1 INTRODUCTION ....................................................................................................................................... 1
1.1 LEARNING GOALS ........................................................................................................................................ 1
1.2 EVALUATION.............................................................................................................................................. 1
2 THE KEY MESSAGE ................................................................................................................................... 2
2.1 THE HR-PERFORMANCE LINK ........................................................................................................................ 2
2.1.1 Resource-based view ......................................................................................................................... 2
2.1.2 Contingency theory (“it depends”) .................................................................................................... 2
2.1.3 The AMO framework (“the black box”) ............................................................................................. 3
2.2 THE HR-WELLBEING LINK ............................................................................................................................. 4
2.3 RECAP ...................................................................................................................................................... 4
3 HR ROLES ................................................................................................................................................. 5
4 HISTORY OF HUMAN RESOURCES MANAGEMENT ................................................................................... 7
4.1 EARLY BEGINNINGS ..................................................................................................................................... 7
4.2 PRE-INDUSTRIAL SOCIETY ............................................................................................................................. 7
4.3 INDUSTRIAL REVOLUTION ............................................................................................................................. 8
4.4 PERSONNEL MANAGEMENT .......................................................................................................................... 9
4.4.1 Industrial welfare .............................................................................................................................. 9
4.4.2 Scientific management ...................................................................................................................... 9
4.4.3 Human relations movement ............................................................................................................ 10
4.4.4 Industrial psychology ....................................................................................................................... 12
4.5 PERSONNEL DEPARTMENTS ......................................................................................................................... 13
4.6 STRATEGIC HRM...................................................................................................................................... 13
5 FUTURE OF HUMAN RESOURCES MANAGEMENT .................................................................................. 15
5.1 COVID-19 ............................................................................................................................................... 15
5.2 EVIDENCE-BASED HRM ............................................................................................................................. 15
5.3 BIG DATA AND E-HRM .............................................................................................................................. 17
5.4 HR-OUTSOURCING.................................................................................................................................... 17
5.5 TALENT MANAGEMENT .............................................................................................................................. 18
5.6 SUSTAINABLE HRM .................................................................................................................................. 18
5.7 TEST YOUR UNDERSTANDING....................................................................................................................... 19
6 STRATEGY DRIVEN HR ............................................................................................................................ 20
6.1 RESOURCES-BASED VIEW ON HUMAN RESOURCES............................................................................................ 20
6.1.1 Case ................................................................................................................................................. 20
6.1.2 Key tenets of SHRM ......................................................................................................................... 20
6.1.3 Resource-based view of the firm ..................................................................................................... 20
6.1.4 Are human resources valuable? ...................................................................................................... 21
6.1.5 Are human resources rare? ............................................................................................................. 23
6.1.6 Are human resources inimitable? .................................................................................................... 23
6.1.7 Are human resources non-substitutable?........................................................................................ 25
6.2 ALIGNMENT............................................................................................................................................. 26
6.2.1 The concept ‘alignment’ .................................................................................................................. 26
6.2.2 What is strategy .............................................................................................................................. 27
6.2.3 Types of strategy ............................................................................................................................. 28
6.2.4 Organizational structure ................................................................................................................. 29
6.2.5 Organizational culture..................................................................................................................... 34
, 6.2.6 Michigan Matching Model .............................................................................................................. 36
6.2.7 Misalignment .................................................................................................................................. 37
6.3 MEASURING HR EFFECTIVENESS .................................................................................................................. 38
6.3.1 The importance of data ................................................................................................................... 38
6.3.2 Data-driven decision making ........................................................................................................... 38
6.3.3 HR analytics ..................................................................................................................................... 38
6.3.4 HRM systems ................................................................................................................................... 39
6.3.5 HR scorecards .................................................................................................................................. 39
6.3.6 Case HR scorecards ......................................................................................................................... 41
6.4 THE HR-TRIAD ......................................................................................................................................... 41
6.5 TEST YOUR UNDERSTANDING....................................................................................................................... 42
7 WORK ANALYSIS AND COMPETENCY MODELING ................................................................................... 43
7.1 TRADITIONAL JOB ANALYSIS ........................................................................................................................ 43
7.1.1 Why is this topic relevant? .............................................................................................................. 43
7.1.2 Contemporary definition ................................................................................................................. 43
7.2 TRADITIONAL APPROACHES ......................................................................................................................... 44
7.2.1 Case: funeral attendant ................................................................................................................... 44
7.2.2 Building blocks ................................................................................................................................. 44
7.2.3 Who would you consult to obtain information? (sources) .............................................................. 45
7.2.4 How would you seek information? (methods) ................................................................................. 46
7.2.5 What types of information would you look for?.............................................................................. 48
7.2.6 How will we analyze the data? ........................................................................................................ 49
7.2.7 Criticism of traditional approach ..................................................................................................... 49
7.3 THREE CHALLENGES ................................................................................................................................... 50
7.3.1 Challenge 1: New ways of working ................................................................................................. 50
7.3.2 Challenge 2: They don’t act ............................................................................................................. 51
7.3.3 Challenge 3: operational navel-gazing ............................................................................................ 52
7.4 COMPETENCY MODELING ........................................................................................................................... 52
7.4.1 Competency profile ......................................................................................................................... 53
7.4.2 Dream versus nightmare ................................................................................................................. 54
7.4.3 Case example .................................................................................................................................. 54
7.4.4 Strategic job modeling .................................................................................................................... 54
7.5 TEST YOUR UNDERSTANDING....................................................................................................................... 55
8 RECRUITMENT AND EMPLOYER BRANDING ........................................................................................... 56
8.1 INTRODUCTION ........................................................................................................................................ 56
