7OUTSOURCE

Using relevant academic literature on Human Resource Management, you have read so far; prepare a critical review of any two topics given below. You will have ti study the execution of these functions in an organization/workplace.

a) Equal Employment Opportunity
b) Personnel selection
c) Career Development
d) Payment and Reward
e) Occupational health and safety
f) Employment relations

You are expected to give relevant organizational examples.

• Personnel selection
• Payment and Reward

Personnel Selection

Introduction

Once you have completed application forms and all stuffs regarding this matter, the next step is to select the best person for the job. In most organizations & firms, this means whittling down the application pool by using the screening tools mentioned in this topic like tests, assessment centres, and background and reference checks. The prospective supervisor can then interview a handful of viable candidates and decide who will be hired. Recruitment and selection allow management to determine and gradually modify the behavioural characteristics and competences of the workforce. The fashion for team working, for example, has focused on people with a preference for working with others as opposed to the individualist ’stars’ preferred by recruiters in the 1980’s. Attention has switched from rigid lists of skills and abilities to broader-based competences. In general - as we noted in the previous section - there is greater regard for personal flexibility and adaptability - a reorientation from present to future stability.

Definition:

The recruitment and selection process is concerned with identifying, attracting and choosing suitable people to meet an organization’s human resource requirements. They are integrated activities, and ‘where recruitment stops and selection begins is a moot point’. Nevertheless, it is useful to try to differentiate between ‘building a roster of potentially qualified applications’, as opposed to the ‘negative’ process of selection. So a useful definition of recruitment is ‘searching for and obtaining potential job candidates in sufficient numbers and quality so that the organization can select the most appropriate people to fill its job needs’;whereas selection is concerned more with ‘predicting which candidates will make the most appropriate contribution to the organisation - now and in the future’

Advantages

Employee selection is important for following three reasons.

Performance
First, your performance and that of your organization depends in part on your employees. Employees who haven’t got the right skills or who are abrasive or obstructionist won’t perform effectively, and your performance in turn will suffer. The time to screen out unsuitable candidates is before they are employed-during the recruitment and selection process.

Cost
Second, effective screening is important because it’s costly to recruit and hire employees.

For examples, NRMA estimated that it cost $48,000 to replace a manager, $29,000 to replace a senior officer and $21,000 to replace specialist. The minimum cost of any replacement was $12,000

Legal implications and negligent hiring
Good selection is also important because of the legal implication of ineffective or incompetent selection

The equal employment legislation guidelines and court decisions require you to evaluate systematically the effectiveness of your selection process to ensure that you are not unfairly discriminating against minorities, women, the elderly or the handicapped

The recent increase in negligent hiring cases underscores the need for employers to think through carefully what the human requirement really are when conducting a job analysis and to ensure that thorough references checking occurs. Specifically, ‘Negligent hiring litigation point out that ability to do the job is interpreted beyond the types of information typically collected in a job analysis.’

Targeting

Competition for the ‘best’ graduates requires employers to have a clear idea of what they mean by ‘best’. Recruitment needs to send a strong, distinctive message to these people.

Researching Candidates

This section looks at the early stages of the selection process - often called pre-selection. The recruitment campaign should have attracted a pool of applicants from which selectors can make their choice. If a job analysis has been conducted, the criteria or competences which are deemed necessary have been identified. These may be well defined and focused on experience and skills, as in the ‘right person’ approach; or general and related to education, intellect and personality for the ‘cultural fit’ and ‘flexible person’ models. (…)

Application letters and CVs/resumes
Employer can choose they employee who is perfect for their objective to be achieved. They can choose one or more employee from the application letters or CVs which they have received.

These are typically used for initial or speculative applications. There are significant cultural differences between different cultures in the way these are prepared. Applicants should be careful to use the style expected in the recruiters’ country. For example, recruiters in France typically expect short, factual education and career histories. They tend not to want the hobbies or sports interests which also feature in applications from job-seekers in the UK, USA and other countries influenced by the British tradition. Some countries use photographs at this stage; others are concerned about the equal opportunity implications and discourage this practice.

