effective for Chern's.

Chapter 8: Measurement Chapter 9: Assessing External Candidates Remember to write your repott so that the various measurements you learned about in these chapters will be understandable to the firm's store managers and department managers. These employees do not have a staffing or statistics background. Consequently, many of the concepts you discuss in the report will be unfamiliar to them. Be sure you thoroughly explain the concepts and their importance. This will be particularly important when completing the next part of the assignment, which spans Chapters 8 through 11.

Chern's is in the middle of hiring two sales associates for its flagship store and has reduced the initial applicant pool to eight candidates. Because it is the company's flagship store, it is important that all sales associates who work at the store excel at customer service and embody the company's values, and they need the new people to get up to speed quickly. Although Chern's often invests in the training and development of new employees, in this case they would like the two new hires to arrive with the knowledge, skills, abilities, competencies, and other characteristics required to be immediately successful. They also would like the newly hired sales associates to be strong candidates for future management positions.

Ryan and Ann ask you to become involved in the assessment and hiring process. Nearly 80 percent of Chern's sales associates are considered successful. However, Chern's would like the percentage to be at least 85 percent. Ryan and Ann feel that improving the company's assess- ment and selection system will help it accomplish this goal. Use this opportunity to help Chern's develop a new sales associate assessment and selection system. This is a pilot project to deter- mine how well you are able to improve Chern's staffing process.

All eight candidates are already scheduled to participate in one structured and one unstruc- tured interview that you are asked to view and score (you may or may not choose to score and use the unstructured interviews). After deducting the costs of the initial applicant screening and the two scheduled interviews for each candidate from the initial budget, the store has $4,000 left to apply to this staffing initiative. It's up to you to decide how to spend the money. What other assessment methods should you use? (The costs of the two interviews are not to be included in your $4,000 budget.)

The a<;signment for Chapter 8 is to read the case assignment spanning Chapters 8 through 11 and review the eight candidates' resumes at the end of the appendix. You then need to develop an assessment plan that does not exceed your $4,000 budget.

Your goals in developing your sales associate assessment system are threefold:

1. Maximize the return on investment of your assessment system. 2. Maximize the job success of the new sales associates hired (in terms of their sales, turn-

over, and levels of customer service). 3. Maximize the fit of the new sales associates hired (including their customer service orien-

tation and leadership skills) with the company's culture.

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TABLE A-7 Potential Assessment Methods and Their Costs

Assessment Method

Cognitive ability test (measures a candidate's ability to learn, process, and apply information rapidly; verbal, spatial, and mathematical abilities)

Conscientiousness (measures a candidate's persistence, dutifulness, order, attention to detail, and achievement motivation)

Openness (measures a candidate's openness to new ideas and situations and intellectual curiosity)

Sales interest (measures a candidate's interest in sales as a career; vocational interest inventory)

Scale of Assessment Cost

Typical scores range from 85 to $70 per candidate 130 (mean and standard deviation for this sample are 112.5 and 8.02, respectively).

Possible scores range from 1 to 6 $100 per candidate (mean = 4.38, std. dev. = 1.06).

Possible scores range from 0 to 60 $30 per candidate (meal")= 42.50, std. dev. = 7.07).

Possible scores range from 1 to 5 $50 pe r candidate (mean = 3.63, std. dev. = .92).

Desire to avoid failure (measures Possible scores range from 1 to 4 $30 per candidate a candidate's need to avoid failure (mean = 2.88, std. dev. = .83). and desire to avoid taking risk)

Technology skills test (measures a candidate's abil ity to become proficient with the company's various technology tools)

Job knowledge test (measures a candidate's knowledge of sales techniques, understanding of effective customer service practices, and awareness of related issues in the retail industry)

Simulation (measures a candidate's leadership, sales, judgment, and customer service skills using a work simulation)

Integrity test (measures a candidate's trustworthiness, integrity, and honesty)

Fashion knowledge test (measures a candidate's knowledge of fashion trends, styles, and fabrics as they apply to a variety of customers)

Handwriting analysis (measu res a candidate's trustworthiness, personal drive, dependabil ity, sociability, and desire to achieve)

Possible scores for this test range from 0 to 80 (mean = 58.13, std. dev. = 7.99).