8.1.1 Michigan Matching Model .............................................................................................................. 56
8.1.2 Relevance ........................................................................................................................................ 56
8.1.3 Recruitment vs selection.................................................................................................................. 57
8.1.4 Internal vs external recruitment ...................................................................................................... 58
8.2 TRADITIONAL RECRUITMENT ....................................................................................................................... 58
8.2.1 Timing .............................................................................................................................................. 59
8.2.2 Target population............................................................................................................................ 59
8.2.3 Recruitment sources ........................................................................................................................ 59
8.2.4 Recruitment message ...................................................................................................................... 61
8.2.5 Recruiters ........................................................................................................................................ 63
8.2.6 Traditional recruitment: Critiques ................................................................................................... 63
8.3 RECRUITMENT TODAY ................................................................................................................................ 63
8.3.1 Employer branding .......................................................................................................................... 63
, 8.3.2 Targeting non-traditional applicants .............................................................................................. 67
8.3.3 Use of technology ............................................................................................................................ 68
8.3.4 Use of metrics .................................................................................................................................. 69
8.4 ALTERNATIVES TO RECRUITMENT ................................................................................................................. 69
8.5 TEST YOUR UNDERSTANDING....................................................................................................................... 70
9 PERSONNEL SELECTION .......................................................................................................................... 71
9.1 INTRODUCTION ........................................................................................................................................ 71
9.1.1 Michigan Matching Model .............................................................................................................. 71
9.1.2 Relevance ........................................................................................................................................ 71
9.2 BASE MODEL OF PERSONNEL SELECTION ........................................................................................................ 72
9.2.1 Criterion domain.............................................................................................................................. 72
9.2.2 Criterion measure ............................................................................................................................ 73
9.2.3 Predictor construct .......................................................................................................................... 73
9.2.4 Predictor instrument ....................................................................................................................... 74
9.3 PREDICTOR CONSTRUCTS ............................................................................................................................ 75
9.3.1 Personality (“Big Five”) .................................................................................................................... 75
9.3.2 Vocal interests (RIASEC) .................................................................................................................. 76
9.3.3 General Mental Ability .................................................................................................................... 78
9.3.4 Emotional intelligence ..................................................................................................................... 80
9.3.5 Knowledge and work experience ..................................................................................................... 80
9.3.6 Person-organization fit .................................................................................................................... 80
9.3.7 Physical and psychomotor abilities ................................................................................................. 81
9.4 PREDICTOR INSTRUMENTS .......................................................................................................................... 81
9.4.1 Overview.......................................................................................................................................... 81
9.4.2 Sign versus sample .......................................................................................................................... 81
9.4.3 Temporal focus ................................................................................................................................ 82
9.4.4 Psychometric properties .................................................................................................................. 82
9.4.5 Biodata (via application form) ........................................................................................................ 84
9.4.6 References and recommendations .................................................................................................. 85
9.4.7 Personality inventories .................................................................................................................... 86
9.4.8 Integrity tests .................................................................................................................................. 88
9.4.9 Cognitive ability tests ...................................................................................................................... 89
9.4.10 Emotional intelligence tests ........................................................................................................ 91
9.5 THE SELECTION INTERVIEW ......................................................................................................................... 92
9.5.1 Medical and physical examination .................................................................................................. 95
9.5.2 Work sample ................................................................................................................................... 95
9.5.3 Assessment center method ............................................................................................................. 97
9.5.4 Situational judgment tests .............................................................................................................. 98
9.6 HOW TO MAKE A DECISION ......................................................................................................................... 99
9.6.1 Predictive validity ............................................................................................................................ 99
9.6.2 Face validity................................................................................................................................... 100
9.6.3 Adverse impact .............................................................................................................................. 100
9.6.4 Recommendations ......................................................................................................................... 100
9.7 PODCAST: REINVENTING THE JOB INTERVIEW ............................................................................................... 101
9.8 TEST YOUR UNDERSTANDING..................................................................................................................... 103
10 TRAINING AND DEVELOPMENT........................................................................................................ 104
10.1 INTRODUCTION ...................................................................................................................................... 104
10.1.1 Michigan Matching model ........................................................................................................ 104
, 10.1.2 Relevance .................................................................................................................................. 104
10.1.3 Terminology .............................................................................................................................. 105
10.1.4 Case ........................................................................................................................................... 105
10.2 IDEAL MODEL ......................................................................................................................................... 105
10.2.1 Needs analysis........................................................................................................................... 106
10.2.2 Training goals ........................................................................................................................... 106
10.2.3 Training design and method ..................................................................................................... 107
10.2.3.1 Trainer-centered................................................................................................................................... 107
10.2.3.2 Trainee-centered .................................................................................................................................. 107
10.2.3.3 Teambuilding methods ......................................................................................................................... 110
10.2.3.4 E-learning ............................................................................................................................................. 110
10.2.4 Transfer ..................................................................................................................................... 111
10.2.4.1 Training design ..................................................................................................................................... 112
10.2.4.2 Trainee characteristics.......................................................................................................................... 113
10.2.4.3 Work environment ............................................................................................................................... 114
10.2.5 Evaluate .................................................................................................................................... 115
10.3 INFORMAL LEARNING............................................................................................................................... 117
