HRM Lecture 2013/14

Lecture
Human Resource Management
Winter 2013/14

Prof. Dr. Dr.
Irina von Kempski

Human Resource Management WS
2013/14

1

Contents
1 Introducing human resource management
Defining human resource management
HRM and the achievement of organisational
effectiveness
Major themes in the HRM business
environment
Major themes in contemporary HRM practice
The state of the psychological contract
Prof. Dr. Dr.
Irina von Kempski

2013/14

2

2 Organising a workforce
Workforce organisation
Flexibility for organisational benefit
Work-life integration

Prof. Dr. Dr.
Irina von Kempski

2013/14

3

3 Recruitment and retention
Recruitment in a tight labour market
Methods of recruitment
Employer Branding
Staff turnover rates and trends
Staff retention strategies
Prof. Dr. Dr.
Irina von Kempski

2013/14

4

4 Selection
Selection as a two-way process
Selection criteria
Selection methods
Final selection decision making
Validity and use of selection methods
Prof. Dr. Dr.
Irina von Kempski

2013/14

5

5 Performance management
Introducing performance management
Stages in a performance management
system
Implementation and critique of performance
management
Evaluation of performance management
systems
Examples: MRA and 360-degree feedback
Prof. Dr. Dr.
Irina von Kempski

2013/14

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6 People development
The learning and development context
The value of learning and development to
organisations and
individuals
The line manager and learning and
development
The use of behavioural competencies in
learning and development
Methods of learning and development
Is e-learning the future of learning and
development?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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7 Reward management
Management objectives
Setting base pay
The elements of payment
Incentives
Benefits
Does performance-related pay work?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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8 Employee relations
Strategic choices
Employee involvement
Terminology
Information sharing
The role and future of trade unions and
employee representatives
Prof. Dr. Dr.
Irina von Kempski

2013/14

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9 Diversity in employment
What do we mean by diversity in
employment?
Why is diversity in employment
important?
Implications for line managers
Achieving sucessful diversity in
organisations
Managing diversity or emphasing
equality?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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10 Human Resource strategy
The nature of HR strategy and its
link with organisational
strategy
Theoretical perspectives of
strategic HRM
What are the people management
implications of downsizing?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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11 Leading people
Definitions of leadership and management
What are the traits of leaders and effective
leaders?
What is the ‚best way to lead‘?
Do leaders need different styles for different
situations?
Developing leadership skills
Do organisations need heroic or empowering
leaders?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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12 The HR contribution
The role of line managers in HR
Analysis of HR roles and
structures
Outsourcing HR
HR shared services – what‘s best
for line managers and
employees?
Prof. Dr. Dr.
Irina von Kempski

2013/14

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12 Managing people internationally
The HRM dimension to international
management
Different ways of working overseas
Managing an international workforce,
away or at home?

Prof. Dr. Dr.
Irina von Kempski

2013/14

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1. Introducing human resource management
Defining human resource management
The term ‘human resource management’ is not easy to
define.
It is used in two different ways.
•Generically to describe the body of management
activities
•Widely to denote a particular approach to the
management of people. That means a distinctive
philosophy towards carrying out people-oriented
organisational activities
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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The topics of human resource management have
been mentioned in the “Contents” and visualised by
the cycle discussed.
They can be grouped differently taking the role of
human resource management as point of view. Then
they are best explained by identifying the key
objectives to be achieved:
•Staffing objectives
•Performance objectives
•Change-management objectives
•Administration objectives
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Staffing objectives
Human resource managers (and line-managers) are
concerned with ensuring that the business is
appropriately staffed.
This involves different tasks:
•Designing organisational structures
•Identifying under what type of contract different
groups of employees should/will work
•Recruiting and retaining the best
•Development of employment packages
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Performance objectives
Human resource managers seek to ensure that people
are well motivated and committed so as to maximise
their performance in their different roles.
This involves different tasks:
•Training and development
•Reward systems
•Negotiations with employee representatives/trade
unions
•Welfare functions
•Employee involvement initiatives
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Change-management objectives
The third set of core objectives relates to the role
played by the HR function in effectively managing
change.
Change comes in different forms:
•Merely structural, requiring reorganisation
•Cultural change to alter attitudes, philosophies, norms
Both need special activities and special leadership to
drive the change process.