After going through Application letters and CVs they can interview to find out who is perfect and will give them best output.

Interviewing
The interview is a social ritual which is expected by all participants, including applicants. It is such a ‘normal’ feature of filling vacancies that candidates for a job would be extremely surprised not to be interviewed at least once.

1. Informal Interviews
Many employers invite applicants for informal interviews prior to the main selection procedure. These interviews are useful for information exchange, particularly in the case of professionals. They provide an opportunity to discuss the full nature of the job, the working environment, prospects for further development and promotion. There seems to be some ambiguity as to whether informal interviews should be used as part of the pre-selection process by the employer rather than self-selection by the candidate. The crux of the issue depends on what interviewees have been told. If they have been led to believe that it is a truly informal information session they will not consider the process to be fair if they are subsequently told that they have not been short listed as a result.

2. Formal Interviews
Despite the existence of alternative methods of selection most employers regard the formal selection interview as the most important source of evidence in making the final decision. A selection interview can be neatly defined as a conversation with a purpose, but not infrequently the purpose is obscure to the point of invisibility. More often than not, pointless chat would be nearer the mark. The interview has attracted severe criticism for a very long time - being attacked on the grounds of its subjective nature, questionable validity and unreliability.

Conclusion
In the global era, with extraordinary, competitive and unbelievable competition, personal selection of employees plays an important role for the company, firms and organization.
To achieve success, it is important for every company to choose perfect employee suitable to achieve their success. It is also acceptable in some cases that there is shortage of particular types of employees in some fields. So for those firms, there is totally different situation in comparison to those firms who can get employees very easily. It those companies failed to choose perfect employee with extraordinary skills or choose wrong employee for their target than it costs them in millions & billions dollars.
E.g. Aircraft manufacturing companies. Like Boaing etc…..

In free market countries, the personnel profession has adopted a ‘best practice’ model which fits the prevailing business ideology. This model prescribes a quest for the ‘right (best) person for the job’. To achieve this goal, criteria are used to rate prospective applicants by means of selection techniques, including biographical data, interviews, psychometric tests, group exercises, simulated work samples and even handwriting analysis. The most definitive form of selection is likely to take place within the context of assessment centres, which involve several assessors and a variety of selection techniques. The ‘best-person’ or psychometric model has achieved the status of orthodoxy in free market countries. Elsewhere different models of resourcing apply. For example, in Japan there is a greater concern with personality and background than presumed ability. Recruits are sought who will ‘fit in’ with the culture of the corporation; who will be content to build a career within the organization; who will absorb the goals of the organization.

Payment and Reward

Introduction

There is no doubt that motivation is the crux for good performance

Money is a factor in motivating people and this section concentrates on this. Reward systems are discussed in general and later in specifics in terms of payment by results. Various schemes for financial motivation are also described.

Definition: The amount of money which is given by employer to employee in order to fulfil the requirement of service by employer or company.
Money is important!

This is, perhaps, saying the obvious. But it still needs to be said, for a perusal of the previous section may give the impression to the contrary, at least judging from Maslow’s concept. Refreshing as it is, if the theory was completely valid then, at least in affluent countries, economic incentives should have lost all their force. This, we know is not correct.

There is no doubt that we live in a money-motivated world. Any amount of human relations cannot compensate for a lack of monetary reward. If the reward is right, good human relations will give that extra zest to a team, motivating them to give of their best efforts. Insufficient monetary reward cannot be compensated by good human relations.

It is no different in the industrial world. Strikes for better salary and rewards do still occur. All this despite the claim of psychologists that security is the prime need of a person, as indicated in the previous section. Has the sense of values changed with time? But we are not concerned here with the philosophical angle, but with hard facts of life in a commercial world.

