Human Resource discussion question

“BEGIN WITH THE END IN MIND”

(Steven Covey: Seven Habits…)

Outcome variables for Human

Resource Systems

Chris J. Berger

1/15/2015

HUMAN RESOURCE

MANAGEMENT*

ORGANIZATION & ENVIRONMENT

HR SYSTEM (HR affects INDIVIDUALS…. ALL individuals in Org.)

ORGANIZATIONAL EFFECTIVENESS (The Ends we Want to Achieve for all Stakeholders)

OUTCOMES EXIST AT

MULTIPLE LEVELS*

 Organization

 Work Unit

 Individual and Small Group

ORGANIZATIONAL

EFFECTIVENESS*all*

 Survival

 Adaptation to Change

 Growth

 Productivity

 Profit (And ultimately market value of the firm: Stock Price; IPO; Acquisition; etc.)

WHAT IS ORGANIZATIONAL

EFFECTIVENESS?

 Stockholders

 Stakeholders

Survival

 Organizations Routinely Fail

 Many Threats to Survival Exist

 When Survival is Threatened, Coping

with the Threat is The Dominant Task

Adaptation to Change

 Consumer Preference

 Product Technology

 Production Technology

Growth

 Growth Leads to “Economies of Scale”*

 Growth Increases Shareholder Value

 The Opportunity to Grow is Not Always

Available

Growth

 Growth Increases the Size of the

Organization (Number of Employees)*

 Problems

 Solutions

Productivity*

 Multiple Measures of Productivity

 Appropriate Measures Depend on How

the Firm Intends to Compete

 Operations Strategy (primary and

secondary)

ORGANIZATIONAL

EFFECTIVENESS

THE ULTIMATE GOAL OF ALL

FUNCTIONAL AREAS OF THE

ORGANIZATION

WORK UNIT OUTCOMES

What is a “Work Unit”?

- Depends on the Organization

- Depends on our Purpose or Problem

Units Within Corporations Human Resources Most Frequently Functions at the Corporate &

Plant Levels

 Corporation (GM)  N = 90,000

 Division (product) within Corp. (Allison … no more!, Chev.Cad. Buick, GMC, GMAC, GM Europe, etc.)

 Function in Division

 Plants in Division

 Areas in Plant (e.g. chassis, paint, interior, testing, etc.)

 Groups in Areas

 Employees

 Corporation (MWMP)  N = 500

 Plants (5)

 Employees

Work Unit Effectiveness* [For Strategic Business Unit (specific product/service) or Facility]

 Price  unit cost and selling price

 Availability  Delivery Reliability

 Delivery Speed

 Customization  Design

 Manufacturing flexibility

 Quality  Compliance/conformance to standard

 Service

Work Unit or Operations

Strategy*

 The critical idea is the the firm

(Business Unit) will try to be

 1)The Best on

 2) “Good Enough” on

INDIVIDUAL LEVEL

OUTCOMES

 Job Satisfaction

 Firm Attraction

 Job Choice

 Turnover

 Job Performance

 Other

JOB SATISFACTION*

 Why Job Satisfaction is Important?

 Job Satisfaction Defined

 Dimensions of Job Satisfaction

Job Satisfaction is Important

 To the Individual*

 This is the person’s evaluation of the rewards they receive from working in their organization.

Individuals differ in what they value (or want).

 Predicts voluntary turnover, vote for union,

commitment to the organization

Job Satisfaction is Important

 To the Organization*

 Job satisfaction is a primary tool for assessing how well the organization’s rewards are functioning (or how they might be improved)

 Job satisfaction is systematically measured and monitored by employee surveys in well managed organizations (L.T. $1/person online)

Job Satisfaction Defined*

 Job Satisfaction is the pleasurable

emotional state resulting from attaining

valued work outcomes or rewards.