10.3.1 What is it? ................................................................................................................................. 117
10.3.2 Why popular? ............................................................................................................................ 117
10.3.3 A conceptual model .................................................................................................................. 117
10.3.4 Facilitating informal learning .................................................................................................... 118
10.4 TEST YOUR UNDERSTANDING..................................................................................................................... 119
11 PERFORMANCE APPRAISAL AND MANAGEMENT ............................................................................ 120
11.1 INTRODUCTION ...................................................................................................................................... 120
11.1.1 Michigan Matching Model ........................................................................................................ 120
11.1.2 Relevance .................................................................................................................................. 120
11.1.3 Case ........................................................................................................................................... 120
11.2 BUILDING BLOCKS OF PERFORMANCE MANAGEMENT ..................................................................................... 121
11.2.1 What is performance? .............................................................................................................. 121
11.2.2 Instruments ............................................................................................................................... 123
11.2.2.1 Qualitative assessment ......................................................................................................................... 123
11.2.2.2 Relative rankings .................................................................................................................................. 124
11.2.2.3 Absolute rankings ................................................................................................................................. 125
11.2.2.4 Management-by-objectives (MBO) ...................................................................................................... 127
11.2.3 Who should assess performance? ............................................................................................. 128
11.2.4 Training ..................................................................................................................................... 131
11.2.5 The performance appraisal interview ....................................................................................... 132
11.2.6 General principles ..................................................................................................................... 133
11.3 REALITY OF PERFORMANCE MANAGEMENT................................................................................................... 133
11.3.1 Problems ................................................................................................................................... 133
11.3.2 Causes ....................................................................................................................................... 133
11.3.3 Solutions.................................................................................................................................... 133
11.3.4 Future ........................................................................................................................................ 134
11.4 TEST YOUR UNDERSTANDING..................................................................................................................... 135
12 COMPENSATION AND BENEFITS ...................................................................................................... 136
12.1 INTRODUCTION ...................................................................................................................................... 136
12.1.1 Michigan Matching Model ........................................................................................................ 136
12.1.2 Relevance .................................................................................................................................. 136
12.1.3 Terminology .............................................................................................................................. 137
, 12.1.4 Case ........................................................................................................................................... 138
12.2 PAY-FOR-PERFORMANCE SYSTEMS ............................................................................................................. 138
12.2.1 Case ........................................................................................................................................... 138
12.2.2 Individual pay-for-performance ................................................................................................ 138
12.2.2.1 Merit pay .............................................................................................................................................. 138
12.2.2.2 Bonuses ................................................................................................................................................ 139
12.2.2.3 Sales commissions ................................................................................................................................ 139
12.2.2.4 Piecework and standard hour plans ..................................................................................................... 140
12.2.3 Group pay-for-performance ...................................................................................................... 141
12.2.3.1 Profit sharing ........................................................................................................................................ 142
12.2.3.2 Gainsharing........................................................................................................................................... 142
12.2.3.3 Stock options ........................................................................................................................................ 142
12.2.4 Lessons learned ......................................................................................................................... 143
12.3 BENEFITS .............................................................................................................................................. 145
12.3.1 Costs and expenses ................................................................................................................... 145
12.3.2 Retirement plans ....................................................................................................................... 145
12.3.3 Medical plans ............................................................................................................................ 145
12.3.4 Work-family balance ................................................................................................................. 146
12.3.5 Perks.......................................................................................................................................... 146
12.3.6 Flexible benefits plans ............................................................................................................... 146
12.3.7 Popularity .................................................................................................................................. 147
12.4 ESTABLISHING A PAY STRUCTURE................................................................................................................ 148
12.4.1 Case ........................................................................................................................................... 148
12.4.2 Pay structure - Goals ................................................................................................................. 148
12.4.3 Internal equity ........................................................................................................................... 149
12.4.3.1 Ranking method ................................................................................................................................... 150
12.4.3.2 Classification method ........................................................................................................................... 150
12.4.3.3 Point-factor method ............................................................................................................................. 151
12.4.4 External equity .......................................................................................................................... 151
12.4.5 Integrating internal and external equity ................................................................................... 152
12.4.5.1 Market pay line..................................................................................................................................... 153
12.4.5.2 Pay policy line ....................................................................................................................................... 153
12.4.5.3 Pay grades ............................................................................................................................................ 154
12.4.6 Individual equity........................................................................................................................ 154
12.4.7 General solution ........................................................................................................................ 155
12.5 PODCAST: WHY IT PAYS TO RAISE PAY ......................................................................................................... 156
12.6 TEST YOUR UNDERSTANDING..................................................................................................................... 158
,1 Introduction
• Human Resources
o As opposed to tangible (ex. financial)/intangible resources (ex. reputation)
o Human resources are one of the primary means of creating a competitive
advantage for the organization
o Human resource strategy needs to be aligned with the business strategy
o By creating a workforce that is capable and motivated, and by creating
a work environment that offers opportunities to participate
1.1 Learning goals
Identify causes of
HR-related problems
and formulate
recommendations
based on the best
available evidence
Critically analyze factors
that influence the strategic
management of human
resources in today’s
international environment
Apply the theoretical concepts to a
fictional business case
Understand how the HR functions separately and in
combination contribute to sustainable competitive
advantage
Identify and describe the key concepts and frameworks for HRM, and
the fundamentals and functionality of the different HR functions
1.2 Evaluation
• Identical for first and second attempt
• Written exam
o Multiple choice (75% of total score)
▪ 30 questions
▪ Standard setting (18,75/30 = 10/20)
o Case (25% of total score)
▪ Analyze, apply, recommend
1
,• Marc Huselid, in his 1995 study entitled, “…”, provided evidence for the link
between HR practices and firm performance? What can we conclude from the
study results?