Motivation

The five basic elements of executive compensation are:
• salary,
• short-term incentives,
• long-term incentives,
• employee benefits and
• Perquisites.

We discuss this subject separately, since there is an indication from various surveys (see previous section) that the blue-collar and white-collar workers do not attach the same importance to financial incentives. This is probably more due to differing value system of the two, rather than the importance each attaches to the money per se.

Properly used, money can be a motivating factor, but little money may have no effect. To achieve motivation of executives, therefore:

• reward should be meaningful; and
• reward should vary with performance.
• The concept is simple, but its implementation is not easy. However, the job is well worth trying. To be effective, the reward should be ‘tailored’ to each individual, but only as part of the total compensation concept. It is essential (Moore (1968)) to develop an overall program within which each compensation package must be individualized.
Any plan for executives should take into account the following factors:
• Executives perceive others as working less and paid more.
• Appearance of a reward as important a factor as the reward itself.
• Flexibility, but not at the expense of discretion.
• Performance rating should support the pay action.
• Correcting one inequity may lead to yet another.
• A decision once announced is difficult to modify.
• An arithmetic increase in the number of people involved results in a geometric increase in the time required to reach agreement.

Motivating for high performance can cost a lot of money. Not everyone can be motivated by money alone, however much. Incentive pay plans should be designed (Ivancevich (1983)) not only to reward good performance but also to minimize the negative side-effects, such as conflict and grievance. At times it is difficult to develop a valid, equitable and acceptable means of performance. Many pay plans fail because of either not being suited to the particular situation or because of poor implementation. It is essential to consider the following aspects before designing a pay plan to motivate performance:
• preference of individual employees;
• size of pay rewards for high performance;
• method of motivating individual job performance;

We have pointed out earlier that for effective and sustained motivation, the reward must be prompt and immediate. The example of Foxboro has been quoted. In its early days, the company’s very survival depended on technical innovation. Late one evening (Peters & Waterman (1982)) a scientist walked into the president’s office with a working prototype. The president was dumbfounded by the elegance of the solution and sought to reward him immediately and on the spot. Rummaging through the drawers of his desk, all he could find was a banana and this had to suffice. This was the forerunner of the ‘gold banana’ concept, a very apt and fitting reward. Likewise, Thomas Watson Snr. had made a practice of writing out a check on the spot for any unusual achievement that he observed.

Executive pay - a caution

However, we must introduce a note of caution. There is a connection between executive pay and company size, in terms of turnover or number of employees, but no connection between executive pay and improvement in profitability - the bigger the company, the higher the pay, but efficiency is not necessarily higher. The higher salary is probably because of a larger number of levels in big companies. Of course, with the large number of variables involved, it is difficult to correlate any two isolated factors, such as executive pay and overall company efficiency.

Performance related pay

Reward can act as the ‘catalyst’ for improved performance and better productivity. But reward, as such, is not enough and in any case it is not a substitute for good management. Rather, it is a part of management. Certain basic criteria are essential for rewards to be effective. These include:
• Reward should be quick.
• Reward should be significant.
• The goals and rewards must be; known, understandable; and attainable.
• Reward must be distinctly and directly related to performance.
• Reward should be irrevocable.
• Reward should be compatible with job measurement.

If the reward plan is seen to be unfair and unrealistic, for example promotion on the basis of seniority or favoritism, it may have a definitely negative effect as a motivator. For rewards to be effective, they have to be generous and significant as noted above, hence they must be structured to attain a proper balance of motivating people to purpose and at optimum effort.
Rewards are generally reckoned to improve productivity by somewhere of the order of 20 to 30 per cent. This is nearly twice as much as that attained by goal-setting or job-redesign. But each incentive or reward system is likely to have value under certain conditions only. Hence to be effective, the rewards must be ‘tailored’ and changed to suit the specific conditions. There is no magic formula for all situations and at all times.

Reward systems

The financial rewards are basically of three types:
1. profit sharing;
2. job evaluation; and
3. merit rating.