Prof. Dr. Dr.
von Kempski

Irina

2013/14

19

Administration objectives
The fourth type of objectives is focused on
underpinning the achievement of the other forms of
objectives. It is carried out in order to facilitate an
organisation’s smooth running.
This includes:
•Maintaining accurate and comprehensive data on
individual employees
•Record of their achievement, attendance, training,
terms and conditions of employment, personal details
•Ensuring that legal requirements (i. e. health, safety,
contracts, minimum pay, working time) are met
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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For covering all the different tasks, different
types of HR managers are needed and should
be in charge:
•Human resource generalists
•Human resource specialists
•Subcontractors
•Consultants and advisers
•Line managers
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Human resource management and the
achievement of organisational effectiveness
HR research has been dominated by study of links
between HR practice and organisational effectiveness:
Mainly it is discussed, how what happens in the HR
field impacts on an organisation’s ability to meet the
objectives. The objectives will vary depending on the
type of organisation and the situation.
•Achievement and maintenance of competitive
advantage, commercial success vis-à-vis principal
competitors
•Ensuring survival
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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• Meeting a service need as cost effectively as
possible (public and voluntary sector)
• A positive long-term corporate reputation
• Grow the customer base
• Achieving a high level of corporate ethics and
social responsibility
• Attract and retain a strong management team
• Planning for the future by having in place
effective succession planning
Prof. Dr. Dr.
von Kempski

Irina

2013/14

23

Major trends in the human resource business
environment
We are now entering the era of hyper-competition.
This is being driven by two major developments:
•Moves towards the globalisation of economic activity
on a scale that has not been experienced before.
Markets are becoming more and more international
with the effect that competition is becoming more and
more international too
•Technology moves forward. Development in i. e.
information technology, energy production, chemical
engineering are in process of revolutionising the way
many industries operate

Prof. Dr. Dr.
von Kempski

Irina

2013/14

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What does that mean for the HR manager?
•Practices have to be developed continually and
quality has to be improved
•Volatility and change is the norm, people in working
organisations have to be prepared accordingly
•Managing in international workforce effectively with all
aspects of human resource management: attract,
retain, develop and motivate people in an international
environment
Other major trends important for the HR function are
the labour market trends and the evaluation of
employment regulation
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Major themes in contemporary HRM practice
Before starting to introduce the various areas of
HRM activity, it is helpful to introduce some of the
broader underlying issues which are having a
significant impact in more general terms:
•Skills shortages
•Best practice versus best fit
•Ethics, regulatory compliance and competitive
advantage
•Sustainable flexibility
Prof. Dr. Dr.
von Kempski

Irina

2013/14

26

Skills shortages
Dominant feature of the current HRM environment in
Germany, UK and other countries is the combination
of increasingly competitive product markets with
increasingly tight labour markets.
Employers have to compete harder to recruit and
retain the staff they need. And highly competitive
markets for goods and services are putting a premium
on operational efficiency. Therefore organisations are
unable to compete for talent simply by paying people
more money.
This is not new, but new now is that the majority of
organisations are effected and the problem is long27
term rather than temporary.

Best practice versus best fit
The debate between best practice and best fit is both –
interesting and significant. Consequences are across
the field of HRM.
Basically the question is whether or not there is an
identifiable ‘best way’ of carrying out HR activities
which is universally applicable.
The best practice approach states that there are
certain HR practices and approaches to the operation
which will invariably help an organisation in achieving
competitive advantage.
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Following this approach there is a clear link between
HR activity and business performance, but the effect
will only be maximised if the ‘right’ HR policies are
pursued.
It is strongly suggested that the same basic bundle of
human resource practices or that a general human
resource management orientation tends to enhance
business performance in all organisations.
The main elements of the ‘best practice bundle’ are:
•More advanced selection methods
•Serious commitment to employee involvement
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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• Substantial investment in training and development
• Use of individualised reward systems
• Harmonised terms and conditions of employment
The ‘best fit’ approach is characterised by another way
of thinking.
There is no belief in the existence of universal
solutions. All is contingent on the particular
circumstances of each organisation. What is needed
is HR policies and practices which ‘fit’ and are thus
appropriate to the specific situation of individual
employers. What is appropriate (‘best’) for one will
not necessarily be right for another.
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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Key variables are:
•Size of the establishment
•Dominant product market strategy
•Nature of the relevant labour markets

Prof. Dr. Dr.
von Kempski

Irina

2013/14

31

Ethics, regulatory compliance and competitive
advantage
One element is part of an organisation to mange a
commitment on the relationship with its people
ethically and in accordance with the expectations of
the law.
This can be a quite costly aspiration:
•It tends to reduce flexibility due to the requirement for
lengthy procedures to be followed in cases of
dismissal, recruiting and managing performance
•It restricts the ability of managers to take decisions
purely in the interests of the organisation
Prof. Dr. Dr.
von Kempski

Irina

2013/14

32

The more employment regulation that is introduced,
the greater the number of situations in which dilemmas
have to be faced and decisions made about how to
proceed.
Sustainable flexibility
A contemporary issue in HRM is an apparent clash
between two very different organisational imperatives:
•Development of a capacity for flexibility to compete
effectively
•Approach to management which engenders high
levels of commitment to staff, particularly over the long
term
Prof. Dr. Dr.
von Kempski

Irina

2013/14

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The key is to focus on ‘mutual flexibility’ by which is
meant initiatives which increase an organisation’s
capacity to be flexible, but which also benefit
employees.
It might be provided by the so called ‘work-life
balance’.
An agenda has to be implemented accordingly,
providing employees with part-time working options,
flexible working hours, annual hours contracts and
temporary career breaks.
Another area of development is in multiskilling jobs.
Prof. Dr. Dr.
von Kempski