o Better HR practices are the reason why firms achieve better financial
performance.
o It is because firms perform better that they can afford more advanced, and
therefore better, HR practices.
o High-performing firms tend to have better HR practices.
o There is a reciprocal relationship between HR practices and firm
performance.
2 The key message
2.1 The HR-performance link
• The premise/claim of this course is that investments in human resources
(“people”) lead to better firm performance.
• Why is this?
→ If you invest in people, they’re going to be motivated and more productive
→ People will feel seen, respected, engaged, …
2.1.1 Resource-based view
• Besides tangible (financial, equipment, buildings) and intangible resources
(reputation, patents), a company also has human resources
→ People can do thing that can’t be imitated by other things
o Knowledge, skills, abilities, and other characteristics (e.g. personality)
o Motivation
• Human resources are an important source of sustained competitive advantage
o They are valuable
o They are rare
o Inimitable (very hard to imitate)
o Non-substitutable (also not by machines)
2.1.2 Contingency theory (“it depends”)
• HR practices contribute to firm performance if they are tailored to the context
in which they are to serve → HR need to be aligned with the business strategy
• Two types of fit:
o Vertical fit: HR practices should be aligned with business strategy
o Horizontal fit: HR practices should be aligned with each other
o No such thing as ‘best practices’ → ‘it depends’
2
,• Business strategy: innovation
o Vertical fit: HR is organized to promote innovative behavior amongst its
employees
o Horizontal fit: Align HR practices - recruitment, selection, training and
development, performance appraisal and management, compensation and
benefits - to obtain an innovative workforce
2.1.3 The AMO framework (“the black box”)
• HR practices influence firm performance through enhancing:
o Ability (skill levels)
▪ Recruitment, selection, training and development
o Motivation (willingness to exert effort)
▪ Performance appraisal and management, compensation and benefits
o Opportunity (to participate)
▪ Work design, leadership
→ When you have the ability (skills) and you are motivated (+ you have
the opportunity to perform), you are going to perform better than when
you don’t have the ability and/or are not motivated
3
,2.2 The HR-wellbeing link
• HR defends the interests of management and shareholders (HR-performance
link) as well as those of employees.
• One of its important responsibilities involves watching over employee well-
being, not (only) because healthy employees perform better, but because it is
important in itself.
• Can be accomplished through work design interventions
2.3 Recap
• In this course we claim that
o people provide a source of sustainable competitive advantage
o to achieve superior firm performance HR practices need to be vertically
and horizontally aligned
o HR leads to superior firm performance by influencing people’s abilities,
motivation and opportunities to participate
o HR must watch over the wellbeing of its employees, not for instrumental
reasons, but because it’s an end in itself.
4
, 3 HR roles
HR roles according to Dave Ulrich
• What role does HR play in the overall success of an organization?
• What key problems and challenges does he/she face?