Possible scores for this test range from 0 to 50 (mean = 36.88, std. dev. = 7.04).

Possible scores for the simulation range from 0 to 70 (mean= 43.75, std. dev. = 10.61).

Possible scores for this test range from 1 to 5 (mean = 3.50, std. dev. = 0.93).

Possible scores for this test range from 0 to 60 (mean= 38.75, std. dev. = 8.76).

Possible scores for this ana lysis range from 0 to 10 (mean = 5.38, std . dev. = 3.38).

$70 per candidate

$150 per candidate

$250 per candidate

$70 per cand idate

$50 per candidate

$150 per candidate

Table A-7 summarizes the possible assessment methods you can use and their costs. Next is an overview of the steps you will need to take in completing the next parts of the

assignment and the chapter in which each part is assigned. The work will be spread out over the next few chapters.

1. Develop a sales associate assessment and selection plan that does not exceed the remaining $4,000 budget. In your report, justify your proposed selection system using the determi- nants of the effectiveness of an assessment method identified in Chapter 8. These determi- nants include the following: a. Validity- how well the assessment method predicts relevant components of a person's

job performance. Table 9-3 describes typical validities for various assessment tools across many different occupations. You can look at Table 9-3 and consider the results of your job analysis/competency model to determine which assessment is most likely to predict job performance at Chern's.

b. Return on investment-the extent to which the assessment method generates a frnan- cial return that exceeds the cost associated with using it.

c. Applicant reactions- the extent to which applicants perceive the assessment methods to be job related and fair.

d. Selection ratio- the extent to which the selection ratio is low. A low ratio means hiring only a few applicants, which allows an assessment method to have maximal impact in terms of improving the performance of the people hired.

e. Usability-the extent to which people in the organization are willing and able to use the method consistently and correctly.

f. Adverse impact- the extent to which an assessment method predicts job performance and other important hiring outcomes without discriminating against members of a pro- tected class.

2. Before viewing the interviews for the next part of the selection process, develop a scoring key for each structured interview question and create a formula to combine the three scores into an overall structured interview score (Chapter 8). The three structured interview ques- tions are as follows: a. A disgruntled customer is returning a damaged suit jacket he bought the previous week

that he needed for an event that night. He is extremely upset. What do you do? b. A person walks into your store and mentions that she has just moved into the area and

that this is the first time she has visited your store. What would you do to make her a customer now and a loyal customer in the future?

c. You' re working alone because two people called in sick. Suddenly, five customers walk into your department at once. What do you do?

If you plan to use the unstructured interviews to assess candidates (optional), create a scoring key for the unstructured interview based on your expected determinants of suc- cess at Chern's. The scoring keys for both types of interviews should reflect the KSAOs or competencies assessed by the questions or interview, not the answers to the questions themselves. Then view the eight structured and eight unstructured interviews available on the book's Web site or if your instructor prefers, view them as a part of the class (Chapter 9).

3. Before or during your next class, submit your assessment plan to your instructor. Your instructor will then give you the candidates' scores on the assessments you choose to uti- lize (Chapter 9). If your instructor agrees, you can use a multiple hurdles, compensatory, or combined approach for your assessment plan.

4. Using your interview score results, candidate resumes, and scores on the assessment meth- ods you included in your assessment plan, determine which two candidates should receive an offer and submit this information along with the rationale for your choice to your instructor. Write a job offer letter to your top chosen candidate, who is currently consider- ing two other job offers from competitors (Chapter 11).

At the end of the case, your instructor will give you feedback on the job success of your two new hires.

For now you will work on step 1. Submit your assessment score request to the instructor by the deadline the instructor gives you to receive candidates' scores on the assessments you choose to utilize. Your instructor needs to know which scores you would like and which candidates you would like to assess. You can assess candidates in one round before making a hiring decision or in multiple rounds, depending on your assessment plan.