Irina

2013/14

34

Growing interest in the psychological contract
The term ‘psychological contract’ was coined in the
1960s, since two decades there has been significant
interest in it.
It is understood as a broad explanatory framework for
understanding employee-organisation linkages
because of
•The shift in focus in the employment relationship to an
individual
•The pace of change in product markets globally
Prof. Dr. Dr.
von Kempski

Irina

2013/14

35

HRM has emerged as a mechanism for
establishing the relationship between manager and
employee at an individual level. This individual
level focus is to which the psychological contract is
ideally suited.
What is the psychological contract?
The psychological contract is influenced by:
•HR practices: recruitment, training and reward
It leads to:
•Commitment, motivation and performance
Prof. Dr. Dr.
von Kempski

Irina

2013/14

36

The ‘old deal’ is: ‘job for life’.
The ‘new deal’ is: transactional, focused on
pay, swapping employee loyalty and
conformance for long hours and high
performance.
The ‘new deal’ has made significant inroads
into the employment relationship and has to
be discussed.
Prof. Dr. Dr.
von Kempski

Irina

2013/14

37

2 Organising a workforce
The traditional nine-to-five working day is in
decline. New flexible working time is required
and possible because of new flexible working
rights legislation.
Business is struggling with
•Skills shortages
•Increasing demands to provide a familyfriendly workplace
Prof. Dr. Dr.
Irina von Kempski

2013/14

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On the other hand the following
became the norm
•Redundancies
•Job insecurity
•Stress
•Long working hours
Therefore the HRM is confronted with
significant challenges.
Prof. Dr. Dr.
Irina von Kempski

2013/14

39

Workforce organisation
Changes in workforce organisation to meet the
need for workforce flexibility are required by the
employer as well as the employee.
Employers
•Provide less secure jobs
•Use ‘flexible’ workers
•Are enabled to greater control of workflow due to
new technology
•Require flexible working hours to extend capital
utilisation
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•Require ‘24/7’ service availability

Employees
•Fact is the increased labour force participation of
women
•Increasing number of women with childbearing
years
•Increase of single parent families
•Increase of dual career couples
•Demographic influences (ageing population in
western countries)
•Increasing demands for childcare and elder care
responsibilities
Prof. Dr. Dr.
Irina von Kempski

2013/14

41

Work organisation concerns the design of jobs and
working patterns in order to meet both
•Employer need for flexibility
•Employee need for flexibility
The impact is that work organisation is central to
the whole employment relationship.
Work organisation strongly influences
organisational performance.
Tight labour markets increasingly require
employers to accommodate employee demands
for flexibility in order to recruit and retain scare
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labour.
2013/14

Organising flexibility means taking into account
the approach of ‘work-life-balance’ or ‘work-lifeintegration’.
Part of the work organisation and flexibility
debate is both
•Demand-driven flexibility
•Supply-driven flexibility
Employee-driven flexibility is emerging and
becoming more and more critical for employers.
Prof. Dr. Dr.
Irina von Kempski

2013/14

43

Flexibility for organisational benefit
According to the ‘Model of the ‘flexible
firm’’ of Atkinson (1984) different forms
of flexibility are necessary
•Numerical flexibility
•Temporal flexibility
•Functional flexibility
Prof. Dr. Dr.
Irina von Kempski

2013/14

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Numerical flexibility
Numerical flexibility allows organisations to
respond quickly to the environmental changes in
terms of the numbers of people employed.
Traditional full-time posts are replaced by
•Short-term contract staff
•Staff with rolling contracts
•Outworkers
•Leasing personnel
By this workforce can be reduced or expanded
quickly and cheaply.
Prof. Dr. Dr.
Irina von Kempski

2013/14

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The workforce of an organisation consists of
•Core employees, who form the primary labour market.
They are highly regarded by the employer, well paid
and involved in those activities that are unique to the
firm or give a distinct character. These employees
have improved career prospects.
As peripheral groups
•Employees who have skills that are needed but not
specific to the particular firm. Organisations rely on the
external labour market for these posts. The employee
has a job but no career. The scope of these jobs is
limited.
Prof. Dr. Dr.
Irina von Kempski

2013/14

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• Employees with limited contracts of employment
(i. e. short-term, part-time, job sharers).
• Contracting-out the work by temporary
personnel from agencies (leasing), outsourcing
the entire operation, split of make and buy.
Temporal flexibility
Temporal flexibility concerns varying the pattern of
hours worked in order to respond to
• Business demands
• Employee needs
Prof. Dr. Dr.
Irina von Kempski

2013/14

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Temporal flexibility is crucial for organisations because
of
•Increase of opening hours in retailing
•Growth of the leisure sector
•Internationalisation/globalisation
•Increase of export
Temporal flexibility can be realised by
•Annual hours contracts
•Part-time work
•Job sharing
•Flexible working hours
Prof. Dr. Dr.
Irina von Kempski