→ recruiting people, payroll administration, relationships between employees,
training employees, …
Two dimensions:
- processes (administration, procedures) – people
- future/strategic focus – day-to-day/operational focus (payroll, hiring)
FUTURE/STRATEGIC FOCUS
Strategic Partner Change Agent
Aligning HR & Business Strategy Managing Transformation &
Active Role in Setting Change
Strategic Direction Effecting Transformation &
Creating added value Change
• Translate corporate strategy Managing & supporting the change
into specific, supportive HR- process
activities • Preparing people for change
• Aligning HR-processes (“change readiness”)
• HR information systems (e.g. • Organizational culture
HR scorecards, dashboards) • Conflict/problem resolution
• Action plans, monitoring
PROCESSES
progress, and making change
PEOPLE
last
Administrative Expert Employee Champion
Managing the Firm’s HR Managing Employees’ Contribution
Infrastructure Motivated & Competent
Personnel
Process Optimization &
Working relationships
Efficiency • Unions
Job Analysis, Recruitment & • Employee involvement &
Selection, Training & participation
Development, Career • Communication & trust
Management, Performance • Monitoring work stress and job
Appraisal & Management, satisfaction (“work
Compensation Systems, Labor engagement”)
Legislation, Human Resource • Psychological contract
Planning
DAY-TO-DAY/OPERATIONAL FOCUS
5
1.1 LEARNING GOALS ........................................................................................................................................ 1
1.2 EVALUATION.............................................................................................................................................. 1
2 THE KEY MESSAGE ................................................................................................................................... 2
2.1 THE HR-PERFORMANCE LINK ........................................................................................................................ 2
2.1.1 Resource-based view ......................................................................................................................... 2
2.1.2 Contingency theory (“it depends”) .................................................................................................... 2
2.1.3 The AMO framework (“the black box”) ............................................................................................. 3
2.2 THE HR-WELLBEING LINK ............................................................................................................................. 4
2.3 RECAP ...................................................................................................................................................... 4
3 HR ROLES ................................................................................................................................................. 5
4 HISTORY OF HUMAN RESOURCES MANAGEMENT ................................................................................... 7
4.1 EARLY BEGINNINGS ..................................................................................................................................... 7
4.2 PRE-INDUSTRIAL SOCIETY ............................................................................................................................. 7
4.3 INDUSTRIAL REVOLUTION ............................................................................................................................. 8
4.4 PERSONNEL MANAGEMENT .......................................................................................................................... 9
4.4.1 Industrial welfare .............................................................................................................................. 9
4.4.2 Scientific management ...................................................................................................................... 9
4.4.3 Human relations movement ............................................................................................................ 10
4.4.4 Industrial psychology ....................................................................................................................... 12
4.5 PERSONNEL DEPARTMENTS ......................................................................................................................... 13
4.6 STRATEGIC HRM...................................................................................................................................... 13
5 FUTURE OF HUMAN RESOURCES MANAGEMENT .................................................................................. 15
5.1 COVID-19 ............................................................................................................................................... 15
5.2 EVIDENCE-BASED HRM ............................................................................................................................. 15
5.3 BIG DATA AND E-HRM .............................................................................................................................. 17
5.4 HR-OUTSOURCING.................................................................................................................................... 17
5.5 TALENT MANAGEMENT .............................................................................................................................. 18
5.6 SUSTAINABLE HRM .................................................................................................................................. 18
5.7 TEST YOUR UNDERSTANDING....................................................................................................................... 19
6 STRATEGY DRIVEN HR ............................................................................................................................ 20
6.1 RESOURCES-BASED VIEW ON HUMAN RESOURCES............................................................................................ 20
6.1.1 Case ................................................................................................................................................. 20
6.1.2 Key tenets of SHRM ......................................................................................................................... 20
6.1.3 Resource-based view of the firm ..................................................................................................... 20
6.1.4 Are human resources valuable? ...................................................................................................... 21
6.1.5 Are human resources rare? ............................................................................................................. 23
6.1.6 Are human resources inimitable? .................................................................................................... 23
6.1.7 Are human resources non-substitutable?........................................................................................ 25
6.2 ALIGNMENT............................................................................................................................................. 26
6.2.1 The concept ‘alignment’ .................................................................................................................. 26
6.2.2 What is strategy .............................................................................................................................. 27
6.2.3 Types of strategy ............................................................................................................................. 28
6.2.4 Organizational structure ................................................................................................................. 29
6.2.5 Organizational culture..................................................................................................................... 34
, 6.2.6 Michigan Matching Model .............................................................................................................. 36
6.2.7 Misalignment .................................................................................................................................. 37
6.3 MEASURING HR EFFECTIVENESS .................................................................................................................. 38
6.3.1 The importance of data ................................................................................................................... 38
6.3.2 Data-driven decision making ........................................................................................................... 38
6.3.3 HR analytics ..................................................................................................................................... 38
6.3.4 HRM systems ................................................................................................................................... 39
6.3.5 HR scorecards .................................................................................................................................. 39
6.3.6 Case HR scorecards ......................................................................................................................... 41
6.4 THE HR-TRIAD ......................................................................................................................................... 41
6.5 TEST YOUR UNDERSTANDING....................................................................................................................... 42
7 WORK ANALYSIS AND COMPETENCY MODELING ................................................................................... 43
7.1 TRADITIONAL JOB ANALYSIS ........................................................................................................................ 43
7.1.1 Why is this topic relevant? .............................................................................................................. 43
7.1.2 Contemporary definition ................................................................................................................. 43
7.2 TRADITIONAL APPROACHES ......................................................................................................................... 44
7.2.1 Case: funeral attendant ................................................................................................................... 44
7.2.2 Building blocks ................................................................................................................................. 44
7.2.3 Who would you consult to obtain information? (sources) .............................................................. 45
7.2.4 How would you seek information? (methods) ................................................................................. 46
7.2.5 What types of information would you look for?.............................................................................. 48
7.2.6 How will we analyze the data? ........................................................................................................ 49
7.2.7 Criticism of traditional approach ..................................................................................................... 49
7.3 THREE CHALLENGES ................................................................................................................................... 50
7.3.1 Challenge 1: New ways of working ................................................................................................. 50
7.3.2 Challenge 2: They don’t act ............................................................................................................. 51
7.3.3 Challenge 3: operational navel-gazing ............................................................................................ 52
7.4 COMPETENCY MODELING ........................................................................................................................... 52
7.4.1 Competency profile ......................................................................................................................... 53
