MID TERM EXAM

BUS 502 HUMAN RESOURCE MANSGEMENT

SPRING 2015

Tanzir Rifat KhanId: 20884

QUESTIONS I (20% Points):

Suppose that you are currently the Human Resource (HR) Manager of a hypothetical company Hugo, Inc. Explain the strategic management process in your part of Human Resource Managerwith practical examples based on the framework of human resource management - ARDM

The process of developing a strategic human resources management (HRM) plan allows businesses of any size to better understand the human resources available to them, determine what human resources they will need, decide how to best use the human resources at their disposal, and develop a system to ensure human resources needs are sufficiently covered.1. Identify both opportunities and problems that can affect your HRM plan. Consider the business environment, upcoming projects, potential drops in revenue, and anything else that may affect how many employees you’ll need and be able to hire.2. Consider your current and future demand for human resources. Look at the quantity of employees you will need as well as the job functions they’ll have to perform. Finding a concrete number is nearly impossible, but estimating projected human resource needs will help you create a more effective HRM plan.  If necessary, provide online training opportunities to ready employees to step into positions with more responsibility.3. Analyze the human resources you have available. Look at the strengths and skills of current employees, as well as their weaknesses. This will help you to better place each employee in a position to achieve their best and avoid problems that might arise when an employee is put into a position for which he has no aptitude. Consider your business environment, space and company culture as well to see how you can best use all of the available resources you have on hand.

Human Resource Management

Steps in developing HRM strategy

Step 1: Get the 'big picture'

Understand your business strategy.

Highlight the key driving forces of your business. What are they? e.g. technology, distribution, competition, the markets.

What are the implications of the driving forces for the people side of your business?

What is the fundamental people contribution to bottom line business performance?

Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.

Do not be put off by negative reactions to the words or references to idealistic statements - it is the actual process of thinking through the issues in a formal and explicit manner that is important.

What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the business.

Consider the current skill and capability issues.Vigorously research the external business and market environment. High light the opportunities and threats relating to the people side of the business.

What impact will/ might they have on business performance? Consider skill shortages? The impact of new technology on staffing levels?

From this analysis you then need to review the capability of your personnel department. Complete a SWOT analysis of the department - consider in detail the department's current areas of operation, the service levels and competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization's COPS (culture, organization, people, HR systems)

Consider: Where you are now? Where do you want to be? What gaps exists between the reality of where you are now and

where you want to be?Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and COPS Analysis

Identify the critical people issues namely those people issues that you must address. Those which have a key impact on the delivery of your business strategy.

Prioritize the critical people issues. What will happen if you fail to address them?

Remember you are trying to identify where you should be focusing your efforts and resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate, elaborate and create - don't go for the obvious. This is an important step as frequently people jump for the known rather than challenge existing assumptions about the way things have been done in the past. Think about the consequences of taking various courses of action.

Consider the mix of HR systems needed to address the issues. Do you need to improve communications, training or pay?

What are the implications for the business and the personnel function?

Once you have worked through the process it should then be possible to translate the action plan into broad objectives. These will need to be broken down into the specialist HR Systems areas of:

employee training and development management development organization development performance appraisal employee reward employee selection and recruitment manpower planning communication

Develop your action plan around the critical issues. Set targets and dates for the accomplishment of the key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure that the objectives set are mutually supportive so that the reward and payment systems are integrated with employee training and career development plans.

There is very little value or benefit in training people only to then frustrate them through a failure to provide ample career and development opportunities.

QUESTIONS II (20% Points):Assuming that you are the HR Manager of a hypothetical company Hugo, Inc., (a) provide a job descriptions and job specifications for your assistant before

hiring a person with whom to replace you. (b) For job design, explain the job characteristics model of work motivation.

A) Administrative Assistant –              hugo inc   

Position Description

The Administrative Assistant will support the       hugo inc.           Market

Operations team. You will support the       hugo inc.           Market

Manager,Tanzir rifat KhanOperations and the VP of Market Operations

for        hugo inc.        .