2013/14

48

Functional flexibility
Functional flexibility refers to a process in which
employees gain the capacity to undertake a variety
of tasks (multifunctional worker). The approach
has been developed in Japan.
Advantages are
•Reduction of monotonous assembly-line work
•Increase of motivation
•Increased usage of working capacity of the
employee
•Employees are becoming multiskilled
Prof. Dr. Dr.
Irina von Kempski

2013/14

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That means
•Employees are kept busy throughout their working
day
•Absence is more easily covered
•Employees being more stretched, fulfilled and
productive
Organisations need to invest in training
significantly to achieve multi- functionality within
the workforce.
Prof. Dr. Dr.
Irina von Kempski

2013/14

50

Work-life integration
A number of high-profile organisations seek to position
themselves as ‘employer of choice’ by adopting such
as work-life integration policies.
Options for achieving work-life integration are
•Flexibility in terms of the number of hours worked
•Exact timing of hours worked
•Location at which the work is carried out
Work-life integration means different things to different
people, depending on their age, life circumstances,
values, interests, personality and so on
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Options for achieving work-life integration
•Part-time
•Flexitime
•Compressed work
•Annual hours
•Term-time work
•Job share
•Self-rostering
•Shift swapping
•Unpaid leave
•Sabbatical
•Work from home
•Informal flexibility

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Benefits of work-life integration
In some instances work-life integration practices lead to
•Raising moral
•Increasing level of job satisfaction
•Reduction of absence, esp. unplanned absence
•Positive impact on retention
•Positive impact on recruitment
•Positive impact on motivation
•Increasing level of performance
•Increasing effectivity
•Improve of productivity and quality
Prof. Dr. Dr.
Irina von Kempski

2013/14

53

Barriers to work-life integration
The demand for flexible work options is much greater
than the take-up (take-up-gap).
Reasons for that are
•Work-life integration strategies cost the company
money
•Difficulties in setting up teleworking at home
•Tight management and measurement of home-based
teleworkers is necessary
•Access to work-life balance is limited to certain
groups of employees
•Usage in a fire-fighting manner
•Limiting the career development
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•Management/managers

Manager’s role in work-life integration
Often line managers are those who will be the one
who decides whether or not work-life integration
becomes a reality because of their attitudes and
management practices.
The manager has to reconciling performance and
flexibility. They have to
•Be fair
•Make decisions on who might work flexibly in an
acceptable way
•Taking care of the company’s performance
Prof. Dr. Dr.
Irina von Kempski

2013/14

55

3 Recruitment and retention
In recent years the Western Europe economy has
experienced a strong period of economic growth
leading to the development of relatively tight labour
market conditions.
Recruitment and retention issues have moved to
the top of the HR agenda. Therefore more money
is being spent on these areas of activity, leading to
substantial growth in the recruitment industry.
Elsewhere in the world some of the largest
economies are experiencing historically
unprecedented rates of economic growth.
Prof. Dr. Dr.
Irina von Kempski

2013/14

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The Chinese economy is growing by appr. 11 per cent a
year, the Indian by appr. 7 per cent a year.
Skills shortages are the consequence, recruitment and
retention issues are rising to the top not only on the HR
agenda.
Contents of this chapter are
•Major contemporary developments in the field of
recruitment
•Different approaches that can be adopted
•Circumstances in which each is most appropriate to use
•How organisations address the need to retain their staff
•Policy prescriptions to reduce unwanted turnover
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Recruiting in a tight labour market
The Chartered Institute of Personnel and
Development did a survey of recruitment practice
and found out that the majority of companies are
experiencing recruitment difficulties, particularly
when it comes to finding appropriated
management and professional staff.
The employer is more and more required to ‘sell’
its jobs to potential employees so as to ensure that
it can generate an adequate pool of applicants.
Jobs have to be presented in an attractive way in
terms of
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• Rate of pay
• Likelihood of career development
• Quality of the employment experience
The recruitment process is not by any means
finished at the point at which a pool of applicants
has been received.
It continues through the shortlisting and
interviewing stages until an offer is made and
accepted.
The offered job has to be ‘sold’ to the applicants
but it is important to avoid overselling. This
would be an easy trap to fall into and
counterproductive. Resource Management WS
Prof. Dr. Dr.
Human
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Irina von Kempski

2013/14

A balance always has to be struck in recruitment
between putting over an attractive message to the
target labour market and ensuring that people are not
misled in any way about the what to expect if their
applications are accepted and a job offer made.
In case of vacancies the like-for-like recruitment is the
most obvious tactic. Appropriate may be also
•Reorganise the work
•Use overtime
•Mechanise the work
•Make the job part time
•Subcontract the work
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•Use an agency to supply a temporary worker

Methods of recruitment
Internal recruitment
Vacancies are often filled internally. Sometimes
organisations advertise all vacancies publicly
and consider internal candidates along with
anyone from outside of the organisation who
applies.
Management of internal recruitment practices is
difficult to carry out effectively and smoothly in
practice.
Prof. Dr. Dr.
Irina von Kempski