7.4.2 Dream versus nightmare ................................................................................................................. 54
7.4.3 Case example .................................................................................................................................. 54
7.4.4 Strategic job modeling .................................................................................................................... 54
7.5 TEST YOUR UNDERSTANDING....................................................................................................................... 55
8 RECRUITMENT AND EMPLOYER BRANDING ........................................................................................... 56
8.1 INTRODUCTION ........................................................................................................................................ 56
8.1.1 Michigan Matching Model .............................................................................................................. 56
8.1.2 Relevance ........................................................................................................................................ 56
8.1.3 Recruitment vs selection.................................................................................................................. 57
8.1.4 Internal vs external recruitment ...................................................................................................... 58
8.2 TRADITIONAL RECRUITMENT ....................................................................................................................... 58
8.2.1 Timing .............................................................................................................................................. 59
8.2.2 Target population............................................................................................................................ 59
8.2.3 Recruitment sources ........................................................................................................................ 59
8.2.4 Recruitment message ...................................................................................................................... 61
8.2.5 Recruiters ........................................................................................................................................ 63
8.2.6 Traditional recruitment: Critiques ................................................................................................... 63
8.3 RECRUITMENT TODAY ................................................................................................................................ 63
8.3.1 Employer branding .......................................................................................................................... 63
, 8.3.2 Targeting non-traditional applicants .............................................................................................. 67
8.3.3 Use of technology ............................................................................................................................ 68
8.3.4 Use of metrics .................................................................................................................................. 69
8.4 ALTERNATIVES TO RECRUITMENT ................................................................................................................. 69
8.5 TEST YOUR UNDERSTANDING....................................................................................................................... 70
9 PERSONNEL SELECTION .......................................................................................................................... 71
9.1 INTRODUCTION ........................................................................................................................................ 71
9.1.1 Michigan Matching Model .............................................................................................................. 71
9.1.2 Relevance ........................................................................................................................................ 71
9.2 BASE MODEL OF PERSONNEL SELECTION ........................................................................................................ 72
9.2.1 Criterion domain.............................................................................................................................. 72
9.2.2 Criterion measure ............................................................................................................................ 73
9.2.3 Predictor construct .......................................................................................................................... 73
9.2.4 Predictor instrument ....................................................................................................................... 74
9.3 PREDICTOR CONSTRUCTS ............................................................................................................................ 75
9.3.1 Personality (“Big Five”) .................................................................................................................... 75
9.3.2 Vocal interests (RIASEC) .................................................................................................................. 76
9.3.3 General Mental Ability .................................................................................................................... 78
9.3.4 Emotional intelligence ..................................................................................................................... 80
9.3.5 Knowledge and work experience ..................................................................................................... 80
9.3.6 Person-organization fit .................................................................................................................... 80
9.3.7 Physical and psychomotor abilities ................................................................................................. 81
9.4 PREDICTOR INSTRUMENTS .......................................................................................................................... 81
9.4.1 Overview.......................................................................................................................................... 81
9.4.2 Sign versus sample .......................................................................................................................... 81
9.4.3 Temporal focus ................................................................................................................................ 82
9.4.4 Psychometric properties .................................................................................................................. 82
9.4.5 Biodata (via application form) ........................................................................................................ 84
9.4.6 References and recommendations .................................................................................................. 85
9.4.7 Personality inventories .................................................................................................................... 86
9.4.8 Integrity tests .................................................................................................................................. 88
9.4.9 Cognitive ability tests ...................................................................................................................... 89
9.4.10 Emotional intelligence tests ........................................................................................................ 91
9.5 THE SELECTION INTERVIEW ......................................................................................................................... 92
9.5.1 Medical and physical examination .................................................................................................. 95
9.5.2 Work sample ................................................................................................................................... 95
9.5.3 Assessment center method ............................................................................................................. 97
9.5.4 Situational judgment tests .............................................................................................................. 98
9.6 HOW TO MAKE A DECISION ......................................................................................................................... 99
9.6.1 Predictive validity ............................................................................................................................ 99
9.6.2 Face validity................................................................................................................................... 100
9.6.3 Adverse impact .............................................................................................................................. 100
9.6.4 Recommendations ......................................................................................................................... 100
9.7 PODCAST: REINVENTING THE JOB INTERVIEW ............................................................................................... 101
9.8 TEST YOUR UNDERSTANDING..................................................................................................................... 103
10 TRAINING AND DEVELOPMENT........................................................................................................ 104
10.1 INTRODUCTION ...................................................................................................................................... 104
10.1.1 Michigan Matching model ........................................................................................................ 104
, 10.1.2 Relevance .................................................................................................................................. 104
10.1.3 Terminology .............................................................................................................................. 105
10.1.4 Case ........................................................................................................................................... 105
10.2 IDEAL MODEL ......................................................................................................................................... 105
10.2.1 Needs analysis........................................................................................................................... 106
10.2.2 Training goals ........................................................................................................................... 106
10.2.3 Training design and method ..................................................................................................... 107
10.2.3.1 Trainer-centered................................................................................................................................... 107
10.2.3.2 Trainee-centered .................................................................................................................................. 107
10.2.3.3 Teambuilding methods ......................................................................................................................... 110
10.2.3.4 E-learning ............................................................................................................................................. 110
10.2.4 Transfer ..................................................................................................................................... 111
10.2.4.1 Training design ..................................................................................................................................... 112
10.2.4.2 Trainee characteristics.......................................................................................................................... 113