Primary Responsibilities:

Performs general clerical duties to include but not limited to: photocopying, faxing, mail distribution and filing.

Coordinates and maintains records for staff office space, phones, company credit cards and office keys.

Creates and modifies various documents using Microsoft Office. Maintains Outlook calendar(s) in current and accurate status. Coordinates meetings and conference calls as needed or

anticipated. Coordinates travel arrangements as needed. Answer phones promptly and uses good judgment to prioritize the

distribution of messages in a timely manner. Prepares meeting materials and assists with the development of

PowerPoint presentations. Responsible for keeping inventory of all office supplies and placing

orders for replenishment is needed. Records minutes at various meetings and archives them

accordingly. Performs all other related duties as assigned.

Requirements:

High school diploma/GED 3+ years of administrative support experience with increasing

responsibility required Microsoft Word: Mail merge and know how to embed documents

Microsoft Excel: (transferring Word documents to Excel and editing spreadsheets)

Assets:

Some college coursework or business vocational school education preferred

Previous experience in a healthcare environment preferred Bilingual/Spanish is a plus

Core Competencies:

Strong attention to detail and excellent organizational skills required. Must have the ability to multi-task in a fast paced and deadline

driven environment. Must be able to maintain professionalism and a positive service

attitude at all times. Must be able to work Monday to Friday, 8 a.m. to 5 p.m.

                is part of the family of companies that make                  one of the

leaders across most major segments of the US health care system.

                 helps nearly 60 million Americans live their lives to the fullest by

educating them about their symptoms, conditions and treatments; helping

them to navigate the system, finance their health care needs and stay on

track with their health goals. No other business touches so many lives in

such a positive way. And we do it all with every action focused on our

shared values of Integrity, Compassion, Relationships, Innovation &

Performance.

At                , you will perform within an innovative culture that’s focused on

transformational change in the health care system. You will leverage your

skills across a diverse and multi-faceted business. And you will make

contributions that will have an impact that’s greater than you’ve ever

imagined.

Diversity creates a healthier atmosphere: equal opportunity employer

M/F/D/V

                is a drug-free workplace. Candidates are required to pass a

drug test before beginning employment. In addition, employees in

certain positions are subject to random drug testing

b) Job Characteristics Model

The job characteristics model is one of the most influential attempts to design jobs with increased motivational properties.[ Proposed by Hackman and Oldham, the model describes five core job dimensions leading to three critical psychological states, resulting in work-related outcomes.Figure 6.3. 

The Job Characteristics Model has five core job dimensions.

Skill variety refers to the extent to which the job requires a person to utilize multiple high-level skills. A car wash employee whose job consists of directing customers into the automated car wash demonstrates low levels of skill variety, whereas a car wash employee who acts as a cashier, maintains carwash equipment, and manages the inventory of chemicals demonstrates high skill variety.

QUESTIONS III (20% Points):

In recruiting employees to fill open positions, you have two resources of manpower: internal and external. If you have two positions - High and Low, from which source are you going to recruit to fill both positions? Why?

The searching of suitable candidates and informing them about the openings in the enterprise is the most important aspect of recruitment process.

The candidates may be available inside or outside the organization. Basically, there are two sources of recruitment i.e., internal and external sources.

(A) Internal Sources:

Best employees can be found within the organisation… When a vacancy arises in the organisation, it may be given to an employee who is already on the pay-roll. Internal sources include promotion, transfer and in certain cases demotion. When a higher post is given to a deserving employee, it motivates all other employees of the organisation to work hard. The employees can be informed of such a vacancy by internal advertisement.

Advantages of Internal Sources:

The Following are The Advantages of Internal Sources:

1. Improves morale:

When an employee from inside the organisation is given the higher post, it helps in increasing the morale of all employees. Generally every employee expects promotion to a higher post carrying more status and pay (if he fulfills the other requirements).

2. No Error in Selection:

When an employee is selected from inside, there is a least possibility of errors in selection since every company maintains complete record of its employees and can judge them in a better manner.