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394 Appendix

Chapter 10: Assessing Internal Candidates STRATEGIC STAFFING CASE STUDY As explained earlier, 75 percent of the department managers and assistant department managers at Chern's have been promoted from the com- pany's sales associate staff based on their supervisors' recommendations and structured interviews. Unfortunately, Chern 's recently analyzed its turnover data and found that a disproportionate number of good sales associates who would have been potentially strong candidates for department manager and assistant department manager positions have left the organization. The exit interviews with these people revealed that the finn's efforts to communicate its promotionai opportunities and succession planning intentions to the high- potential sales associates have been insufficient. Many of the sales associates said that they were leaving because they had poor career planning visibility to the managerial positions they sought. The company currently does not tell its high-potential sales associates that they have been flagged for future promotion opportunities, believing that this would demoralize those not on the list.

Because the company's talent philosophy is to promote from within, it feels that it could improve its internal promotion practices. The company asks you to recommend ways that it can identify and develop sales associates who have the potential to become department managers.

Chapter 11: Choosing and Hiring Candidates

You will now continue your assessment and selection process for the two new hires. Develop a rational way of combining the scores on the assessment methods you recommended in your report for Chapter 9. How should Chern's choose which candidates to hire? Do you recommend a multiple hurdles, compensatory, or combined approach? What weights should each assessment score receive when calculating each candidate's overall score? Your job requirements matrix should help you make this judgment. Using your interview score results, candidate resumes, and scores on the assessment methods you included in your assessment plan, identify which two candidates should receive an offer and submit this information, along with the rationale for your choice, to your instructor. Also, explain what additional information you would like to have had before making a hiring decision.

Ann and Ryan believe that in addition to the promotional opportunities Chern' s has to offer, the nonfinancial rewards of the job, including the extensive training and development new hires receive and the supportive work climate they experience, have not been sufficiently communicated to candidates. Not only does this explain why good sales associates are leav- ing the firm, it could also explain why its sales associate job offer acceptance rates have been trending slightly downward. Write a job offer letter to your top chosen candidate, who is cur- rently considering two other job offers. You would very much like to hire your top choice, but she or he has to decide on the other offers within one week. Be sure to use any relevant information from the job rewards analysis you conducted in Chapter 4 as well as the informa- tion contained in the initial case description. You can also use the information about Chern's presented in this Appendix. You only need to write one offer letter even though you are hiring two candidates.

Your instructor will give you feedback on the outcomes for the two candidates you chose. Each candidate's profile was evaluated by staffing experts and given a job success score of 1 to 10. The scores correspond with the individual financial returns to the company presented in Table A-8 (which were based on a combination of sales performance and a new hire's fit with the company's culture).

Calculate the ROI of your staffing investment in the new hires' first year based on the financial return realized by your chosen hires and the cost of your assessment system. In addition to the assessment costs you incurred, assume that recruitment and the initial applicant screen- ing cost the company $20,000, and the 16 interviews cost the company an additional $14,800. You can either calculate a net return or an ROI ratio. To compute the net return you will sum the financial return realized by your two hires and subtract the total cost of the selection system. To compute the ROI ratio, you will sum the financial return and divide it by the total cost of the selection system. Interpret either or both of these values.

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TABLE A-8 The First Year Financial Value of Different Job Success Levels

Candidate's Job Success Score First Year Financial Return to Chern's

10

9

8

7

6

5

4

3

2

Chapter 12: Managing Workforce Flow

$50,000

$40,000

$30,000

$20,000

$10,000

0

($10,000)

($20,000)

($30,000)

($40,000)

Chern's asks you to develop an onboarding and socialization strategy for its newly hired sales associates. Using Table 12- l as a guide, write a report recommending appropriate onboarding and socialization strategies, and explain why you are making each recommendation.

Chern 's recently completed a turnover analysis for sales associates at different perfor- mance levels and found that functional tw-nover begins at a performance level that cun·ently covers the lowest-performing 15 percent of its sales associates. It also discovered that the top- performing 10 percent of its sales associates are responsible for 20 percent of the company's sales. Unfortunately, the turnover rate of its top performers is almost twice the turnover rate of its low performers. Ann and Ryan ask you to develop a retention plan for the company's top per- formers. Because they have developed good relationships with customers, sales associates who have been with the store more than 18 months tend to be the highest performers.