10.2.4.3 Work environment ............................................................................................................................... 114
10.2.5 Evaluate .................................................................................................................................... 115
10.3 INFORMAL LEARNING............................................................................................................................... 117
10.3.1 What is it? ................................................................................................................................. 117
10.3.2 Why popular? ............................................................................................................................ 117
10.3.3 A conceptual model .................................................................................................................. 117
10.3.4 Facilitating informal learning .................................................................................................... 118
10.4 TEST YOUR UNDERSTANDING..................................................................................................................... 119
11 PERFORMANCE APPRAISAL AND MANAGEMENT ............................................................................ 120
11.1 INTRODUCTION ...................................................................................................................................... 120
11.1.1 Michigan Matching Model ........................................................................................................ 120
11.1.2 Relevance .................................................................................................................................. 120
11.1.3 Case ........................................................................................................................................... 120
11.2 BUILDING BLOCKS OF PERFORMANCE MANAGEMENT ..................................................................................... 121
11.2.1 What is performance? .............................................................................................................. 121
11.2.2 Instruments ............................................................................................................................... 123
11.2.2.1 Qualitative assessment ......................................................................................................................... 123
11.2.2.2 Relative rankings .................................................................................................................................. 124
11.2.2.3 Absolute rankings ................................................................................................................................. 125
11.2.2.4 Management-by-objectives (MBO) ...................................................................................................... 127
11.2.3 Who should assess performance? ............................................................................................. 128
11.2.4 Training ..................................................................................................................................... 131
11.2.5 The performance appraisal interview ....................................................................................... 132
11.2.6 General principles ..................................................................................................................... 133
11.3 REALITY OF PERFORMANCE MANAGEMENT................................................................................................... 133
11.3.1 Problems ................................................................................................................................... 133
11.3.2 Causes ....................................................................................................................................... 133
11.3.3 Solutions.................................................................................................................................... 133
11.3.4 Future ........................................................................................................................................ 134
11.4 TEST YOUR UNDERSTANDING..................................................................................................................... 135
12 COMPENSATION AND BENEFITS ...................................................................................................... 136
12.1 INTRODUCTION ...................................................................................................................................... 136
12.1.1 Michigan Matching Model ........................................................................................................ 136
12.1.2 Relevance .................................................................................................................................. 136
12.1.3 Terminology .............................................................................................................................. 137
, 12.1.4 Case ........................................................................................................................................... 138
12.2 PAY-FOR-PERFORMANCE SYSTEMS ............................................................................................................. 138
12.2.1 Case ........................................................................................................................................... 138
12.2.2 Individual pay-for-performance ................................................................................................ 138
12.2.2.1 Merit pay .............................................................................................................................................. 138
12.2.2.2 Bonuses ................................................................................................................................................ 139
12.2.2.3 Sales commissions ................................................................................................................................ 139
12.2.2.4 Piecework and standard hour plans ..................................................................................................... 140
12.2.3 Group pay-for-performance ...................................................................................................... 141
12.2.3.1 Profit sharing ........................................................................................................................................ 142
12.2.3.2 Gainsharing........................................................................................................................................... 142
12.2.3.3 Stock options ........................................................................................................................................ 142
12.2.4 Lessons learned ......................................................................................................................... 143
12.3 BENEFITS .............................................................................................................................................. 145
12.3.1 Costs and expenses ................................................................................................................... 145
12.3.2 Retirement plans ....................................................................................................................... 145
12.3.3 Medical plans ............................................................................................................................ 145
12.3.4 Work-family balance ................................................................................................................. 146
12.3.5 Perks.......................................................................................................................................... 146
12.3.6 Flexible benefits plans ............................................................................................................... 146
12.3.7 Popularity .................................................................................................................................. 147
12.4 ESTABLISHING A PAY STRUCTURE................................................................................................................ 148
12.4.1 Case ........................................................................................................................................... 148
12.4.2 Pay structure - Goals ................................................................................................................. 148
12.4.3 Internal equity ........................................................................................................................... 149
12.4.3.1 Ranking method ................................................................................................................................... 150
12.4.3.2 Classification method ........................................................................................................................... 150
12.4.3.3 Point-factor method ............................................................................................................................. 151
12.4.4 External equity .......................................................................................................................... 151
12.4.5 Integrating internal and external equity ................................................................................... 152
12.4.5.1 Market pay line..................................................................................................................................... 153
12.4.5.2 Pay policy line ....................................................................................................................................... 153
12.4.5.3 Pay grades ............................................................................................................................................ 154
12.4.6 Individual equity........................................................................................................................ 154
12.4.7 General solution ........................................................................................................................ 155
12.5 PODCAST: WHY IT PAYS TO RAISE PAY ......................................................................................................... 156
12.6 TEST YOUR UNDERSTANDING..................................................................................................................... 158
,1 Introduction
• Human Resources
o As opposed to tangible (ex. financial)/intangible resources (ex. reputation)
o Human resources are one of the primary means of creating a competitive
advantage for the organization
o Human resource strategy needs to be aligned with the business strategy
o By creating a workforce that is capable and motivated, and by creating
a work environment that offers opportunities to participate
1.1 Learning goals
Identify causes of
HR-related problems
and formulate
recommendations
based on the best
available evidence
Critically analyze factors
that influence the strategic
management of human
resources in today’s
international environment
Apply the theoretical concepts to a
fictional business case
Understand how the HR functions separately and in
combination contribute to sustainable competitive
advantage
Identify and describe the key concepts and frameworks for HRM, and
the fundamentals and functionality of the different HR functions
1.2 Evaluation
• Identical for first and second attempt
• Written exam
o Multiple choice (75% of total score)
▪ 30 questions
▪ Standard setting (18,75/30 = 10/20)
o Case (25% of total score)
▪ Analyze, apply, recommend
1
,• Marc Huselid, in his 1995 study entitled, “…”, provided evidence for the link
between HR practices and firm performance? What can we conclude from the
study results?