3. Promotes Loyalty:

It promotes loyalty among the employees as they feel secured on account of chances of advancement.

4. No Hasty Decision:

The chances of hasty decisions are completely eliminated as the existing employees are well tried and can be relied upon.

5. Economy in Training Costs:

The existing employees are fully aware of the operating procedures and policies of the organisation. The existing employees require little training and it brings economy in training costs.

6. Self-Development:

It encourages self-development among the employees as they can look forward to occupy higher posts.

Disadvantages of Internal Sources:

(i) It discourages capable persons from outside to join the concern.

(ii) It is possible that the requisite number of persons possessing qualifications for the vacant posts may not be available in the organisation.

(iii) For posts requiring innovations and creative thinking, this method of recruitment cannot be followed.

(iv) If only seniority is the criterion for promotion, then the person filling the vacant post may not be really capable.

Inspite of the disadvantages, it is frequently used as a source of recruitment for lower positions. It may lead to nepotism and favouritism. The employees may be employed on the basis of their recommendation and not suitability.

(B) External Sources:

All organisations have to use external sources for recruitment to higher positions when existing employees are not suitable. More persons are needed when expansions are undertaken.

The external sources are discussed below:

ows which attract many prospective employees. Many a time advertisements may be made for a special class of work force (say married ladies) who worked prior to their marriage.

These ladies can also prove to be very good source of work force. Similarly there is the labour market consisting of physically handicapped. Visits to other companies also help in finding new sources of recruitment.

Merits of External Sources:

1. Availability of Suitable Persons:

Internal sources, sometimes, may not be able to supply suitable persons from within. External sources do give a wide choice to the management. A large number of applicants may be willing to join the organisation. They will also be suitable as per the requirements of skill, training and education.

2. Brings New Ideas:

The selection of persons from outside sources will have the benefit of new ideas. The persons having experience in other concerns will be able to suggest new things and methods. This will keep the organisation in a competitive position.

3. Economical:

This method of recruitment can prove to be economical because new employees are already trained and experienced and do not require much training for the jobs.

Demerits of External Sources:

1. Demoralisation:

When new persons from outside join the organisation then present employees feel demoralised because these positions should have gone to them. There can be a heart burning among old employees. Some employees may even leave the enterprise and go for better avenues in other concerns.

2. Lack of Co-Operation:

The old staff may not co-operate with the new employees because they feel that their right has been snatched away by them. This problem will be acute especially when persons for higher positions are recruited from outside.

3. Expensive:

The process of recruiting from outside is very expensive. It starts with inserting costly advertisements in the media and then arranging written tests and conducting interviews. In spite of all this if suitable persons are not available, then the whole process will have to be repeated.

4. Problem of Maladjustment:

There may be a possibility that the new entrants have not been able to adjust in the new environment. They may not temperamentally adjust with the new persons. In such cases either the persons may leave themselves or management

may have to replace them. These things have adverse effect on the working of the organisation.

Suitability of External Sources of Recruitment:

External Sources of Recruitment are Suitable for The Following Reasons:

(i) The required qualities such as will, skill, talent, knowledge etc., are available from external sources.

(ii) It can help in bringing new ideas, better techniques and improved methods to the organisation.

(iii) The selection of candidates will be without preconceived notions or reservations.

(iv) The cost of employees will be minimum because candidates selected in this method will be placed in the minimum pay scale.

(v) The entry of new persons with varied experience and talent will help in human resource mix.

(vi) The existing employees will also broaden their personality.

(vii) The entry of qualitative persons from outside will be in the long-run interest of the organisation.

So to me it can be said that both of sources are needed to finally recruit the candidates.

Performance evaluation is important for compensation and promotion of employees. (a) Explain the process of performance evaluation with practical examples. (b) How could you create a market-competitive pay plan? Explain this with the point system.