 Satisfaction is continuous:

 Dissatisfaction (failure to attain valued outcomes) UNPLEASANT

 Neutral INDIFFERENT

 Satisfaction (attains high levels of valued outcomes) PLEASANT

Dimensions of Job

Satisfaction (List of Rewards*)

 Pay Satisfaction*

 Cash Compensation

 Employee Benefits

 Employment Security

 Base Pay, Bonuses, Raises, etc

 Medical, retirement, life

insurance, Payment for time not

worked, etc.

 Job and income security

Dimensions of Job

Satisfaction

 Promotion & Career

Development Sat.*

 Opportunity for Promotion

 Fair Promotion Policy

 Free from overt bias

 Based on required KSA’s and past performance

 Free of discrimination based

on SNORRC

 Career development

 Assessment (strengths and

weaknesses

 KSA acquisition

Job Satisfaction Dimensions

 Coworker (Peer) Satisfaction*

 Competent at job

 Interpersonally pleasant; Likable

 Satisfaction w/Manager or Supervisor*

 Competent at job “Initiating Structure”

 Interpersonally pleasant; Likable

“Consideration”

Job Satisfaction Dimensions

 Satisfaction with Work Itself*

 Complexity of work relative to individual’s preferences and KSA’s

 Satisfaction with Organization*

 Characteristics such as location,

reputation, industry, etc.

Initial Attraction to the

Organization*

 Depends on the applicants perception of the

organization

 What information do applicants have?

 How does getting more applicants help the

organization?

 “Elimination By Aspects” or “Normative” decision models commonly used by prospective applicants

Job Choice

 Once the Organization Makes an Offer, the

Individual must Decide whether or not to

Accept the Offer. (more on j.c. later)

 Choice is a comparison of alternatives (offer-1,

offer-2, …..offer-N,Continued Search)

 Multi-Attribute Utility model most often used.

 What information might the individual have?

Want?

 How can the organization influence the choice?

Turnover*

 Employment Relationship is Severed

 Involuntary Turnover  Individual fired or laid off

 Often a selection problem (low KSA’s)

 Often a Rewards problem (low motivation to perform)

 Voluntary Turnover  Individual decides to leave

 Voluntary turnover is a form of job choice, based on best “package” of rewards.

Is Turnover Good or Bad?

Utility = 1 - 2 - 3*

 1. Productivity of Replacement - Leaver.

 2. Employment Cost (cash & benefits)

of Replacement - Leaver

 3. Transaction Costs

Job Performance

 Job Performance Defined*

 Definition:The degree to which the individual

successfully accomplishes the Tasks, Duties and

Responsibilities of the job.

Job Performance*

 Job Performance Determined (or caused) by

 JP = KSAs x Motivation to Perform

 If you want to increase Job Performance, you

must increase KSA _______ Motivation

 AND ?

 OR ?

Why does it matter?

How does the org. Affect KSA and Motivation?

What does HR do to Increase

KSA’s?

 Recruit many applicants with high

KSA’s

 Select individuals with the highest

KSA’s

 Train individuals to increase their KSA’s

What does HR do to Increase

Motivation to Perform?

 Pay for Performance

 Career Development

 Promotion of best performers

 Teams (Reward members for JP)

 Attract People who value rewards the

firm offers. WHY?

Job Performance**

 Job Performance and Organizational

Effectiveness

3. O.E. =  Unit Effectiveness

2. U.E. =  Individual Job Performance

1. JP = KSA x Motivation to Perform

Always Remember & Never

Forget*….. :o)

 1. The outcomes we are trying to

achieve exist at multiple levels (I; U; O)

 2. The aggregation (sum) of individual

outcomes = Unit Effectiveness

 3. The Sum of all Unit Effectiveness =

Organization Effectiveness

Always Remember & Never

Forget*….. :o)

 4. The Human Resource “Unit” (function) must affect individual’s attitudes and behaviors, but must affect All Individuals in

the organization to be successful. We would

measure the effectiveness of the HR System

on that basis.