o Better HR practices are the reason why firms achieve better financial
performance.
o It is because firms perform better that they can afford more advanced, and
therefore better, HR practices.
o High-performing firms tend to have better HR practices.
o There is a reciprocal relationship between HR practices and firm
performance.
2 The key message
2.1 The HR-performance link
• The premise/claim of this course is that investments in human resources
(“people”) lead to better firm performance.
• Why is this?
→ If you invest in people, they’re going to be motivated and more productive
→ People will feel seen, respected, engaged, …
2.1.1 Resource-based view
• Besides tangible (financial, equipment, buildings) and intangible resources
(reputation, patents), a company also has human resources
→ People can do thing that can’t be imitated by other things
o Knowledge, skills, abilities, and other characteristics (e.g. personality)
o Motivation
• Human resources are an important source of sustained competitive advantage
o They are valuable
o They are rare
o Inimitable (very hard to imitate)
o Non-substitutable (also not by machines)
2.1.2 Contingency theory (“it depends”)
• HR practices contribute to firm performance if they are tailored to the context
in which they are to serve → HR need to be aligned with the business strategy
• Two types of fit:
o Vertical fit: HR practices should be aligned with business strategy
o Horizontal fit: HR practices should be aligned with each other
o No such thing as ‘best practices’ → ‘it depends’
2
,• Business strategy: innovation
o Vertical fit: HR is organized to promote innovative behavior amongst its
employees
o Horizontal fit: Align HR practices - recruitment, selection, training and
development, performance appraisal and management, compensation and
benefits - to obtain an innovative workforce
2.1.3 The AMO framework (“the black box”)
• HR practices influence firm performance through enhancing:
o Ability (skill levels)
▪ Recruitment, selection, training and development
o Motivation (willingness to exert effort)
▪ Performance appraisal and management, compensation and benefits
o Opportunity (to participate)
▪ Work design, leadership
→ When you have the ability (skills) and you are motivated (+ you have
the opportunity to perform), you are going to perform better than when
you don’t have the ability and/or are not motivated
3
,2.2 The HR-wellbeing link
• HR defends the interests of management and shareholders (HR-performance
link) as well as those of employees.
• One of its important responsibilities involves watching over employee well-
being, not (only) because healthy employees perform better, but because it is
important in itself.
• Can be accomplished through work design interventions
2.3 Recap
• In this course we claim that
o people provide a source of sustainable competitive advantage
o to achieve superior firm performance HR practices need to be vertically
and horizontally aligned
o HR leads to superior firm performance by influencing people’s abilities,
motivation and opportunities to participate
o HR must watch over the wellbeing of its employees, not for instrumental
reasons, but because it’s an end in itself.
4
, 3 HR roles
HR roles according to Dave Ulrich
• What role does HR play in the overall success of an organization?
• What key problems and challenges does he/she face?
→ recruiting people, payroll administration, relationships between employees,
training employees, …
Two dimensions:
- processes (administration, procedures) – people
- future/strategic focus – day-to-day/operational focus (payroll, hiring)
FUTURE/STRATEGIC FOCUS
Strategic Partner Change Agent
Aligning HR & Business Strategy Managing Transformation &
Active Role in Setting Change
Strategic Direction Effecting Transformation &
Creating added value Change
• Translate corporate strategy Managing & supporting the change
into specific, supportive HR- process
activities • Preparing people for change
• Aligning HR-processes (“change readiness”)
• HR information systems (e.g. • Organizational culture
HR scorecards, dashboards) • Conflict/problem resolution
• Action plans, monitoring
PROCESSES
progress, and making change
PEOPLE
last
Administrative Expert Employee Champion
Managing the Firm’s HR Managing Employees’ Contribution
Infrastructure Motivated & Competent
Personnel
Process Optimization &
Working relationships
Efficiency • Unions
Job Analysis, Recruitment & • Employee involvement &
Selection, Training & participation
Development, Career • Communication & trust
Management, Performance • Monitoring work stress and job
Appraisal & Management, satisfaction (“work
Compensation Systems, Labor engagement”)
Legislation, Human Resource • Psychological contract
Planning
DAY-TO-DAY/OPERATIONAL FOCUS
5