2013/14

61

External recruitment
Once an employer has decided that external
recruitment is necessary, a cost-effective and
appropriate method of recruitment must be
selected.
There are a number of distinct approaches to
choose from, each of which is more or less
appropriate in different circumstances.
Most employers use a wide variety of different
recruitment methods at different times.
Prof. Dr. Dr.
Irina von Kempski

2013/14

62

Usage of various methods of recruitment
•Advertisement in local press
•Corporate website
•Recruitment agencies
•Specialist journals and trade press
•Employee referral scheme
•Word of mouth
•Jobcentre
•National newspaper advertisements
•Apprentices work/work placements
•Search consultants
Prof. Dr. Dr.
Irina von Kempski

2013/14

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Methods of obtaining a job
•Hearing from someone who worked
there
•Reply to an advertisement
•Direct application
•Private employment agency
•Jobcentre
Prof. Dr. Dr.
Irina von Kempski

2013/14

64

Informal recruitment is not generally considered to
constitute good practice. This is because in using
the approach an organisation denies itself the
opportunity to select the best possible candidate
from the wide pool of applicants.
The approach is also strongly criticised on ethical
grounds because it has the effect of favouring
friends and relatives of existing employees.
When seeing purely from the perspective of the
employer seeking a good worker cheaply and
quickly, it is understandable that it is used
extensively.

65

There is plenty of research evidence
which suggests that informal recruits
are often stronger performers than
those who are recruited formally and
they are less likely to leave at an early
date too.

Prof. Dr. Dr.
Irina von Kempski

2013/14

66

Employer branding
In recent years considerable interest has developed in
the idea that employers have much to gain when
competing for staff borrowing techniques long used in
marketing goods and services to potential customers.
In particular, many organisations have sought to
position themselves as ‘employer of choice’ in their
labour markets with a view to attracting stronger
applications from potential employees.
Central is the development over time of a positive
‘brand image’ of the organisation as an employer.
Prof. Dr. Dr.
Irina von Kempski

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67

The ‘employer branding’ consists the
four p’s of the marketing mix
•Product
•Price
•Promotion
•Placement
adapted for recruitment and retention.
Prof. Dr. Dr.
Irina von Kempski

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68

Staff turnover rates and trends
The length of service is discussed extensively.
It is said that the ‘job for life’ is rare and long
term employment is decreasing.
Even if it depends on the specific situation in
the different countries job tenure in Western
Europe countries shows that more than 50 per
cent of employment ends before 5 years of
service are fulfilled. On the other hand nearly
25 per cent of the employees stay more than
12 years with their company.
Prof. Dr. Dr.
Irina von Kempski

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69

Reasons for staff turnover are
•Outside factors
•Functional turnover
•Push factors
•Pull factors

Prof. Dr. Dr.
Irina von Kempski

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Staff retention strategies
Organisations are more and more confronted with
resignations. The strategy against this trend are
staff retention strategies. They consist of
•Pay
•Managing expectations
•Induction
•Family-friendly HR practices
•Training and development
•Improving the quality of line management
Prof. Dr. Dr.
Irina von Kempski

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4 Selection
Recruitment, the attraction of candidates to apply
for a position, and selection, the decision over
which candidate to appoint to a position, are
typically line-manager responsibilities.
Thus it becomes increasingly critical for linemanagers to understand selection processes and
their role in them.
They have to understand
•The flaws in various selection methods
•The need to exercise subjective judgement within
an apparently objective process
Prof. Dr. Dr.
Irina von Kempski

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While the perfect method of selection still does not exist,
HR and line managers continue to use a variety of
imperfect methods to predict which applicant will
•Meet the demands of the job most successfully
•Be the best fit with the work group and culture of the
organisation
Poor selection and therefore an early termination is costly
due to
•Poor performance
•Additional training
•Demotivation of others
•High levels of absence
•At least more than € 7.000 as cost of filling a vacancy 73

Selection as a two-way process
The various stages of a selection process provide
information for decision by both the employer and
the potential employee.
Labour market shortages have promoted a
concern for the organisation’s image and the
treatment of applicants during the recruitment and
selection process.
The employer has to be concerned with
•The job to be done
•The work
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•The organisational context

Employees are influenced by
•The recruiter’s ability to supply adequate and
accurate information
•The way the recruiter managed interaction:
control of interaction, listening, ability to allow
candidates to present themselves effectively
Employers are influenced by the candidate’s
•Hard skills
•Soft skills
•Personality
Prof. Dr. Dr.
Irina von Kempski

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Selection criteria
Unless the criteria against which applicants will be
measured are made explicit, it is impossible to
make credible selection decisions.
It will be difficult to adopt the most appropriate
selection procedure and approach, and difficult to
validate the selection process.
Selection criteria are
•Person specification
•Competency-based criteria
Prof. Dr. Dr.
Irina von Kempski