Profit sharing

Profit sharing could be on a macro basis or on a micro basis. The former relates to the entire company as a whole and the latter to a particular section or group dealing with a particular activity and/or product. On a macro level, it would be difficult to identify and reward outstanding performance. This is possible on a micro level by treating the particular activity as a cost and profit center by itself. This is easier said than done, since overheads and other common services have to be charged and this cannot be done completely objectively. The cost allocation in such cases is somewhat arbitrary and the profit will therefore not be a true reflection of the performance of that particular group or activity.

Job evaluation

In case of job evaluation, the various component factors have to be isolated and evaluated for purposes of inter-job comparison. Each factor is assigned a rating on the basis of a scale agreed beforehand by the union and the management joint committee. The total rating for each job then forms the basis of wage structure. However, there must be a base level, representing, in effect, the ‘minimum wage’, depending on the nature of work and the geographical area. In some cases and in some countries these are stipulated by law. A typical, though somewhat broad, list of job factors is as follows:
• working environment;
• physical characteristics;
• mental characteristics;
• extent of responsibility;
• training and experience.

In case of managers, the factors are:
• responsibility;
• expertise;
• human relations.

Merit rating

Merit rating has been used as an indicator of performance. Each employee is rated, typically as excellent, good, average or poor, in respect of the following abilities:
• communication;
• human relations, including leadership and motivation;
• intelligence;
• judgment;
• knowledge.
The rating, unfortunately, tends to be carried out purely mechanically and it carries a heavy bias of the rater who may be too lenient, may not be objective and may also have favorites or otherwise in the group being rated.

Payment by results

One of the earliest and best examples of this is the Rucker and Scanlon plans introduced in the USA in the depression of the 1930s. Joseph Scanlon was a union officer in the Penn Steel Mill which, as a result of the depression, was on the brink of extinction.

The aim of the plan was to reduce waste and increase efficiency with consequent increase of productivity and profits. The savings and surplus resulting from implementation of the suggestions of the group are shared.

Methods of payment by results following:
• time saved;
• piecework;
• daily work measurement;
• productivity index;
• Added value.

In each case, the savings or increased production are quantified in monetary terms and sought to be shared amongst the concerned people. Earlier schemes were based on individual effort which could be appropriately rewarded. However, modern technology and production methods are quite often based on a team approach, hence new schemes for payment by results have to be tried and implemented, if found effective. In this case individuals do not get rewarded as a result of their own effort and it is the group performance which counts. This requires a change of attitude of the workers, as also of the management.

Conclusions

Money is certainly a motivator and a major one at that. Success of companies such as of Microsoft, IBM and other such tech companies is certainly, at least to some extent, a result of such motivation. There are, of course, other factors particularly job satisfaction as shown in the previous section.

Rewarding employees financially does improve levels of employee motivation and thus improves productivity, which ultimately shows up in the ‘bottom line’, and part of the increased profits must be circulated back to the workforce responsible for it.

Some of the schemes for reward systems and payment by results have are briefly discussed. The novel Glacier project and the Scanlon plan are briefly described. There is no such thing as the ‘best scheme’. It must be formulated and ‘tailored’ to each specific case.

According to this, wages should be related to the responsibility involved and this in turn depends on the discretionary elements. There are techniques for measuring the time-span for discretion for different types of work and formulated a scale of equitable earnings for a labour, machine operator, supervisor and engineer.

Which scheme is best?
There is no such scheme! Each situation must be studied in depth and a suitable scheme ‘tailored’ for the specific situation. Also important is the history and culture of the organisation concerned.

Reference

1. A Handbook of HUMAN RESOURCE MANAGEMENT Michael Armstrong, 8th edition, 2003
2. Human Resource Management Gary Dessler, 9th edition, 2003
3. Personnel Management A comprehensive Guide to theory and Practice
Stephen Bach and Keith Sisson, 3rd edition, 2003