QUESTIONS IV (20% Points):Performance evaluation is important for compensation and promotion of employees. (a) Explain the process of performance evaluation with practical examples. (b) How could you create a market-competitive pay plan? Explain this with the point system.

a) Most appraisal instruments require raters to evaluate employees in relation to some standard of excellence. With employee comparison systems, however, employee performance is evaluated relative to the performance of other employees. In other words, employee comparison systems use rankings, rather than ratings. A number of formats can be used to rank employees, such as simple rankings, paired comparisons, or forced distributions. Simple rankings require raters to rank-order their employees from best to worst, according to their job performance. When using the paired comparison

Exhibit 1 Rating Errors and their Likely Causes

Errors A B C D E F

Leniency X X X

Severity X X

Central tendency X X

Halo X X

Implicit personality

theoryX

Recency X

Key:

Aadministrative

proceduresD political considerations

Bpoorly defined rating

standardsE incomplete information

C memory decay Frater's lack of

conscientiousness

approach, a rater compares each possible pair of employees. For example, Employee 1 is compared to Employees 2 and 3, and Employee 2 is compared to Employee 3. The employee winning the most "contests" receives the highest ranking. A forced distribution approach requires a rater to assign a certain percentage of employees to each category of excellence, such as

best, average, or worst. Forced distribution is analogous to grading on a curve, where a certain percentage of students get As, a certain percentage get Bs, and so forth.

GRAPHIC RATING SCALE.

A graphic rating scale (GRS) presents appraisers with a list of dimensions, which are aspects of performance that determine an employee's effectiveness. Examples of performance dimensions are cooperativeness, adaptability, maturity, and motivation. Each dimension is accompanied by a multi-point (e.g., 3, 5, or 7) rating scale. The points along the scale are defined by numbers and/or descriptive words or phrases that indicate the level of performance. The midpoint of the scale is usually anchored by such words as "average," "adequate," "satisfactory," or "meets standards."

Many organizations use graphic rating scales because they are easy to use and cost little to develop. HR professionals can develop such forms quickly, and because the dimensions and anchors are written at a general level, a single form is applicable to all or most jobs within an organization. Graphic rating scales do present a number of problems, however. Such scales may not effectively direct behavior; that is, the rating scale does not clearly indicate what a person must do to achieve a given rating, thus employees are left in the dark as to what is expected of them. For instance, an employee given a rating of 2 on "attitude" may have a difficult time figuring out how to improve.

BEHAVIORALLY-ANCHORED RATING SCALES.

A behaviorally-anchored rating scale (BARS), like a graphic rating scale, requires appraisers to rate employees on different performance dimensions. The typical BARS includes seven or

eight performance dimensions, each anchored by a multi-point scale. But the rating scales used on BARS are constructed differently than those used on graphic rating scales. Rather than using numbers or adjectives, a BARS anchors each dimension with examples of specific job behaviors that reflect varying levels of performance.

The process for developing a BARS is rather complex. Briefly, it starts with a job analysis, using the critical incident technique. This involves having experts generate a list of critical incidents—or specific examples of poor, average, and excellent behaviors—that are related to a certain job. The incidents are then categorized bydimension. Finally, a rating scale is developed for each dimension, using these behaviors as "anchors" to define points along the scale.

BEHAVIOR OBSERVATION SCALES.

A behavior observation scale (BOS) contains a list of desired behaviors required for the successful performance of specific jobs, which are assessed based on the frequency with which they occur. The development BOS, like BARS, also begins with experts generating critical incidents for the jobs in the organization and categorizing these incidents into dimensions. One major difference between BARS and BOS is that, with BOS, each behavior is rated by the appraiser.

When using BOS, an appraiser rates job performance by indicating the frequency with which the employee engages in each behavior. A multi-point scale is used ranging from "almost never" to "almost always." An overall rating is derived by adding the employee's score on each behavioral item. A high score means that an individual frequently engages in desired

behaviors, and a low score means that an individual does not often engage in desired behaviors.

ACCURACY OF THE RATINGS.