Recall that in their exit interviews, many sales associates who resigned say they are leav- ing Chern's because they believed they lacked promotional opportunities. Quite a few other top performers would have liked to continue working for Chern's but could not adequately balance their school and family demands because their work hours as sales associates were fixed. The third most common reason top performers gave for leaving Chern's was the lack of training and development opportunities. The company recently conducted an employee engagement survey, which reinforced the fact that employees found these three issues the most pressing. However, the company's sales associates also reported being satisfied with their pay and benefits and very satisfied with the company culture and the support they receive from their department managers.

Chern's has been growing steadily, but its conservative fmancial goals also create a need to be prepared for unexpected changes in its environment. Chern 's believes that the economy is likely to stay strong, fueling its expansion strategy. However, the company wants to be prepared in the event that the economy cools and the demand for its products declines. Although Chern's tries to protect its employees, it recognizes that in the event of an economic downturn, it will need to downsize its sales force to control costs. Chern 's asks you to recommend a downsizing strategy in the event that it needs to quickly reduce its number of sales associates by 15 percent.

Chapter 13: Staffing System Evaluation and Technology Chern's wants a way to find out whether your recommendations helped it reach the following goals:

I. Attracting a more diverse set of qualified applicants. 2. Complying with equal employment opportunity and affirmative action guidelines. 3. Hiring sales associates who

a. Are better able to execute its business strategy. b. Sell more merchandise.

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396 Appeod[x

c. Develop higher-quality relationships with the firm's customers. d. Stay with the company longer. e. Are more promotable to department manager positions. f. Reinforce the company's customer service-oriented culture and make every employee

and customer feel valued and cared for. 4. Realizing a meaningful positive return on its investment in your recommendations.

To help it track its staffing performance, Chern' s asks you to create a digital staffing dash- board that contains the five most important staffing indicators to which its store managers need to pay attention in terms of the sales-associate hiring and evaluation process.

Chern's has always been willing to invest in technologies and tools that improve its per- formance. It asks you to recommend various staffing technologies it should consider adopting to enhance the performance and efficiency of its staffing system. Because the company is finan- cially conservative and is willing to invest in compelling technologies but does not want to waste its money, be sure to thoroughly explain your recommendations and persuade the company to consider adopti ng them.

With your completed set of recommendations, write an executive summary that describes the highlights of your overall recommendations for Chern' s (covering Chapters 1 through 13). This summary should cover your most important identified issues and opportunities and your primary recommendations for the entire project yet it should be concise enough (maybe one to two pages long) to place at the front of the report to highlight the most in1portant recommenda- tions you have made.

SUMMARY OF ASSIGNMENTS

The following is a compiled list of all assignments to be completed in the case study. The spe- cific details are found in each chapter assignment.

1. a. Identify realistic long-term and short-term process and outcome goals. b. Ensure goals are related to business strategy and explain why each is important.

2. a. Develop a formal talent philosophy, HR strategy, and specific staffing strategy. b. Address each of the nine strategic staffing decisions. c. Explain each of your recommendations for the nine decisions.

3. a. Use stock, flow, and concentration statistics to determine if any evidence of discrimina- tion exists.

b. Recommend strategies to alleviate any discrimination you find. 4. a. Using O*Net and other sources of data, create a job requirements matrix.

b. For each competency or KSAO, decide if it should be used to hire or plan to develop. c. Estimate how important each characteristic is relative to the others as well as the rela-

tive time spent on each job duty. d. Create a job rewards matrix.

5. a. Conduct a transition analysis. b. Summarize the internal labor market and highlight any trends or forecasted gaps. c. Based on the transition probability matrix, calculate bow many new full-time sales

associates should be hired externally. d. Calculate the number of applicants needed to acquire the number of new hires you

forecasted. e. Use multiple sources of data to describe the current and future labor market for retail

salespeople. If you forecast a gap, determine whether the gap is temporary or perma- nent. Make some recommendations to address the gap.

6. a. Rank order the recruiting sources based on their ability to maximize the company's staffing goals.

b. Provide recommendations on how the Internet might be more effectively used to source and recruit applicants.

c. Conduct a Boolean search to source two promising applicants using the Internet. Include the search engines and exact Boolean commands used. Provide information about your two leads in an appendix. Justify each recommendation.

d. Determine how Chern's can improve the diversity of its applicant pool.