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Selection methods
There are a wide range of selection methods. The
mechanics of each method is different, they are
differently effective and have a different ‘predictive
validity’.
The most popular selection methods are clearly
based around interviews and application forms,
with assessment centres and other forms of testing
also being used.
Overall more traditional methods as well as more
advanced methods are to be considered.
Prof. Dr. Dr.
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Traditional methods of selection
Often referred to as ‘the classical trio’, traditional
methods of selection comprise
•Application form
•Interview – face-to-face or telephone interviewing
o Structured
o Half-structured
o Unstructured
•References – factual check, character reference
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Irina von Kempski

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Advanced methods of selection
The increasing cost of selection, coupled with the
increasing recognition of the problems associated
with ‘the classical trio’, have led organisations to
consider more sophisticated methods of selection.
Some of them are
•Testing
o Aptitude/ability tests
o General intelligence tests
o Special aptitude tests
o Attainment/achievement tests
o Personality tests
79

• Group selection methods
o Group methods to provide evidence about
the candidate’s ability
− To get on with others,
− Influence others
− Express themselves verbally
− Think clearly and logical
− Argue from past experience and apply
themselves to a new problem
− Identify the type of role they play in
80
group situations

oAssessment centres
•Work sampling/portfolios
•Other methods
oGraphology
oBody language
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Irina von Kempski

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Validity and use of selection methods
Selection method and predictive validity
Selection method

Predictive validity

Usage %

Assessment centres
Structured interviews
Work samples

0.68

47

0.62

88

0.55

80

Ability tests
Personality
questionnaires

0.54

72

0.38

92

Unstructured interviews
References

0.31

92

0.13

45

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Irina von Kempski

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The different methods show different predictive validity
as a single used method.
Modern and advanced methods of selection achieve a
higher level of validity by combining different methods,
i. e. assessment centres.
If a company does not want to use advanced methods
of selection they might use a combination of a couple
of different traditional methods to come to more valid
results than using only one or two methods.
This is the approach of the modern model: multimethodical selection process.
Prof. Dr. Dr.
Irina von Kempski

2013/14

83

5 Performance management
The term ‘performance management’ is used in two
different ways:
1. To imply
organisational targets, frameworks like the
balanced scorecard, measurements and metrics,
with individual measures derived from these.
2. To align
the individual and the organisation, with the
developmental and
motivational approach
The focus in this chapter is on the second
understanding.
84

Introducing performance management
The idea of performance measurement is not new.
It exists since years and annual review of
objectives between manager and team member
has been revolved.
The traditional performance appraisal systems are
usually
•Centrally designed by specialists
•Backwards focused on historic performance
•Elaborating forms completed as a record of the
process (no “living” documents)
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Irina von Kempski

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In the last two decades the concept of performance
management has emerged to a system
•Future-oriented
•Strategically focussed
•Applied to all employees in an organisation
•Line-manager owned
The focus of performance management is
•To maximise current performance
•To maximise future potential
•A preoccupation which arises from the pressure of
globalisation
•To survive in an international marketplace
86

Defining performance management
Performance management can be defined as
proposed by Clark (2005):
“Establishing a framework in which performance by
human resources can be directed, monitored,
motivated and refined, and that links in the cycle can
be audited”, wherein performance means both
behaviour and results.
Therefore managing performance requires a focus on
•The outcomes, the ‘whats’
•The behaviours adopted, the ‘hows’
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Irina von Kempski

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Characteristics of performance management
systems
Performance management systems (PMS) are closely
tied into the objectives of the organisation, so that the
resulting performance is more likely to meet
organisational needs.
PMS is integrated with performance planning, which
links an individual’s objectives to business objectives.
The employees efforts are directed towards
organisational priorities.
The employee is enabled to be successful by
•Development plans
•Coaching
•Ongoing review
88

Performance has to be
•Assessed
•Rewarded if successful
•Reinforced
For a successful performance management goal
setting is key.
The theoretical base on goal setting includes two
aspects
•Goals are seen to provide motivation – this view is
based on goal setting theory originally developed
by Locke in 1968
•Individuals will be motivated to act provided they
expect to be able to achieve the goals set
89

Characteristics of performance management
systems
•Top-down link between business objectives and
individual objectives
•Line manager driven and owned rather than being
owned by the HR function
•A living document where performance and
development plans, support and ongoing review
are documented as work progresses, and prior to
annual review
•Performance is rewarded and reinforced
90

Stages in a performance management system
Definition of business role
Job description
- Objectives of department/group
-

Formal assessment and reward

Planning performance

Annual assessment
- Link to pay

- Individual objectives
- Development plans

-

Delivering and monitoring
- Ongoing manager support
- Ongoing review

91

Business mission, values, objectives and
competencies
Before it is possible to plan and manage individual
performance the organisation will have made
significant steps in identifying the performance
required of the organisation as a whole.
In most cases this will involve a mission statement
so that performance is seen within the context of
an overriding theme.
Many organisations will also identify core values of
the business and the key competencies required.
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Irina von Kempski

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Organisational objectives are particularly important, as
it is common for objectives contribute to their
achievement.
The objective-setting cascade
Board level
Functional level
Department level
Team level
Individual level
The direction of objectives cascading is top down, of
feedback going upwards.
Prof. Dr. Dr.
Irina von Kempski