Accurate ratings reflect the employees' actual job performance levels. Employment decisions that are based on inaccurate ratings are not valid and would thus be difficult to justify if legally challenged. Moreover, employees tend to lose their trust in the system when ratings do not accurately reflect their performance levels, and this causes morale and turnover problems. Unfortunately, accurate ratings seem to be rare. Inaccuracy is most often attributable to the presence of rater errors, such as leniency, severity, central tendency, halo, and recency errors. These rating errors occur because of problems with human judgment. Typically, raters do not consciously choose to make these errors, and they may not even recognize when they do make them.

b)

I. Basic Factors in Determining Pay Rates Employee compensation refers to all forms of pay or rewards going to employees, which include direct financial payments and indirect payments. Direct financial payments include wages, salaries, incentives, commissions, and bonuses. Indirect payments include financial benefits like employer-paid insurance and vacations.

A. Aligning Total Rewards with Strategy – The basic thrust in pay plans today is to produce an aligned reward strategy to create compensation plans that guide employee

behaviors in the desired, strategic direction. Distinguishing between high and low performers is a policy issue, as is seniority-based pay.

B. Equity and Its Impact on Pay Rates – External and internal equity are crucial in pay rates. External equity refers to how pay compares with rates in other organizations. Internal equity refers to employees viewing their pay as equitable given other pay rates in the organization. Individual equity refers to the fairness of an individual’s pay as compared with what his/her coworkers are earning for the same or very similar jobs in the company. Last, procedural equity refers to the perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay.

C. Legal Considerations in Compensation – There are many laws that govern compensation. For example, the Fair Labor Standards Act (FLSA) regulates the minimum wage and requires that overtime be paid at a rate of one and one half times the normal rate of pay for hours worked over 40 in a workweek. Employees are categorized as exempt from the act or non-exempt from its provisions. Other compensation laws include the Equal Pay Act, the Employee Retirement Income Security Act (ERISA), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Family Medical Leave Act (FMLA.)

Table 1. Companies with Salary Range Structures

Percent of Companies

All Companies 72%

Number Employees

1 to 100 44%

101 to 500 64%

501 to 2,500 78%

2,501 to 10,000 86%

Over 10,000 85%

Source: 2010-2011 Culpepper Salary Budget & Planning Survey.

Frequency Salary Range Structures Are Reviewed

Salary range structures should be reviewed regularly to maintain a competitive edge in attracting and

retaining top talent. Most companies with formal base salary range structures review their ranges and

structures annually (Table 2).

Table 2. Frequency of Salary Range Structure Review

Job Level Percent of Companies

Annually Every Two Years Every Three Years

Top executives 60% 8% 5%

Nonexecutives 77% 9% 7%

Nonexecutives include directors, managers, professionals and hourly nonexempt employees.

Nineteen percent of participants with formal salary range structures reported that they do not use formal salary structures with executives.

Companies choosing "other/varies" indicated that the frequency for reviewing structures varies by type of job, business unit, location or union status. Examples include:

Some companies with union employees review salary structures based on the length of multiyear labor contracts and review other nonunion jobs annually.

Some companies in very competitive job markets review salary structures for critical jobs semiannually.

Methods Used to Design Salary Range Structures

The two most common methods companies use to design base salary structure ranges are market pricing using external market data and point factor focusing on internal pay equity.

Most companies use a market-pricing approach with current salary survey data for individual jobs, to design and adjust salary range structures (Figure 1). Only 3 percent of companies rely solely on the point-factor method, which assigns a point value to specific jobs within a company.

In addition, 19 percent of companies blend market-based and point-factor approaches when designing their salary range structures.

Traditional vs. Broadband Salary Structures

Traditional salary structures are organized with numerous layers and range structures (or pay grades) with a relatively small distance between each

range. This provides a hierarchal system enabling employees to be promoted from one pay grade to another. When designed correctly, traditional structures enable the recognition of differing rates of pay for performance and guarantee a reasonable level of control over internal compression and salary expenditures.

Broadband salary structures are more flexible and consolidate pay grades into fewer structures with wider salary ranges.

On average, 82 percent of surveyed companies use traditional salary structures, while only 7 percent use broadband structures (Figure 2). Nine percent use a hybrid or mix of traditional and broadband structures.