7. a. Develop an outline for a recruiting guide. b. Determine how to increase fairness perceptions of the recruiting process and reduce any

negative spillover effects. c. Determine what the employer brand should be. d. Make recommendations for how the brand can be marketed and reinforced throughout

the staffing process. e. Explain why your approach would be effective.

8. a. Read the next few parts then evaluate the eight candidates' resumes. b. Create a scoring key for the interviews.

9. a. Develop an assessment and selection plan that does not exceed the remaining $4,000 budget.

b. Justify your proposed selection system in your report. c. Submit your assessment plan. to your instructor. Receive scores from your instructor. d. Use the scoring key you developed for the structured interviews to view and score the

eight structured interviews. Also view the eight unstructured interviews and score them if you included them in your assessment plan.

10. a. Improve internal promotion practices. b. Recommend ways to identify and develop sales associates who have the potential Lo

become department managers. 11. a. Develop a rational way of combining the scores on the assessment methods you recom-

mended. Recommend either a multiple hurdles, compensatory, or combined approach and explain.

b. Describe the weights for each assessment method when calculating the overall score. c. Using your interview score results, candidate resumes, and scores on the assessment

methods you included in your assessment plan, identify which two candidates should receive an offer.

d. Submit this information along with the rationale for your choices. e. Explain what additional information you would like to have had before making a hiring

decision. f. Write a job offer letter to the top candidate of your two chosen hires (you only need to

write one letter). g. Receive feedback from your instructor on the outcomes for the candidates you chose. h. Calculate the ROI or net return of your staffing investment for the two people you

selected. Interpret the ROI or net return. 12. a. Write a report recommending appropriate onboarding and socialization strategies, and

explain why you are making each recommendation. b. Develop a retention plan for the company's top performers. c. Identify a downsizing strategy to reduce the number of sales associates by 15 percent.

13. a. Create a digital staffing dashboard with the five most important indicators of the overall staffing process.

b. Recommend various staffing technologies to enhance the performance and efficiency of the staffing system.

c. Thoroughly explain your recommendations and persuade the company to consider adopting them.

d. Write an executive summary of the entire set of recommendations and place it at the front of the report.

Appendix 397

TABLE 1-2 Examples of Staffing Goals27

Process Goals • Attracting sufficient numbers of appropriately qualified applicants • Complying with the law and any organizational hiring policies • Fulfi lling any affirmative action obligations • Meeting hiring timeline goals • Staffing efficiently

Outcome Goals • Hiring ind ividuals who succeed in their jobs • Hiring individuals who will eventually be promoted • Reducing turnover rates among hig h performers • Hiring individuals for whom the other human resource functions will have the desired

impact (e.g., who will benefit from training, and who will be motivated by the f irm's compensation package)

• Meeting stakeholder needs • Maxim izing the financial return on the organization's staffing investment • Enhancing the d iversity of the organization • Enabling organizational flexibility • Enhancing the business's strategy execution

TABLE 1-3 Questions to Ask When Setting Staffing Goals

• Is it more important to fill t he position quickly or fill it with someone who closely matches a particular t alent profile?

• What levels of which competencies, styles, values, and traits are rea lly needed for job success and to execute the business strategy?

• What is the business's strategy and what types of people wi ll it need 1, 5, and 10 years from now?

• What ta lents must new hires possess rather than be trained t o develop? • What are the organization's long-term talent needs? Is it important for the person hired t o

have the potential t o assume leadership roles in the future?

TABLE 2.:4!'..:, -- -- ,_#'. Questions Addressed by an Organization's Talent Philosophy 1. Do we want people to contribute to the company over long-term careers or do we want

to focus on f illing vacancies in the short term? 2. Do we value the ideas and contributions of people with d iverse ideas and perspectives? 3. Do we see our employees as assets to be managed or employees as investors who

choose where to allocate their t ime and efforts? 4. What are our ethical principles when it comes to our employees?