2013/14

93

Planning performance: a shared view of
expected performance
Individual objectives derived from department or
team objectives and an agreed job description can
jointly devised by manager and employee and may
focus on outcomes or behaviours.
Objectives which are outcome/results oriented are
tightly defined and include measures to be
assessed.
The objectives are designed to stretch the
individual, and offer potential development as well
as meeting business needs.
94

Often organisations use the ‘SMART’ acronym for
describing individual objectives or targets.
S
–
specific
M
–
measurable
A
–
appropriate/achievable
R
–
relevant/realistic
T
–
timed
Moving staff to a different view of how their
personal objectives contribute to team and
organisational objectives is an important part of the
performance management.
95

The critical point about a shared view of
performance suggests the handing out a job
description or list of objectives to the employee is
not adequate.
Performance expectations need to be understood
and, where possible, to involve a contribution from
the employee.
That employees might achieve their goals,
necessary and imperative is the planning of
•Support
•Development/personal development plan
•Resources
96

Delivering and monitoring performance
The manager’s role is key in the performance
management. His role is to enable the employee
by i. e.
•Organising the resources
•Off-job training
•Being accessible
•Ongoing coaching
Sometimes the situation will demand that the
expected performance needs to be revised.
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Irina von Kempski

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Formal performance review/assessment
Regular formal reviews are needed to concentrate
on developmental issues and to motivate the
employee.
An annual review and assessment is needed, of
the extent to which objectives have been met. This
may well affect pay received.
Methods and instruments on which to base
performance review are
•Managers give an overall rating to staff at all
•Linking ratings with behavioural at work
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Irina von Kempski

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98

Reward
Performance management may have a
number of aims, the most common are
•Developmental (training, employee growth)
•Judgemental (pay, promotion)
The functioning of rewards depends on the
question if employees motivation is intrinsic
or extrinsic triggered.
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Irina von Kempski

2013/14

99

360-degree feedback
A special kind of performance measurement
is the 360-degree feedback. It is a all-round
feedback given by the stakeholders of the
employee concerned.
The stakeholders are
•Supervisor/manager (= higher level)
•Colleagues (= equal level)
•Customers (= equal level)
•Team-members (= lower level)
100

The formal process is a survey using a carefully
constructed questionnaire of all the contributors of
feedback.
The questionnaire has to answer on certain
requirements. Each question
•Has to be relevant to the recipient’s job
•Should be concise
•Should be used to measure a particular
competency
•Should set standards
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Irina von Kempski

2013/14

101

6 People development
Remedying skills deficiencies requires that both
organisations and individuals commit themselves
to people development, yet this has often been a
neglected area.
Therefore the value that employee development
has for employers and individuals to be explored.
The focus is on
•The line managers role
•Competencies in people development
•Specific development methods and e-learning

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The value of learning and development to
organisations and individuals
The problem with people development is that it is
very difficult to provide compelling evidence that it
really does improve performance and provide a
clear business benefit.
Supporters claim that it improves recruitment,
motivation and retention; enhances individuals’
skills, knowledge and attitudes appropriate for the
job they are doing to enable them to do it better;
and prepares employees to take on different and
sometimes higher-level roles in the organisation. 103

Learning and development can bee seen as an
investment in improving business performance.
In a more general sense the pace of change in
business today means that there is a constant
need for new skills to be developed in order for the
organisation to remain competitive.
Continuous development is a key part of
enhancing the value of the employee capital in any
organisation and this is generally seen as the way
in which organisations gain competitive advantage.
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Irina von Kempski

2013/14

104

In the everyday business problems are associated
with development activities.
•People may require time off the job
•Costs of internal learning
•Costs of external learning
•Costs of development specialists, courses and
materials
•Employees might be provided with skills and
qualifications they need to get a better job
elsewhere
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Irina von Kempski

2013/14

105

Learning and development has changed during the
last decades.
In the past the focus was on instructor-led training,
with an emphasis on trainers identifying the
content of what is delivered to learners.
The modern approach to learning and
development is to implement self-directed
development with the emphasis on integrating
learning with job tasks.
So it becomes highly relevant to the job and job
performance.
This involves learners and their managers taking
the lead and identifying what they need to learn.
106

The line manager and learning and development
As the focus of learning and development has shifted
from the development specialist or the HR-function to
the line manager and from the trainer to the learner,
the importance of learning on the job has risen.
The role of the line manager becomes critical as they
work with an individual
•To determine the learning needs
•To agree on the best ways to meet the needs
•To support and enable the application of skills
learned
•To provide ongoing feedback, guidance, coaching
and review
107

Line managers are also increasingly responsible
for their group’s learning and development budget.
The line manager has a coaching role too.
Coaching is an informal approach to individual
development based on a close relationship
between the individual and one other person,
internal or external.
The coach is often the immediate manager, who
experienced in the task, and as a coach helps the
learner to develop by giving them the opportunity
to perform an increasing range of tasks, and by
helping them to learn from their experience.
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They work to improve the learner’s performance by
• Asking searching questions
• Actively listening
• Discussion
• Encouragement
• Understanding
• Counselling
• Providing (‘inside’) information
• Providing honest feedback
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Irina von Kempski