Single vs. Multiple Salary Structures

Fifty percent of companies with salary range structures have multiple structures varying by job and/or

geographic location. There is a strong correlation between job level and number of salary structures.

Single salary structures are more common for executives and multiple salary structures are more

common for nonexecutive positions (Table 3).

Table 3. Single vs. Multiple Salary Structures

Job Level Percent of Companies

Single Structure

Multiple Structures Differing by Job Function

Multiple Structures Differing by 

Geographic Location

Executives 52% 12% 8%

Directors/ managers

47% 18% 19%

Professional 44% 19% 20%

Hourly/nonexempt

43% 17% 24%

As companies increase in size, they typically have a higher number of salary structures to accommodate more locations and job structures.

QUESTIONS V (10% Points)Explain the typical benefits and services of employees. (b) Suppose that you are now retired from your profession at the age of 65 years old. After your retirement, how could you make your livings as an ordinary citizen or resident in the United States?

Employee Benefits Programs

The objective of a good employee benefits program is to help protect both employees and their families from the possibility of severe economic hardships caused by illness, disability, loss of life, or unemployment.

A comprehensive employer program will also provide retirement income for the employee and their family, as well as suitable assistance such as paid time off from work.

Administering and Selecting Programs

Employers consider the cost to provide and administer benefits plans an integral part of the total compensation package offered to its employees.  While these

benefits programs are typically managed by employers, oftentimes employees are asked to contribute small premiums or copayments to enjoy the added coverage.

Employers offer benefits to employees for one or more of the following reasons:

Attracting and retaining a talented workforce.

Aligning benefits packages with competitive offers in the marketplace.

Promoting higher levels of morale among employees.

Providing opportunities for promotion or advancement as workers resign, retire, or move to other positions within the organization.

Keep in mind that no single program can provide for the needs of all employees, it is usually a combination of benefits that is most effective in meeting the employer's objectives.  That being said, there are two broad categories of benefits offered by employers in today's work environment: mandated and optional.

Mandated Benefits Programs

Mandated benefits are those required by law.  These include federal or state sponsored programs that aim to provide for the most essential needs of employees and / or their families.  Examples of three very important, and mandated, benefits include:

Social Security

Unemployment Insurance

Workers Compensation

While unemployment provides help to those that lose their jobs, workers compensation programs provide assistance to those disabled by occupational illness or injury.  Social Security protects the aged and disabled against expenses that might otherwise exhaust their entire savings.

In March 2010, the Patient Protection and Affordable Care Act, also known as Obamacare and the Affordable Care Act (ACA), was signed into law.  While not mandating health care coverage, the law states that firms employing fifty or more

people, and not offering health insurance, will pay a shared responsibility requirement if the government subsidizes an employee's health care costs.

Optional Benefits Programs

As the name implies, optional employee benefits includes a wide array of programs that employers can choose to offer employees; typical programs include:

Health Care Insurance

Disability Insurance

Life Insurance

Retirement / Pension Plans

Flexible Compensation

Paid Leave

Perhaps one of the most valued of all employee benefits includes paid time away from the job, which is often spent with family and friends:  holiday pay and vacation time.  Nationally, the average number of paid holidays is eight.

Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits.

If your full retirement age is older than 65 (that is, you were born after 1937), you still will be able to take your benefits at age 62, but the reduction in your benefit amount will be greater than it is for people who were born before 1938.

Here's how it works if your full retirement age is 65.

If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age

o 63 is about 25 percent;

o 64 is about 20 percent;

o 65 is about 13.3 percent; and

o 66 is about 6.7 percent.

If you start receiving spouse's benefits at age 62, your monthly benefit amount is reduced to about 32.5 percent of the amount your spouse would receive if his or her benefits started at full retirement age. (The reduction is about 67.5 percent.) The reduction for starting benefits as a spouse at age

o 63 is about 65 percent;

o 64 is about 62.5 percent;

o 65 is about 58.3 percent;

o 66 is about 54.2 percent; and

67 is 50 percent (the maximum benefit amount).