How a Firm's Talent Philosophy Affects Its Human Resource Strategy and Staffing Strategy

Talent Philosophy

Wants employees to contribute to the firm over long-term careers

Values the ideas and cont ributions of people with d iverse ideas and perspectives

Views applicants and employees as investors of their time and effort

Has high ethical standards regarding the treatment of its applicants and employees

Human Resource Strategy

Acquires, develops, and retains ta lent able to cont ribute to the fi rm over time

Acquires and retains a diverse workforce; creates and maintains a culture of inclusion and respect to leverage diversity

Develops mutually beneficial relationships with its employees; respects applicants and employees

Treats appl icants and employees with fairness, honesty, and integrity

Staffing Strategy

Hiring: Recruits and hires talent able to perform now and in future jobs

Deploying: Uses succession planning, career p lanning, and career development to take adva ntage of employees' potential over t ime

Retaining: Retains top performers and high-potential employees

Hiring: Recruit s and hires diverse people

Deploying: Creates mentoring programs

Retaining: Rewards and promotes diversity "champions"

Hiring: Attracts and hires employees who fit the firm 's culture and values; responds quickly to applicant inquiries

Deploying: Puts employees in jobs that match their interests and abilities

Retaining: Allows f lexible work arrangements to meet employees' needs

Hiring: Explains the hiring decision-making process and the uses of all assessment methods; hires based on merit; complies with laws

Deploying: Gives honest performance feedback

Retaining: Promotes based on merit

Nine Elements of the Staffing Strategy

1. Do we want a core or flexib le workforce? 2. Do we prefer to hire internally or external ly? 3. Do we want to hire for or t rain and develop needed skills? 4. Do we want to replace or retain our talent? 5. What levels of wh ich skills do we need where? 6. Wil l we st aff proactively o r reactively? 7. Which jobs should we focus on? 8. Is staffing t reated as an investment or a cost? 9. Will staffing be centralized or decentralized?

DEVELOP YOUR SKILLS

Conducting Boolean Searches on the Internet

If you are interested in developing your staffing skills, online courses are available in using Boolean searches to f ind passive recruits (see www.recruiting-online.com). Some companies offer even more comprehensive in-person and Web-based t raining and certification on active, Web-based sourcing strategies (see www.airsdirectory.com). Here is an example of how to use the Boolean technique to find Web designers located in the Chicago, Illinois, area able to use JavaScript.

1. Go to www.google.com 2. In the search box, type: site:Linkedln.com (web designer or

graphic designer) (San Francisco) and not (EOE).

The f irst part of the Boolean search string req uests pages in the social networking site Linkedln.com. The next part requests the skil ls "web designer" or "graphic designer" (each must be enclosed in quotation marks so it's recognized as a phrase). The last part of the request specifies the San Francisco area and screens out job postings (which typically contain "EOE" ). Boolean search syntax is precise. If you encounter problems, check for spelling or punctuation errors I and/or missing or extra spaces. Varying search terms with words and phrases job candidates are likely to use can further improve your results.

TABLE 12-1 Socialization Program Choices

One-time versus staggered programs: programs that put newcomers through one long session versus many smaller ones

Collective versus individual programs: programs that put newcomers through a common set of experiences as a group versus socializing them one-on-one

Formal versus informal programs: programs providing structured socialization using specifically designed formal activities and materials away from the work setting versus informal socialization done by a new hire's coworkers on the job

Sequential versus random programs: programs that require recruits to pass through a series of distinct steps to obtain full employee status versus using a random sequence of activities

Fixed versus variable programs: programs providing newcomers with a fixed timetable associated with completing each stage in the transit ion from one role to another versus provid ing no consistent timetable and few cues as to when to expect the next stage

Tournament versus contest programs: programs treating each socialization stage as an "eliminat ion tournament" where failure means that a new hire is out of the organization (fired) versus a "contest" in which new hires build up a track record and "batting average" over t ime

Serial versus disjunctive programs: programs using experienced organizat ional members as role models or mentors who groom newcomers to follow in their footsteps versus providing no role models or mentors

Investiture versus divestiture programs: programs that take advantage of a new hire's unique skills versus trying to deny or strip away personal characteristics through socialization