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109

Boundaries to the manager’s coaching role:
•The extent to which the manager takes a
counselling role (when does it become more
personal)
•Enhancing of the relationship between the line
manager coach and the individual
•Adopting different (managerial)
styles/behaviour at times
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Irina von Kempski

2013/14

110

Methods of learning and
development
Off-job methods
•Education
•Training courses
•

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Irina von Kempski

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Learning on the job
•Coaching (manager’s coaching, other coaching
internal or external)
•Mentoring
•Peer relationships
•Self-development
•Self-development groups
•Learning logs
•Learning contracts
•E-learning
•
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Irina von Kempski

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People development is not only important
for company’s developments it can also
contribute to (organisational) change.
In such a process the role of leaders is key.
They can plan and manage change by
giving the right process and the right tools to
use.
The tools and processes have to be defined
by focussing on the following stages:
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Irina von Kempski

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•
•
•
•
•

Identify the need for change
Define the company’s current state
Envisage the future desired state
Identify the gap
Diagnose capacity for change including barriers
and how they can be overcome
• Plan actions and behaviours needed to close the
gap
This list of stages is by principle applicable for any
development task and not only for change
management processes.
114

7 Reward management
Reward is central to the employment relationship.
Most of the employees work mainly because it is
their only means of earning the money they need
to sustain them and their families in the style to
which they are accustomed.
How much employees are paid and in what form
therefore matters hugely to them.
It helps determine which jobs people choose to do,
which employers they seek work with and, to a
significant extent, how much effort they put into
their work.
Prof. Dr. Dr.
von Kempski

Irina

2013/14

115

Effective reward management is therefore
very important for employers.
Getting it wrong makes recruiting and
retaining good people much harder,
demotivation can easily arise.
Pay also matters to the employer because
money spent on salaries, benefits and other
forms of reward typically amounts to well
over half an organisation’s total costs.
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von Kempski

Irina

2013/14

116

There are two central questions that employers should
ask when determining the approach they intend to
take in managing reward:
•What principals should the company use to
determine how much each person in the organisation
should be paid?
•What form should the reward package the company
offers take?
This is not an area of HR activity in which ‘best
practice’ is readily identified.
It is necessary for managers to devise distinct reward
strategies which are tailored to meet the needs of their
circumstances and the expectations of the people,
117
employees and applicants.

What kind of payment system the company choose is one
of the most difficult decisions to take. Manager’s thinking
has to start about what objectives should be achieved.
These are likely to include the following:
•To minimise expenditure on wages and salaries over the
long term
•To attract and retain staff of the desired calibre,
experience and qualifications
•To motivate the workforce so as to maximise
organisational performance
•To direct effort and enthusiasm in specific directions and
to encourage particular types of employees behaviour
•To underpin and facilitate the manager of organisational
change
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von Kempski

Irina

2013/14

118

There is no one payment system or form of
incentive that can achieve all of the
objectives for all groups of staff in an
organisation.
Total pay includes normally three
components:
•Base pay
•Incentives/variable pay
•Benefits
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von Kempski

Irina

2013/14

119

Setting base pay
One of the most important decisions in the
development of reward strategies concerns the
mechanism or mechanisms that will be used to
determine the basic rate of pay for different jobs in
the organisation.
Base pay can be designed in accordance to
•External market comparisons/external relativities
(‘the going rate’)
•Internal labour market mechanisms/internal
differentials (pay of fellow employees)
•Job evaluation (size and significance)
•Collective bargaining
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von Kempski

Irina

2013/14

120

Incentives/variable pay
One of the most fundamental questions is whether
or not the company wants to use an incentive
payment system at all.
The major types of incentive payment systems are
•Payment by results
•Performance-related pay
•Skills-based pay
•Profit sharing with cash-based schemes (bonus
on annual profits) and share-based schemes
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von Kempski

Irina

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Benefits
Benefits or ‘fringe benefits’ include additional
perks, allowances and entitlements mostly paid
in kind rather than in cash.
Often benefits are provided as
•Occupational pensions (defined benefit
schemes, defined contribution schemes)
•Flexible benefits/cafeteria plans
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von Kempski

Irina

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122

Performance-related payment
Performance-related payment is
difficult to implement but it is possible.
It is one of a range of tools that have a
useful if limited role to play in some
situations.

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Irina

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The following conditions are favourable:
•Where individual performance can objectively and
meaningful be measured
•Where individuals are in a position to control the
outcomes of their work
•Where close team-working or corporation with others
is not central to successful job performance
•Where there is an individualistic organisational
culture
Nowadays companies implement performancerelated pay even if these conditions are not or only
partially given.
The different components should be part of a
124
strategic rewarding.

Strategic reward

(Torrington, D. et al., 2009, p. 171)

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Irina

2013/14

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